EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
WEBSTER FINANCIAL CORPORATION,
WEBSTER SUBSIDIARY CORPORATION
AND
PEOPLE'S SAVINGS FINANCIAL CORP.
DATED AS OF
APRIL 4, 1997
TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER...........................................................1
1.1 The Merger...........................................................1
1.2 Effective Time.......................................................2
1.3 Effects of the Merger................................................2
1.4 Conversion of People's Corp. Common Stock............................2
1.5 Conversion of Merger Sub Common Stock................................3
1.6 Options..............................................................3
1.7 Certificate of Incorporation.........................................4
1.8 By-Laws..............................................................4
1.9 Directors and Officers...............................................4
1.10 Tax Consequences....................................................5
ARTICLE II EXCHANGE OF SHARES..................................................5
2.1 Webster to Make Shares Available.....................................5
2.2 Exchange of Shares...................................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PEOPLE'S CORP....................6
3.1 Corporate Organization...............................................6
3.2 Capitalization.......................................................7
3.3 Authority; No Violation..............................................8
3.4 Consents and Approvals...............................................9
3.5 Loan Portfolio; Reports..............................................9
3.6 Financial Statements; Exchange Act Filings; Books and Records.......10
3.7 Broker's Fees.......................................................10
3.8 Absence of Certain Changes or Events................................10
3.9 Legal Proceedings...................................................11
3.10 Taxes and Tax Returns..............................................11
3.11 Employee Plans.....................................................11
3.12 Certain Contracts..................................................12
3.13 Agreements with Regulatory Agencies................................13
3.14 State Takeover Laws; Certificate of Incorporation..................13
3.15 Environmental Matters..............................................13
3.16 Reserves for Losses................................................14
3.17 Properties and Assets..............................................14
3.18 Insurance..........................................................15
3.19 Liquidation Account................................................16
3.20 Compliance with Applicable Laws....................................16
3.21 Loans..............................................................16
3.22 Affiliates.........................................................17
3.23 Ownership of Webster Common Stock..................................17
3.24 People's DRIP......................................................17
3.25 Fairness Opinion...................................................17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF WEBSTER..........................18
4.1 Corporate Organization..............................................18
4.2 Capitalization......................................................18
4.3 Authority; No Violation.............................................19
4.4 Regulatory Approvals................................................20
4.5 Financial Statements; Exchange Act Filings; Books and Records.......21
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4.6 Absence of Certain Changes or Events................................21
4.7 Compliance with Applicable Law......................................21
4.8 Ownership of People's Common Stock; Affiliates and Associates.......21
4.9 Employee Benefit Plans..............................................22
4.10 Agreements with Regulatory Agencies................................22
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS...........................22
5.1 Covenants of People's Corp..........................................22
5.2 Covenants of Webster................................................25
5.3 Merger Covenants....................................................25
5.4 Compliance with Antitrust Laws......................................26
5.5 Employment and Other Agreements.....................................26
ARTICLE VI ADDITIONAL AGREEMENTS..............................................26
6.1 Regulatory Matters..................................................26
6.2 Access to Information...............................................27
6.3 Shareholder Meetings................................................28
6.4 Legal Conditions to Merger..........................................28
6.5 Stock Exchange Listing..............................................29
6.6 Employees...........................................................29
6.7 Indemnification.....................................................29
6.8 Subsequent Interim and Annual Financial Statements..................30
6.9 Additional Agreements...............................................31
6.10 Advice of Changes..................................................31
6.11 Current Information................................................31
6.12 Execution and Authorization of Bank Merger Agreement...............31
6.13 Change in Structure................................................31
6.14 Transaction Expenses of People's...................................32
ARTICLE VII CONDITIONS PRECEDENT..............................................32
7.1 Conditions to Each Party's Obligation To Effect the Merger..........32
7.2 Conditions to Obligations of Webster and Merger Sub.................33
7.3 Conditions to Obligations of People's Corp..........................34
ARTICLE VIII TERMINATION AND AMENDMENT........................................35
8.1 Termination.........................................................35
8.2 Effect of Termination...............................................36
8.3 Amendment...........................................................37
8.4 Extension; Waiver...................................................37
ARTICLE IX GENERAL PROVISIONS.................................................37
9.1 Closing.............................................................37
9.2 Nonsurvival of Representations, Warranties and Agreements...........37
9.3 Expenses; Breakup Fee...............................................37
9.4 Notices.............................................................38
9.5 Interpretation......................................................39
9.6 Counterparts........................................................39
9.7 Entire Agreement....................................................39
9.8 Governing Law.......................................................39
9.9 Enforcement of Agreement............................................39
9.10 Severability.......................................................40
9.11 Publicity..........................................................40
9.12 Assignment; Limitation of Benefits.................................40
9.13 Additional Definitions.............................................40
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EXHIBITS
A Articles of Combination and Bank Merger Agreement
B Option Agreement
C Certificate of Merger
D People's Savings Financial Corp. Stockholder Agreement
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of April 4, 1997 (this
"Agreement"), is entered into by and among Webster Financial Corporation, a
Delaware corporation ("Webster"), Webster Subsidiary Corporation, a Delaware
corporation and wholly-owned subsidiary of Webster ("Merger Sub"), and People's
Savings Financial Corp., a Connecticut corporation ("People's Corp.").
WHEREAS, the Boards of Directors of Webster, Merger Sub and People's
Corp. have determined that it is in the best interests of their respective
companies and shareholders to consummate the business combination transaction
provided for herein in which Merger Sub will, subject to the terms and
conditions set forth herein, merge with and into People's Corp., with People's
Corp. being the Surviving Corporation (as defined) and a wholly-owned subsidiary
of Webster (the "Merger");
WHEREAS, prior to the consummation of the Merger, Webster and People's
Corp. will respectively cause Webster Bank, a federal savings bank and
wholly-owned subsidiary of Webster, and the People's Savings Bank & Trust
("People's Bank"), a Connecticut-chartered state savings bank and wholly-owned
subsidiary of People's Corp., to enter into a merger agreement, in the form
attached hereto as Exhibit A (the "Bank Merger Agreement"), providing for the
merger (the "Bank Merger") of People's Bank with and into Webster Bank, with
Webster Bank being the "Surviving Bank" of the Bank Merger, and it is intended
that the Bank Merger be consummated immediately after consummation of the
Merger;
WHEREAS, as an inducement to Webster to enter into this Agreement,
People's Corp. will enter into an option agreement, in the form attached hereto
as Exhibit B (the "Option Agreement"), with Webster immediately following the
execution of this Agreement pursuant to which People's Corp. will grant Webster
an option to purchase, under certain circumstances, an aggregate of 476,167
newly issued shares of common stock, par value $1.00 per share, of People's
Corp. ("People's Common Stock") upon the terms and conditions therein contained,
and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER.
Subject to the terms and conditions of this Agreement, in accordance
with the Delaware General Corporation Law (the "DGCL") and the State of
Connecticut Stock Corporation Act, as amended (the "Connecticut Corporation
Law"), at the Effective Time (as defined in Section 1.2 hereof), Merger Sub
shall merge into People's Corp., with People's Corp. being the surviving
corporation (hereinafter sometimes called the "Surviving Corporation") in the
Merger. Upon consummation of the Merger, the corporate existence of Merger Sub
shall cease and the Surviving Corporation shall continue to exist as a
Connecticut corporation, and a wholly owned subsidiary of Webster.
1.2 EFFECTIVE TIME.
The Merger shall become effective on the Closing Date (as defined in
Section 9.1 hereof), as set forth in the certificate of merger (the "Certificate
of Merger") in the form attached as Exhibit C hereto which shall be filed with
the Secretaries of State of the States of Connecticut and Delaware on the
Closing Date. The term "Effective Time" shall be the date and time when the
Merger becomes effective on the Closing Date, as set forth in the Certificate of
Merger.
1.3 EFFECTS OF THE MERGER.
At and after the Effective Time, the Merger shall have the effects set
forth in Sections 259 and 261 of the DGCL and Sections 33-820 and 33-821 of the
Connecticut Corporation Law.
1.4 CONVERSION OF PEOPLE'S CORP. COMMON STOCK.
(a) At the Effective Time, subject to Sections 1.4(b), 2.2(e)
and 8.1(h) hereof, each share of People's Common Stock issued and outstanding
prior to the Effective Time (other than Objecting Shares (as such term is
defined below in this Section 1.4)) shall, by virtue of this Agreement and
without any action on the part of the holder thereof, be converted into and
exchangeable for that number of shares of Webster common stock, par value $.01
per share ("Webster Common Stock"), determined by dividing $34.00 by the Base
Period Trading Price (as defined below), as may be adjusted as provided below,
computed to five decimal places (the "Exchange Ratio"); provided, however, that
if the Base Period Trading Price shall be greater than $40.00, the Exchange
Ratio shall be 0.85000 and if the Base Period Trading Price shall be less than
$34.00, the Exchange Ratio shall be 1.00000. The number of shares of Webster
Common Stock issuable with respect to each share of People's Common Stock, as
determined as set forth herein, is called the "Merger Consideration." For
purposes of this Agreement, the term "Base Period Trading Price" shall mean the
average of the daily closing prices per share for Webster Common Stock for the
15 consecutive trading days which shares of Webster Common Stock are actually
traded (as reported on the Nasdaq Stock Market National Market System) ending on
the day preceding the receipt of the last required federal bank regulatory
approval (such period herein called the "Base Period").
(b) All of the shares of People's Common Stock converted into
Webster Common Stock pursuant to this Article I shall no longer be outstanding
and shall automatically be canceled and shall cease to exist, and each
certificate (each a "Certificate") previously representing any such shares of
People's Common Stock shall thereafter represent the right to receive (i) the
number of whole shares of Webster Common Stock and (ii) cash in lieu of
fractional shares into which the shares of People's Common Stock represented by
such Certificate have been converted pursuant to this Section 1.4(a) and Section
2.2(e) hereof. Certificates previously representing shares of People's Common
Stock shall be exchanged for certificates representing whole shares of Webster
Common Stock and cash in lieu of fractional shares issued in consideration
therefor upon the surrender of such Certificates in accordance with Section 2.2
hereof, without any interest thereon. If prior to the Effective Time Webster
should split or combine its common stock, or pay a dividend or other
distribution in such common stock, then the Exchange Ratio shall be
appropriately adjusted to reflect such split, combination, dividend or
distribution.
(c) At the Effective Time, all shares of People's Common Stock
that are owned by People's Corp. as treasury stock and all shares of People's
Common Stock that are owned directly or indirectly by Webster or People's Corp.
or any of their respective Subsidiaries (other than shares of People's Common
Stock held directly or indirectly in trust accounts, managed accounts and the
like or otherwise held in a fiduciary capacity that are beneficially owned by
third parties (any such shares, and shares of Webster Common Stock which are
similarly held, whether held directly or indirectly by Webster or People's
Corp., as the case may be, being referred to herein as "Trust Account Shares")
and other than any shares of People's Common Stock held by Webster or People's
Corp. or any of their
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respective Subsidiaries in respect of a debt previously contracted (any such
shares of People's Common Stock, and shares of Webster Common Stock which are
similarly held, whether held directly or indirectly by Webster or People's
Corp., being referred to herein as "DPC Shares") shall be canceled and shall
cease to exist and no stock of Webster or other consideration shall be delivered
in exchange therefor. All shares of Webster Common Stock that are owned by
People's Corp. or any of its Subsidiaries (other than Trust Account Shares and
DPC Shares) shall become treasury stock of Webster.
(d) Certificates for fractions of shares of Webster Common
Stock will not be issued. In lieu of a fraction of a share of Webster Common
Stock, each holder of People's Common Stock otherwise entitled to a fraction of
a share of Webster Common Stock shall be entitled to receive an amount of cash
equal to (i) the fraction of a share of the Webster Common Stock to which such
holder would otherwise be entitled, multiplied by (ii) the actual market value
of the Webster Common Stock, which shall be deemed to be the average of the
daily closing prices per share for Webster Common Stock for the fifteen
consecutive trading days on which shares of Webster Common Stock are actually
traded (as reported on the Nasdaq Stock Market National Market System) ending on
the third trading day preceding the Closing Date. Following consummation of the
Merger, no holder of People's Common Stock shall be entitled to dividends or any
other rights in respect of any such fraction.
(e) Notwithstanding anything in this Agreement to the contrary
and unless otherwise provided by applicable law, shares of People's Common Stock
that are issued and outstanding immediately prior to the Effective Time and that
are owned by shareholders who have properly objected within the meaning of
Sections 33-855 through 33-872 of the Connecticut Corporation Law (the
"Objecting Shares"), shall not be converted into the right to receive shares of
Webster Common Stock, unless and until such shareholders shall have failed to
perfect or shall have effectively withdrawn or lost their right of payment under
applicable law. If any such shareholder shall have failed to perfect or shall
have effectively withdrawn or lost such right of payment, each share of People's
Common Stock held by such shareholder shall thereupon be deemed to have been
converted into the right to receive and become exchangeable for, at the
Effective Time, shares of Webster Common Stock pursuant to Section 1.4(a)
hereof.
(f) People's Corp. shall give Webster (i) prompt notice of any
objections filed pursuant to Section 33-861 of the Connecticut Corporation Law
received by People's Corp., withdrawals of such objections, and any other
instruments served in connection with such objections pursuant to the
Connecticut Corporation Law and received by People's Corp. and (ii) the
opportunity to direct all negotiations and proceedings with respect to
objections under the Connecticut Corporation Law consistent with the obligations
of People's Corp. thereunder. People's Corp. shall not, except with the prior
written consent of Webster, (x) make any payment with respect to any such
objection, (y) offer to settle or settle any such objections or (z) waive any
failure to timely deliver a written objection in accordance with the Connecticut
Corporation Law.
1.5 CONVERSION OF MERGER SUB COMMON STOCK.
Each of the shares of the common stock, par value $.01 per share, of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
become shares of the Surviving Corporation after the Merger and shall thereupon
constitute all of the issued and outstanding shares of the Surviving
Corporation.
1.6 OPTIONS.
At the Effective Time, each option granted by People's Corp. to
purchase shares of People's Common Stock which is outstanding and unexercised
immediately prior thereto shall be converted automatically into an option to
purchase shares of Webster Common Stock in an amount and at an
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exercise price determined as provided below (and otherwise subject to the terms
of the 1986 Stock Option and Incentive Plan (the "1986 Option Plan"), the 1986
Stock Option Plan for Outside Directors (the "1986 Directors Plan"), the 1995
Stock Option and Incentive Plan (the "1995 Stock Option Plan") or the 1995 Stock
Option Plan for Outside Directors (the "1995 Directors Plan") (the 1986 Option
Plan, the 1986 Directors Plan, the 1995 Stock Option Plan, and the 1995
Directors Plan, collectively, the "People's Stock Plans");
(1) The number of shares of Webster Common Stock to be subject
to the option immediately after the Effective Time shall be
equal to the product of the number of shares of People's
Common Stock subject to the option immediately before the
Effective Time, multiplied by the Exchange Ratio, provided
that any fractional shares of Webster Common Stock resulting
from such multiplication shall be rounded down to the nearest
share; and
(2) The exercise price per share of Webster Common Stock under
the option immediately after the Effective Time shall be equal
to the exercise price per share of People's Common Stock under
the option immediately before the Effective Time divided by
the Exchange Ratio, provided that such exercise price shall be
rounded to the nearest cent.
(3) For purposes of the People's Stock Plans, service as an
advisory director of Webster Bank shall be deemed to be
service.
The adjustment provided herein shall be and is intended to be effected in a
manner which is consistent with Section 424(a) of the Internal Revenue Code of
1986, as amended (the "Code"). The duration and other terms of the option
immediately after the Effective Time shall be the same as the corresponding
terms in effect immediately before the Effective Time, except that all
references to People's Corp. or People's Bank in the People's Stock Plans (and
the corresponding references in the option agreement documenting such option)
shall be deemed to be references to Webster.
1.7 CERTIFICATE OF INCORPORATION.
At the Effective Time, the Certificate of Incorporation of People's
Corp., as in effect at the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation.
1.8 BY-LAWS.
At the Effective Time, the By-Laws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation.
1.9 DIRECTORS AND OFFICERS.
At the Effective Time, the directors and officers of Merger Sub
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation. One director of People's Corp., to be selected by the
Board of Directors of Webster in consultation with People's Corp., shall be
invited to serve as an additional member (the "New Member") of the Board of
Directors of Webster Bank for a term not to expire prior to Webster's 2000
annual meeting of stockholders. The New Member will receive directors fees on
the same basis as other non-employee directors of Webster Bank who are not
directors of Webster, which fees as of the date hereof are based on an annual
retainer of $10,000 (payable in shares of Webster Common Stock, in accordance
with the Directors Retainer Fees Plan of Webster), and $750 per meeting
attended. In addition, the non-employee directors of People's Corp. serving
immediately prior to the Effective Time will be invited to serve on an advisory
board to Webster after the Bank Merger for a period of up to 24 months. Such
advisory directors will each be paid for such service up to $40,000 based on a
quarterly retainer of $3,500 and quarterly meeting
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attendance fees of $1,500 for each meeting attended; provided, however, that
while any such advisory director also is a director of Webster Bank, such
director will not receive any compensation as an advisory director.
1.10 TAX CONSEQUENCES.
It is intended that the Merger, either alone or in conjunction with the
Subsidiary Merger, shall constitute a reorganization within the meaning of
Section 368(a) of the Code, and that this Agreement shall constitute a "plan of
reorganization" for the purposes of the Code.
ARTICLE II
EXCHANGE OF SHARES
2.1 WEBSTER TO MAKE SHARES AVAILABLE.
At or prior to the Effective Time, Webster shall deposit, or shall
cause to be deposited, with Webster's transfer agent, American Stock Transfer &
Trust Company, or such other bank, trust company or transfer agent as Webster
may select (the "Exchange Agent"), for the benefit of the holders of
Certificates, for exchange in accordance with this Article II, certificates
representing the shares of Webster Common Stock and the cash in lieu of
fractional shares (such cash and certificates for shares of Webster Common
Stock, being hereinafter referred to as the "Exchange Fund") to be issued
pursuant to Section 1.4 and paid pursuant to Section 2.2(a) hereof in exchange
for outstanding shares of People's Common Stock.
2.2 EXCHANGE OF SHARES.
(a) As soon as practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a Certificate or
Certificates a form letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent) and instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing the shares of Webster Common Stock and the cash in
lieu of fractional shares into which the shares of People's Common Stock
represented by such Certificate or Certificates shall have been converted
pursuant to this Agreement. People's Corp. shall have the right to review both
the letter of transmittal and the instructions prior to such documents being
finalized. Upon surrender of a Certificate for exchange and cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor (x)
a certificate representing that number of whole shares of Webster Common Stock
to which such holder of People's Common Stock shall have become entitled
pursuant to the provisions of Article I hereof and (y) a check representing the
amount of cash in lieu of fractional shares, if any, which such holder has the
right to receive in respect of the Certificate surrendered pursuant to the
provisions of this Article II, and the Certificate so surrendered shall
forthwith be canceled. No interest will be paid or accrued on the cash in lieu
of fractional shares and unpaid dividends and distributions, if any, payable to
holders of Certificates.
(b) No dividends or other distributions declared after the
Effective Time with respect to Webster Common Stock and payable to the holders
of record thereof shall be paid to the holder of any unsurrendered Certificate
until the holder thereof shall surrender such Certificate in accordance with
this Article II. After the surrender of a Certificate in accordance with this
Article II, the record holder thereof shall be entitled to receive any such
dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to shares of Webster Common Stock
represented by such Certificate. No holder of an unsurrendered Certificate shall
be entitled, until the surrender of such Certificate, to vote the shares of
Webster Common Stock into which his People's Common Stock shall have been
converted.
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(c) If any certificate representing shares of Webster Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the Certificate so surrendered shall be properly endorsed
(or accompanied by an appropriate instrument of transfer) and otherwise in
proper form for transfer, and that the person requesting such exchange shall pay
to the Exchange Agent in advance any transfer or other taxes required by reason
of the issuance of a certificate representing shares of Webster Common Stock in
any name other than that of the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not payable.
(d) After the close of business on the day immediately prior
to the Effective Time, there shall be no transfers on the stock transfer books
of People's Corp. of the shares of People's Common Stock which were issued and
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates representing such shares are presented for transfer to the
Exchange Agent, they shall be canceled and exchanged for certificates
representing shares of Webster Common Stock as provided in this Article II.
(e) Any portion of the Exchange Fund that remains unclaimed by
the shareholders of People's Corp. for six months after the Effective Time shall
be returned to Webster. Any shareholders of People's Corp. who have not
theretofore complied with this Article II shall thereafter look only to Webster
for payment of their shares of Webster Common Stock, cash in lieu of fractional
shares and unpaid dividends and distributions on Webster Common Stock
deliverable in respect of each share of People's Common Stock such shareholder
holds as determined pursuant to this Agreement, in each case, without any
interest thereon. Notwithstanding the foregoing, none of Webster, People's
Corp., the Exchange Agent or any other person shall be liable to any former
holder of shares of People's Common Stock for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(f) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Webster, the posting by such person of a bond in such amount as Webster may
reasonably direct as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the shares of Webster Common Stock
and cash in lieu of fractional shares deliverable in respect thereof pursuant to
this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PEOPLE'S CORP.
People's Corp. hereby makes the following representations and
warranties to Webster and Merger Sub as set forth in this Article III, each of
which is being relied upon by Webster and Merger Sub as a material inducement to
enter into and perform this Agreement. All of the disclosure schedules of
People's Corp. referenced below and thereby required of People's Corp. pursuant
to this Agreement, which disclosure schedules shall be cross-referenced to the
specific sections and subsections of this Agreement and delivered herewith, are
referred to herein as the "People's Corp. Disclosure Schedule."
3.1 CORPORATE ORGANIZATION.
(a) People's Corp. is a corporation duly organized, validly
existing and in good standing under the laws of the State of Connecticut.
People's Corp. has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of
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any material business conducted by it or the character or location of any
material properties or assets owned or leased by it makes such licensing or
qualification necessary. People's Corp. is duly registered as a bank holding
company with the Board of Governors of the Federal Reserve System ("FRB") under
the Banking Holding Company Act of 1956, as amended ("BHCA"). The Certificate of
Incorporation and By-Laws of People's Corp., copies of which have previously
been delivered to Webster, are true, correct and complete copies of such
documents as in effect as of the date of this Agreement.
(b) People's Bank is a state chartered savings bank duly
organized, validly existing and in good standing under the laws of the State of
Connecticut. The deposit accounts of People's Bank are insured by the Federal
Deposit Insurance Corporation (the "FDIC") through the Bank Insurance Fund (the
"BIF") to the fullest extent permitted by law, and all premiums and assessments
required in connection therewith have been paid by People's Bank. People's Bank
is the only subsidiary of People's Corp. that is a "Significant Subsidiary" as
such term is defined in Regulation S-X promulgated by the Securities and
Exchange Commission (the "SEC"). People's Bank has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted and is duly licensed or qualified to do
business in each jurisdiction in which the nature of any material business
conducted by it or the character or the location of any material properties or
assets owned or leased by it makes such licensing or qualification necessary.
The Certificate of Incorporation and By-Laws of People's Bank, copies of which
have previously been delivered to Webster, are true, correct and complete copies
of such documents as in effect as of the date of this Agreement.
3.2 CAPITALIZATION.
(a) The authorized capital stock of People's Corp. consists of
10,000,000 shares of People's Common Stock and 1,000,000 shares of serial
preferred stock, no par value (the "People's Preferred Stock"). As of the date
hereof, there are (x) 1,906,863 shares of People's Common Stock issued and
outstanding and an additional 636,961 shares of People's Common Stock held in
People's Corp.'s treasury, (y) no shares of People's Common Stock reserved for
issuance upon exercise of outstanding stock options or otherwise, except for
222,500 shares of People's Common Stock reserved for issuance pursuant to the
People's Stock Plans (of which options for 166,500 shares are currently
outstanding) and (ii) 476,167 shares of People's Common Stock reserved for
issuance upon exercise of the option to be issued to Webster pursuant to the
Option Agreement, and (z) no shares of People's Preferred Stock issued or
outstanding, held in People's Corp.'s treasury or reserved for issuance upon
exercise of outstanding stock options or otherwise. All of the issued and
outstanding shares of People's Common Stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. Except for the
Option Agreement and the People's Stock Plans, People's Corp. does not have and
is not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of People's Common Stock or People's Preferred Stock or any other
equity security of People's Corp. or any securities representing the right to
purchase or otherwise receive any shares of People's Common Stock or any other
equity security of People's Corp. The names of the optionees, the date of each
option to purchase People's Common Stock granted, the number of shares subject
to each such option, the expiration date of each such option, and the price at
which each such option may be exercised under the People's Stock Plans are set
forth in Section 3.2(a) of the People's Corp. Disclosure Schedule. Since
December 31, 1996 People's Corp. has not issued any shares of its capital stock
or any securities convertible into or exercisable for any shares of its capital
stock, other than pursuant to the exercise of director or employee stock options
granted prior to December 31, 1996, under the People's Stock Plans and pursuant
to the People's Savings Financial Corp. Dividend Reinvestment Plan and Stock
Purchase Plan (the "People's DRIP").
(b) Section 3.2(b) of the People's Corp. Disclosure Schedule
sets forth a true, correct and complete list of all Subsidiaries of People's
Corp. as of the date of this Agreement. People's Corp. owns, directly or
indirectly, all of the issued and outstanding shares of capital stock of each of
its Subsidiaries, free and clear of all liens, charges, encumbrances and
security interests whatsoever, and
7
all of such shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No People's Corp. Subsidiary has or is bound
by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of capital stock or any other equity security of such Subsidiary or any
securities representing the right to purchase or otherwise receive any shares of
capital stock or any other equity security of such Subsidiary.
3.3 AUTHORITY; NO VIOLATION.
(a) People's Corp. has full corporate power and authority to
execute and deliver this Agreement and the Option Agreement and to consummate
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly approved by the Board
of Directors of People's Corp. The Board of Directors of People's Corp. has
directed that this Agreement and the transactions contemplated hereby be
submitted to People's Corp.'s shareholders for approval at a special meeting of
such shareholders and, except for the adoption of this Agreement by the
requisite vote of People's Corp.'s shareholders, no other corporate proceedings
on the part of People's Corp. (except for matters related to setting the date,
time, place and record date for the special meeting) are necessary to approve
this Agreement or the Option Agreement or to consummate the transactions
contemplated hereby or thereby. This Agreement has been, and the Option
Agreement will be, duly and validly executed and delivered by People's Corp. and
(assuming due authorization, execution and delivery by Webster and Merger Sub of
this Agreement and by Webster of the Option Agreement) will constitute valid and
binding obligations of People's Corp., enforceable against People's Corp. in
accordance with their terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally.
(b) People's Bank has full corporate power and authority to
execute and deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby have been duly and
validly approved by the Board of Directors of People's Bank and by People's
Corp. as the sole shareholder of People's Bank. No other corporate proceedings
on the part of People's Bank will be necessary to consummate the transactions
contemplated thereby. The Bank Merger Agreement, upon execution and delivery by
People's Bank, will be duly and validly executed and delivered by People's Bank
and will (assuming due authorization, execution and delivery by Webster Bank)
constitute a valid and binding obligation of People's Bank, enforceable against
People's Bank in accordance with its terms, except as enforcement may be limited
by general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally.
(c) Neither the execution and delivery of this Agreement and
the Option Agreement by People's Corp. or the Bank Merger Agreement by People's
Bank, nor the consummation by People's Corp. or People's Bank, as the case may
be, of the transactions contemplated hereby or thereby, nor compliance by
People's Corp. or People's Bank with any of the terms or provisions hereof or
thereof, will (i) violate any provision of the Certificate of Incorporation or
By-Laws of People's Corp. or the Certificate of Incorporation or By-Laws of
People's Bank, or (ii) assuming that the consents and approvals referred to in
Section 3.4 hereof are duly obtained, (x) violate any Laws (as defined in
Section 9.13) applicable to People's Corp. or People's Bank, or any of their
respective properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of People's Corp. or
People's Bank under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease,
8
agreement or other instrument or obligation to which People's Corp. or People's
Bank is a party, or by which they or any of their respective properties or
assets may be bound or affected.
3.4 CONSENTS AND APPROVALS.
(a) Except for (i) the filing of applications and notices, as
applicable, as to the Merger and the Bank Merger with the FRB under the BHCA and
the Office of Thrift Supervision ("OTS") under the Home Owners Loan Act of 1933
("HOLA") and the Bank Merger Act and approval of such applications and notices,
(ii) the filing of any required applications or notices with the FDIC and OTS as
to the subsidiary activities of People's Bank which become service corporation
or operating subsidiaries of Webster Bank and approval of such applications and
notices, (iii) the filing of applications and notices with the Banking
Commissioner of the State of Connecticut (the "Connecticut Commissioner") and
approval of such applications and notices as to the Merger and the Bank Merger
(the "State Banking Approvals"), (iv) the filing with the Connecticut
Commissioner of an acquisition statement pursuant to Section 36a-184 of the
Banking Law of the State of Connecticut prior to the acquisition of more than
10% of the People's Common Stock pursuant to the Option Agreement, if not
exempt, (v) the filing with the SEC of a registration statement on Form S-4 to
register the shares of Webster Common Stock to be issued in connection with the
Merger (including the shares of Webster Common Stock that may be issued upon the
exercise of the options referred to in Section 1.6 hereof), which will include
the joint proxy statement/prospectus to be used in soliciting the approval of
People's Corp.'s shareholders at a special meeting to be held in connection with
this Agreement and the transactions contemplated hereby (the "Proxy
Statement/Prospectus"), (vi) the approval of this Agreement by the requisite
vote of the shareholders of People's Corp., (vii) the filing of the Certificate
of Merger with the Secretary of State of Connecticut pursuant to the Connecticut
Corporation Law, (viii) the filing of the Certificate of Merger with the
Secretary of State of Delaware pursuant to the DGCL, (ix) the filings required
by the Bank Merger Agreement, (x) the filings required for the Subsidiary
Merger, and (xi) such filings, authorizations or approvals as may be set forth
in Section 3.4 of the People's Corp. Disclosure Schedule, 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
(1) the execution and delivery by People's Corp. of this Agreement and the
Option Agreement, (2) the consummation by People's Corp. of the Merger and the
other transactions contemplated hereby, (3) the execution and delivery by
People's Bank of the Bank Merger Agreement, (4) the consummation by People's
Corp. of the Option Agreement; and (5) the consummation by People's Bank of the
Bank Merger and the transactions contemplated thereby, except, in each case, for
such consents, approvals or filings, the failure of which to obtain will not
have a material adverse effect on the ability of Webster to consummate the
transactions contemplated hereby.
(b) People's Corp. hereby represents to Webster that it has no
knowledge of any reason why approval or effectiveness of any of the
applications, notices or filings referred to in Section 3.4(a) cannot be
obtained or granted on a timely basis.
3.5 LOAN PORTFOLIO; REPORTS.
(a) As of December 31, 1996 and thereafter through and
including the date of this Agreement, neither People's Corp. nor People's Bank
is a party to any written or oral loan agreement, note or borrowing arrangement
(including, without limitation, leases, credit enhancements, commitments,
guarantees and interest-bearing assets) (collectively, "Loans"), with any
director, officer or five percent or greater shareholder of People's Corp. or
any of its Subsidiaries, or any Affiliated Person (as defined in Section 9.13)
of the foregoing.
(b) People's Corp. and People's Bank have timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since December 31,
1992 with (i) the FRB, (ii) the FDIC, (iii) the Connecticut
9
Commissioner and any other state banking commissions or any other state
regulatory authority (each a "State Regulator"), (iv) the SEC and (v) any other
self-regulatory organization ("SRO") (collectively "Regulatory Agencies").
Except for normal examinations conducted by a Regulatory Agency in the regular
course of the business of People's Corp. and its Subsidiaries, no Governmental
Entity is conducting, or has conducted, any proceeding or investigation into the
business or operations of People's Corp. or People's Bank since December 31,
1992.
3.6 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
People's Corp. has previously delivered to Webster true, correct and
complete copies of the consolidated statements of position of People's Corp. and
its Subsidiaries as of December 31 for the fiscal years 1994, 1995, and 1996 and
the related consolidated statements of earnings, stockholders' equity and cash
flows for the fiscal years 1993 through 1996, inclusive, as reported in People's
Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1996
filed with the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), in each case accompanied by the audit report of Coopers &
Lybrand L.L.P., independent public accountants with respect to People's Corp.
The financial statements referred to in this Section 3.6 (including the related
notes, where applicable) fairly present, and the financial statements referred
to in Section 6.9 hereof will fairly present (subject, in the case of the
unaudited statements, to recurring audit adjustments normal in nature and
amount), the results of the consolidated operations and consolidated financial
condition of People's Corp. and its Subsidiaries for the respective fiscal
periods or as of the respective dates therein set forth; each of such statements
(including the related notes, where applicable) comply, and the financial
statements referred to in Section 6.9 hereof will comply, with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto and each of such statements (including the related notes,
where applicable) has been, and the financial statements referred to in Section
6.9 hereof will be prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied during the periods involved, except in
each case as indicated in such statements or in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q. People's Corp.'s Annual
Report on Form 10-K for the fiscal year ended December 31, 1996 and all reports
filed under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act since
December 31, 1993 comply in all material respects with the appropriate
requirements for such reports under the Exchange Act, and People's Corp. has
previously delivered or made available to Webster true, correct and complete
copies of such reports. The books and records of People's Corp. and People's
Bank have been, and are being, maintained in all material respects in accordance
with GAAP and any other applicable legal and accounting requirements.
3.7 BROKER'S FEES.
Neither People's Corp. nor any People's Corp. Subsidiary nor any of
their respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement, the Bank
Merger Agreement or the Option Agreement, except that People's Corp. has
engaged, and will pay a fee or commission to Advest, Inc. ("Advest") in
accordance with the terms of a letter agreement between Advest and People's
Corp., dated January 14, 1997, as amended on February 12, 1997, true, complete
and correct copies of which have been previously delivered by People's Corp. to
Webster.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in People's Corp.'s Annual Report on
Form 10-K for the fiscal year ended December 31, 1996, since December 31, 1996
(i) neither People's Corp. nor any of its Subsidiaries has incurred any material
liability, except as contemplated by the Agreement or in the ordinary course of
their business consistent with their past practices, and (ii) no event has
occurred which has had, or is likely to have, individually or in the aggregate,
a Material Adverse Effect (as defined in Section 9.13) on People's Corp.
10
(b) Since December 31, 1996 People's Corp. and its
Subsidiaries have carried on their respective businesses in the ordinary and
usual course consistent with their past practices.
3.9 LEGAL PROCEEDINGS.
(a) Neither People's Corp. nor any of its Subsidiaries is a
party to any, and there are no pending or threatened, legal, administrative,
arbitration or other proceedings, claims, actions or governmental or regulatory
investigations of any nature against People's Corp. or any of its Subsidiaries
in which there is a reasonable probability of any material recovery against or
other material effect upon People's Corp. or any of its Subsidiaries or which
challenge the validity or propriety of the transactions contemplated by this
Agreement, the Bank Merger Agreement or the Option Agreement as to which there
is a reasonable probability of success.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon People's Corp., any of its Subsidiaries or
the assets of People's Corp. or any of its Subsidiaries.
3.10 TAXES AND TAX RETURNS.
Each of People's Corp. and its Subsidiaries has duly filed all Federal
and state tax returns required to be filed by it on or prior to the date hereof
(all such returns being accurate and complete in all material respects) and has
duly paid or made provisions for the payment of all material taxes and other
governmental charges which have been incurred or are due or claimed to be due
from it by Federal and state taxing authorities on or prior to the date hereof
other than taxes or other charges (a) which (x) are not yet delinquent or (y)
are being contested in good faith and set forth in Section 3.10 of the People's
Corp. Disclosure Schedule and (b) which have not been finally determined. All
liability with respect to the income tax returns of People's Corp. and its
Subsidiaries has been satisfied for all years to and including 1995. The
Internal Revenue Service ("IRS") has not notified People's Corp. of, or
otherwise asserted, that there are any material deficiencies with respect to the
income tax returns of People's Corp. subsequent to 1993. There are no material
disputes pending, or claims asserted for, Taxes or assessments upon People's
Corp. or any of its Subsidiaries, nor has People's Corp. or any of its
Subsidiaries been requested to give any currently effective waivers extending
the statutory period of limitation applicable to any Federal or state income tax
return for any period. In addition, Federal and state returns which are accurate
and complete in all material respects have been filed by People's Corp. and its
Subsidiaries for all periods for which returns were due with respect to income
tax withholding, Social Security and unemployment taxes and the amounts shown on
such Federal and state returns to be due and payable have been paid in full or
adequate provision therefor has been included by People's Corp. in its
consolidated financial statements as of December 31, 1996.
3.11 EMPLOYEE PLANS.
(a) Section 3.11(a) of the People's Corp. Disclosure Schedule
sets forth a true and complete list of each employee benefit plan (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), arrangement or agreement that is maintained or
contributed to as of the date of this Agreement, or that has within the last six
years been maintained or contributed to, by People's Corp. or any of its
Subsidiaries or any other entity which together with People's Corp. would be
deemed a "single employer" within the meaning of Section 4001 of ERISA or Code
Sections 414(b), (c) or (m) or under which People's Corp. or any such Subsidiary
has any liability (collectively, the "Plans").
(b) People's Corp. has heretofore delivered to Webster true,
correct and complete copies of each of the Plans and all related documents,
including but not limited to (i) the actuarial report for such Plan (if
applicable) for each of the last five years, (ii) the most recent determination
letter from the Internal Revenue Service (if applicable) for such Plan, (iii)
the current summary plan
11
description and any summaries of material modification, (iv) all annual reports
(Form 5500 series) for each Plan filed for the preceding five plan years, (v)
all agreements with fiduciaries and service providers relating to the Plan, and
(vi) all substantive correspondence relating to any such Plan addressed to or
received from the Internal Revenue Service, the Department of Labor, the Pension
Benefit Guaranty Corporation or any other governmental agency.
(c) Except as set forth at Section 3.11(c) of the People's
Corp. Disclosure Schedule, (i) Each of the Plans has been operated and
administered in all material respects in compliance with applicable Laws,
including but not limited to ERISA and the Code, (ii) each of the Plans intended
to be "qualified" within the meaning of Section 401(a) of the Code is so
qualified, (iii) with respect to each Plan which is subject to Title IV of
ERISA, the present value of accrued benefits under such Plan, based upon the
actuarial assumptions used for funding purposes in the most recent actuarial
report prepared by such Plan's actuary with respect to such Plan, did not, as of
its latest valuation date, exceed the then current value of the assets of such
Plan allocable to such accrued benefits, (iv) no Plan provides benefits,
including, without limitation, death or medical benefits (whether or not
insured), with respect to current or former employees of People's Corp. or any
People's Corp. Subsidiary beyond their retirement or other termination of
service, other than (w) coverage mandated by applicable Law, (x) death benefits
or retirement benefits under a Plan that is an "employee pension plan," as that
term is defined in Section 3(2) of ERISA, (y) deferred compensation benefits
under a Plan that are accrued as liabilities on the books of People's Corp. or
any People's Corp. Subsidiary, or (z) benefits the full cost of which is borne
by the current or former employee (or his beneficiary), (v) no liability under
Title IV of ERISA has been incurred by People's Corp. or any People's Corp.
Subsidiary that has not been satisfied in full, and no condition exists that
presents a material risk to People's Corp. or any People's Corp. Subsidiary
incurring a material liability thereunder, (vi) no Plan is a "multi employer
pension plan," as such term is defined in Section 3(37) of ERISA, (vii) all
contributions or other amounts payable by People's Corp. or any People's Corp.
Subsidiary as of the Effective Time with respect to each Plan and all other
liabilities of each such entity with respect to each Plan, in respect of current
or prior plan years have been paid or accrued in accordance with generally
accepted accounting practices and Section 412 of the Code, (viii) neither
People's Corp. nor any People's Corp. Subsidiary has engaged in a transaction in
connection with which People's Corp. or any People's Corp. Subsidiary could be
subject to either a civil penalty assessed pursuant to Section 409 or 502(i) of
ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code, (ix) to the
knowledge of People's Corp., there are no pending, threatened or anticipated
claims (other than routine claims for benefits) by, on behalf of or against any
of the plans or any trusts related thereto, and (x) all Plans (other than Plans
providing for the payment of benefits from the general assets of People's Corp.
or any People's Corp. Subsidiary) could be terminated as of the Effective Time
without material liability; (xi) no Plan, program, agreement or other
arrangement, either individually or collectively, provides for any payment by
People's Corp. or any People's Corp. Subsidiary that would not be deductible
under Code Sections 162(a)(1), 162(m) or 404 or that would constitute a
"parachute payment" within the meaning of Code Section 280G; (xii) no
"accumulated funding deficiency" as defined in Section 302(a)(2) of ERISA or
Section 412 of the Code, whether or not waived, and no "unfunded current
liability" as determined under Section 412(l) of the Code exists with respect to
any Plan; and (xiii) no Plan has experienced a "reportable event" (as such term
is defined in Section 4043(b) of ERISA) that is not subject to an administrative
or statutory waiver from the reporting requirement.
3.12 CERTAIN CONTRACTS.
(a) Except as set forth at Section 3.12 of the People's Corp.
Disclosure Schedule, neither People's Corp. nor any of its Subsidiaries is a
party to or bound by any contract, arrangement or commitment (i) with respect to
the employment of any directors, officers, employees or consultants, (ii) which,
upon the consummation of the transactions contemplated by this Agreement or the
Bank Merger Agreement will (either alone or upon the occurrence of any
additional acts or events) result in any payment (whether of severance pay or
otherwise) becoming due from Webster, People's Corp., People's Bank, the
Surviving Corporation, Webster Bank or any of their respective Subsidiaries to
any
12
director, officer or employee thereof, (iii) which materially restricts the
conduct of any line of business by People's Corp. or People's Bank, (iv) with or
to a labor union or guild (including any collective bargaining agreement) or (v)
(including any stock option plan, stock appreciation rights plan, restricted
stock plan or stock purchase plan) any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the Bank
Merger 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 or the Bank Merger Agreement. People's Corp. has previously delivered
to Webster true, correct and complete copies of all employment, consulting and
deferred compensation agreements to which People's Corp. or any of its
Subsidiaries is a party. Section 3.12(a) of the People's Corp. Disclosure
Schedule sets forth a list of all material contracts (as defined in Item
601(b)(10) of Regulation S-K) of People's Corp. Each contract, arrangement or
commitment of the type described in this Section 3.12(a), whether or not set
forth in Section 3.12(a) of the People's Corp. Disclosure Schedule, is referred
to herein as a "People's Corp. Contract," and neither People's Corp. nor any of
its Subsidiaries has received notice of, nor do any executive officers of such
entities know of, any violation of any People's Corp. Contract.
(b) (i) Each People's Corp. Contract is valid and binding and
in full force and effect, (ii) People's Corp. and each of its Subsidiaries has
in all material respects performed all obligations required to be performed by
it to date under each People's Corp. Contract, and (iii) no event or condition
exists which constitutes or, after notice or lapse of time or both, would
constitute, a material default on the part of People's Corp. or any of its
Subsidiaries under any such People's Corp. Contract.
3.13 AGREEMENTS WITH REGULATORY AGENCIES.
Neither People's Corp. nor People's Bank is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or has adopted
any board resolutions at the request of (each, whether or not set forth on
Section 3.13 of the People's Corp. Disclosure Schedule, a "Regulatory
Agreement"), any Governmental Entity that restricts the conduct of its business
or that in any manner relates to its capital adequacy, its credit policies, its
management or its business, nor has People's Corp. or People's Bank been advised
by any Governmental Entity that it is considering issuing or requesting any
Regulatory Agreement.
3.14 STATE TAKEOVER LAWS; CERTIFICATE OF INCORPORATION.
The Board of Directors of People's Corp. has approved the offer of
Webster to enter into this Agreement, the Bank Merger Agreement and the Option
Agreement, and has approved People's entering into this Agreement, the Bank
Merger Agreement and the Option Agreement, and the transactions contemplated
thereby, such that under the Connecticut Corporation Law and People's Corp.'s
Certificate of Incorporation the only vote of People's Corp. stockholders
necessary to consummate the transactions contemplated hereby (including the Bank
Merger, Subsidiary Merger and issuance under the Option Agreement) is the
approval of at least two-thirds of the outstanding shares of People's Common
Stock.
3.15 ENVIRONMENTAL MATTERS.
(a) Each of People's Corp. and the People's Corp. Subsidiaries
is in compliance in all material respects with all applicable federal and state
laws and regulations relating to pollution or protection of the environment
(including without limitation, laws and regulations relating to emissions,
discharges, releases and threatened releases of Hazardous Material (as
hereinafter defined), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials;
(b) There is no suit, claim, action, proceeding, investigation
or notice pending or to the knowledge of People's Corp. and People's Bank's
directors and executive officers threatened (or past
13
or present actions or events that could form the basis of any such suit, claim,
action, proceeding, investigation or notice), in which People's Corp. or any
People's Corp. Subsidiary has been or, with respect to threatened suits, claims,
actions, proceedings, investigations or notices may be, named as a defendant (x)
for alleged material noncompliance (including by any predecessor), with any
environmental law, rule or regulation or (y) relating to any material release or
threatened release into the environment of any Hazardous Material, whether or
not occurring at or on a site owned, leased or operated by People's Corp. or any
People's Corp. Subsidiary;
(c) To the knowledge of People's Corp. and People's Bank's
directors and executive officers, during the period of People's Corp.'s or any
People's Corp. Subsidiary's ownership or operation of any of its properties,
there has not been any material release of Hazardous Materials in, on, under or
affecting any such property.
(d) To the knowledge of People's Corp. and People's Bank's
executive officers, neither People's Corp. nor any People's Corp. Subsidiary has
made or participated in any loan to any person who is subject to any suit,
claim, action, proceeding, investigation or notice, pending or threatened, with
respect to (i) any alleged material noncompliance as to any property securing
such loan with any environmental law, rule or regulation, or (ii) the release or
the threatened release into the environment of any Hazardous Material at a site
owned, leased or operated by such person on any property securing such loan.
(e) For purposes of this section 3.15, the term "Hazardous
Material" means any hazardous waste, petroleum product, polychlorinated
biphenyl, chemical, pollutant, contaminant, pesticide, radioactive substance, or
other toxic material, or other material or substance (in each such case, other
than small quantities of such substances in retail containers) regulated under
any applicable environmental or public health statute, law, ordinance, rule or
regulation.
3.16 RESERVES FOR LOSSES.
All reserves or other allowances for possible losses reflected in
People's Corp.'s most recent financial statements referred to in Section 3.6
complied with all Laws and are adequate under GAAP. Neither People's Corp. nor
People's Bank has been notified by the FRB, the FDIC, the Connecticut
Commissioner or People's Corp.'s independent auditor, in writing or otherwise,
that such reserves are inadequate or that the practices and policies of People's
Corp. or People's Bank in establishing such reserves and in accounting for
delinquent and classified assets generally fail to comply with applicable
accounting or regulatory requirements, or that the FRB, the FDIC, the
Connecticut Commissioner or People's Corp.'s independent auditor believes such
reserves to be inadequate or inconsistent with the historical loss experience of
People's Corp. or People's Bank. People's Corp. has previously furnished Webster
with a complete list of all extensions of credit and other real estate owned
("OREO") that have been classified by any bank examiner (regulatory or internal)
as other loans specially mentioned, special mention, substandard, doubtful,
loss, classified or criticized, credit risk assets, concerned loans or words of
similar import. People's Corp. agrees to update such list no less frequently
than monthly after the date of this Agreement until the earlier of the Closing
Date or the date that this Agreement is terminated in accordance with Section
8.1. All OREO held by People's Corp. or People's Bank is being carried net of
reserves at the lower of cost or net realizable value.
3.17 PROPERTIES AND ASSETS.
Section 3.17 of the People's Corp. Disclosure Schedule lists (i) all
real property owned by People's Corp. and each People's Corp. Subsidiary; (ii)
each real property lease, sublease or installment purchase arrangement to which
People's Corp. or any People's Corp. Subsidiary is a party; (iii) a description
of each contract for the purchase, sale, or development of real estate to which
People's Corp. or any People's Corp. Subsidiary is a party; and (iv) all items
of People's Corp.'s or any People's Corp. Subsidiary's tangible personal
property and equipment with a book value of $50,000 or more or having
14
any annual lease payment of $25,000 or more. Except for (a) items reflected in
People's Corp.'s consolidated financial statements as of December 31, 1996
referred to in Section 3.6 hereof, (b) exceptions to title that do not interfere
materially with People's Corp.'s or any People's Corp. Subsidiary's use and
enjoyment of owned or leased real property (other than OREO), (c) liens for
current real estate taxes not yet delinquent, or being contested in good faith,
properly reserved against (and reflected on the financial statements referred to
in Section 3.6 above), (d) properties and assets sold or transferred in the
ordinary course of business consistent with past practices since December 31,
1996, and (e) items listed in Section 3.17 of the People's Corp. Disclosure
Schedule, People's Corp. and each People's Corp. Subsidiary have good and, as to
owned real property, marketable and insurable title to all their properties and
assets, reflected in its consolidated financial statements of People's Corp. as
of December 31, 1996, free and clear of all liens, claims, charges and other
encumbrances. People's Corp. and each People's Corp. Subsidiary, as lessees,
have the right under valid and subsisting leases to occupy, use and possess all
property leased by them, and there has not occurred under any such lease any
material breach, violation or default by People's Corp. or People's Bank, and
neither People's Corp. nor any People's Corp. Subsidiary has experienced any
material uninsured damage or destruction with respect to such properties since
December 31, 1996. All properties and assets used by People's Corp. and each
People's Corp. Subsidiary are in good operating condition and repair suitable
for the purposes for which they are currently utilized and comply in all
material respects with all Laws relating thereto now in effect or scheduled to
come into effect. People's Corp. and each People's Corp. Subsidiary enjoy
peaceful and undisturbed possession under all leases for the use of all property
under which they are the lessees, and all leases to which People's Corp. or any
People's Corp. Subsidiary is a party are valid and binding obligations in
accordance with the terms thereof. Neither People's Corp. nor any People's Corp.
Subsidiary is in material default with respect to any such lease, and there has
occurred no default by People's Corp. or People's Bank or event which with the
lapse of time or the giving of notice, or both, would constitute a material
default under any such lease. There are no Laws, conditions of record, or other
impediments which interfere with the intended use by People's Corp. or any
People's Corp. Subsidiary of any of the property owned, leased, or occupied by
them.
3.18 INSURANCE.
Section 3.18 of the People's Corp. Disclosure Schedule contains a true,
correct and complete list of all insurance policies and bonds maintained by
People's Corp. and any People's Corp. Subsidiary, including the name of the
insurer, the policy number, the type of policy and any applicable deductibles,
and all such insurance policies and bonds (or other insurance policies and bonds
that have, from time to time, in respect of the nature of the risks insured
against and amount of coverage provided, been substantially similar in kind and
amount to that customarily carried by parties similarly situated who own
properties and engage in businesses substantially similar to that of People's
Corp. and any People's Corp. Subsidiary) are in full force and effect and have
been in full force and effect. As of the date hereof, neither People's Corp. nor
any People's Corp. Subsidiary has received any notice of cancellation or
amendment of any such policy or bond or is in default under any such policy or
bond, no coverage thereunder is being disputed and all material claims
thereunder have been filed in a timely fashion. The existing insurance carried
by People's Corp. and People's Corp. Subsidiaries is and will continue to be, in
respect of the nature of the risks insured against and the amount of coverage
provided, substantially similar in kind and amount to that customarily carried
by parties similarly situated who own properties and engage in businesses
substantially similar to that of People's Corp. and the People's Corp.
Subsidiaries, and is sufficient for compliance by People's Corp. and the
People's Corp. Subsidiaries with all requirements of Law and agreements to which
People's Corp. or any of the People's Corp. Subsidiaries is subject or is party.
True, correct and complete copies of all such policies and bonds reflected at
Section 3.18 of the People's Corp. Disclosure Schedule, as in effect on the date
hereof, have been delivered to Webster.
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3.19 LIQUIDATION ACCOUNT.
The liquidation account established by People's Bank in connection with
its conversion from the mutual to stock form has been eliminated as provided
under Connecticut law.
3.20 COMPLIANCE WITH APPLICABLE LAWS.
Each of People's Corp. and any People's Corp. Subsidiary has complied
in all material respects with all Laws applicable to it or to the operation of
its business. Neither People's Corp. nor any People's Corp. Subsidiary has
received any notice of any material alleged or threatened claim, violation, or
liability under any such Laws that has not heretofore been cured and for which
there is no remaining liability.
3.21 LOANS.
As of the date hereof:
(a) All loans owned by People's Corp. or any People's Corp.
Subsidiary, or in which People's Corp. or any People's Corp. Subsidiary has an
interest, comply in all material respects with all Laws, including, but not
limited to, applicable usury statutes, underwriting and recordkeeping
requirements and the Truth in Lending Act, the Equal Credit Opportunity Act, and
the Real Estate Procedures Act, and other applicable consumer protection
statutes and the regulations thereunder.
(b) All loans owned by People's Corp. or any People's Corp.
Subsidiary, or in which People's Corp. or any People's Corp. Subsidiary has an
interest, have been made or acquired by People's Corp. in accordance with board
of director-approved loan policies and all of such loans are collectible, except
to the extent reserves have been made against such loans in People's Corp.'s
consolidated financial statements at December 31, 1996 referred to in Section
3.6 hereof. Each of People's Corp. and each People's Corp. Subsidiary holds
mortgages contained in its loan portfolio for its own benefit to the extent of
its interest shown therein; such mortgages evidence liens having the priority
indicated by their terms, subject, as of the date of recordation or filing of
applicable security instruments, only to such exceptions as are discussed in
attorneys' opinions regarding title or in title insurance policies in the
mortgage files relating to the loans secured by real property or are not
material as to the collectability of such loans; and all loans owned by People's
Corp. and each People's Corp. Subsidiary are with full recourse to the
borrowers, and each of People's Corp. and any People's Corp. Subsidiary has
taken no action which would result in a waiver or negation of any rights or
remedies available against the borrower or guarantor, if any, on any loan. All
applicable remedies against all borrowers and guarantors are enforceable except
as may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting creditors' rights and except as may be limited by the exercise of
judicial discretion in applying principles of equity. Except as set forth at
Section 3.21 of the People's Corp. Disclosure Schedule, all loans purchased or
originated by People's Corp. or any People's Corp. Subsidiary and subsequently
sold by People's Corp. or any People's Corp. Subsidiary have been sold without
recourse to People's Corp. or any People's Corp. Subsidiary and without any
liability under any yield maintenance or similar obligation. True, correct and
complete copies of loan delinquency reports as of February 28, 1997 prepared by
People's Corp. and each People's Corp. Subsidiary, which reports include all
loans delinquent or otherwise in default, have been furnished to Webster. True,
correct and complete copies of the currently effective lending policies and
practices of People's Corp. and each People's Corp. Subsidiary also have been
furnished to Webster.
(c) Except as set forth at Schedule 3.21(c) each outstanding
loan participation sold by People's Corp. or any People's Corp. Subsidiary was
sold with the risk of non-payment of all or any portion of that underlying loan
to be shared by each participant (including People's Corp. or any People's Corp.
Subsidiary) proportionately to the share of such loan represented by such
participation without any recourse of such other lender or participant to
People's Corp. or any People's Corp.
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Subsidiary for payment or repurchase of the amount of such loan represented by
the participation or liability under any yield maintenance or similar
obligation. People's Corp. and any People's Corp. Subsidiary have properly
fulfilled in all material respects its contractual responsibilities and duties
in any loan in which it acts as the lead lender or servicer and has complied in
all material respects with its duties as required under applicable regulatory
requirements.
(d) People's Corp. and each People's Corp. Subsidiary have
properly perfected or caused to be properly perfected all security interests,
liens, or other interests in any collateral securing any loans made by it.
(e) Schedule 3.21(e) sets forth a list of all loans or other
extensions of credit to all directors, officers and employees, or any other
person covered by Regulation O of the FRB.
3.22 AFFILIATES.
Each director, executive officer and other person who is an "affiliate"
(for purposes of Rule 145 under the Securities Act of 1933, as amended (the
"Securities Act"), and for purposes of qualifying the Merger for
"pooling-of-interests" accounting treatment) of People's Corp. is listed at
Section 3.22 of the People's Corp. Disclosure Schedule, and except as indicated
thereon each such person has delivered to Webster, concurrently with the
execution of this Agreement, a stockholder agreement in the form of Exhibit D
hereto (the "People's Stockholder Agreement"). The People's Stockholder
Agreement has been duly and validly executed and delivered by each person that
is a party thereto (assuming due authorization, execution and delivery by
Webster and constitutes the valid and binding obligation of such person,
enforceable against such person in accordance with their terms, except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally.
3.23 OWNERSHIP OF WEBSTER COMMON STOCK.
Except as set forth at Section 3.23 of the People's Corp. Disclosure
Schedule, neither People's Corp. nor any of its directors, officers, 5% or
greater shareholders or affiliates (as used above in Section 3.22) (i)
beneficially own, directly or indirectly, or (ii) is a party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, any shares of outstanding capital stock of Webster
(other than those agreements, arrangements or understandings specifically
contemplated hereby).
3.24 PEOPLE'S DRIP.
People's Corp. has suspended the People's DRIP such that from the date
hereof, no issuances or purchases of People's Common Stock under the People's
DRIP shall be permitted, nor shall any other obligations thereunder accrue.
3.25 FAIRNESS OPINION.
People's Corp. has received an opinion from Advest to the effect that,
in its opinion, the consideration to be paid to stockholders of People's Corp.
hereunder is fair to such stockholders from a financial point of view ("Fairness
Opinion"), and Advest has consented to the inclusion of the Fairness Opinion in
the Registration Statement (defined below).
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF WEBSTER
Webster, on behalf of itself and its wholly-owned subsidiaries, Webster
Bank and Merger Sub, hereby makes the following representations and warranties
to People's Corp. as set forth in this Article IV, each of which is being relied
upon by People's Corp. as a material inducement to enter into and perform this
Agreement.
4.1 CORPORATE ORGANIZATION.
(a) Webster is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Webster has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
Webster is duly registered as a savings and loan holding company with the OTS
under HOLA. The Certificate of Incorporation and By-Laws of Webster, copies of
which have previously been made available to People's Corp., are true, correct
and complete copies of such documents as in effect as of the date of this
Agreement.
(b) Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(c) Webster Bank is a federal savings bank chartered by the
OTS under the laws of the United States with its main office in the State of
Connecticut. Webster Bank has the corporate power and authority to own or lease
all of its properties and assets and to carry on business as is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary. The Charter and By-Laws of Webster Bank, copies of
which have previously been made available to People's Corp., are true, correct
and complete copies of such documents as in effect as of the date of this
Agreement.
4.2 CAPITALIZATION.
(a) The authorized capital stock of Webster consists of
30,000,000 shares of Webster Common Stock, of which 11,949,991 shares were
outstanding (net of 54,578 treasury shares) at February 28, 1997 and 3,000,000
shares of serial preferred stock, par value $.01 per share ("Webster Preferred
Stock"), none of which were outstanding at February 28, 1997. At such date,
there were options outstanding to purchase 63,791 shares of Webster Common
Stock. All of the issued and outstanding shares of Webster Common Stock have
been duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the ownership
thereof. As of the date of this Agreement, except as set forth above, Webster
does not have and is not bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of Webster Common Stock or Webster Preferred
Stock or any other equity securities of Webster or any securities presenting the
right to purchase or otherwise receive any shares of Webster Common Stock or
Webster Preferred Stock, other than a warrant to purchase 300,000 shares of
Webster Common Stock issued to Fleet Financial Group and a contingent payment
arrangement with Fleet Financial Group as described in the Form 8-K filed by
Webster with the Securities and Exchange Commission for such event and other
than pursuant to that certain Rights Agreement between Webster and American
Stock Transfer & Trust Co. The shares of Webster Common Stock to be issued
pursuant to the Merger are authorized and, at the Effective Time, all such
shares will be validly issued, fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof.
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(b) The authorized capital stock of Merger Sub consists of 100
shares of common stock, par value $.01 per share, all of which are issued and
outstanding and owned by Webster free and clear of all liens, charges,
encumbrances and security interests whatsoever, and all of such shares are duly
authorized and validly issued and fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to ownership thereof.
(c) The authorized capital stock of Webster Bank consists of
1,000 shares of common stock, par value $.01 per share, all of which are issued
and outstanding. The outstanding shares of common stock of Webster Bank are
owned by Webster free and clear of all liens, charges, encumbrances and security
interests whatsoever, and all of such shares are duly authorized and validly
issued and fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to ownership thereof.
4.3 AUTHORITY; NO VIOLATION.
(a) Webster has full corporate power and authority to execute
and deliver this Agreement and the Option Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby have been duly and validly approved by the Board of
Directors of Webster. No other corporate proceedings on the part of Webster are
necessary to consummate the transactions contemplated hereby. This Agreement has
been, and the Option Agreement will be, duly and validly executed and delivered
by Webster and (assuming due authorization, execution and delivery by People's
Corp.) will constitute valid and binding obligations of Webster, enforceable
against Webster in accordance with their terms, except as enforcement may be
limited by general principles of equity whether applied in a court of law or a
court of equity and by bankruptcy, insolvency and similar law affecting
creditors' rights and remedies generally.
(b) Merger Sub has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
approved by the Board of Directors of Merger Sub and by Webster as the sole
shareholder of Merger Sub. No other corporate proceedings on the part of Merger
Sub will be necessary to consummate the transactions contemplated hereby. This
Agreement, upon execution and delivery by Merger Sub, will be duly and validly
executed and delivered by Merger Sub and will (assuming due authorization,
execution and delivery by People's Corp.) constitute a valid and binding
obligation of Merger Sub, enforceable against Merger Sub in accordance with its
terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
(c) Webster Bank has full corporate power and authority to
execute and deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby will be duly and
validly approved by the Board of Directors of Webster Bank and by Webster as the
sole shareholder of Webster Bank prior to the Effective Time. All corporate
proceedings on the part of Webster Bank necessary to consummate the transactions
contemplated thereby will have been taken prior to the Effective Time. The Bank
Merger Agreement, upon execution and delivery by Webster Bank, will be duly and
validly executed and delivered by Webster Bank and will (assuming due
authorization, execution and delivery by People's Bank) constitute a valid and
binding obligation of Webster Bank, enforceable against Webster Bank in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally.
(d) Neither the execution and delivery of this Agreement by
Webster or Merger Sub, the Option Agreement by Webster or the Bank Merger
Agreement by Webster Bank, nor the
19
consummation by Webster, Merger Sub or Webster Bank, as the case may be, of the
transactions contemplated hereby or thereby, nor compliance by Webster, Merger
Sub or Webster Bank with any of the terms or provisions hereof or thereof, will
(i) violate any provision of the Certificate of Incorporation or Bylaws of
Webster, the Certificate of Incorporation or By-Laws of Merger Sub or the
Charter or By-Laws of Webster Bank, as the case may be, or (ii) assuming that
the consents and approvals referred to in Section 4.4 are duly obtained, (x)
violate any Laws applicable to Webster, Merger Sub, Webster Bank or any of their
respective properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of Webster, Webster
Bank or Merger Sub under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Webster, Webster Bank or Merger Sub is a
party, or by which they or any of their respective properties or assets may be
bound or affected.
4.4 REGULATORY APPROVALS.
(a) Except for (i) the filing of applications and notices, as
applicable, as to the Merger and the Bank Merger with the FRB under the BHCA and
the OTS under HOLA and the Bank Merger Act and approval of such applications and
notices, (ii) the filing of any required applications or notices with the FDIC
and OTS as to the subsidiary activities of People's Bank which become service
corporation or operating subsidiaries of Webster Bank and approval of such
applications and notices, (iii) the State Banking Approvals, (iv) the filing
with the Connecticut Commissioner of an acquisition statement pursuant to
Section 36a-184 of the Banking Law of the State of Connecticut prior to the
acquisition of more than 10% of the People's Common Stock pursuant to the Option
Agreement, if not exempt, (v) the filing with the SEC of a registration
statement on Form S-4 to register the shares of Webster Common Stock to be
issued in connection with the Merger (including the shares of Webster Common
Stock that may be issued upon the exercise of the options referred to in Section
1.6 hereof), which will include the Proxy Statement/Prospectus, (vi) the
approval of this Agreement by the requisite vote of the shareholders of People's
Corp., (vii) the filing of the Certificate of Merger with the Secretary of State
of Connecticut pursuant to the Connecticut Corporation Law, (viii) the filing of
the Certificate of Merger with the Secretary of State of Delaware pursuant to
the DGCL, (ix) the filings required by the Bank Merger Agreement, (x) the
filings required for the Subsidiary Merger, and (xi) such filings and approvals
as are required to be made or obtained under the securities or "Blue Sky" laws
of various states or with Nasdaq (or such other exchange as may be applicable)
in connection with the issuance of the shares of Webster Common Stock pursuant
to this Agreement, no consents or approvals of or filings or registrations with
any Governmental Entity are necessary in connection with (1) the execution and
delivery by Webster and Merger Sub of this Agreement and the Option Agreement,
(2) the consummation by Webster and Merger Sub of the Merger and the other
transactions contemplated hereby, (3) the execution and delivery by Webster Bank
of the Bank Merger Agreement, and (4) the consummation by Webster Bank of the
transactions contemplated by the Bank Merger Agreement except for such consents,
approvals or filings the failure of which to obtain will not have a material
adverse effect on the ability of People's Corp. to consummate the transactions
contemplated thereby.
(b) Webster hereby represents to People's Corp. that it has no
knowledge of any reason why approval or effectiveness of any of the
applications, notices or filings referred to in Section 4.4(a) cannot be
obtained or granted on a timely basis.
(c) Webster and Webster Bank have filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that they were required to file since December 31, 1993,
with (i) the OTS, (ii) the Connecticut Commissioner and any other state banking
commissions or any other state regulatory authority (each a "State Regulator"),
(iii) the SEC and (iv) any other self-regulatory organization ("SRO")
(collectively "Regulatory Agencies"). Except for
20
normal examinations conducted by a Regulatory Agency in the regular course of
the business of Webster and its Subsidiaries, no Governmental Entity is
conducting, or has conducted, any proceeding or investigation into the business
or operations of Webster since December 31, 1993.
4.5 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
Webster has previously delivered to People's Corp. true, correct and
complete copies of the consolidated balance sheets of Webster and its
Subsidiaries as of December 31 for the fiscal years 1995 and 1996 and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for the fiscal years 1994 through 1996, inclusive, as reported in
Webster's Annual Report on Form 10-K for the fiscal year ended December 31, 1996
filed with the SEC under the Exchange Act, in each case accompanied by the audit
report of KPMG Peat Marwick LLP, independent public accountants with respect to
Webster. The financial statements referred to in this Section 4.5 (including the
related notes, where applicable) fairly present, and the financial statements
referred to in Section 6.9 hereof will fairly present (subject, in the case of
the unaudited statements, to recurring audit adjustments normal in nature and
amount), the results of the consolidated operations and consolidated financial
condition of Webster and its Subsidiaries for the respective fiscal periods or
as of the respective dates therein set forth; each of such statements (including
the related notes, where applicable) comply, and the financial statements
referred to in Section 6.9 hereof will comply, with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto; and each of such statements (including the related notes, where
applicable) has been, and the financial statements referred to in Section 6.9
hereof will be, prepared in accordance with GAAP consistently applied during the
periods involved, except as indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q. Webster's Annual Report on Form
10-K for the fiscal year ended December 31, 1996 and all subsequently filed
reports under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act comply in
all material respects with the appropriate requirements for such reports under
the Exchange Act, and Webster has previously delivered to People's Corp. true,
correct and complete copies of such reports. The books and records of Webster
and Webster Bank have been, and are being, maintained in all material respects
in accordance with GAAP and any other applicable legal and accounting
requirements and reflect only actual transactions.
4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as disclosed in Webster's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, true, correct and complete copies of which
have previously been delivered to People's Corp., since December 31, 1996, no
event has occurred which has had, individually or in the aggregate, a Material
Adverse Effect on Webster.
4.7 COMPLIANCE WITH APPLICABLE LAW.
Except as set forth in Section 4.7 of the Webster Disclosure Schedule,
Webster and each Webster Subsidiary has complied in all material respects with
all Laws applicable to it or to the operation of its business. Except as set
forth in Section 4.7 of the Webster Disclosure Schedule, neither Webster nor any
Webster Subsidiary has received any notice of any alleged or, threatened claim,
violation of or liability or potential responsibility under any such Laws that
has not heretofore been cured and for which there is no remaining liability.
4.8 OWNERSHIP OF PEOPLE'S COMMON STOCK; AFFILIATES AND ASSOCIATES.
(a) Except for this Agreement, neither Webster nor any of its
affiliates or associates (as such terms are defined under the Exchange Act), (i)
beneficially own, directly or indirectly, or (ii) is a party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, more than five percent of the outstanding capital
stock of People's Corp.,
21
excluding the shares of People's Common Stock issuable pursuant to the Option
Agreement to be executed subsequent to the execution of the Agreement.
(b) Neither Webster nor any of its Subsidiaries is an
"affiliate" (as such term is defined in DGCL ss.203(c) (1)) or an "associate"
(as such term is defined in DGCL ss.203(c) (2)) of People's Corp.
4.9 EMPLOYEE BENEFIT PLANS.
Webster has heretofore made available for inspection, or delivered (if
requested) to People's Corp. true, correct and complete copies of each employee
benefit plan arrangement or agreement that is maintained as of the date of this
Agreement (the "Webster Plans") by Webster or any of its Subsidiaries. No
"accumulated funding deficiency" as defined in Section 302(a)(2) of ERISA or
Section 412 of the Code, whether or not waived, and no "unfunded current
liability" as determined under Section 412(l) of the Code exists with respect to
any Webster Plan. The Webster Plans are in compliance in all material respects
with the applicable requirements of ERISA and the Code.
4.10 AGREEMENTS WITH REGULATORY AGENCIES.
Neither Webster nor any of its affiliates is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or has adopted
any board resolutions at the request of any Governmental Entity that restricts
the conduct of its business or that in any manner relates to its capital
adequacy, its credit policies, its management or its business, nor has Webster,
nor Webster Bank been advised by any Governmental Entity that it is considering
issuing or requesting any Regulatory Agreement.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 COVENANTS OF PEOPLE'S CORP.
During the period from the date of this Agreement and continuing until
the Effective Time, except as expressly contemplated or permitted by this
Agreement, the Bank Merger Agreement or the Option Agreement or with the prior
written consent of Webster, People's Corp. and each People's Corp. Subsidiary
shall carry on their respective businesses in the ordinary course consistent
with past practices and consistent with prudent banking practices. People's
Corp. will use its reasonable efforts to (x) preserve its business organization
and that of each People's Corp. Subsidiary intact, (y) keep available to itself
and Webster the present services of the employees of People's Corp. and each
People's Corp. Subsidiary and (z) preserve for itself and Webster the goodwill
of the customers of People's Corp. and each People's Corp. Subsidiary and others
with whom business relationships exist. Without limiting the generality of the
foregoing, and except as set forth in the People's Corp. Disclosure Schedule or
as otherwise contemplated by this Agreement or consented to by Webster in
writing, People's Corp. shall not, and shall not permit any People's Corp.
Subsidiary to:
(a) declare or pay any dividends on, or make other
distributions in respect of, any of its capital stock (except for the payment of
regular quarterly cash dividends by People's Corp. of $.23 per share on the
People's Common Stock with declaration, record and payment dates corresponding
to the quarterly dividends paid by People's Corp. during its fiscal year ended
December 31, 1996 and except that any People's Corp. Subsidiary may declare and
pay dividends and distributions to People's Corp.); PROVIDED, HOWEVER, that
under no circumstances shall People's Corp. declare, set aside or pay any
dividends if it would result in the holders of People's Common Stock receiving
more than four dividend payments in fiscal 1997, when considered with
anticipated Webster dividends based on past practice, nor shall People's Corp.
be prohibited from declaring, setting aside or paying dividends
22
consistent herewith if the Closing Date is such that holders of People's Common
Stock would receive fewer than four dividends in fiscal 1997, when considered
with anticipated Webster dividends based on past practice it being understood
that the parties hereto intend for People's Corp. to pay its regular quarterly
cash dividends to stockholders as to any completed fiscal quarter prior to the
Effective Time;
(b) (i) split, combine or reclassify any shares of its capital
stock or issue, authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock except
upon the exercise or fulfillment of rights or options issued or existing
pursuant to the People's Stock Plans in accordance with their present terms, all
to the extent outstanding and in existence on the date of this Agreement, and
except pursuant to the Option Agreement, or (ii) repurchase, redeem or otherwise
acquire (except for the acquisition of Trust Account Shares and DPC Shares, as
such terms are defined in Section 1.4(c) hereof), any shares of the capital
stock of People's Corp. or any People's Corp. Subsidiary, or any securities
convertible into or exercisable for any shares of the capital stock of People's
Corp. or any People's Corp. Subsidiary;
(c) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares, or enter into any agreement with respect to any of the
foregoing, other than (i) the issuance of People's Common Stock pursuant to
stock options or similar rights to acquire People's Common Stock granted
pursuant to the People's Stock Plans and outstanding prior to the date of this
Agreement, in each case in accordance with their present terms and (ii) pursuant
to the Option Agreement;
(d) amend its Certificate of Incorporation, By-Laws or other
similar governing documents;
(e) authorize or permit any of its officers, directors,
employees or agents to, directly or indirectly, solicit, initiate or encourage
any inquiries relating to, or the making of any proposal from, hold substantive
discussions or negotiations with or provide any information to, any person,
entity or group (other than Webster) concerning any Acquisition Transaction (as
defined below) (an "Acquisition Transaction"). Notwithstanding the foregoing,
People's Corp. may enter into discussions or negotiations or provide information
in connection with a possible Acquisition Transaction if the Board of Directors
of People's Corp., following receipt of written advice of counsel, reasonably
determines in the exercise of its fiduciary duty that such discussions or
negotiations must be commenced or such information must be furnished. People's
Corp. shall promptly communicate to Webster the material terms of any proposal,
whether written or oral, which it may receive in respect of any such Acquisition
Transaction and whether it is having discussions or negotiations with a third
party about an Acquisition Transaction with or providing information in
connection with, or which may lead to, an Acquisition Transaction with a third
party. People's Corp. will promptly cease and cause to be terminated any
existing activities, discussions or negotiations previously conducted with any
parties other than Webster with respect to any of the foregoing. As used in this
Agreement, Acquisition Transaction shall mean any offer, proposal or expression
of interest relating to (i) any tender or exchange offer, (ii) merger,
consolidation or other business combination involving People's Corp. or any
People's Corp. Subsidiary, or (iii) the acquisition in any manner of a
substantial equity interest in, or a substantial portion of the assets, out of
the ordinary course of business, of, People's Corp. or People's Bank other than
the transactions contemplated or permitted by this Agreement, the Bank Merger
Agreement and the Option Agreement;
(f) make capital expenditures aggregating in excess of
$25,000;
(g) enter into any new line of business;
(h) acquire or agree to acquire, by merging or consolidating
with, or by purchasing an equity interest in or the assets of, or by any other
manner, any business or any corporation,
23
partnership, association or other business organization or division thereof or
otherwise acquire any assets, other than in connection with foreclosures,
settlements in lieu of foreclosure or troubled loan or debt restructurings, or
in the ordinary course of business consistent with prudent banking practices;
(i) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue or in any of the conditions to the
Merger set forth in Article VII not being satisfied, or in a violation of any
provision of this Agreement or the Bank Merger Agreement, except, in every case,
as may be required by applicable law;
(j) change its methods of accounting in effect at December 31,
1996 except as required by changes in GAAP or regulatory accounting principles
as concurred to by Webster's independent auditors;
(k) (i) except as required by applicable law or to maintain
qualification pursuant to the Code, adopt, amend, renew or terminate any Plan or
any agreement, arrangement, plan or policy between People's Corp. or any
People's Corp. Subsidiary and one or more of its current or former directors or
officers, (ii) increase in any manner the compensation of any employee or
director or pay any benefit not required by any plan or agreement as in effect
as of the date hereof (including, without limitation, the granting of stock
options, stock appreciation rights, restricted stock, restricted stock units or
performance units or shares), other than 20,000 options required to be granted
as of April 22, 1997 pursuant to the 1995 Directors Plan, (iii) enter into,
modify or renew any contract, agreement, commitment or arrangement providing for
the payment to any director, officer or employee of compensation or benefits,
other than normal annual increases in pay, consistent with past practice, for
employees not subject to an employment, change of control or severance
agreement, (iv) hire any new employee at an annual compensation in excess of
$30,000, (v) pay expenses of any employees or directors for attending
conventions or similar meetings which conventions or meetings are held after the
date hereof, (vi) promote to a rank of vice president or more senior any
employee, or (vii) pay any retention or other bonuses to any employees;
(l) except for short-term borrowings with a maturity of one
year or less by People's Bank in the ordinary course of business consistent with
past practices, incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity;
(m) sell, purchase, enter into a lease, relocate, open or
close any banking or other office, or file an application pertaining to such
action with any Governmental Entity;
(n) make any equity investment or commitment to make such an
investment in real estate or in any real estate development project, other than
in connection with foreclosure, settlements in lieu of foreclosure, or troubled
loan or debt restructuring, in the ordinary course of business consistent with
past banking practices;
(o) make any new loans to, modify the terms of any existing
loan to, or engage in any other transactions (other than routine banking
transactions) with, any Affiliated Person of People's Corp. or any People's
Corp. Subsidiary;
(p) make any investment, or incur deposit liabilities, other
than in the ordinary course of business consistent with past practices,
including deposit pricing, and which would not change the risk profile of
People's Bank based on its existing deposit and lending policies or make any
equity investments;
24
(q) purchase any loans or sell, purchase or lease any real
property, except for the sale of real estate that is the subject of a casualty
loss or condemnation or the sale of OREO on a basis consistent with past
practices;
(r) originate (i) any loans except in accordance with existing
People's Bank lending policies, (ii) unsecured consumer loans in excess of
$10,000, (iii) commercial real estate first mortgage loans in excess of $250,000
as to any loan or $500,000 in the aggregate as to related loans, or loans to
related persons, or (iv) land acquisition loans to borrowers who intend to
construct a residence on such land in excess of the lesser of 75% of the
appraised value of such land or $100,000, except in each case for loans for
which written applications have been received by People's Bank.;
(s) make any investments in any equity or derivative
securities or engage in any forward commitment, futures transaction, financial
options transaction, hedging or arbitrage transaction or covered asset trading
activities or make any investments in any investment security with a maturity of
greater than one year;
(t) sell or purchase any mortgage loan servicing rights; or
(u) agree or commit to do any of the actions set forth in (a)
- - (t) above.
The consent of Webster to any action by People's Corp. or any People's Corp.
Subsidiary that is not permitted by any of the preceding paragraphs shall be
evidenced by a writing signed by the President or any Executive Vice President
of Webster.
5.2 COVENANTS OF WEBSTER.
During the period from the date of this Agreement and
continuing until the Effective Time, except as expressly contemplated or
permitted by this Agreement or with People's Corp.'s prior written consent,
Webster shall not, and shall not permit Webster Bank to:
(a) take any action that will result in (i) any of Webster's
representations and warranties set forth in this Agreement being or becoming
untrue, unless the failure of such representations or warranties to be true
would not, individually or in the aggregate, have a Material Adverse Effect on
Webster, or (ii) any of the conditions to the Merger set forth in Article VII
not being satisfied or in a violation of any provision of this Agreement or the
Bank Merger Agreement, except, in every case, as may be required by applicable
law; or
(b) take any other action that would materially adversely
affect or materially delay the ability of Webster to obtain the Requisite
Regulatory Approvals or otherwise materially adversely affect Webster's and
Webster Bank's ability to consummate the transactions contemplated by this
Agreement.
5.3 MERGER COVENANTS.
Notwithstanding that People's Corp. believes that it has established
all reserves and taken all provisions for possible loan losses required by GAAP
and applicable laws, rules and regulations, People's Corp. recognizes that
Webster may have adopted different loan, accrual and reserve policies (including
loan classifications and levels of reserves for possible loan losses). In that
regard, and in general, from and after the date of this Agreement to the
Effective Time, People's Corp. and Webster shall consult and cooperate with each
other in order to formulate the plan of integration for the Merger, including,
among other things, with respect to conforming, based upon such consultation,
People's Corp.'s loan, accrual and reserve policies to those policies of Webster
to the extent appropriate, PROVIDED, that any change in People's Corp.'s
policies in connection with such matters
25
need not be effected until the parties receive all necessary governmental and
stockholder approvals and consents to consummate the transactions contemplated
hereby.
5.4 COMPLIANCE WITH ANTITRUST LAWS.
Each of Webster and People's Corp. shall use its reasonable best
efforts to resolve objections, if any, which may be asserted with respect to the
Merger under antitrust laws, including, without limitation, the
Hart-Scott-Rodino Act. In the event a suit is threatened or instituted
challenging the Merger as violative of antitrust laws, each of Webster and
People's Corp. shall use its reasonable best efforts to avoid the filing of, or
resist or resolve such suit. Webster and People's Corp. shall use their
reasonable best efforts to take such action as may be required: (a) by the
Antitrust Division of the Department of Justice or the Federal Trade Commission
in order to resolve such objections as either of them may have to the Merger
under antitrust laws, or (b) by any federal or state court of the United States,
in any suit brought by a private party or governmental entity challenging the
Merger as violative of antitrust laws, in order to avoid the entry of, or to
effect the dissolution of, any injunction, temporary restraining order, or other
order which has the effect of preventing the consummation of the Merger.
Reasonable best efforts shall not include, among other things and to the extent
Webster so desires, the willingness of Webster to accept an order agreeing to
the divestiture, or the holding separate, of any assets of Webster or People's
Corp.
5.5 EMPLOYMENT AND OTHER AGREEMENTS.
Following the Merger, Webster agrees that it shall honor the existing
written deferred compensation, employment, change of control and severance
contracts with directors and employees of People's Corp. and People's Bank that
are specifically listed at Section 5.5 of the People's Corp. Disclosure
Schedule; provided, however, that in making the foregoing agreement, Webster
will honor such contracts only to the extent that, as represented at Section
3.11 hereof, none of such deferred compensation, employment, change of control
and severance contracts, nor any other Plan, program, agreement or other
arrangement, either individually or collectively, provides for any payment by
People's Corp. or any People's Corp. Subsidiary that would not be deductible
under Code Sections 162(a)(1) or 404 or that would constitute a "parachute
payment" within the meaning of Code Section 280G.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS.
(a) Upon the execution and delivery of this Agreement, Webster
and People's Corp. (as to information to be included therein pertaining to
People's Corp.) shall promptly cause to be prepared and filed with the SEC a
registration statement of Webster on Form S-4, including the Proxy
Statement/Prospectus (the "Registration Statement") for the purpose of
registering the Webster Common Stock to be issued in the Merger, and for
soliciting the approval of this Agreement and the Merger by the shareholders of
People's Corp. Webster and People's Corp. shall use their reasonable best
efforts to have the Registration Statement declared effective by the SEC as soon
as possible after the filing. The parties shall cooperate in responding to and
considering any questions or comments from the SEC staff regarding the
information contained in the Registration Statement. If at any time after the
Registration Statement is filed with the SEC, and prior to the Closing Date, any
event relating to People's Corp. is discovered by People's Corp. which should be
set forth in an amendment of, or a supplement to, the Registration Statement,
including the Prospectus/Proxy Statement (including, without limitation, any
change in the Fairness Opinion), People's Corp. shall promptly inform Webster,
and shall furnish Webster with all necessary information relating to such event
whereupon Webster shall promptly cause an appropriate amendment to the
Registration Statement to be filed with the
26
SEC. Upon the effectiveness of such amendment, People's Corp. (if prior to the
meeting of shareholders pursuant to Section 6.3 hereof) will take all necessary
action as promptly as practicable to permit an appropriate amendment or
supplement to be transmitted to its shareholders entitled to vote at such
meeting. Webster shall also use reasonable efforts to obtain all necessary state
securities law or "Blue Sky" permits and approvals required to carry out the
transactions contemplated by this Agreement and the Bank Merger Agreement and
People's Corp. shall furnish all information concerning People's Corp. and the
holders of People's Common Stock as may be reasonably requested in connection
with any such action.
(b) The parties hereto shall cooperate with each other and use
their best efforts to promptly prepare and file all necessary documentation, to
effect all applications, notices, petitions and filings, and to obtain as
promptly as practicable all permits, consents, approvals and authorizations of
all third parties and Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement (including without
limitation the Merger, the Bank Merger, and, if applicable, the Subsidiary
Merger). People's Corp. and Webster shall have the right to review in advance,
and to the extent practicable each will consult the other on, in each case
subject to applicable laws relating to the exchange of information, all the
information relating to People's Corp. or Webster and Merger Sub, as the case
may be, which appears in any filing made with, or written materials submitted
to, any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement; PROVIDED, HOWEVER, that nothing
contained herein shall be deemed to provide either party with a right to review
any information provided to any Governmental Entity on a confidential basis in
connection with the transactions contemplated hereby. In exercising the
foregoing right, each of the parties hereto shall act reasonably and as promptly
as practicable. The parties hereto agree that they will consult with each other
with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other apprised of the status of matters relating to
contemplation of the transactions contemplated herein.
(c) People's Corp. shall, upon request, furnish Webster with
all information concerning People's Corp. and its directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with the Registration Statement or any other statement, filing,
notice or application made by or on behalf of Webster or Merger Sub to any
Governmental Entity in connection with the Merger or the other transactions
contemplated by this Agreement.
(d) Webster and People's Corp. shall promptly advise each
other upon receiving any communication from any Governmental Entity whose
consent or approval is required for consummation of the transactions
contemplated by this Agreement which causes such party to believe that there is
a reasonable likelihood that any Requisite Regulatory Approval (defined in
Section 7.1(c) hereof) will not be obtained or that the receipt of any such
approval will be materially delayed.
6.2 ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable Laws
relating to the exchange of information, People's Corp. shall accord to the
officers, employees, accountants, counsel and other representatives of Webster
and Merger Sub, access, during normal business hours during the period prior to
the Effective Time, to all its and People's Bank's properties, books, contracts,
commitments and records and, during such period, People's Corp. shall make
available to Webster (i) a copy of each report, schedule, registration statement
and other document filed or received by it (including People's Bank) during such
period pursuant to the requirements of federal securities laws or federal or
state banking laws and (ii) all other information concerning its (including
People's Bank) business, properties and personnel as Webster may reasonably
request. Webster shall receive notice of all meetings of the People's Corp. and
People's Bank's Board of Directors and any committees thereof, and of any
management committees (in all cases, at least as timely as all People's Corp.
and People's Bank, as the
27
case may be) representatives to such meetings are required to be provided
notice). Up to two representatives of Webster shall be permitted to attend all
meetings of the Board of Directors (except for the portion of such meetings
which relate to the Merger or an Acquisition Transaction or such other matters
deemed confidential ("Confidential Matters") of People's Corp. or People's Bank,
as the case may be) and such meetings of committees of the Board of Directors
and management of People's Corp. and People's Bank which Webster desires.
Webster will hold all such information in confidence to the extent required by,
and in accordance with, the provisions of the confidentiality agreement which
Webster entered into with Advest dated February 11, 1997 (the "Confidentiality
Agreement").
(b) Upon reasonable notice and subject to applicable Laws
relating to the exchange of information, Webster shall, and shall cause Merger
Sub to, afford to the officers, employees, accountants, counsel and other
representatives of People's Corp., access, during normal business hours during
the period prior to the Effective Time, to such information regarding Webster as
shall be reasonably necessary for People's Corp. to fulfill its obligations
pursuant to this Agreement or which may be reasonably necessary for People's
Corp. to confirm that the representations and warranties of Webster contained
herein are true and correct and that the covenants of Webster contained herein
have been performed in all material respects. People's Corp. will hold all such
information in confidence to the extent required by, and in accordance with, the
provisions of the Confidentiality Agreement.
(c) No investigation by either of the parties or their
respective representatives shall affect the representations and warranties of
the other set forth herein.
(d) People's Corp. shall provide Webster with true, correct
and complete copies of all financial and other information provided to directors
of People's Corp. and People's Bank in connection with meetings of their Boards
of Directors or committees thereof.
6.3 SHAREHOLDER MEETINGS.
People's Corp. shall take all steps necessary to duly call, give notice
of, convene and hold a meeting of its shareholders within 35 days after the
Registration Statement becomes effective for the purpose of voting upon the
approval of this Agreement and the Merger (the "Special Meeting"). Management
and the Board of Directors of People's Corp. shall recommend to People's Corp.'s
shareholders approval of this Agreement, including the Merger, and the
transactions contemplated hereby, together with any matters incident thereto,
and shall oppose any third party proposal or other action that is inconsistent
with this Agreement or the consummation of the transactions contemplated hereby,
unless the Board of Directors of People's Corp. reasonably determines, based
upon the written advice of People's Corp.'s legal counsel, that such
recommendation or opposition, as the case may be, would constitute a breach of
the exercise of its fiduciary duty. People's Corp. and Webster shall coordinate
and cooperate with respect to the foregoing matters.
6.4 LEGAL CONDITIONS TO MERGER.
Each of Webster and People's Corp. shall use their reasonable best
efforts (a) to take, or cause to be taken, all actions necessary, proper or
advisable to comply promptly with all legal requirements which may be imposed on
such party with respect to the Merger and, subject to the conditions set forth
in Article VII hereof, to consummate the transactions contemplated by this
Agreement and (b) to obtain (and to cooperate with the other party to obtain)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity and any other third party which is required to be obtained
by People's Corp. or Webster in connection with the Merger and the other
transactions contemplated by this Agreement.
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6.5 STOCK EXCHANGE LISTING.
Webster shall cause the shares of Webster Common Stock to be issued in
the Merger and pursuant to options referred to herein to be approved for
quotation on the Nasdaq Stock Market National Market System (or such other
exchange on which the Webster Common Stock has become listed, or approved for
listing) prior to or at the Effective Time.
6.6 EMPLOYEES.
(a) To the extent permissible under the applicable provisions
of the Code and ERISA, for purposes of crediting periods of service for
eligibility to participate and vesting, but not for benefit accrual purposes,
under employee pension benefit plans (within the meaning of ERISA Section 3(2))
maintained by Webster or Webster Bank, as applicable, (other than Webster's
employee stock ownership plan), individuals who are employees of People's Corp.
or People's Bank at the Effective Time will be credited with periods of service
with People's Corp. or People's Bank before the Effective Time as if such
service had been with Webster or Webster Bank, as applicable. Similar credit
shall also be given by Webster or Webster Bank in calculating other retirement
plan, vacation and similar benefits for such employees of People's Corp. or
People's Bank after the Merger.
(b) Webster and Webster Bank will pay severance in accordance
with Webster's policy described below as to employees of People's Corp. or
People's Bank whose employment is terminated in connection with the Merger
either because an employee's position is eliminated or an employee is not
offered comparable employment (I.E., not offered employment for a position of
generally similar job description or responsibilities) within six months of the
Effective Time of the Merger (except for such employees referenced in Section
5.5 above, or who have existing employment or severance agreements or whose
employment is terminated for non-performance, cause or like reason). Payments
under such policy will be based on (i) one week of base salary (or one week of
average weekly hourly wages, calculated on a weekly average basis for the
quarter ended March 31, 1997 in the case of hourly employees) for personnel
junior in rank to vice president; and (ii) two weeks of base salary for
personnel with a rank of vice president or senior; for each full year of
employment with People's Corp. or People's Bank with a minimum of four weeks for
personnel junior in rank to vice president, and a minimum of eight weeks for
personnel with a rank of vice president or senior, up to a maximum in all cases
of 26 weeks.
(c) Webster will cause Webster Bank to offer a position of
at-will employment to each of People's Bank's branch office personnel in good
standing as of the Effective Time. Webster will use its reasonable best efforts
in connection with reviewing applicants for employment positions to give
People's Corp. and People's Bank employees who are not offered positions at the
Effective Time the same consideration as is afforded Webster or Webster Bank
employees for such position in accordance with existing formal or informal
policies. Webster will provide outplacement assistance to People's Corp. and
People's Bank employees who are not offered positions at the Effective Time.
6.7 INDEMNIFICATION.
(a) In the event of any threatened or actual claim, action,
suit, proceeding or investigation, whether civil, criminal or administrative, in
which any person who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or officer or
employee of People's Corp. (the "Indemnified Parties") is, or is threatened to
be, made a party based in whole or in part on, or arising in whole or in part
out of, or pertaining to (i) the fact that he is or was a director, officer or
employee of People's Corp. or any of their respective predecessors or (ii) this
Agreement or any of the transactions contemplated hereby, whether in any case
asserted or arising before or after the Effective Time, the parties hereto agree
to cooperate and use their best efforts to defend against and respond thereto to
the extent permitted by applicable law and the Amended and Restated Certificate
of Incorporation and Bylaws of People's Corp. It is understood and agreed that
29
after the Effective Time, Webster shall indemnify and hold harmless, as and to
the fullest extent permitted by applicable law and the Restated Certificate of
Incorporation and Bylaws of Webster or the Certificate of Incorporation and
Bylaws of Merger Sub, as may be the case, each such Indemnified Party against
any losses, claims, damages, liabilities, costs, expenses (including reasonable
attorney's fees and expenses in advance of the final disposition of any claim,
suit, proceeding or investigation to each Indemnified Party to the fullest
extent permitted by law upon receipt of any undertaking required by applicable
law), judgments, fines and amounts paid in settlement in connection with any
such threatened or actual claim, action, suit, proceeding or investigation, and
in the event of any such threatened or actual claim, action, suit, proceeding or
investigation (whether asserted or arising before or after the Effective Time),
the Indemnified Parties may retain counsel reasonably satisfactory to Webster;
PROVIDED, HOWEVER, that (1) Webster shall have the right to assume the defense
thereof and upon such assumption Webster shall not be liable to any Indemnified
Party for any legal expenses of other counsel or any other expenses subsequently
incurred by any Indemnified Party in connection with the defense thereof, except
that if Webster elects not to assume such defense or counsel for the Indemnified
Parties reasonably advises the Indemnified Parties that there are issues which
raise conflicts of interest between Webster and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to Webster, and
Webster shall pay the reasonable fees and expenses of such counsel for the
Indemnified Parties, (2) Webster shall be obligated pursuant to this paragraph
to pay for only one firm of counsel for each Indemnified Party, and (3) Webster
shall not be liable for any settlement effected without its prior written
consent (which consent shall not be unreasonably withheld or delayed). Webster
shall have no obligation to advance expenses incurred in connection with a
threatened or pending action, suit or preceding in advance of final disposition
of such action, suit or proceeding, unless (i) Webster would be permitted to
advance such expenses pursuant to the DGCL and Webster's Restated Certificate of
Incorporation or Bylaws, and (ii) Webster receives an undertaking by the
Indemnified Party to repay such amount if it is determined that such party is
not entitled to be indemnified by Webster pursuant to the DGCL and Webster's
Restated Certificate of Incorporation or Bylaws. Any Indemnified Party wishing
to claim indemnification under this Section 6.8, upon learning of any such
claim, action, suit, proceeding or investigation, shall notify Webster thereof;
PROVIDED, HOWEVER, that the failure to so notify shall not affect the
obligations of Webster under this Section 6.8 except to the extent such failure
to notify materially prejudices Webster. Webster's obligations under this
Section 6.8 continue in full force and effect for a period of six years from the
Effective Time; PROVIDED, HOWEVER, that all rights to indemnification in respect
of any claim asserted or made within such period shall continue until the final
disposition of such claim.
(b) Webster shall use commercially reasonable efforts to cause
the persons serving as officers and directors of People's Corp. immediately
prior to the Effective Time to be covered by a directors' and officers'
liability insurance policy ("Tail Insurance") of substantially the same coverage
and amounts containing terms and conditions which are generally not less
advantageous than People's Corp.'s current policy with respect to acts or
omissions occurring prior to the Effective Time which were committed by such
officers and directors in their capacity as such for a period not less than one
year.
(c) In the event Webster or any of its successors or assigns
(i) consolidates with or merges into any other person 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, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Webster
assume the obligations set forth in this section.
6.8 SUBSEQUENT INTERIM AND ANNUAL FINANCIAL STATEMENTS.
As soon as reasonably available, but in no event more than 45 days
after the end of each fiscal quarter (other than the fourth fiscal quarter),
Webster will deliver to People's Corp. and People's Corp. will deliver to
Webster their respective Quarterly Reports on Form 10-Q, as filed with the SEC
under the Exchange Act. Each party shall deliver to the other any Current
Reports on Form 8-K promptly after filing such reports with the SEC.
30
6.9 ADDITIONAL AGREEMENTS.
In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, or to vest
the Surviving Corporation or the Surviving Bank with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, or the constituent banks to the Bank Merger, as the case
may be, the proper officers and directors of each party to this Agreement and
Webster's and People's Corp.'s Subsidiaries shall take all such necessary action
as may be reasonably requested by Webster.
6.10 ADVICE OF CHANGES.
Webster and People's Corp. shall promptly advise the other party of any
change or event that, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect on it or to cause or
constitute a material breach of any of its representations, warranties or
covenants contained herein. From time to time prior to the Effective Time, each
party will promptly supplement or amend its disclosure schedule delivered in
connection with the execution of this Agreement to reflect any matter which, if
existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in such disclosure schedule or which is
necessary to correct any information in such disclosure schedule which has been
rendered inaccurate thereby. No supplement or amendment to such disclosure
schedule shall have any effect for the purpose of determining satisfaction of
the conditions set forth in Sections 7.2(a) or 7.3(a) hereof, as the case may
be, or the compliance by People's Corp. or Webster, as the case may be, with the
respective covenants set forth in Sections 5.1 and 5.2 hereof.
6.11 CURRENT INFORMATION.
During the period from the date of this Agreement to the Effective
Time, People's Corp. will cause one or more of its designated representatives to
confer on a regular and frequent basis (not less than monthly) with
representatives of Webster and to report the general status of the ongoing
operations of People's Corp. People's Corp. will promptly notify Webster of any
material change in the normal course of business or in the operation of the
properties of People's Corp. and of any governmental complaints, investigations
or hearings (or communications indicating that the same may be contemplated), or
the institution or the threat of litigation involving People's Corp., and will
keep Webster fully informed of such events.
6.12 EXECUTION AND AUTHORIZATION OF BANK MERGER AGREEMENT.
Prior to the Effective Time, (a) Webster shall (i) cause the Board of
Directors of Merger Sub to approve the Certificate of Merger substantially in
the form at Exhibit C, and (ii) approve the Bank Merger Agreement as the sole
shareholder of Webster Bank, and (b) People's Bank shall execute and deliver the
Bank Merger Agreement.
6.13 CHANGE IN STRUCTURE.
Webster may elect to modify the structure of the transactions
contemplated by this Agreement as noted herein so long as (i) there are no
material adverse federal income tax consequences to the People's Corp.
shareholders as a result of such modification, (ii) the consideration to be paid
to the People's Corp. shareholders under this Agreement is not thereby changed
or reduced in amount, and (iii) such modification will not be reasonably likely
to delay materially or jeopardize receipt of any required regulatory approvals.
In the event that Webster elects to change the structure of the Merger, the
parties agree to modify this Agreement and the various exhibits hereto to
reflect such revised structure. In such event, Webster shall prepare appropriate
amendments to this Agreement and the exhibits hereto for execution by the
parties hereto. Webster and People's Corp. agree to cooperate fully with each
other to effect such amendments.
31
6.14 TRANSACTION EXPENSES OF PEOPLE'S.
(a) For planning purposes, People's Corp. shall, within 15
days from the date hereof, provide Webster with its estimated budget of
transaction-related expenses reasonably anticipated to be payable by People's
Corp. in connection with this transaction, including the fees and expenses of
counsel, accountants, investment bankers and other professionals. People's Corp.
shall promptly notify Webster if or when it determines that it will expect to
exceed its budget.
(b) Promptly after the execution of this Agreement, People's
Corp. shall ask all of its attorneys and other professionals to render current
and correct invoices for all unbilled time and disbursements. People's Corp.
shall accrue and/or pay all of such amounts as soon as possible.
(c) People's Corp. shall advise Webster monthly of all
out-of-pocket expenses which People's Corp. has incurred in connection with this
transaction.
(d) Webster, in reasonable consultation with People's Corp.,
shall make all arrangements with respect to the printing and mailing of the
Joint Proxy Statement/Prospectus. Webster, if it deems necessary, also shall
engage (at Webster's expense) a proxy solicitation firm to assist in the
solicitation of proxies for the Special Meeting. People's Corp. agrees to
cooperate as to such matters.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) SHAREHOLDER APPROVALS.
This Agreement, including the Certificate of Merger, and the
Merger shall have been approved and adopted by the affirmative vote of the
holders of at least two-thirds of the outstanding shares of People's Common
Stock entitled to vote thereon.
(b) STOCK EXCHANGE LISTING.
The shares of Webster Common Stock which shall be issued in
the Merger (including the Webster Common Stock that may be issued upon exercise
of the options referred to in Section 1.6 hereof) upon consummation of the
Merger shall have been authorized for quotation on the Nasdaq Stock Market
National Market System (or such other exchange on which the Webster Common Stock
may become listed).
(c) OTHER APPROVALS.
All regulatory approvals required to consummate the
transactions contemplated hereby shall have been obtained and shall remain in
full force and effect and all statutory waiting periods in respect thereof shall
have expired (all such approvals and the expiration of all such waiting periods
being referred to herein as the "Requisite Regulatory Approvals"). No Requisite
Regulatory Approval shall contain a non-customary condition that Webster
reasonably determines to be burdensome or otherwise alter the benefits for which
it bargained in this Agreement.
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(d) REGISTRATION STATEMENT.
The Registration Statement shall have become effective under
the Securities Act, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC.
(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY.
No order, injunction or decree issued by any court or agency
of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger or any of the other
transactions contemplated by this Agreement or the Certificate of Merger shall
be in effect. No statute, rule, regulation, order, injunction or decree shall
have been enacted, entered, promulgated or enforced by any Governmental Entity
which prohibits, restricts or makes illegal consummation of the Merger.
(f) FEDERAL TAX OPINION.
Webster shall have received from Hogan & Hartson L.L.P.,
Webster's special counsel, an opinion to Webster and People's Corp., in form and
substance reasonably satisfactory to Webster, substantially to the effect that
on the basis of facts, representations, and assumptions set forth in such
opinion which are consistent with the state of facts existing at the time of
such opinion, the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code. In rendering
such opinion, such counsel may require and, to the extent such counsel deems
necessary or appropriate, may rely upon representations made in certificates of
officers of People's Corp., Webster, Merger Sub, their respective affiliates and
others.
7.2 CONDITIONS TO OBLIGATIONS OF WEBSTER AND MERGER SUB.
The obligation of Webster and Merger Sub to effect the Merger is also
subject to the satisfaction or waiver by Webster at or prior to the Effective
Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of People's Corp. set forth
in this Agreement shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date;
PROVIDED, HOWEVER, that for purposes of this paragraph, such representations and
warranties shall be deemed to be true and correct, unless the failure or
failures of such representations and warranties to be so true and correct,
individually or in the aggregate, would have a Material Adverse Effect on
People's Corp. Such determination of aggregate Material Adverse Effect shall be
made as if there were no materiality qualifications in such representations and
warranties. Webster shall have received a certificate signed on behalf of
People's Corp. by each of the President and Chief Executive Officer and the
Chief Financial Officer of People's Corp. to the foregoing effect.
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS OF PEOPLE'S CORP.
People's Corp. shall have performed in all material respects
all covenants and agreements required to be performed by it under this Agreement
at or prior to the Closing Date. Webster shall have received a certificate
signed on behalf of People's Corp. by each of the President and Chief Executive
Officer and the Chief Financial Officer of People's Corp. to such effect.
33
(c) CONSENTS UNDER AGREEMENTS.
The consent, approval or waiver of each person (other than the
Governmental Entities referred to in Section 7.1(c) hereof) whose consent or
approval shall be required in order to permit the succession by the Surviving
Bank pursuant to the Merger to any obligation, right or interest of People's
Corp. under any loan or credit agreement, note, mortgage, indenture, lease,
license or other agreement or instrument shall have been obtained except for
those, the failure of which to obtain, will not result in a Material Adverse
Effect on the Surviving Bank.
(d) NO PENDING GOVERNMENTAL ACTIONS.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
(e) LEGAL OPINION.
Webster shall have received the opinion of Tyler Cooper &
Alcorn, counsel to People's Corp., dated the Closing Date, as to such matters as
Webster may reasonably request. As to any matter in such opinion which involves
matters of fact, such counsel may rely upon the certificates of officers and
directors of People's Corp. and of public officials, reasonably acceptable to
Webster.
(f) ACCOUNTANT'S COMFORT LETTER.
People's Corp. shall have caused to be delivered on the
respective dates thereof to Webster "comfort letters" from Coopers & Lybrand,
LLP, People's Corp.'s independent public accountants, dated the date on which
the Registration Statement or last amendment thereto shall become effective, and
dated the date of the Closing (defined in Section 9.1 hereof), and addressed to
Webster and People's Corp., with respect to People's Corp.'s financial data
presented in the Proxy Statement/Prospectus, which letters shall be based upon
Statements on Auditing Standards Nos. 72 and 76.
(g) POOLING OF INTERESTS.
Webster shall have received (i) advice of KPMG Peat Marwick
LLP, independent accountants, within two weeks of the date hereof, to the effect
that the Merger will be accounted for as a pooling of interests, and (ii) as of
the Effective Time, a written opinion of KMPG Peat Marwick to the effect that
the Merger will be accounted for as a pooling-of-interests. The foregoing shall
not apply in the event that Webster prior to the effectiveness of the
Registration Statement advises People's Corp. that the Merger is to be accounted
for as a purchase.
7.3 CONDITIONS TO OBLIGATIONS OF PEOPLE'S CORP.
The obligation of People's Corp. to effect the Merger is also subject
to the satisfaction or waiver by People's Corp. at or prior to the Effective
Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Webster set forth in
this Agreement shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date;
PROVIDED, HOWEVER, that for purposes of this paragraph, such representations and
warranties shall be deemed to be true and correct, unless the failure or
failures of such representations and warranties to be so true and correct,
individually or in the aggregate, would have a Material Adverse Effect on
Webster. Such determination of aggregate Material Adverse Effect shall be made
as if there were no
34
materiality qualifications in such representations and warranties. People's
Corp. shall have received a certificate signed on behalf of Webster by each of
the President and Chief Executive Officer and the Chief Financial Officer of
Webster to the foregoing effect.
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS OF WEBSTER.
Webster and Merger Sub shall have each performed in all
material respects all covenants and agreements required to be performed by it
under this Agreement at or prior to the Closing Date. People's Corp. shall have
received a certificate signed on behalf of Webster by each of the President and
Chief Executive Officer and the Chief Financial Officer of Webster to such
effect.
(c) CONSENTS UNDER AGREEMENTS.
The consent or approval or waiver of each person (other than
the Governmental Entities referred to in Section 7.1(c)) whose consent or
approval shall be required in connection with the transactions contemplated
hereby under any loan or credit agreement, note, mortgage, indenture, lease,
license or other agreement or instrument to which Webster or Merger Sub is a
party or is otherwise bound shall have been obtained.
(d) NO PENDING GOVERNMENTAL ACTIONS.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
(e) LEGAL OPINION.
People's Corp. shall have received the opinion of Hogan &
Hartson L.L.P., special counsel to Webster, dated the Closing Date, as to such
matters as People's Corp. may reasonably request. As to any matter in such
opinion which involves matters of fact, such counsel may rely upon the
certificates of officers and directors of Webster and of public officials and
opinions of local counsel, reasonably acceptable to People's Corp.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION.
This Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval of the matters presented in connection
with the Merger by the shareholders of People's Corp. or Webster, if applicable:
(a) by mutual consent of Webster and People's Corp. in a
written instrument, if the Board of Directors of each so determines by a vote of
a majority of the members of its entire Board;
(b) by either Webster or People's Corp. upon written notice to
the other party (i) 30 days after the date on which any request or application
for a Regulatory Approval shall have been denied or withdrawn at the request or
recommendation of the Governmental Entity which must grant such Regulatory
Approval, unless within the 30-day period following such denial or withdrawal
the parties agree to file, and have filed with the applicable Governmental
Entity, a petition for rehearing or an amended application, PROVIDED, HOWEVER,
that no party shall have the right to terminate this Agreement pursuant to this
Section 8.1(b), if such denial or request or recommendation for withdrawal shall
be due to the failure of the party seeking to terminate this Agreement to
perform or observe the covenants and agreements of such party set forth herein;
35
(c) by either Webster or People's Corp. if the Merger shall
not have been consummated on or before December 31, 1997, unless the failure of
the Closing to occur by such date shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the covenants and
agreements of such party set forth herein;
(d) by either Webster or People's Corp. (PROVIDED that the
terminating party is not in breach of its obligations under Section 6.3 hereof)
if the approval of the shareholders of People's Corp. required for the
consummation of the Merger shall not have been obtained by reason of the failure
to obtain the required vote at a duly held meeting of shareholders or at any
adjournment or postponement thereof;
(e) by either Webster or People's Corp. (provided that the
terminating party is not then in breach of any representation, warranty,
covenant or other agreement contained herein that, individually or in the
aggregate, would give the other party the right to terminate this Agreement) if
there shall have been a breach of any of the representations or warranties set
forth in this Agreement on the part of the other party, if such breach,
individually or in the aggregate, has had or is likely to have a Material
Adverse Effect on the breaching party, and such breach shall not have been cured
within 30 days following receipt by the breaching party of written notice of
such breach from the other party hereto or such breach, by its nature, cannot be
cured prior to the Closing;
(f) by either Webster or People's Corp. (provided that the
terminating party is not then in breach of any representation, warranty,
covenant or other agreement contained herein that, individually or in the
aggregate, would give the other party the right to terminate this Agreement) if
there shall have been a material breach of any of the covenants or agreements
set forth in this Agreement on the part of the other party, and such breach
shall not have been cured within 30 days following receipt by the breaching
party of written notice of such breach from the other party hereto or such
breach, by its nature, cannot be cured prior to the Closing;
(g) by Webster, if the management of People's Corp. or its
Board of Directors, for any reason, (i) fails to call and hold within 35 days of
the effectiveness of the Registration Statement a special meeting of People's
Corp.'s shareholders to consider and approve this Agreement and the transactions
contemplated hereby, (ii) fails to recommend to shareholders the approval of
this Agreement and the transactions contemplated hereby, (iii) fails to oppose
any third party proposal that is inconsistent with the transactions contemplated
by this Agreement or (iv) violates Section 5.1(e) of this Agreement; and
(h) by People's Corp., upon written notice delivered to
Webster, as provided below in this subsection (h), if the Base Period Trading
Price shall be less than $32.00, unless Webster elects, as provided below in
this subsection (h), that the Exchange Ratio shall be 1.06250. If People's Corp.
elects to exercise its termination right pursuant to this subsection (h), it
shall give written notice to Webster within three business days following the
end of the Base Period. During the three business-day period commencing with its
receipt of such notice, Webster shall have the option of agreeing to fix the
Exchange Ratio at 1.06250. If Webster makes the election contemplated by the
preceding sentence, then within such three business-day period Webster shall
give written notice to People's Corp. of such election and the revised Exchange
Ratio, whereupon no termination shall have occurred pursuant to this subsection
(h) and this Agreement shall remain in effect in accordance with its terms
(except as the Exchange Ratio shall have been so modified), and any references
in this Agreement to "Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as adjusted pursuant to this subsection (h).
8.2 EFFECT OF TERMINATION.
In the event of termination of this Agreement by either Webster or
People's Corp. as provided in Section 8.1 hereof, this Agreement shall forthwith
become void and have no effect except (i) the last sentences of Sections 6.2(a)
and 6.2(b) and Sections 8.2, 9.2 and 9.3 hereof shall survive any termination
36
of this Agreement, and (ii) 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 or intentional breach of any provision of
this Agreement.
8.3 AMENDMENT.
Subject to compliance with applicable law, this Agreement may be
amended by the parties hereto, by action taken or authorized by their respective
Board of Directors, at any time before or after approval of the matters
presented in connection with the Merger by the shareholders of People's Corp.;
PROVIDED, HOWEVER, that after any approval of the transactions contemplated by
this Agreement by People's Corp.'s shareholders, there may not be, without
further approval of such shareholders, any amendment of this Agreement which
reduces the amount or changes the form of the consideration to be delivered to
People's Corp. shareholders hereunder other than as contemplated by this
Agreement. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
8.4 EXTENSION; WAIVER.
At any time prior to the Effective Time, the parties hereto, by action
taken or authorized by their respective Boards of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party, but such extension or waiver
or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 CLOSING.
Subject to the terms and conditions of this Agreement, the closing of
the Merger (the "Closing") will take place at 10:00 a.m. at the main offices of
Webster on (i) the fifth day after the last Requisite Regulatory Approval is
received and all applicable waiting periods have expired, or (ii) such other
date, place and time as the parties may agree (the "Closing Date").
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations, warranties, covenants and agreements in
this Agreement or in any instrument delivered pursuant to this Agreement (other
than pursuant to the Option Agreement, which shall terminate in accordance with
its terms) shall survive the Effective Time, except for those covenants and
agreements contained herein and therein which by their terms apply in whole or
in part after the Effective Time.
9.3 EXPENSES; BREAKUP FEE.
All costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expense, except that all filing and other fees paid to the SEC, the Connecticut
Commissioner and the OTS in connection with this Agreement shall be borne by
Webster. In the event that this Agreement is terminated by either Webster or
People's Corp. by reason of a material breach pursuant to Sections 8.1(e) or (f)
hereof or by Webster
37
pursuant to Section 8.1(g) hereof, the other party shall pay all documented,
reasonable costs and expenses up to $500,000 incurred by the terminating party
in connection with this Agreement and the transactions contemplated hereby, plus
a breakup fee of $500,000. Except as set forth in the next sentence, in the
event that this Agreement is terminated by Webster under Section 8.1(d) by
reason of People's Corp. shareholders not having given any required approval,
People's Corp. shall pay all documented, reasonable costs and expenses up to
$500,000 incurred by Webster in connection with this Agreement and the
transactions contemplated hereby. In the event that this Agreement is terminated
by Webster under Section 8.1(d) by reason of People's Corp. shareholders not
having given any required approval, and there shall have been prior to the
Special Meeting a "Third Party Public Event" (as defined below), People's Corp.
shall pay all documented, reasonable costs and expenses up to $500,000 incurred
by Webster in connection with this Agreement and the transactions contemplated
hereby, plus a breakup fee of $500,000. For purposes of this Section 9.3, a
"Third Party Public Event" shall refer to any of the following events: (i) any
person (as defined at Sections 3(a)(9) and 13(d)(3) of the Exchange Act and the
rules and regulations thereunder), other than Webster or any Webster Subsidiary,
shall have made a bona fide proposal to People's Corp. or, by a public
announcement or written communication that is or becomes the subject of public
disclosure, to People's Corp.'s shareholders to engage in an Acquisition
Transaction (including, without limitation, any situation in which any person
other than Webster or any Webster Subsidiary shall have commenced (as such term
is defined in Rule 14d-2 under the Exchange Act), or shall have filed a
registration statement under the Securities Act, with respect to a tender offer
or exchange offer to purchase any shares of People's Common Stock such that,
upon consummation of such offer, such person would have beneficial ownership of
10.0% or more of the then outstanding shares of People's Common Stock); or (ii)
any director, officer or affiliate of People's Corp. shall have, by any means
which becomes the subject of public disclosure, communicated opposition to this
Agreement, the Merger or other transactions contemplated hereby, or otherwise
takes action to influence the vote of People's Corp. shareholders against this
Agreement and the Merger.
9.4 NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, mailed by registered or certified
mail (return receipt requested) or delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Webster, to:
Webster Financial Corporation
Webster Plaza
145 Bank Street
Waterbury, Connecticut 06702
Attn.: James C. Smith
Chairman and Chief Executive Officer
WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, DC 20004
Attn.: Stuart G. Stein, Esq.
and
38
(b) if to People's Corp., to:
People's Saving Financial Corp.
123 Broad Street
New Britain, Connecticut 06053
Attn.: Richard S. Mansfield
President and Chief Executive Officer
WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
Tyler Cooper & Alcorn
CityPlace One, 35th Floor
Hartford, Connecticut 06103
Attn.: William W. Bouton, Esq.
9.5 INTERPRETATION.
When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of or an Exhibit or Schedule to
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
9.6 COUNTERPARTS.
This Agreement may be executed in counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
9.7 ENTIRE AGREEMENT.
This Agreement (including the disclosure schedules, documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the
Confidentiality Agreement, the Certificate of Merger, the Option Agreement, the
People's Stockholder Agreement and the Webster Stockholder Agreement.
9.8 GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the
laws of the State of Delaware, without regard to any applicable conflicts of law
rules.
9.9 ENFORCEMENT OF AGREEMENT.
The parties hereto agree that irreparable damage would occur in the
event that the provisions of this Agreement were not performed in accordance
with its specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
thereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
39
9.10 SEVERABILITY.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
9.11 PUBLICITY.
Except as otherwise required by law or the rules of the Nasdaq Stock
Market National Market System (or such other exchange on which the Webster
Common Stock may become listed), so long as this Agreement is in effect, neither
Webster nor People's Corp. shall, or shall permit any of Webster's or People's
Corp.'s Subsidiaries to, issue or cause the publication of any press release or
other public announcement with respect to, or otherwise make any public
statement concerning, the transactions contemplated by this Agreement, the
Certificate of Merger, the Option Agreement or the People's Stockholder
Agreement without the consent of the other party, which consent shall not be
unreasonably withheld.
9.12 ASSIGNMENT; LIMITATION OF BENEFITS.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns. Except as otherwise specifically provided in Section 6.7 hereof,
this Agreement (including the documents and instruments referred to herein) is
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder, and the covenants, undertakings and agreements set out
herein shall be solely for the benefit of, and shall be enforceable only by, the
parties hereto and their permitted assigns.
9.13 ADDITIONAL DEFINITIONS.
In addition to any other definitions contained in this Agreement, the
following words, terms and phrases shall have the following meanings when used
in this Agreement.
"Affiliated Person": any director, officer or 5% or greater
shareholder, spouse or other person living in the same household of such
director, officer or shareholder, or any company, partnership or trust in which
any of the foregoing persons is an officer, 5% or greater shareholder, general
partner or 5% or greater trust beneficiary.
"Laws": any and all statutes, laws, ordinances, rules, regulations,
orders, permits, judgments, injunctions, decrees, case law and other rules of
law enacted, promulgated or issued by any Governmental Entity.
"Material Adverse Effect": with respect to Webster or People's Corp.,
as the case may be, means a condition, event, change or occurrence that is
reasonably likely to have a material adverse effect upon (A) the financial
condition, results of operations, business or properties of Webster or People's
Corp. (other than as a result of (i) changes in laws or regulations or
accounting rules of general applicability or interpretations thereof, or (ii)
decreases in capital under Financial Accounting Standards No. 115 attributable
to general changes in interest rates), or (B) the ability of Webster or People's
Corp. to perform its obligations under, and to consummate the transactions
contemplated by, this Agreement, the Certificate of Merger and, in the case of
People's Corp., the Option Agreement.
40
"Subsidiary": with respect to any party means any corporation,
partnership or other organization, whether incorporated or unincorporated, which
is consolidated with such party for financial reporting purposes.
41
IN WITNESS WHEREOF, Webster, Merger Sub and People's Corp. have caused
this Agreement to be executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
WEBSTER FINANCIAL CORPORATION
ATTEST:
By: /s/ John V. Brennan By: /s/ James C. Smith
---------------------------------------------- --------------------------------------------
John V. Brennan James C. Smith
Executive Vice President, Chief Chairman and Chief Executive Officer
Financial Officer and Treasurer
WEBSTER SUBSIDIARY CORPORATION
ATTEST:
By: /s/ John V. Brennan By: /s/ James C. Smith
---------------------------------------------- ---------------------------------------------
John V. Brennan James C. Smith
Executive Vice President, Chief President
Financial Officer and Treasurer
PEOPLE'S SAVINGS FINANCIAL CORP.
ATTEST:
By: /s/ Teresa Sasinski By: /s/ Richard S. Mansfield
---------------------------------------------- ---------------------------------------------
Teresa Sasinski Richard S. Mansfield
Secretary President and Chief Executive Officer
Exhibit A
ARTICLES OF COMBINATION
and
BANK MERGER AGREEMENT
These Articles of Combination and Bank Merger Agreement ("Bank
Merger Agreement") are made and entered into this ____ day of ________, 1997
between Webster Bank, a federally-chartered savings bank ("Webster Bank"), and
the People's Savings Bank & Trust, a Connecticut-chartered savings bank
("People's Bank").
WITNESSETH
WHEREAS, Webster Financial Corporation, a Delaware corporation
("Webster"), Webster Subsidiary Corporation, a Delaware corporation ("Merger
Sub"), and People's Savings Financial Corp., a Connecticut corporation
("People's Corp."), have entered into an Agreement and Plan of Merger, dated as
of April __, 1997 (the "Agreement");
WHEREAS, pursuant to the Agreement, Webster will acquire
People's Corp. through a merger of Merger Sub with and into People's Corp., and
thereafter People's Bank will merge with and into Webster Bank, as the surviving
bank;
WHEREAS, Webster Bank has 1,000 shares of common stock
outstanding, $.01 par value per share, and People's Bank has [_______] shares of
common stock outstanding, [$_____] par value per share; and
WHEREAS, all of the issued and outstanding shares of common
stock of Webster Bank, and all of the issued and outstanding shares of common
stock of People's Bank, have been voted in favor of the merger of People's Bank
with and into Webster Bank.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein and in the Agreement, the
parties hereto do mutually agree, intending to be legally bound, as follows:
ARTICLE 1
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
1.1 "BANK MERGER" shall refer to the merger of People's Bank with and
into Webster Bank as provided in Section 2.1 of this Bank Merger Agreement.
1.2 "EFFECTIVE TIME" shall mean the date and time at which the merger
contemplated by this Bank Merger Agreement becomes effective as provided in
Section 2.2 hereof.
1.3 "MERGING BANKS" shall collectively refer to People's Bank and
Webster Bank.
1.4 "OTS" shall mean the Office of Thrift Supervision.
1.5 "SURVIVING BANK" shall refer to Webster Bank as the surviving bank
in the Bank Merger. The location of the home office and other offices of the
Surviving Bank shall be as set forth at Annex 1 hereto.
ARTICLE 2
TERMS OF THE BANK MERGER
2.1 THE BANK MERGER
(a) Subject to the terms and conditions set forth in the
Agreement at the Effective Time, People's Bank shall be merged with and into
Webster Bank pursuant to 12 U.S.C. ss.ss. 1467a(s), 1815(d)(3) and 1828(c),
Section 552.13 of the rules and regulations of the OTS promulgated thereunder,
and pursuant to Section 36a-126(b) of the Banking Law of the State of
Connecticut. Webster Bank shall be the Surviving Bank in the Merger and shall
continue to be regulated by the OTS.
(b) As a result of the Bank Merger, (i) each share of common
stock, par value [$____] per share, of People's Bank issued and outstanding
immediately prior to the Effective Time shall be canceled and (ii) each share of
common stock, par value $.01 per share, of Webster Bank issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding and
shall constitute the only shares of capital stock of the Surviving Bank issued
and outstanding immediately after the Effective Time.
(c) Upon the Effective Time, all assets and property of the
Merging Banks shall immediately, without any further act, become the property of
the Surviving Bank to the same extent as they were the property of the Merging
Banks,
-2-
and the Surviving Bank shall be a continuation of the entity that absorbed the
Merging Banks. All rights and obligations of the Merging Banks shall remain
unimpaired, and the Surviving Bank shall, upon the Effective Time, succeed to
all those rights and obligations.
(d) Without limiting the terms and provisions of Section
2.1(c) above, as a result of the Bank Merger, Webster Bank shall assume and
succeed, in accordance with 12 C.F.R. Part 563b, to all the rights and
obligations of People's Bank relating to its liquidation account, which
liquidation account was established in connection with conversion of People's
Corp. from mutual to stock form of organization.
2.2 EFFECTIVE TIME
The Bank Merger shall become effective as of the date
specified in the endorsement of this Bank Merger Agreement, as the Articles of
Merger, by the Secretary of the OTS. The Bank Merger shall not be effective
unless and until approved by the OTS and all other "Regulatory Authorities" as
contemplated by the Agreement, including the "Commissioner."
2.3 NAME OF THE SURVIVING BANK
The name of the Surviving Bank shall be "Webster Bank."
2.4 CHARTER
On and after the Effective Time, the charter of Webster Bank
shall be the charter of the Surviving Bank, until amended in accordance with
applicable law.
2.5 BY-LAWS
On and after the Effective Time, the by-laws of Webster Bank
shall be the by-laws of the Surviving Bank, provided, however, that the by-laws
of the Surviving Bank be amended to provide that the number of directors set in
Article III, Section 2 thereof be increased from 13 to 14, until further amended
in accordance with applicable law.
2.6 DIRECTORS AND OFFICERS
On and after the Effective Time, until changed in accordance
with the charter and by-laws of the Surviving Bank (i) the directors of the
Surviving Bank shall be the directors of Webster Bank immediately prior to the
Effective Time plus one director of People's Corp. as selected pursuant to the
Agreement, and (ii) the officers of the Surviving Bank shall be the officers of
Webster Bank immediately prior to the Effective Time. The directors and officers
of the Surviving Bank shall
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hold office in accordance with the charter and by-laws of the Surviving Bank.
The number, names and residence addresses, and terms of directors of the
Surviving Bank are as set forth at Annex 2 hereto.
2.7 SAVINGS ACCOUNTS
The savings accounts of the Surviving Bank issued after the
Effective Time shall be issued on the same basis as savings accounts had been
issued by Webster Bank prior to the Bank Merger.
ARTICLE 3
MISCELLANEOUS
3.1 AMENDMENTS
To the extent permitted by law, this Bank Merger Agreement may
be amended by a subsequent writing signed by the parties hereto upon the
approval of the board of directors of each of the parties hereto.
3.2 SUCCESSORS
This Bank Merger Agreement shall be binding on the successors
of Webster Bank and People's Bank.
[Signatures on following page]
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In accordance with the procedures set forth in the rules and
regulations of the OTS and other applicable law, Webster Bank and People's Bank
have caused this Bank Merger Agreement to be executed by their duly authorized
representatives on the date indicated.
WEBSTER BANK
ATTEST:
By: By:
------------------------------ ------------------------------
Name: Lee A. Gagnon Name: James C. Smith
Title: Secretary Title: Chairman and Chief
Executive Officer
PEOPLE'S SAVINGS
BANK & TRUST
ATTEST:
By: By:
------------------------------ ------------------------------
Name: Name:
---------------------------- ----------------------------
Title: Title:
--------------------------- ---------------------------
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Exhibit B
OPTION AGREEMENT
THE TRANSFER OF THE OPTION GRANTED
BY THIS AGREEMENT IS SUBJECT TO RESALE RESTRICTIONS.
This OPTION AGREEMENT, dated as of April 4, 1997 (this
"Agreement"), is entered into between PEOPLE'S SAVINGS FINANCIAL CORP.,
Connecticut corporation ("Issuer"), and WEBSTER FINANCIAL CORPORATION, a
Delaware corporation ("Grantee").
WITNESSETH:
WHEREAS, Grantee, Webster Subsidiary Corporation, a
wholly-owned subsidiary of Grantee, and Issuer have entered into an Agreement
and Plan of Merger, dated as of April 4, 1997 (the "Plan"), which was executed
by the parties thereto prior to the execution of this Agreement; and
WHEREAS, as a condition and inducement to Grantee's entering
into the Plan and in consideration therefor, Issuer has agreed to grant Grantee
the Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Plan, the parties
hereto agree as follows:
SECTION 1. Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 476,167 fully paid and nonassessable shares of common stock, par value $1.00
per share of Issuer ("Issuer Common Stock") (which number of shares is equal to
19.99% of the total of (i) the number of outstanding shares of Issuer Common
Stock on the date hereof and (ii) 476,167), at a price per share equal to $25.00
(the "Initial Price"); provided, however, that in the event Issuer issues or
agrees to issue any additional shares of Issuer Common Stock (other than shares
issued upon the exercise of options outstanding as of the date of the Plan in
accordance with their terms pursuant to existing stock option plans), or grants
one or more options to purchase additional shares of Issuer Common Stock at a
price less than the Initial Price, as adjusted pursuant to Section 5(b) hereof,
such price shall be equal to such lesser price (such price, as adjusted, is
hereinafter referred to as the "Option Price"). The number of shares of Issuer
Common Stock that may be received upon the exercise of the Option and the Option
Price are subject to adjustment as herein set forth.
SECTION 2. (a) Grantee may exercise the Option, in whole or part, at
any time and from time to time following the occurrence of a Purchase Event (as
defined below); provided, however, that the Option shall terminate and be of no
further force and effect upon the earliest to occur of the following events
(which are collectively referred to as an "Exercise Termination Event"):
(i) The time immediately prior to the Effective Time;
(ii) 12 months after the first occurrence of a Purchase
Event;
(iii) 12 months after the termination of the Plan
following the occurrence of a Preliminary Purchase Event (as defined
below), unless clause (vii) is applicable;
(iv) upon the termination of the Plan, prior to the
occurrence of a Purchase Event or Preliminary Purchase Event, by Issuer
pursuant to Sections 8.1(h), (e) or (f) of the Plan, both parties
pursuant to Section 8.1(a) of the Plan, or by either party pursuant to
Section 8.1(b) or (c) of the Plan;
(v) 12 months after the termination of the Plan, by either
party pursuant to Section 8.1(d) of the Plan based on the required vote
of Issuer's shareholders not being received, if no Purchase Event or
Preliminary Purchase Event has occurred prior to the meeting of
shareholders (or any adjournment or postponement thereof) held to vote
on the Plan;
(vi) 12 months after the termination of the Plan, by
Grantee pursuant to Section 8.1(e) or (f) thereof as a result of a
breach by Issuer, unless such breach was willful or intentional; or
(vii) 24 months after the termination of the Plan, by
Grantee pursuant to Section 8.1(e) or (f) thereof as a result of a
willful or intentional breach by Issuer, or by Grantee pursuant to
Section 8.1(g) of the Plan.
(b) The term "Preliminary Purchase Event" shall mean any of
the following events or transactions occurring on or after the date hereof and
prior to an Exercise Termination Event:
(i) Issuer without having received Grantee's prior
written consent, shall have entered into any letter of intent or
definitive agreement to engage in an Acquisition Transaction (as
defined below) with any person (as defined below) other than Grantee or
any of its subsidiaries (each a "Grantee Subsidiary") or the Board of
Directors of Issuer shall have recommended that the shareholders of
Issuer approve or accept any Acquisition Transaction with any Person
(as the term "person" is defined in Section 3(a)9 and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and
the rules and regulations thereunder) other than Grantee or any Grantee
Subsidiary. For purposes of this Agreement "Acquisition Transaction"
shall mean (x) a merger, consolidation or other business combination
involving Issuer, (y) a purchase, lease or other acquisition of all or
substantially all of the assets of Issuer, (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange
or otherwise) of Beneficial Ownership (as the term "beneficial
ownership" is defined in Regulation 13d-3(a) of the Exchange Act) of
securities representing 10.0% or more of the voting power of Issuer;
provided, however, that "Acquisition Transaction" shall not include a
transaction entered into after the termination of the Plan in which the
Issuer is the surviving entity, if in connection with such transaction,
no person acquires Beneficial Ownership of 10.0% or more of the total
voting power of the Issuer to be outstanding after giving effect to
such transaction and in which the aggregate voting power of Issuer
acquired by all persons is less than 15% of the total voting power of
Issuer;
(ii) Any Person (other than Grantee, any Grantee
Subsidiary or any current affiliate of Issuer) shall have acquired
Beneficial Ownership of 10.0% or more of the outstanding shares of
Issuer Common Stock;
(iii) (a) Any Person (other than Grantee or any
Grantee Subsidiary) shall have made a bona fide proposal to Issuer or,
by a public announcement or written communication that is or becomes
the subject of public disclosure, to Issuer's shareholders to engage in
an Acquisition Transaction (including, without limitation, any
situation in which any Person other than Grantee or any Grantee
Subsidiary shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act), or shall have filled a registration
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statement under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to a tender offer or exchange offer to purchase any
shares of Issuer Common Stock such that, upon consummation of such
offer, such person would have Beneficial Ownership of 10.0% or more of
the then outstanding shares of Issuer Common Stock (such an offer being
referred to herein as a "Tender Offer" or an "Exchange Offer",
respectively)), and (b) the shareholders of Issuer do not approve the
Merger, as defined in the Plan, at the Special Meeting, as defined in
the Plan;
(iv) There shall exist a willful or intentional
breach under the Plan by Issuer and such breach would entitle Grantee
to terminate the Plan;
(v) The special meeting of Issuers' shareholders held
for the purpose of voting on the Plan shall not have been held pursuant
to the Plan or shall have been canceled prior to termination of the
Plan, or for any reason whatsoever Issuer's Board of Directors shall
have failed to recommend, or shall have withdrawn or modified in a
manner adverse to Grantee the recommendation of Issuer's Board of
Directors, that Issuer's shareholders approve the Plan, or if Issuer or
Issuer's Board of Directors fails to oppose any proposal by any Person
(other than Grantee or any Grantee Subsidiary); or
(vi) Any Person (other than Grantee or any Grantee
Subsidiary) shall have filed an application or notice with the Board of
Governors of the Federal Reserve System (the "FRB"), the Federal
Deposit Insurance Corporation (the "FDIC"), the Connecticut Banking
Commissioner (the "Commissioner"), or other regulatory or
administrative agency or commission (each, a "Governmental Authority")
for approval to engage in an Acquisition Transaction.
(c) The term "Purchase Event" shall mean any of the following
events or transactions occurring on or after the date hereof and prior to an
Exercise Termination Event:
(i) The acquisition by any Person (other than Grantee
or any Grantee Subsidiary) of Beneficial Ownership (other than on
behalf of the Issuer) of 25% or more of the then outstanding Issuer
Common Stock; or
(ii) The occurrence of a Preliminary Purchase Event
described in Section 2(b)(i) except that the percentage referred to in
clause (z) thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event known to Issuer;
provided, however, that the giving of such notice by Issuer shall not be a
condition to the right of Grantee to exercise the Option.
(e) In the event that Grantee is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the "Option
Notice," the date of which being hereinafter referred to as the "Notice Date")
specifying (i) the total number of shares of Issuer Common Stock it will
purchase pursuant to such exercise and (ii) the time (which shall be on a
business day that is not less than three nor more than 10 business days from the
Notice Date) on which the closing of such purchase shall take place (the
"Closing Date"); such closing to take place at the principal office of the
Issuer; provided, however, that, if prior notification to or approval of the
FDIC, the FRB, the Commissioner or any other Governmental Authority is required
in connection with such purchase (each, a "Notification" or an "Approval," as
the case may be), (a) Grantee shall promptly file the required notice or
application for approval ("Notice/Application"), (b) Grantee shall expeditiously
process the Notice/Application and (c) for the purpose of determining the
Closing Date pursuant to clause (ii) of this sentence, the period of time that
otherwise would run from the Notice Date shall instead run from the later of (x)
in connection with any Notification, the date on which any required notification
periods have expired or been terminated and (y) in connection with any Approval,
the
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date on which such approval has been obtained and any requisite waiting period
or periods shall have expired. For purposes of Section 2(a) hereof, any exercise
of the Option shall be deemed to occur on the Notice Date relating thereto. On
or prior to the Closing Date, Grantee shall have the right to revoke its
exercise of the Option by written notice to the Issuer given not less than three
business days prior to the Closing Date.
(f) At the closing referred to in Section 2(e) hereof, Grantee
shall pay to Issuer the aggregate purchase price for the number of shares of
Issuer Common Stock specified in the Option Notice in immediately available
funds by wire transfer to a bank account designated by Issuer; provided,
however, that failure or refusal of Issuer to designate such a bank account
shall not preclude Grantee from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in Section 2(f) hereof, Issuer shall
deliver to Grantee a certificate or certificates representing the number of
shares of Issuer Common Stock specified in the Option Notice and, if the Option
should be exercised in part only, a new Option evidencing the rights of Grantee
thereof to purchase the balance of the shares of Issuer Common Stock purchasable
hereunder.
(h) Certificates for Issuer Common Stock delivered at a
closing hereunder shall be endorsed with a restrictive legend substantially as
follows:
The transfer of the shares represented by this certificate is
subject to resale restrictions arising under the Securities Act of
1933, as amended, and applicable state securities laws and to certain
provisions of an agreement among Webster Financial Corporation, Webster
Subsidiary Corporation and People's Savings Financial Corp., dated as
of April 4, 1997. A copy of such agreement is on file at the principal
office of Webster Financial Corporation, and will be provided to the
holder hereof without charge upon receipt by Webster Financial
Corporation of a written request therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the Securities and Exchange
Commission (the "SEC") or Governmental Authority responsible for administering
any applicable state securities laws or an opinion of counsel, in form and
substance satisfactory to Issuer's counsel, to the effect that such legend is
not required for purposes of the Securities Act or applicable state securities
laws; (ii) the reference to the provisions of this Agreement in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the shares have been sold or transferred in compliance with the provisions of
this Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In addition
such certificates shall bear any other legend as may be required by law.
(i) Upon the giving by Grantee to Issuer of an Option Notice
and the tender of the applicable purchase price in immediately available funds
on the Closing Date, unless prohibited by applicable law, Grantee shall be
deemed to be the holder of record of the number of shares of Issuer Common Stock
specified in the Option Notice, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Issuer Common Stock shall not then actually be delivered to Grantee. Issuer
shall pay all expenses and other charges that may be payable in connection with
the preparation, issuance and delivery of stock certificates under this Section
2 in the name of Grantee.
SECTION 3. Issuer agrees: (i) that it shall at all times until the
termination of this Agreement have reserved for issuance upon the exercise of
the Option that number of authorized and reserved shares of Issuer Common Stock
equal to the maximum number of shares of Issuer
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Common Stock at any time and from time to time issuable hereunder, all of which
shares will, upon issuance pursuant hereto, be duly authorized, validly issued,
fully paid, non-assessable, and delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights;
(ii) that it will not, by amendment of its certificate of incorporation or
through reorganization, consolidation, merger, dissolution or sale of assets, or
by any other voluntary act, avoid or seek to avoid the observance or performance
of any of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all reasonable action as may from
time to time be requested by the Grantee, at Grantee's expense (including (x)
complying with all premerger notification, reporting and waiting period
requirements specified in 15 U.S.C. ss. 18a and regulations promulgated
thereunder and (y) in the event prior approval of or notice to the FDIC, the
FRB, the Commissioner or any other Governmental Authority, under the Change in
Bank Control Act of 1978, as amended, the Bank Holding Company Act, as amended,
Section 36a-181 or Section 36a- 184, as applicable, of the Connecticut Bank
Holding Company Act, or any other applicable federal or state banking law, is
necessary before the Option may be exercised, cooperating with Grantee in
preparing such applications or notices and providing such information to each
such Governmental Authority as it may require in order to permit Grantee to
exercise the Option and Issuer duly and effectively to issue shares of Issuer
Common Stock pursuant hereto; and (iv) to take all action provided herein to
protect the rights of Grantee against dilution.
SECTION 4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer, for other
agreements providing for Options of different denominations entitling the holder
thereof to purchase, on the same terms and subject to the same conditions as are
set forth herein, in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any agreements and related options for which this Agreement (and the
Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date.
SECTION 5. The number of shares of Issuer Common Stock purchasable upon
the exercise of the Option shall be subject to adjustment from time to time as
follows:
(a) In the event of any change in the type or number of shares
of Issuer Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or other issuances of additional shares (other than pursuant to the exercise of
the Option), the type and number of shares of Issuer Common Stock purchasable
upon exercise hereof shall be appropriately adjusted and proper provision shall
be made so that, in the event that any additional shares of Issuer Common Stock
are to be issued or otherwise become outstanding as a result of any such change
(other than pursuant to an exercise of the Option), the number of shares of
Issuer Common Stock that remain subject to the Option shall be increased or
decreased (as applicable) so that, after such issuance and together with the
shares of Issuer Common Stock previously issued pursuant to the exercise of the
Option (as adjusted on account of any of the foregoing changes in the Issuer
Common Stock), the Option shall equal the sum of 19.9% of the total of (i) the
number of shares of Issuer Common Stock then issued and outstanding and (ii) the
number of share issuable pursuant to this Option.
(b) Whenever the number of shares of Issuer Common Stock
purchasable upon exercise hereof is adjusted as provided in this Section 5, the
Option Price shall be adjusted by multiplying the Option Price by a fraction,
the numerator of which shall be equal to the number of shares of Issuer Common
Stock purchasable prior to the adjustment and the denominator of which shall be
equal to the number of shares of Issuer Common Stock purchasable after the
adjustment.
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SECTION 6. (a) Upon the occurrence of a Purchase Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
(whether on its own behalf or on behalf of any subsequent holder of the Option
(or part thereof) or of any of the shares of Issuer Common Stock issued pursuant
hereto), promptly prepare, file and keep current a shelf registration statement
with the SEC, under the Securities Act covering any shares issued and issuable
pursuant to the Option and shall use its reasonable best efforts to cause such
registration statement to become effective, and to remain current and effective
for a period not in excess of 180 days from the day such registration statement
first becomes effective, in order to permit the sale or other disposition of any
shares of Issuer Common Stock issued upon total or partial exercise of the
Option ("Option Shares") in accordance with any plan of disposition requested by
Grantee. Grantee shall have the right to demand two such registrations which
right shall be transferable. Grantee shall provide all information reasonably
requested by Issuer for inclusion in any offering circular or, if applicable,
registration statement to be filed hereunder. In connection with any such
offering circular or, if applicable, registration statement, Issuer and Grantee
shall provide each other with representations, warranties, indemnities and other
agreements customarily given in connection with such registration. If requested
by Grantee in connection with such registration, Issuer and Grantee shall become
a party to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating themselves in respect of representations,
warranties, indemnities and other agreements customarily included in such
underwriting agreements. Notwithstanding the foregoing, if Grantee revokes any
exercise notice or fails to exercise any Option with respect to any exercise
notice pursuant to Section 2(e) hereof, Issuer shall not be obligated to
continue any registration process with respect to the sale of Option Shares
issuable upon the exercise of such Option and Grantee shall not be deemed to
have demanded registration of Option Shares.
(b) In the event that Grantee requests Issuer to prepare an
offering circular or, if applicable, to file a registration statement following
the failure to obtain any approval required to exercise the Option as described
in Section 9 hereof, the closing of the sale or other disposition of the Issuer
Common Stock or other securities pursuant to such offering circular or, if
applicable, registration statement shall occur substantially simultaneously with
the exercise of the Option.
(c) Concurrently with the preparation and filing of a
registration statement under Section 6(a) hereof, Issuer shall also make all
filings required to comply with state securities laws in such number of states
as Grantee may reasonably request.
SECTION 7. (a) Upon the occurrence of a Purchase Event that occurs
prior to an Exercise Termination Event, (i) at the request (the date of such
request being the "Option Repurchase Request Date") of Grantee, Issuer shall
repurchase, subject to compliance with applicable law and out of funds legally
available therefor, the Option from Grantee at a price (the "Option Repurchase
Price") equal to the amount by which (A) the market/offer price (as defined
below) exceeds (B) the Option Price, multiplied by the number of shares for
which the Option may then be exercised and (ii) at the request (the date of such
request being the "Option Share Repurchase Request Date") of the owner of Option
Shares from time to time (the "Owner"), Issuer shall repurchase such number of
the Option Shares from the Owner as the Owner shall designate at a price (the
"Option Share Repurchase Price") equal to the market/offer price multiplied by
the number of Option Shares so designated. The term "market/offer price" shall
mean the highest of (i) the price per share of Issuer Common Stock at which a
tender offer or exchange offer therefor has been made after the date hereof and
on or prior to the Option Repurchase Request Date or the Option Share Repurchase
Request Date, as the case may be, (ii) the price per share of Issuer Common
Stock paid or to be paid by any third party pursuant to an agreement with Issuer
(whether by way of a merger, consolidation or otherwise), (iii) the average of
the 20 highest last sale prices for shares of Issuer Common Stock as reported
within the 90-day period ending on the Option Repurchase Request Date or the
Option Share Repurchase Request Date, as the case may be, and (iv) in the event
of a sale of all or substantially all of Issuer's assets, the sum of the price
paid in such sale for such assets and the current market value of the remaining
assets of Issuer as determined by an investment banking
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firm selected by Grantee or the Owner, as the case may be, and reasonably
acceptable to Issuer, divided by the number of shares of Issuer Common Stock
outstanding at the time of such sale. In determining the market/offer price, the
value of consideration other than cash shall be the value determined by an
investment banking firm selected by Grantee or the Owner, as the case may be,
and reasonably acceptable to Issuer. The investment banking firm's determination
shall be conclusive and binding on all parties.
(b) Grantee or the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and/or any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that Grantee or
the Owner, as the case may be, elects to require Issuer to repurchase the Option
and/or the Option Shares in accordance with the provisions of this Section 7. As
promptly as practicable, and in any event within 30 business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto, Issuer shall deliver or
cause to be delivered to Grantee the Option Repurchase Price or to the Owner the
Option Share Repurchase Price.
(c) Issuer hereby undertakes to use its reasonable best
efforts to obtain all required regulatory, shareholder and legal approvals and
to file any required notices as promptly as practicable in order to accomplish
any repurchase contemplated by this Section 7. Nonetheless, to the extent that
Issuer is prohibited under applicable law or regulation from repurchasing any
Option and/or any Option Shares in full, Issuer shall promptly so notify Grantee
and/or the Owner and thereafter deliver or cause to be delivered, from time to
time, to Grantee and/or the Owner, as appropriate, the portion of the Option
Repurchase Price and the Option Share Repurchase Price, respectively, that it is
no longer prohibited from delivering, within five business days after the date
on which Issuer is no longer so prohibited; provided, however, that if Issuer at
any time after delivery of a notice of repurchase pursuant to Section 7(b)
hereof is prohibited as referred to above, from delivering to Grantee and/or the
Owner, as appropriate, the Option Repurchase Price or the Option Share
Repurchase Price, respectively, in full, Grantee or the Owner, as appropriate,
may revoke its notice of repurchase of the Option or the Option Shares either in
whole or in part whereupon, in the case of a revocation in part, Issuer shall
promptly (i) deliver to Grantee and/or the Owner, as appropriate, that portion
of the Option Purchase Price or the Option Share Repurchase Price that Issuer is
not prohibited from delivering after taking into account any such revocation and
(ii) deliver, as appropriate, either (A) to Grantee, a new Agreement evidencing
the right of Grantee to purchase that number of shares of Issuer Common Stock
equal to the number of shares of Issuer Common Stock purchasable immediately
prior to the delivery of the notice of repurchase less the number of shares of
Issuer Common Stock covered by the portion of the Option repurchased or, (B) to
the Owner, a certificate for the number of Option Shares covered by the
revocation.
(d) Issuer shall not enter into any agreement with any Person
(other than Grantee or a Grantee Subsidiary) for an Acquisition Transaction
unless the other Person assumes all the obligations of Issuer pursuant to this
Section 7 in the event that Grantee or the Owner elects, in its sole discretion,
to require such other Person to perform such obligations.
SECTION 8. (a) In the event that prior to an Exercise Termination
Event, Issuer shall enter into a letter of intent or definitive agreement (i) to
consolidate or merge with any Person (other than Grantee or a Grantee
Subsidiary), and Issuer shall not be the continuing or surviving corporation of
such consolidation or merger, (ii) to permit any Person (other than Grantee or a
Grantee Subsidiary) to merge into Issuer, and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Issuer Common Stock shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other property or the then
outstanding shares of Issuer Common Stock shall after such merger
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represent less than 50% of the outstanding shares and share equivalents of the
merged company, or (iii) to sell or otherwise transfer all or substantially all
of its assets to any Person (other than Grantee or a Grantee Subsidiary) then,
and in each such case, such letter of intent or definitive agreement governing
such transaction shall make proper provision so that the Option shall, upon the
consummation of such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Grantee, of either (x) the Acquiring Corporation
(as defined below) or (y) any person that controls the Acquiring Corporation
(the Acquiring Corporation and any such controlling person being hereinafter
referred to as the "Substitute Option Issuer").
(b) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock (as is hereinafter defined) as is equal to
the market/offer price (as defined in Section 7 hereof) multiplied by the number
of shares of Issuer Common Stock for which the Option was theretofore
exercisable, divided by the Average Price (as hereinafter defined). The exercise
price of the Substitute Option per share of the Substitute Common Stock (the
"Substitute Purchase Price") shall then be equal to the Option Price multiplied
by a fraction in which the numerator is the number of shares of Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares for which the Substitute Option is exercisable.
(c) The Substitute Option shall otherwise have the same terms
as the Option, provided, that if the terms of the Substitute Option cannot, for
legal reasons, be the same as the Option, such terms shall be as similar as
possible and in no event less advantageous to Grantee, provided, further that
the terms of the Substitute Option shall include (by way of example and not
limitation) provisions for the repurchase of the Substitute Option and
Substitute Common Stock by the Substitute Option Issuer on the same terms and
conditions as provided in Section 7 hereof.
(d) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or merger with
Issuer (if other than Issuer), (ii) Issuer in a merger in which Issuer
is the continuing or surviving corporation, and (iii) the transferee of
all or any substantial part of Issuer's assets.
(ii) "Substitute Common Stock" shall mean the common
stock issued by the Substitute Option Issuer upon exercise of the
Substitute Option.
(iii) "Average Price" shall mean the average closing
price of a share of Substitute Common Stock for the one-year period
immediately preceding the consolidation, merger or sale in question,
but in no event higher than the closing price of the shares of
Substitute Common Stock on the day preceding such consolidation, merger
or sale; provided, that if Issuer is the issuer of the Substitute
Option, the Average Price shall be computed with respect to a share of
Issuer Common Stock issued by Issuer, the corporation merging into
Issuer or by any company which controls or is controlled by such
merging corporation, as Grantee may elect.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.99% of the aggregate
of (i) the shares of Substitute Common Stock outstanding immediately prior to
the issuance of the Substitute Option and (ii) the shares subject to the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than such number of shares of Substitute Common Stock but for this
clause (e), the Substitute Option Issuer shall make a cash payment to Grantee
equal to the excess of (i) the value of the Substitute Option without giving
effect to the limitation in this clause (e) over (ii) the value of the
Substitute Option after giving effect to the limitation in this clause (e). This
difference
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in value shall be determined by a nationally recognized investment banking firm
selected by Grantee and the Substitute Option Issuer. In addition, the
provisions of Section 5(a) hereof shall not apply to the issuance of any
Substitute Option and for purposes of applying Section 5(a) hereof thereafter to
any Substitute Option, the percentage referred to in Section 5(a) hereof shall
thereafter equal the percentage that the percentage of the shares of Substitute
Common Stock subject to the Substitute Option bears to the number of shares of
Substitute Common Stock outstanding.
SECTION 9. Notwithstanding Sections 2, 6 and 7 hereof, if Grantee has
given the notice referred to in one or more of such Sections, the exercise of
the rights specified in any such Section shall be extended (a) if the exercise
of such rights requires obtaining regulatory approvals (including any required
waiting periods) to the extent necessary to obtain all regulatory approvals for
the exercise of such rights, and (b) to the extent necessary to avoid liability
under Section 16(b) of the Exchange Act by reason of such exercise; provided,
that in no event shall any closing date occur more than 12 months after the
related notice date, and, if the closing date shall not have occurred within
such period due to the failure to obtain any required approval by the OTS, the
FDIC, the Commissioner or any other Governmental Authority despite the best
efforts of Issuer or the Substitute Option Issuer, as the case may be, to obtain
such approvals, the exercise of the rights shall be deemed to have been
rescinded as of the related notice date. In the event (a) Grantee receives
official notice that an approval of the OTS, the FDIC, the Commissioner or any
other Governmental Authority required for the purchase and sale of the Option
Shares will not be issued or granted or (b) a closing date has not occurred
within 12 months after the related notice date due to the failure to obtain any
such required approval, Grantee shall be entitled to exercise the Option in
connection with the concurrent resale of the Option Shares pursuant to a
registration statement as provided in Section 6 hereof. Nothing contained in
this Agreement shall restrict Grantee from specifying alternative means of
exercising rights pursuant to Sections 2, 6 or 7 hereof in the event that the
exercising of any such rights shall not have occurred due to the failure to
obtain any required approval referred to in this Section 9.
SECTION 10. Issuer hereby represents and warrants to Grantee as
follows:
(a) Issuer has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly approved by
the Board of Directors of Issuer and no other corporate proceedings on the part
of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly executed and
delivered by, and constitutes a valid and binding obligation of, Issuer,
enforceable against Issuer in accordance with its terms, subject to any required
Governmental Approval, and except as enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally and except that
the availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
shares of Issuer Common Stock equal to the maximum number of shares of Issuer
Common Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized, validly issued,
fully paid, non-assessable, and will be delivered free and clear of all claims,
liens, encumbrances and security interests and not subject to any preemptive
rights.
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SECTION 11. (a) Neither of the parties hereto may assign any of its
rights or delegate any of its obligations under this Agreement or the Option
created hereunder to any other Person without the express written consent of the
other party, except that Grantee may assign this Agreement to a wholly owned
subsidiary of Grantee and Grantee may assign its rights hereunder in whole or in
part after the occurrence of a Preliminary Purchase Event. The term "Grantee" as
used in this Agreement shall also be deemed to refer to Grantee's permitted
assigns.
(b) Any assignment of rights of Grantee to any permitted
assignee of Grantee hereunder shall bear the restrictive legend at the beginning
thereof substantially as follows:
The transfer of the option represented by this assignment and
the related option agreement is subject to resale restrictions arising
under the Securities Act of 1933, as amended, and applicable state
securities laws and to certain provisions of an agreement among Webster
Financial Corporation, Webster Subsidiary Corporation and People's
Savings Financial Corp., dated as of April 4, 1997. A copy of such
agreement is on file at the principal office of Webster Financial
Corporation, and will be provided to any permitted assignee of the
Option without charge upon receipt of a written request therefor.
SECTION 12. Each of Grantee and Issuer will use its reasonable efforts
to make all filings with, and to obtain consents of, all third parties and
Governmental Authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
FDIC, the FRB, the Commissioner and any other Governmental Authority for
approval to acquire the shares issuable hereunder.
SECTION 13. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and that
the obligations of the parties hereto shall be enforceable by either party
hereto through injunctive or other equitable relief. Both parties further agree
to waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have for any
failure to perform this Agreement.
SECTION 14. If any term, provision, covenant or restriction contained
in this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that Grantee is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7 hereof, the full number of shares of Issuer
Common Stock provided in Section 1 hereof (as adjusted pursuant hereto), it is
the express intention of Issuer to allow Grantee to acquire or to require Issuer
to repurchase such lesser number of shares as may be permissible without any
amendment or modification hereof.
SECTION 15. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in the manner and at the respective addresses of the parties set forth in the
Plan.
SECTION 16. This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto shall be governed by and
construed in accordance with the laws of the State of Delaware (but not
including the choice of law rules thereof).
SECTION 17. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement and shall be effective at the time of execution and
delivery.
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SECTION 18. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder.
SECTION 19. Except as otherwise expressly provided herein or in the
Plan, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
SECTION 20. Capitalized terms used in this Agreement and not defined
herein but defined in the Plan shall have the meanings assigned thereto in the
Plan.
SECTION 21. Nothing contained in this Agreement shall be deemed to
authorize or require Issuer or Grantee to breach any provision of the Plan or
any provision of law applicable to the Grantee or Issuer.
SECTION 22. In the event that any selection or determination is to be
made by Grantee or the Owner hereunder and at the time of such selection or
determination there is more than one Grantee or Owner, such selection shall be
made by a majority in interest of such Grantees or Owners.
SECTION 23. In the event of any exercise of the option by Grantee,
Issuer and such Grantee shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
SECTION 24. Except to the extent Grantee exercises the Option, Grantee
shall have no rights to vote or receive dividends or have any other rights as a
shareholder with respect to shares of Issuer Common Stock covered hereby.
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IN WITNESS WHEREOF, each of the parties has caused this Option
Agreement to be executed and delivered on its behalf by their respective
officers thereunto duly authorized, all as of the date first above written.
PEOPLE'S SAVINGS FINANCIAL CORP.
By:
---------------------------------
Richard S. Mansfield
President and Chief Executive
Officer
WEBSTER FINANCIAL CORPORATION
By:
----------------------------------
James C. Smith
Chairman and Chief Executive
Officer
EXHIBIT C
CERTIFICATE OF MERGER
WEBSTER SUBSIDIARY CORPORATION
INTO
PEOPLE'S SAVINGS FINANCIAL CORP.
Pursuant to Title 33, Section 367 of the Connecticut Stock
Corporation Act and pursuant to Title 8, Section 252 of the General Corporation
Law of the State of Delaware, Webster Subsidiary Corporation, a corporation
organized and existing under the law of the State of Delaware, and People's
Savings Financial Corp., a corporation organized and existing under the law of
the State of Connecticut, do hereby certify to the following facts relating to
the merger (the "Merger") of Webster Subsidiary Corporation into People's
Savings Financial Corp.
FIRST: The name and state of incorporation or formation of
each constituent entity that is a party to the Merger is as follows:
Name State of Incorporation
---- ----------------------
or Formation
------------
Webster Subsidiary Corporation Delaware
People's Savings Financial Corp. Connecticut
SECOND: An Agreement and Plan of Merger, dated April ___, 1997
(the "Agreement and Plan of Merger"), has been approved, adopted, certified,
executed and acknowledged by each of the constituent corporations.
THIRD: Pursuant to the Agreement and Plan of Merger:
(a) Webster Financial Corporation, the owner of all shares of
common stock of Webster Subsidiary Corporation will acquire People's Savings
Financial Corp. through the merger of People's Savings Financial Corp. with
Webster Subsidiary Corporation. The name of the surviving corporation, which
shall be a Connecticut corporation, is "People's Savings Financial Corp." (the
"Surviving Corporation").
(b) Upon the effective date of the Merger, pursuant to the
terms of the Agreement and Plan of Merger, each issued and outstanding share of
common stock of People's Savings Financial Corp., par value $1.00 per share (the
"People's Common Stock"), except for Objecting Shares and shares which are
canceled as specified in the Agreement and Plan of Merger, and without any
action on the part of shareholders of People's Savings Financial Corp., shall be
converted into and exchangeable for ______ share(s) of common stock of Webster
Financial
Corporation, par value $.01 per share (the "Webster Common Stock"), and all of
the shares of People's Common Stock converted into Webster Common Stock shall
automatically be canceled.
(c) Upon the effective date of the Merger, each issued and
outstanding share of common stock of Webster Subsidiary Corporation, par value
$.01 per share (the "Subsidiary Common Stock"), shall become shares of the
Surviving Corporation.
(d) The certificate of incorporation of People's Savings
Financial Corp. shall be the certificate of incorporation of the Surviving
Corporation.
(e) The By-Laws of Webster Subsidiary Corporation shall be the
By-Laws of the Surviving Corporation.
(f) The directors and officers of Webster Subsidiary
Corporation shall be the directors and officers of the Surviving Corporation.
FOURTH: People's Savings Financial Corp. has issued and
outstanding _________ shares of People's Common Stock, each of which such shares
is entitled to one vote on the Agreement and Plan of Merger and the Merger.
FIFTH: Webster Subsidiary Corporation has issued and
outstanding 100 shares of Subsidiary Common Stock, each of which such shares is
entitled to one vote on the Agreement and Plan of Merger and the Merger.
SIXTH: All of the issued and outstanding shares of Subsidiary
Common Stock and _______ of the issued and outstanding shares of People's Common
Stock, which is at least two-thirds of the issued and outstanding People's
Common Stock and which is sufficient for approval by the People's Common Stock
voting as a group, have been voted in favor of the Agreement and Plan of Merger
and the Merger.
SEVENTH: The Agreement and Plan of Merger is on file at the
office of the Surviving Corporation at the following address:
People's Savings Financial Corp.
123 Broad Street
New Britain, Connecticut 06053
EIGHTH: A copy of the Agreement and Plan of Merger will be
furnished by the Surviving Corporation, on request and without cost, to any
shareholder of any constituent corporation.
2
NINTH: The Surviving Corporation hereby agrees that it may be
served with process in the State of Delaware in any proceeding for enforcement
of any obligation of any constituent corporation of the State of Delaware, as
well as for enforcement of any obligation of the Surviving Corporation arising
from the Merger, including any suit or other proceeding to enforce the right of
any stockholders as determined in appraisal proceedings pursuant to the
provisions of ss. 262 of the Delaware General Corporation Law, and hereby
irrevocably appoints the Secretary of the State of Delaware as its agent to
accept service of process in any such suit or other proceedings. The address of
the Surviving Corporation to which a copy of such process shall be mailed by the
Secretary of State is: People's Savings Financial Corp., 123 Broad Street, New
Britain, Connecticut 06053.
TENTH: These Articles of Merger shall act as a certificate of
cancellation of all authorized capital stock of Webster Subsidiary Corporation.
IN WITNESS WHEREOF, Webster Subsidiary Corporation and
People's Savings Financial Corp. have caused these Articles of Merger to be duly
executed as of this _____ day of ________, 1997 to be effective at _____ a.m. on
_________, 1997.
ATTEST WEBSTER SUBSIDIARY CORPORATION
By: By:
---------------------------------- ------------------------------
Lee A. Gagnon James C. Smith
Secretary President
ATTEST PEOPLE'S SAVINGS FINANCIAL CORP.
By: By:
---------------------------------- ------------------------------
Teresa Sasinski Richard S. Mansfield
Secretary President and Chief Executive
Officer
3
Exhibit D
PEOPLE'S SAVINGS FINANCIAL CORP.
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT, dated as of April 4, 1997, is
entered into by and among Webster Financial Corporation, a Delaware corporation
("Webster"), and the stockholders of People's Savings Financial Corp., a
Connecticut corporation ("People's"), named on Schedule I hereto (collectively,
the "Stockholders"), who are directors, executive officers or other affiliates
(for purposes of Rule 145 under the Securities Act of 1933, as amended, and for
purposes of qualifying the Merger for "pooling-of-interests" accounting
treatment) of People's.
WHEREAS, Webster, Webster Subsidiary Corporation, wholly-owned
subsidiary of Webster ("Merger Sub"), and People's have entered into an
Agreement and Plan of Merger, dated as of April 4, 1997 (the "Agreement"), which
is conditioned upon the execution of this Stockholder Agreement and which
provides for, among other things, the acquisition of People's by Webster, to be
effected by the merger of Merger Sub with and into People's, in a
stock-for-stock transaction (the "Merger"); and
WHEREAS, in order to induce Webster to enter into or proceed
with the Agreement, each of the Stockholders agrees to, among other things, vote
in favor of the Agreement, the Merger and the other transactions contemplated by
the Agreement in his/her capacity as a stockholder of People's;
NOW, THEREFORE in consideration of the premises, the mutual
covenants and agreements set forth herein and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. OWNERSHIP OF PEOPLE'S COMMON STOCK. Each Stockholder represents and
warrants that the number of shares of People's common stock, par value $1.00 per
share ("People's Common Stock"), set forth opposite such Stockholder's name on
Schedule I hereto is the total number of shares of People's Common Stock over
which such person has "beneficial ownership" within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended, except that the
provisions of Rule 13d-3(d)(1)(i) shall be considered without any limit as to
time.
2. AGREEMENTS OF THE STOCKHOLDERS. Each Stockholder covenants and
agrees that:
(a) Such Stockholder shall, at any meeting of the holders of
People's Common Stock called for the purpose, vote or cause to be voted all
shares of People's Common Stock in which such Stockholder has the right to vote
(whether owned as of the date hereof or hereafter acquired) (i) in favor of the
Agreement, the Merger and the other transactions contemplated by the Agreement
and (ii) against any plan or proposal pursuant to which People's is to be
acquired by or merged with, or pursuant to which People's proposes to sell all
or substantially all of its assets and liabilities to, any person, entity or
group (other than Webster or any affiliate thereof).
(b) Except as otherwise expressly permitted hereby, such
Stockholder shall not, prior to the consummation of the Merger or the earlier
termination of this Stockholder Agreement in accordance with its terms, sell,
pledge, transfer or otherwise dispose of his/her shares of People's Common
Stock; provided, however, that this Section 2(b) shall not apply to a pledge
existing as of March 28, 1997.
(c) Such Stockholder shall not in his/her capacity as a
stockholder of People's directly or indirectly encourage or solicit or hold
discussions or negotiations with, or provide any information to, any person,
entity or group (other than Webster or an affiliate thereof) concerning any
merger, sale of all or substantially all of the assets or liabilities not in the
ordinary course of business, sale of shares of capital stock or similar
transaction involving People's. Nothing herein shall impair such Stockholder's
fiduciary obligations as a director of People's.
(d) Such Stockholder shall use his/her best efforts to take or
cause to be taken all action, and to do or cause to be done all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the Merger contemplated by this Stockholder
Agreement.
(e) Such Stockholder shall not, prior to the public release by
Webster of an earnings report to its stockholders covering at least one month of
operations after consummation of the Merger (the "Restricted Period"), sell,
pledge (other than the replacement of a pledge existing on March 28, 1997 of
People's Common Stock), transfer or otherwise dispose of the shares of Webster
common stock, par value $.01 per share (the "Webster Common Stock"), to be
received by him/her for his/her shares of People's Common Stock upon
consummation of the Merger, it being agreed that Webster shall use commercially
reasonable efforts to publish such earnings report within 45 days after the end
of the first month after the Merger becomes effective in which there are at
least 30 days of post-Merger combined operations.
(f) Such Stockholder shall comply with all applicable federal
and state securities laws in connection with any sale of Webster Common Stock
received in exchange for People's Common Stock in the Merger, including the
trading and volume limitations as to sales by affiliates contained in Rule 145
under the Securities Act of 1933, as amended.
(g) During the Restricted Period, such Stockholder shall not
sell or otherwise dispose of a number of shares of his/her People's Common
Stock, or shares of Webster Common Stock which are exchanged for said shares,
(i) which is greater than 10% of his/her total beneficial ownership of said
shares as of the date of the first such sale and (ii) which in the aggregate
with shares sold or otherwise disposed of by all other Stockholders will be
greater than 1% of the issued and outstanding shares of People's as of the date
of the first such sale. For purposes of this computation, outstanding stock
options that currently are exercisable would be considered as outstanding or
beneficially owned after such options are converted to common stock equivalents
using the treasury stock method in accordance with generally accepted accounting
principles.
(h) Except as set forth in the attached Schedule II, such
Stockholder has no present plan or intent, and as of the effective time of the
Merger, shall have no present plan or intent, to engage in a sale, exchange,
transfer (other than an intrafamily gift), distribution (including a
distribution by a corporation to its shareholders), redemption, or reduction in
any way of such Stockholder`s risk of ownership by short sale or otherwise, or
other disposition (not including a bona fide pledge), directly or indirectly
(collectively a "Sale"), with respect to any of the shares of Webster Common
Stock to be received by such Stockholder upon the Merger (except for cash
received for fractional shares). Such Stockholder is not aware of, or
participating in, any plan or intent on the part of People's stockholders (a
"Plan") to engage in sales of the Webster Common Stock to be issued in the
Merger such that the aggregate fair market value, as of the effective time of
the Merger, of the shares subject to such Sales would exceed 50% of the
aggregate fair market value of all outstanding People's Common Stock immediately
before the Merger (the "Outstanding People's Common Stock"). A sale of Webster
Common Stock shall be considered to have occurred pursuant to a Plan if, for
example, such Sale occurs in a transaction that is in contemplation of, or
related or pursuant to, the Merger (a "Related Transaction"). In addition,
shares of People's
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Common Stock (i) with respect to which dissenters' rights are exercised, (ii)
exchanged for cash in lieu of fractional shares of Webster Common Stock, and
(iii) with respect to which a Related Transaction occurs before the Merger shall
be considered to be shares of Outstanding People's Common Stock that are
exchanged for shares of Webster Common Stock that are disposed of pursuant to a
Plan.
3. SUCCESSORS AND ASSIGNS. A Stockholder may sell, pledge, transfer or
otherwise dispose of his/her shares of People's Common Stock, provided that such
Stockholder obtains the prior written consent of Webster and that any acquirer
of such People's Common Stock agrees in writing to be bound by this Stockholder
Agreement.
4. TERMINATION. The parties agree and intend that this Stockholder
Agreement be a valid and binding agreement enforceable against the parties
hereto and that damages and other remedies at law for the breach of this
Stockholder Agreement are inadequate. This Stockholder Agreement may be
terminated at any time prior to the consummation of the Merger by the mutual
written consent of the parties hereto and shall be automatically terminated in
the event that the Agreement is terminated in accordance with its terms;
provided, however, that if the holders of People's Common Stock fail to approve
the Agreement or People's fails to hold a stockholders' meeting to vote on the
Agreement, then (i) Section 2(a) clause (ii) hereof shall continue in effect as
to any plan or proposal received by People's from any person, entity or group
(other than Webster or any affiliate thereof) prior to the termination of the
Agreement or within 180 days after such termination and (ii) Section 2(b) hereof
shall continue in effect to preclude a sale other than pursuant to normal
brokers transactions on the Nasdaq Stock Market, pledge other than to a bona
fide financial institution or recognized securities dealer, transfer or other
disposition directly or indirectly to any such person, entity or group in
connection with any such plan or proposal, except upon consummation of such plan
or proposal.
5. NOTICES. Notices may be provided to Webster and the Stockholders in
the manner specified in the Agreement, with all notices to the Stockholders
being provided to them at the addresses set forth at Schedule I.
6. GOVERNING LAW. This Stockholder Agreement shall be governed by the
laws of the State of Delaware, without giving effect to the principles of
conflicts of laws thereof.
7. COUNTERPARTS. This Stockholder Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same and each of
which shall be deemed an original.
8. HEADINGS. The Section headings contained herein are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Stockholder Agreement.
9. REGULATORY APPROVAL. If any provision of this Stockholder Agreement
requires the approval of any regulatory authority in order to be enforceable,
then such provision shall not be effective until such approval is obtained;
provided, however, that the foregoing shall not affect the enforceability of any
other provision of this Stockholder Agreement.
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IN WITNESS WHEREOF, Webster, by a duly authorized officer, and
each of the Stockholders have caused this Stockholder Agreement to be executed
and delivered as of the day and year first above written.
WEBSTER FINANCIAL CORPORATION
By:
--------------------------------------
James C. Smith
Chairman and Chief Executive Officer
STOCKHOLDERS:
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
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- ----------------------------------- -----------------------------------
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SCHEDULE I
Number of Shares of People's Common
Name and Address of Stockholder Stock Beneficially Owned
- ------------------------------- -----------------------------------