EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
WEBSTER FINANCIAL CORPORATION
AND
VILLAGE BANCORP, INC.
DATED AS OF
NOVEMBER 11, 1998
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER..........................................................1
1.1 The Merger.........................................................1
1.2 Effective Time.....................................................1
1.3 Effects of the Merger..............................................2
1.4 Conversion of Village Common Stock.................................2
1.5 The Bank Merger....................................................4
1.6 Options............................................................4
1.7 Certificate of Incorporation.......................................5
1.8 Bylaws.............................................................5
1.9 Directors and Officers.............................................5
1.10 Tax Consequences...................................................5
ARTICLE II EXCHANGE OF SHARES.................................................5
2.1 Webster to Make Cash and Shares Available..........................5
2.2 Exchange of Cash and Shares.......................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF VILLAGE.........................8
3.1 Corporate Organization.............................................8
3.2 Capitalization.....................................................8
3.3 Authority; No Violation............................................9
3.4 Consents and Approvals............................................10
3.5 Loan Portfolio; Reports...........................................11
3.6 Financial Statements; Exchange Act Filings; Books and
Records..........................................................11
3.7 Broker's Fees.....................................................12
3.8 Absence of Certain Changes or Events..............................12
3.9 Legal Proceedings.................................................12
3.10 Taxes and Tax Returns.............................................13
3.11 Employee Benefit Plans............................................13
3.12 Certain Contracts.................................................14
3.13 Agreements with Regulatory Agencies...............................15
3.14 State Takeover Laws; Articles of Incorporation....................15
3.15 Environmental Matters.............................................15
3.16 Reserves for Losses...............................................16
3.17 Properties and Assets.............................................16
3.18 Insurance.........................................................17
3.19 Compliance with Applicable Laws...................................17
3.20 Loans.............................................................18
3.21 Affiliates........................................................19
3.22 Ownership of Webster Common Stock.................................19
3.23 Village Rights Agreement..........................................19
3.24 Fairness Opinion..................................................19
3.25 Year 2000 Compliance..............................................19
3.26 Intellectual Property.............................................20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF WEBSTER.........................20
4.1 Corporate Organization............................................20
4.2 Capitalization....................................................20
4.3 Authority; No Violation...........................................21
4.4 Consents, Approvals and Reports...................................22
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4.5 Financial Statements; Exchange Act Filings; Books and
Records..........................................................23
4.6 Absence of Certain Changes or Events..............................23
4.7 Legal Proceedings.................................................23
4.8 Taxes and Tax Returns.............................................23
4.9 Employee Benefit Plans............................................24
4.10 Compliance with Applicable Laws...................................24
4.11 Agreements with Regulatory Agencies...............................24
4.12 Year 2000 Compliance..............................................24
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS..........................25
5.1 Covenants of Village..............................................25
5.2 Covenants of Webster..............................................28
5.3 Merger Covenants..................................................28
5.4 Compliance with Antitrust Laws....................................28
ARTICLE VI ADDITIONAL AGREEMENTS.............................................29
6.1 Regulatory Matters................................................29
6.2 Access to Information.............................................30
6.3 Shareholder Meeting...............................................31
6.4 Legal Conditions to Merger........................................31
6.5 Stock Exchange Listing............................................31
6.6 Employees; Employment and Other Agreements........................31
6.7 Indemnification...................................................32
6.8 Subsequent Interim and Annual Financial Statements................33
6.9 Additional Agreements.............................................34
6.10 Advice of Changes.................................................34
6.11 Current Information...............................................34
6.12 Execution and Authorization of Bank Merger Agreement..............34
6.13 Change in Structure...............................................34
6.14 Transaction Expenses of Village...................................35
ARTICLE VII CONDITIONS PRECEDENT.............................................35
7.1 Conditions to Each Party's Obligation To Effect the
Merger...........................................................35
7.2 Conditions to Obligations of Webster..............................36
7.3 Conditions to Obligations of Village..............................37
ARTICLE VIII TERMINATION AND AMENDMENT.......................................38
8.1 Termination.......................................................38
8.2 Effect of Termination.............................................39
8.3 Amendment.........................................................39
8.4 Extension; Waiver.................................................40
ARTICLE IX GENERAL PROVISIONS................................................40
9.1 Closing...........................................................40
9.2 Nonsurvival of Representations, Warranties, Covenants
and Agreements....................................................40
9.3 Expenses; Breakup Fee.............................................40
9.4 Notices...........................................................41
9.5 Interpretation....................................................42
9.6 Counterparts......................................................42
9.7 Entire Agreement..................................................42
9.8 Governing Law.....................................................42
9.9 Enforcement of Agreement..........................................42
9.10 Severability......................................................43
9.11 Publicity.........................................................43
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9.12 Assignment; Limitation of Benefits................................43
9.13 Additional Definitions............................................43
EXHIBITS
A Form of Articles of Combination and Bank Merger Agreement
B Form of Option Agreement
C Form of Certificate of Merger
D Form of Village Bancorp, Inc. Stockholder Agreement
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of November 11, 1998 (this
"Agreement"), is entered into by and between Webster Financial Corporation, a
Delaware corporation ("Webster"), and Village Bancorp, Inc., a Connecticut
corporation ("Village").
WHEREAS, the Boards of Directors of Webster and Village 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
Village will, subject to the terms and conditions set forth herein, merge with
and into Webster, with Webster being the "Surviving Corporation" (the "Merger");
WHEREAS, prior to the consummation of the Merger, Webster and Village will
respectively cause Webster Bank, a federally chartered savings bank and wholly
owned subsidiary of Webster ("Webster Bank"), and The Village Bank & Trust
Company, a Connecticut chartered bank and wholly owned subsidiary of Village
("Village Bank"), to enter into articles of combination and bank merger
agreement, in the form attached hereto as Exhibit A (the "Bank Merger
Agreement"), providing for the merger (the "Bank Merger") of Village 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, Village
will enter into an option agreement, in substantially the form attached hereto
as Exhibit B (the "Option Agreement"), with Webster immediately following the
execution of this Agreement pursuant to which Village will grant Webster an
option to purchase, under certain circumstances, an aggregate of 388,466 newly
issued shares of common stock, par value $3.33 per share, of Village ("Village
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 General Corporation Law of the State of Delaware, as amended (the "Delaware
Corporation Law") and the Connecticut Business Corporation Act, as amended (the
"Connecticut Corporation Law"), at the Effective Time (as defined in Section 1.2
hereof), Village shall merge into Webster, with Webster being the Surviving
Corporation in the Merger. Upon consummation of the Merger, the corporate
existence of Village shall cease and the Surviving Corporation shall continue to
exist as a Delaware corporation.
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 hereto as Exhibit C, 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 Delaware Corporation Law and Sections
33-820 and 33-821 of the Connecticut Corporation Law.
1.4 CONVERSION OF VILLAGE COMMON STOCK.
(a) At the Effective Time, subject to Sections 1.4(c), 1.4(d), 2.2(g)
and 8.1(h) hereof, shares of Village Common Stock outstanding immediately prior
to the Effective Time (other than Dissenting Shares as defined in Section 1.4(e)
hereof), shall, at the election of holders of such shares, be converted and
exchangeable into either
(i) the right to receive $23.50 in cash, without interest, or
(ii) the right to receive that number of shares of Webster common
stock, par value $.01 per share ("Webster Common Stock") determined by
dividing $23.50 by the Base Period Trading Price (as defined below), as may
be adjusted as provided below, computed to four decimal places (the
"Exchange Ratio"); provided, however, that if the Base Period Trading Price
shall be greater than $27.50, the Exchange Ratio shall be 0.8545 and if the
Base Period Trading Price shall be less than $19.50, the Exchange Ratio
shall be 1.2051. Notwithstanding the foregoing, if the number of shares of
Village Common Stock as to which Village stockholders elect to receive cash
(the "Cash Election Number") exceeds the Maximum Cash Number, then the
number of shares entitled to receive cash shall be prorated as provided
below so that no more than the Maximum Cash Number shall be converted into
cash. The "Maximum Cash Number" shall be 20% of the total value of the
merger consideration, less the total amount of cash payable in lieu of
fractional shares and that may be payable to Dissenting Shares, and shall
be calculated by the following formula:
[.2 x (O x Y)] - [F + (D x Y)];
where
D = the aggregate number of Dissenting Shares
F = the aggregate of cash payable in respect of fractional shares as
provided in Section 1.4(d) hereof
O = the aggregate number of outstanding shares of Village Common Stock as
of the Effective Time
Y = the Closing Value (as defined in Section 1.4(d) hereof) multiplied by
the Exchange Ratio
If the amount of cash payable in lieu of fractional shares and that
may be payable to Dissenting Shares exceeds 20% of the product of [O x Y] (in
accordance with the above formula), the Maximum Cash Number shall be zero. If
the Cash Election Number exceeds the Maximum Cash Number, then the number of
shares held by each shareholder electing to receive cash for some or all of its
shares shall be determined by multiplying the number of shares as to which that
shareholder elected to receive cash by a cash proration factor (the "Cash
Proration Factor") equal to the quotient obtained by dividing the Maximum Cash
Number by the Cash Election Number and rounding down to the next whole number.
All shares of Village Common Stock, other than shares converted into the right
to receive cash in accordance with the preceding sentence or entitled to receive
cash pursuant
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to Sections 1.4(d) or 1.4(e) hereof, shall be converted into the right to
receive Webster Common Stock in accordance with Section 1.4(a)(ii) above, and a
Stock Election (as defined in Section 2.2(b) hereof) shall be deemed to have
been made with respect to such shares. 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 during
which shares of Webster Common Stock are actually traded (as reported on The
Nasdaq Stock Market, Inc. National Market Tier ("Nasdaq")) ending on the day
preceding the receipt of the last required federal bank regulatory approval or
waiver required to effect the Bank Merger (such period herein called the "Base
Period"). For purposes of this Agreement, references to Webster Common Stock
shall be deemed to include, where appropriate, references to the right to
receive shares of Webster's Series C Participating Preferred Stock pursuant to
the Rights Agreement, dated as of February 5, 1996, as amended, between Webster
and American Stock Transfer & Trust Company (the "Rights Agreement").
(b) All of the shares of Village Common Stock converted into Webster
Common Stock or cash 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
Village Common Stock shall thereafter represent the right to receive (i) the
number of whole shares of Webster Common Stock or cash determined in accordance
with Section 1.4(a) hereof and (ii) if applicable, cash in lieu of fractional
shares determined in accordance with Section 1.4(d) hereof. Certificates
previously representing shares of Village Common Stock shall be exchanged for
certificates representing whole shares of Webster Common Stock, cash and cash in
lieu of fractional shares issued in consideration therefor, as the case may be,
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 Village Common Stock that are
owned by Village as treasury stock and all shares of Village Common Stock that
are owned directly or indirectly by Webster or Village or any of their
respective Subsidiaries (as defined in Section 9.13 hereof) (other than shares
of Village 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, whether held directly or
indirectly by Webster or Village, as the case may be, being referred to herein
as "Trust Account Shares") and other than any shares of Village Common Stock
held by Webster or Village or any of their respective Subsidiaries in respect of
a debt previously contracted (any such shares, whether held directly or
indirectly by Webster or Village, 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 Village or any Village Subsidiary (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 Village 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 closing time average 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) ending on the third trading day preceding the
Closing Date (the "Closing Value"). Following consummation of the Merger, no
holder of Village Common Stock shall be entitled to dividends or any other
rights in respect of any such fraction.
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(e) Notwithstanding anything in this Agreement to the contrary and
unless otherwise provided by applicable law, shares of Village Common Stock that
are issued and outstanding immediately prior to the Effective Time and that are
owned by shareholders who have properly dissented (the "Dissenting Shares")
within the meaning of Sections 33-855 through 33-872 of the Connecticut Business
Corporation Act, as amended (the "Connecticut Corporation Law"), shall not be
converted into the right to receive shares of Webster Common Stock or cash, as
the case may be, 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 Village
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)(ii)
hereof.
(f) Village shall give Webster (i) prompt notice of any written notice
of intent to demand payment for shares filed pursuant to Section 33-861 of the
Connecticut Corporation Law received by Village, withdrawals of such notices,
and any other instruments served in connection with such notices pursuant to the
Connecticut Corporation Law and received by Village and (ii) the opportunity to
direct all negotiations and proceedings with respect to such notices under the
Connecticut Corporation Law consistent with the obligations of Village
thereunder. Village shall not, except with the prior written consent of Webster,
(x) make any payment with respect to any such notice, (y) offer to settle or
settle any such notices or (z) waive any failure to timely deliver a written
notice in accordance with the Connecticut Corporation Law.
1.5 THE BANK MERGER.
(a) Immediately upon the Effective Time, Village Bank will merge with
and into Webster Bank in the Bank Merger, with Webster Bank being the Surviving
Bank of the Bank Merger.
(b) As a result of the Bank Merger, (i) each share of Village Bank
common stock issued and outstanding immediately prior to the Effective Time
shall be canceled and (ii) the 1,000 shares of Webster Bank common stock 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) The Bank Merger shall have the effects set forth at 12 C.F.R.ss.
552.13(l) and Section 36a-126(b) of the Banking Law of Connecticut (the
"Connecticut Banking Law").
1.6 OPTIONS.
At the Effective Time, each option granted by Village to purchase shares of
Village Common Stock under the 1996 Stock Option Plan for Key Employees (the
"Village Stock Plan") 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 exercise price determined as
provided below (and otherwise subject to the terms of the Village Stock Plan);
(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 Village 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
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Village 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.
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 Village or Village Bank in the Village Stock Plan (and the
corresponding references in the option agreement documenting such option) shall
be deemed to be references to Webster or Webster Bank, as appropriate.
1.7 CERTIFICATE OF INCORPORATION.
At the Effective Time, the Restated Certificate of Incorporation, as
amended (the "Certificate of Incorporation"), of Webster, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation.
1.8 BYLAWS.
At the Effective Time, the Bylaws, as amended (the "Bylaws"), of Webster,
as in effect immediately prior to the Effective Time, shall be the bylaws of the
Surviving Corporation.
1.9 DIRECTORS AND OFFICERS.
At the Effective Time, the directors and officers of Webster immediately
prior to the Effective Time shall be the directors and officers of the Surviving
Corporation. The non-employee directors of Village serving immediately prior to
the Effective Time will be invited to serve on an advisory board to Webster Bank
after the Bank Merger for 24 months. Such advisory directors each will be paid
for such service up to $4,000 annually, based on a quarterly retainer of $1,000,
and quarterly meeting attendance fees of $1,000 for each meeting attended in
person. The Chairman of the Board of Village will be invited to serve as the
chairman of the advisory board, and will be paid for such service up to an
additional $2,000 annually, based on a quarterly retainer of $500.
1.10 TAX CONSEQUENCES.
It is intended that the 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 CASH AND 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 cash (such certificates for shares of Webster
Common Stock and cash being hereinafter referred to as the "Exchange Fund") to
be issued or paid pursuant to Sections 1.4 and Section 2.2(a) hereof in exchange
for outstanding shares of Village Common Stock.
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2.2 EXCHANGE OF CASH AND SHARES.
(a) Prior to the date of the special meeting of Village's shareholders
(the "Special Meeting") contemplated by Section 6.3 hereof, Webster shall
prepare a form, subject to review and comment by Village (an "Election Form"),
pursuant to which a holder of shares of Village Common Stock may specify the
number of shares owned by such holder that such holder desires to be converted
into a right to receive cash in the Merger and the number of such shares owned
by such holder that such holder desires to be converted into a right to receive
shares of Webster Common Stock in the Merger. Village shall cause an Election
Form (and a letter of transmittal for use in exchanging Certificates for Webster
Common Stock or cash, as the case may be) to be included with the proxy
statement/prospectus to be sent to Village's shareholders in connection with the
Special Meeting (the "Proxy Statement/Prospectus") and mailed to each holder of
shares of Village Common Stock as of the record date for such meeting (such
shareholders hereinafter referred to as "Election Eligible Shareholders"). Only
Election Eligible Shareholders shall have the right to receive and submit an
Election Form.
(b) Each Election Eligible Shareholder (other than holders of Village
Common Stock which, in accordance with Section 1.4(c) hereof, are to be canceled
in the Merger) shall have the right to specify in an Election Form the number of
shares owned by such holder that such holder desires to have converted into a
right to receive cash in the Merger (a "Cash Election") and the number of Shares
owned by such holder that such holder desires to have converted into a right to
receive shares of Webster Common Stock in the Merger (a "Stock Election");
provided that any holders of Non-Electing Shares shall be deemed to have made a
Stock Election. For purposes of this Agreement, "Non-Electing Shares" means all
shares (other than Dissenting Shares and shares that are to be canceled in the
Merger) of Village Common Stock outstanding at the Effective Time as to which
neither an effective Cash Election nor an effective Stock Election was made as
of the Election Deadline. A Cash Election or a Stock Election shall be effective
only if the Exchange Agent appointed by Webster pursuant to Section 2.1 hereof
shall be received no later than 5:00 p.m. New York City time on the date
specified on such Election Form, which date shall be no earlier than the fifth
business day preceding the date of the Special Meeting (the "Election Deadline")
(i) an Election Form covering the shares to which such Cash Election and/or
Stock Election applies, executed and completed in accordance with the
instructions set forth in such Election Form and (ii) the Certificate or
Certificates and the related letter(s) of transmittal in such form and with such
endorsements, stock powers and signature guarantees as may be required by the
letter of transmittal or a guarantee of delivery of such Certificates that
complies with the requirements set forth in the letter of transmittal, provided
that such Certificates are in fact delivered by the time set forth in such
guarantee of delivery. A Cash Election or Stock Election may be revoked or
changed only by delivering to the Exchange Agent, prior to the Election
Deadline, a written notice of revocation or, in the case of a change, a properly
completed revised Election Form that identifies the Certificates to which such
revised Election Form applies. Delivery to the Exchange Agent prior to the
Election Deadline of a revised Election Form with respect to any Certificate
shall result in the revocation of all prior Election Forms with respect to all
shares evidenced by such Certificate. Any termination of this Agreement in
accordance with Article 8 shall result in the revocation of all Election Forms
delivered to the Exchange Agent on or prior to the date of such termination. If
an Election Form is revoked (either by delivery of a written notice of
revocation or by delivery of a revised Election Form), the Certificates to which
such Election Form applies, if previously delivered to the Exchange Agent, shall
be returned to the person revoking such Election Form unless such person
otherwise instructs the Exchange Agent.
(c) As soon as practicable after the Effective Time, the Exchange
Agent shall mail to each holder of record of a Certificate or Certificates who
did not submit an effective Cash Election or Stock Election 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
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representing the shares of Webster Common Stock and the cash in lieu of
fractional shares into which the shares of Village Common Stock represented by
such Certificate or Certificates shall have been converted pursuant to this
Agreement. Village 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 Village
Common Stock shall have become entitled pursuant to the provisions of Section
1.4(a)(ii) 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.
(d) 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 Village Common Stock shall have been converted.
(e) 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 or cash is to be paid to a person other than the
registered holder, it shall be a condition of the issuance or payment 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 or payment 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.
(f) 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
Village of the shares of Village 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.
(g) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of Village for one year after the Effective Time may be returned to
Webster. Any shareholders of Village who have not complied with this Article II
before such portion of the Exchange Fund is returned to Webster shall thereafter
look only to Webster for payment of their shares of Webster Common Stock and/or
cash, as the case may be, and unpaid dividends and distributions on Webster
Common Stock deliverable in respect of each share of Village Common Stock such
shareholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon. Notwithstanding the foregoing, none of Webster,
Village, the Exchange Agent or any other person shall be liable to any former
holder of shares of Village Common Stock for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(h) 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
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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/or cash, as the case may be, deliverable in respect thereof
pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF VILLAGE
Village hereby makes the following representations and warranties to
Webster as set forth in this Article III, each of which is being relied upon by
Webster as a material inducement to enter into and perform this Agreement. All
of the disclosure schedules of Village referenced below and thereby required of
Village 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 "Village Disclosure Schedule."
3.1 CORPORATE ORGANIZATION.
(a) Village is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Connecticut. Village has the
corporate power and corporate 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 business conducted by it or the character or location of any
properties or assets owned or leased by it makes such licensing or qualification
necessary. Village is duly registered as a bank holding company with the Board
of Governors of the Federal Reserve System (the "Federal Reserve System") under
the Banking Holding Company Act of 1956, as amended (the "BHCA"). The Articles
of Incorporation, as amended (the "Articles of Incorporation"), and By-Laws of
Village, 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) Village Bank is a state chartered bank duly organized, validly
existing and in good standing under the laws of the State of Connecticut. The
deposit accounts of Village Bank are insured by the Federal Deposit Insurance
Corporation (the "FDIC") through the Bank Insurance Fund to the fullest extent
permitted by law, and all premiums and assessments required in connection
therewith have been paid by Village Bank. Village Bank has the corporate power
and corporate 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
business conducted by it or the character or the location of any properties or
assets owned or leased by it makes such licensing or qualification necessary.
The Articles of Incorporation, as amended (the "Articles of Incorporation"), and
Bylaws, as amended (the "Bylaws"), of Village 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 Village consists of 10,000,000
shares of Village Common Stock. As of the date hereof, there are (i) 1,942,334
shares of Village Common Stock issued and outstanding and no shares of Village
Common Stock held in Village's treasury, (ii) no shares of Village Common Stock
reserved for issuance upon exercise of outstanding stock options or otherwise,
except for (x) 137,500 shares of Village Common Stock reserved for issuance
pursuant to the Village Stock Plan (of which options for 91,700 shares are
currently outstanding), (y) 388,466 shares of Village Common Stock reserved for
issuance upon exercise of the option to be issued to Webster pursuant to the
Option Agreement, and (z) shares of Village Common Stock reserved for issuance
pursuant to the
8
terms of the Rights Agreement, dated as of September 16, 1996, between Village
and American Stock Transfer & Trust Company (the "Village Rights Agreement").
All of the issued and outstanding shares of Village 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, the aforementioned options to purchase
91,700 shares of Village Common Stock issued pursuant to the Village Stock Plan
and the rights issued pursuant to the Village Rights Agreement, Village 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 Village Common Stock or any other equity security of
Village or any securities representing the right to purchase or otherwise
receive any shares of Village Common Stock or any other equity security of
Village. The names of the optionees, the date of each option to purchase Village
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 Village Stock Plan are set forth in Section 3.2(a) of the
Village Disclosure Schedule. Since June 30, 1998, Village 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 July 9, 1998 under the
Village Stock Plan.
(b) Section 3.2(b) of the Village Disclosure Schedule sets forth a
true, correct and complete list of all Subsidiaries of Village as of the date of
this Agreement. Village 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 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 Village 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. Except as set forth at
Section 3.2(b) of the Village Disclosure Schedule, Village does not directly or
indirectly engage in any non-banking activities.
3.3 AUTHORITY; NO VIOLATION.
(a) Village has full corporate power and corporate 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 Village. The Board of Directors of Village has directed that
this Agreement, the Merger and the other transactions contemplated hereby be
submitted to Village's shareholders for approval at the Special Meeting and,
except for the approval of this Agreement, the Merger and the other transactions
contemplated hereby by the requisite vote of Village's shareholders, no other
corporate proceedings on the part of Village (except for matters related to
setting the date, time, place and record date for the Special Meeting) are
necessary to approve this Agreement, the Bank Merger 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 Village and (assuming due authorization, execution and delivery
by Webster) will constitute valid and binding obligations of Village,
enforceable against Village 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) Village Bank has full corporate power and corporate 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
9
contemplated thereby have been duly and validly approved by the Board of
Directors of Village Bank and by Village as the sole shareholder of Village
Bank. No other corporate proceedings on the part of Village Bank will be
necessary to consummate the transactions contemplated thereby. The Bank Merger
Agreement will be duly and validly executed and delivered by Village Bank and
will (assuming due authorization, execution and delivery by Webster Bank)
constitute a valid and binding obligation of Village Bank, enforceable against
Village 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 or the Option
Agreement by Village or the Bank Merger Agreement by Village Bank, nor the
consummation by Village or Village Bank, as the case may be, of the transactions
contemplated hereby or thereby, nor compliance by Village or Village Bank with
any of the terms or provisions hereof or thereof, will (i) violate any provision
of the Articles of Incorporation or By-Laws of Village or the Articles of
Incorporation or Bylaws of Village Bank, as the case may be, or (ii) assuming
that the consents and approvals referred to in Section 3.4(a) hereof are duly
obtained, (x) violate any Laws (as defined in Section 9.13 hereof) applicable to
Village, Village 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
Village or Village Bank 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 Village or Village Bank is a party, or
by which they or any of their respective properties or assets may be bound or
affected, except in the case of clause (ii), for such matters as would not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect (as defined in Section 9.13 hereof) on Village or Village Bank or
materially impair their ability to consummate the transactions contemplated by
this Agreement.
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 Federal Reserve Board
under the BHCA and the Office of Thrift Supervision (the "OTS") under the Home
Owners Loan Act of 1933 (the "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 the OTS as to the subsidiary activities of Village
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 Connecticut Banking Law prior to the acquisition of more
than 10% of the Village Common Stock pursuant to the Option Agreement, if not
exempt, (v) the filing with the Securities and Exchange Commission (the "SEC")
of a registration statement on Form S-4 (the "Registration Statement") 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 Village, (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 Delaware Corporation Law,
(ix) the filings with the Secretary of State of Connecticut and the OTS required
in connection with the Bank Merger Agreement, (x) such filings, authorizations
and approvals as are required to be made or obtained under the securities or
"Blue Sky" laws of various states or with The Nasdaq Stock Market, Inc. (or such
other exchange as may be applicable) in connection with the issuance of the
shares of Webster Common Stock pursuant to
10
this Agreement, and (xi) such filings, authorizations, approvals or consents
that are set forth in Section 3.4(a) of the Village 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 Village of this
Agreement and the Option Agreement, (2) the execution and delivery by Village
Bank of the Bank Merger Agreement, (3) the consummation by Village of the
Merger, the Option Agreement and the other transactions contemplated hereby or
thereby, (4) the consummation by Village Bank of the Bank Merger and the
transactions contemplated by the Bank Merger Agreement, except, in each case,
for such consents, approvals or filings, the failure of which to obtain will not
have a Material Adverse Effect on Village, Village Bank, Webster or Webster
Bank, or materially impair the ability of Webster to consummate the transactions
contemplated hereby or thereby.
(b) Village hereby represents to Webster that it has no Knowledge (as
defined in Section 9.13 hereof) of any reason why approval or effectiveness of
any of the applications, notices or filings referred to in Section 3.4(a) hereof
cannot be obtained or granted on a timely basis.
3.5 LOAN PORTFOLIO; REPORTS.
(a) Except as set forth at Section 3.5(a) of the Village Disclosure
Schedule, as of December 31, 1997 and thereafter through and including the date
of this Agreement, neither Village nor Village 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 Village or any of its Subsidiaries, or
any Affiliated Person (as defined in Section 9.13 hereof) of the foregoing.
(b) Village and Village 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 with (i) the Federal
Reserve Board, (ii) the FDIC, (iii) the Connecticut Commissioner and any other
state banking commissions or any other state regulatory authority (each a "State
Regulator"), (iv) the SEC and (v) except for such matters as would not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect on Village or Village Bank or materially impair their ability to
consummate the transactions contemplated by this Agreement, The Nasdaq Stock
Market Small Cap Market and any other self-regulatory organization ("SROs")
(collectively "Regulatory Agencies"). Except for normal examinations conducted
by a Regulatory Agency in the regular course of the business of Village and its
Subsidiaries, no Governmental Entity is conducting, or has conducted, any
proceeding or investigation into the business or operations of Village or
Village Bank, no such proceeding or investigation is pending, nor do Village or
Village Bank have any Knowledge of any threatened proceeding or investigation.
3.6 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
(a) Village has previously delivered to Webster true, correct and
complete copies of (a) the consolidated balance sheets of Village and its
Subsidiaries as of December 31 for the years 1995, 1996, and 1997 and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the years 1994 through 1997, inclusive, as reported in Village's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997 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 Deloitte &
Touche LLP, independent public accountants with respect to Village, and (b) the
unaudited condensed consolidated balance sheets of Village and Subsidiaries as
of June 30, 1998 and the related comparative unaudited condensed consolidated
statements of income and cash flows for the six month periods ended June 30,
1997 and 1998. The financial statements referred to in this Section 3.6(a)
(including the related notes, where applicable) fairly present, and the
financial statements referred to in Section 6.8
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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 Village 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 6.8
hereof will comply, in all material respects, 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 6.8
hereof will be, prepared in accordance with generally accepted accounting
principles ("GAAP") 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. Village's Annual Report on Form
10-K for the fiscal year ended December 31, 1997 and all reports filed under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act since December 31, 1994
comply in all material respects with the appropriate requirements for such
reports under the Exchange Act, and Village has previously delivered or made
available to Webster true, correct and complete copies of such reports. The
books and records of Village and Village Bank have been, and are being,
maintained in all material respects in accordance with GAAP and any other
applicable legal and accounting requirements.
(b) Except and to the extent (i) reflected, disclosed or provided for
in the financial statements as of December 31, 1997 referred to above, (ii) of
liabilities incurred since December 31, 1997 in the ordinary course of business
and consistent with past practice, and (iii) of liabilities related to this
Agreement, Village has no liabilities, whether absolute, accrued, contingent or
otherwise, except for such liabilities as would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect on Village
or Village Bank.
3.7 BROKER'S FEES.
Neither Village nor any Village 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 Village has engaged, and will pay
a fee or commission to Morgan Lewis Githens & Ahn, Inc. ("Morgan Lewis") in
accordance with the terms of a letter agreement between Morgan Lewis and
Village, dated April 23, 1998, a true, complete and correct copy of which has
been previously delivered by Village to Webster.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in Village's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, or in any Current or Quarterly Report
of Village on Form 8-K or Form 10-Q filed on or before the date of this
Agreement, a true, correct and complete copy of which has previously been
delivered to Webster, since December 31, 1997, (i) neither Village nor any of
its Subsidiaries has incurred any material liability, except as contemplated by
this 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 on Village.
(b) Since December 31, 1997, Village 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) Except as set forth at Section 3.9(a) of the Village Disclosure
Schedule, neither Village nor any of its Subsidiaries is a party to any, and
there are no pending or, to the Knowledge of Village or Village Bank,
threatened, legal, administrative, arbitration or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against or in
which Village or any of
12
its Subsidiaries is a party, directly or in a fiduciary capacity, that include a
claim or claims in excess of $10,000, or which challenge the validity or
propriety of the transactions contemplated by this Agreement, the Bank Merger
Agreement or the Option Agreement.
(b) There is no injunction, order, judgment, or decree imposed upon
Village, any of its Subsidiaries or the assets of Village or any of its
Subsidiaries.
3.10 TAXES AND TAX RETURNS.
Each of Village 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 provision 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 which are not yet delinquent and which have not been
finally determined. All liability with respect to the income tax returns of
Village and its Subsidiaries has been satisfied for all years to and including
1997. The Internal Revenue Service (the "IRS") has not notified Village of, or
otherwise asserted, that there are any material deficiencies with respect to the
income tax returns of Village subsequent to 1991. There are no material disputes
pending, or claims asserted for, taxes or assessments upon Village or any of its
Subsidiaries, nor has Village 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 Village 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 Village in its consolidated financial statements
as of December 31, 1997 and June 30, 1998.
3.11 EMPLOYEE BENEFIT PLANS.
(a) Section 3.11(a) of the Village 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 Village or any of its Subsidiaries or any other
entity which together with Village 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 Village or any such Subsidiary has any liability (collectively, the
"Plans").
(b) No Plan is subject to any of the following: (i) Section 302 of
ERISA; (ii) Title IV of ERISA and (iii) Section 412 of the Code. No Plan is a
"multiemployer pension plan," as such term is defined in Section 3(37) of ERISA.
(c) Village has heretofore delivered to Webster true, correct and
complete copies of (i) each of the Plans that is currently in effect or under
which Village or any Village Subsidiary has any liability (an "Existing Plan")
and all related documents, (ii) the most recent determination letter from the
IRS (if applicable) for each Existing Plan, (ii) the current summary plan
description and any summaries of material modifications for each Existing Plan,
(iii) all agreements currently in force with fiduciaries and service providers
relating to each Existing Plan, (iv) annual reports (Form 5500 series) with
respect to all Plans filed for the preceding six plan years, and (v) all
substantive correspondence relating to any Plan addressed to or received from
the IRS, the Department of Labor, the Pension Benefit Guaranty Corporation or
any other governmental agency within the last six years or, if earlier, with
respect to any matter that is ongoing.
13
(d) (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) no Plan
provides benefits, including, without limitation, death or medical benefits
(whether or not insured), with respect to current or former employees of Village
or any Village Subsidiary beyond their retirement or other termination of
service, other than (A) coverage mandated by applicable Law, (B) death benefits
or retirement benefits under a Plan that is a "qualified" plan within the
meaning of Section 401(a) of the Code, (y) deferred compensation benefits under
a Plan that are accrued as liabilities on the financial statements referred to
in Section 3.6(a) hereof and, for purposes of Section 7.2(a) hereof, on the
financial statements referred to in Section 6.8 hereof, or (C) benefits the full
cost of which is borne by the current or former employee (or his beneficiary);
(iv) all contributions or other amounts payable by Village or any Village
Subsidiary with respect to each Plan in respect of current or prior plan years
have been paid or accrued in accordance with the terms of such Plan and
applicable Law and in the ordinary course of Village's business; (v) neither
Village nor any Village Subsidiary has engaged in a transaction in connection
with which Village or any Village Subsidiary could be subject to either a
material civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a
material tax imposed pursuant to Section 4975 or 4976 of the Code; (vi) there
are no pending or, to the Knowledge of Village, 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; (vii) all Plans could be terminated as of
the Effective Time without any liability materially in excess of the amounts
accrued with respect to such Plans on the June 30, 1998 financial statements
referenced in Section 3.6(a) hereof and, for purposes of Section 7.2(a) hereof,
on the financial statements referred to in Section 6.8 hereof; and (viii) no
Plan, program, agreement or other arrangement, either individually or
collectively, provides for any material payment by Village or any Village
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. For purposes of clause (i) of this Section 3.11(d), in the event
that there is a disqualifying defect that is correctable under an existing IRS
program for an expenditure not in excess of $50,000, the failure of such Plan to
be qualified shall not be considered to have a Material Adverse Effect on
Village pursuant to Section 7.2(a) of this Agreement.
3.12 CERTAIN CONTRACTS.
(a) Except as set forth at Section 3.12(a) of the Village Disclosure
Schedule, neither Village 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, the Bank Merger
Agreement or the Option 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, Village, the Surviving Corporation,
Webster Bank, Village Bank or the Surviving Bank or any of their respective
Subsidiaries to any director, officer or employee thereof, (iii) which
materially restricts the conduct of any line of business by Village or Village
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, the Bank Merger Agreement or the Option 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, the Bank Merger Agreement or
the Option Agreement. Village has previously delivered to Webster true, correct
and complete copies of all employment, consulting and deferred compensation
agreements to which Village or any of its Subsidiaries is a party. Section
3.12(a) of the Village Disclosure Schedule sets forth a list of all material
contracts (as defined in Item 601(b)(10) of Regulation S-K) of Village. Each
contract, arrangement or commitment of the type described in this Section
3.12(a), whether or not set forth at Section 3.12(a) of the Village Disclosure
Schedule, is referred to herein as a "Village Contract," and neither Village nor
any of its Subsidiaries has received notice of,
14
nor to the Knowledge of Village and Village Bank, has there been, any violation
of any Village Contract.
(b) (i) Each Village Contract is valid, binding with respect to
Village (or any of its Subsidiaries, as applicable) and in full force and
effect, (ii) Village and each of its Subsidiaries has in all material respects
performed all obligations required to be performed by it to date under each
Village 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 Village or any of its Subsidiaries under any such Village Contract.
3.13 AGREEMENTS WITH REGULATORY AGENCIES.
None of Village, any Village Subsidiary nor any of their 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 (each 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 Village, any Village Subsidiary or any of their
affiliates been advised by any Governmental Entity that it is considering
issuing or requesting any Regulatory Agreement.
3.14 STATE TAKEOVER LAWS; ARTICLES OF INCORPORATION.
The Board of Directors of Village has approved this Agreement, the Bank
Merger Agreement and the Option Agreement, and has approved Village entering
into this Agreement and the Option Agreement, and the transactions contemplated
hereby and thereby, such that under the Connecticut Corporation Law and
Village's Articles of Incorporation, the only vote of Village's stockholders
necessary to consummate the transactions contemplated hereby (including the
Merger and issuance under the Option Agreement) is the approval of this
Agreement, the Merger and the other transactions contemplated hereby by the
affirmative vote of at least two-thirds of the issued and outstanding shares of
Village Common Stock.
3.15 ENVIRONMENTAL MATTERS.
(a) Each of Village and the Village Subsidiaries is in compliance in
all 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, except for such matters as would
not individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect on Village or the Village Subsidiaries or materially impair their
ability to consummate the transactions contemplated by this Agreement;
(b) There is no suit, claim, action, proceeding, investigation or
notice pending, or to the Knowledge of Village or Village Bank, threatened, in
which Village or any Village Subsidiary has been or, with respect to threatened
suits, claims, actions, proceedings, investigations or notices, is threatened to
be, named as a defendant or, to the Knowledge of Village or Village Bank,
threatened with respect to past or present actions or events that could form the
basis of any such suit, claim, action, proceeding, investigation or notice (x)
for alleged noncompliance (including by any predecessor), with any environmental
law, rule or regulation or (y) relating to any 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 Village or any Village Subsidiary, except
for such matters as would not individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect on Village or the Village
Subsidiaries or materially impair their ability to consummate the transactions
contemplated by this Agreement;
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(c) To the Knowledge of Village and Village Bank, during the period of
Village's or any Village Subsidiary's ownership or operation of any of its
properties, there has not been any release of Hazardous Material in, on, under
or affecting any such property.
(d) To the Knowledge of Village and Village Bank, neither Village nor
any Village 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 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.
(f) Except as set forth at Section 3.15(f) of the Village Disclosure
Schedule, no real property owned or leased by Village or Village Bank as other
real estate owned ("OREO") or otherwise, or owned or controlled by Village or
Village Bank as a trustee or fiduciary meets the statutory criteria of an
"Establishment" as that term is defined pursuant to Section 22a-134(3) of the
General Statutes of Connecticut.
3.16 RESERVES FOR LOSSES.
All reserves or other allowances for possible losses reflected in Village's
most recent financial statements referred to in Section 3.6(a) hereof as of
December 31, 1997 and June 30, 1998 comply in all material respects with all
Laws. Neither Village nor Village Bank has been notified by the Federal Reserve
Board, the FDIC, the Connecticut Commissioner or Village's independent auditor,
in writing or otherwise, that such reserves are inadequate or that the practices
and policies of Village or Village 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 Federal Reserve
Board, the FDIC, the Connecticut Commissioner or Village's independent auditor
believes such reserves to be inadequate or inconsistent with the historical loss
experience of Village or Village Bank. Village has previously furnished Webster
with a complete list of all extensions of credit and 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.
Village 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 hereof. All OREO
held by Village or Village 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 Village Disclosure Schedule lists (i) all real property
owned by Village and each Village Subsidiary; (ii) each real property lease,
sublease or installment purchase arrangement to which Village or any Village
Subsidiary is a party; (iii) a description of each contract for the purchase,
sale, or development of real estate to which Village or any Village Subsidiary
is a party; and (iv) all individual items of Village's or any Village
Subsidiary's tangible personal property and equipment with a book value of
$25,000 or more or having any annual lease payment of $10,000 or more. Except
for (a) items reflected in Village's consolidated financial statements as of
December 31, 1997 referred to in Section 3.6(a) hereof, (b) exceptions to title
that do not interfere materially with Village's or any Village 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
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(and reflected on the financial statements referred to in Section 3.6(a) above),
(d) properties and assets sold or transferred in the ordinary course of business
consistent with past practices since December 31, 1997, (e) exceptions set forth
in a related title policy or lease, and (f) items listed at Section 3.17 of the
Village Disclosure Schedule, Village and each Village Subsidiary have good and,
as to owned real property, marketable and insurable title to all their
properties and assets, reflected in the consolidated financial statements of
Village as of December 31, 1997, free and clear of all liens, claims, charges
and other encumbrances. Village and each Village 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
breach, violation or default by Village or Village Bank, and neither Village nor
any Village Subsidiary has experienced any uninsured damage or destruction with
respect to such properties since December 31, 1997. All properties and assets
material to Village and each Village Subsidiary are in such operating condition
and repair that they are suitable for the purposes for which they are currently
utilized and comply with all Laws relating thereto now in effect. Neither
Village nor any Village Subsidiary is in default with respect to any such lease,
except for such defaults as would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect on Village or the Village
Subsidiaries or materially impair their ability to consummate the transactions
contemplated by this Agreement, and there has occurred no default by Village or
Village 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.
3.18 INSURANCE.
Section 3.18 of the Village Disclosure Schedule contains a true, correct
and complete list of all insurance policies and bonds maintained by Village and
any Village 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) are in full
force and effect and have been in full force and effect as of the times they
were supposed to cover. As of the date hereof, neither Village nor any Village
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 claims thereunder have been filed in a
timely fashion. The existing insurance carried by Village and the Village
Subsidiaries is and will continue to be, in respect of the nature of the risks
insured against and the amount of coverage provided, sufficient for compliance
by Village and the Village Subsidiaries with all requirements of Laws and
agreements to which Village or any of the Village Subsidiaries is subject or is
party, except for such noncompliance as would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect on Village
or the Village Subsidiaries or materially impair their ability to consummate the
transactions contemplated by this Agreement. True, correct and complete copies
of all such policies and bonds reflected at Section 3.18 of the Village
Disclosure Schedule, as in effect on the date hereof, have been delivered or
made available to Webster.
3.19 COMPLIANCE WITH APPLICABLE LAWS.
(a) Except for such noncompliance as would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect on Village
or the Village Subsidiaries or materially impair their ability to consummate the
transactions contemplated by this Agreement, each of Village and any Village
Subsidiary has complied with all Laws applicable to it or to the operation of
its business. Neither Village nor any Village 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.
(b) Without in any way limiting the foregoing, Village Bank has
complied in all material respects with all Laws applicable to the provision of
products and services to customers through electronic delivery channels,
including, without limitation, Laws that govern advertising,
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proper use of customer information and insurance logos, the timing and manner of
providing disclosures and notices to customers, receipt of proper signatures and
authorizations, recordkeeping, and, to the extent applicable, the Interagency
Statement on Retail Sales of Nondeposit Investment Products. Any services
provided by third parties in connection with Village Bank's electronic banking
activities are provided under written agreements that provide for the
confidentiality of customer information, ownership of records, and safety of
customer assets. To the Knowledge of Village and Village Bank, there has been no
unauthorized access through electronic means to customer information or records
held at Village Bank or fraudulent use of customer information or accounts
through electronic access to the information or accounts held at Village Bank.
True, correct and complete copies of all contracts, agreements and licenses of
Village and Village Bank related to the provision of products and services
through electronic delivery channels have been delivered to Webster.
3.20 LOANS.
As of the date hereof:
(a) Except for such noncompliance as would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect on Village
or the Village Subsidiaries or materially impair their ability to consummate the
transactions contemplated by this Agreement, all loans owned by Village or any
Village Subsidiary, or in which Village or any Village Subsidiary has an
interest, comply in all 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
Settlement Procedures Act, and other applicable consumer protection statutes and
the regulations thereunder.
(b) All loans owned by Village or any Village Subsidiary, or in which
Village or any Village Subsidiary has an interest, have been made by Village in
accordance with board of director-approved loan policies. Each of Village and
each Village 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 and the related loan file of
Village Bank, 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 Village and each Village
Subsidiary are with full recourse to the borrowers unless otherwise indicated in
the related loan documents. Except as set forth at Section 3.20(b) of the
Village Disclosure Schedule, which shall be provided to Webster within 10 days
of the date of this Agreement, all loans purchased or originated by Village or
any Village Subsidiary and subsequently sold by Village or any Village
Subsidiary have been sold without recourse to Village or any Village Subsidiary
and without any liability under any yield maintenance or similar obligation.
True, correct and complete copies of loan delinquency reports as of October 30,
1998 prepared by Village and each Village 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 Village and each Village Subsidiary also have been furnished to
Webster.
(c) Except as set forth at Section 3.20(c) of the Village Disclosure
Schedule, each outstanding loan participation sold by Village or any Village
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 Village or any
Village Subsidiary) proportionately to the share of such loan represented by
such participation without any recourse of such other lender or participant to
Village or any Village Subsidiary for payment or repurchase of the amount of
such loan represented by the participation or liability under any yield
maintenance or similar obligation. Village and any Village Subsidiary have
properly fulfilled in all respects its contractual responsibilities and duties
in any loan in which it acts as the lead lender or servicer and has complied
with its duties as required under applicable regulatory requirements.
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(d) Village and each Village 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, except for such
matters as would not, individually or in the aggregate, be reasonably expected
to have a Material Adverse Effect on Village or the Village Subsidiaries or
materially impair their ability to consummate the transactions contemplated by
this Agreement.
(e) Section 3.20(e) of the Village Disclosure Schedule 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 Federal Reserve
Board.
3.21 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")) of Village is listed at Section 3.21 of the Village
Disclosure Schedule. Each such person has delivered to Webster, concurrently
with the execution of this Agreement, a stockholder agreement in the form
attached hereto as Exhibit D (the "Village Stockholder Agreement").
3.22 OWNERSHIP OF WEBSTER COMMON STOCK.
Except as set forth at Section 3.22 of the Village Disclosure Schedule,
neither Village nor any of its directors, officers, affiliates or associates (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).
3.23 VILLAGE RIGHTS AGREEMENT.
Village has taken or will take all action (including, if required,
redeeming all of the outstanding Village rights issued pursuant to the Village
Rights Agreement or amending or terminating the Village Rights Agreement) so
that the entering into of this Agreement and the Option Agreement and the
consummation of the transactions contemplated hereby and thereby do not and will
not result in the grant of any rights to any person under the Village Rights
Agreement or enable or require the Village rights to be exercised, distributed
or triggered.
3.24 FAIRNESS OPINION.
Village has received an opinion from Morgan Lewis to the effect that, in
its opinion, the consideration to be paid to stockholders of Village hereunder
is fair to such stockholders from a financial point of view (the "Fairness
Opinion"), and Morgan Lewis has consented to the inclusion of the Fairness
Opinion in the Registration Statement.
3.25 YEAR 2000 COMPLIANCE.
Village and the Village Subsidiaries have taken all reasonable steps
necessary to address the software, accounting and record keeping issues raised
in order to be substantially Year 2000 compliant on or before the end of 1999
and Village does not expect the future cost of addressing such issues to be
material. Neither Village nor any Village Subsidiary has received a rating of
less than satisfactory from any bank regulatory agency with respect to Year 2000
compliance. Village and the Village Subsidiaries are in compliance with all
guidelines provided by the FDIC and the Federal Financial Institution's
Examination Council regarding Year 2000 issues, except for such noncompliance as
would not, individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect on Village or the Village Subsidiaries or materially
impair their ability to consummate the transactions contemplated by this
Agreement.
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3.26 INTELLECTUAL PROPERTY.
None of Village or any Village Subsidiaries has any material undisclosed
liability with respect to (i) patents, trademarks, trade names, service marks,
copyrights and any applications therefor, maskworks, net lists, schematics,
technology, know-how, trade secrets, inventory, ideas, algorithms, processes,
computer software programs and applications (in both source code and object code
form), and tangible or intangible proprietary information or material that are
used in the business of Village or such Village Subsidiary or (ii) licenses,
sublicenses and other agreements as to which Village or such Village Subsidiary
is a party and pursuant to which Village or such Village Subsidiary is
authorized to use any third party patents, trademarks or copyrights, including
software which are incorporated in, are or form a part of any Village or Village
Subsidiary product.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF WEBSTER
Webster hereby makes the following representations and warranties to
Village as set forth in this Article IV, each of which is being relied upon by
Village 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 corporate 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 or
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 the HOLA. The Certificate of Incorporation and Bylaws of Webster, copies
of which have previously been made available to Village, are true, correct and
complete copies of such documents as in effect as of the date of this Agreement.
(b) 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 corporate 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 or 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 Village, 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 50,000,000
shares of Webster Common Stock, of which 37,943,394 shares were outstanding (net
of 410,030 treasury shares) at September 30, 1998 and 3,000,000 shares of serial
preferred stock, par value $.01 per share ("Webster Preferred Stock"), none of
which were outstanding at September 30, 1998. At such date, there were options
outstanding to purchase 2,357,590 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 security of Webster or any securities representing
20
the right to purchase or otherwise receive any shares of Webster Common Stock or
Webster Preferred Stock, other than pursuant to the Webster Rights Agreement.
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.
(b) The authorized capital stock of Webster Bank consists of 2,000
shares of common stock, par value $.01 per share, 1,000 of which are issued and
outstanding, and 1,000 shares of serial preferred stock, par value $.01 per
share, none 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 corporate 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 Webster. No other corporate proceedings on the part of Webster
are necessary 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 Webster and (assuming due authorization, execution and
delivery by Village) 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 laws
affecting creditors' rights and remedies generally.
(b) Webster Bank has full corporate power and corporate 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 Webster Bank and by Webster as the
sole shareholder of Webster Bank. 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 will be
duly and validly executed and delivered by Webster Bank and (assuming due
authorization, execution and delivery by Village Bank) will 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.
(c) Neither the execution and delivery of this Agreement or the Option
Agreement by Webster or the Bank Merger Agreement by Webster Bank, nor the
consummation by Webster or Webster Bank, as the case may be, of the transactions
contemplated hereby or thereby, nor compliance by Webster 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 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(a) hereof are duly obtained, (x)
violate any Laws applicable to Webster, 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 or
21
Webster Bank 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 or Webster Bank is a party, or by
which they or any of their respective properties or assets may be bound or
affected, except in the case of clause (ii), for such matters as would not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect on Webster or Webster Bank or materially impair their ability to
consummate the transactions contemplated by the Agreement.
4.4 CONSENTS, APPROVALS AND REPORTS.
(a) Except for (i) the filing of applications and notices, as
applicable, as to the Merger and the Bank Merger with the Federal Reserve Board
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 the OTS as to the subsidiary activities of Village
Bank which become service corporations or operating subsidiaries of Webster Bank
and approval of such applications and notices, (iii) the filing and approval of
the State Banking Approvals, (iv) the filing with the Connecticut Commissioner
of an acquisition statement pursuant to Section 36a-184 of the Connecticut
Banking Law prior to the acquisition of more than 10% of the Village Common
Stock pursuant to the Option Agreement, if not exempt, (v) the filing with the
SEC of the Registration Statement, (vi) the approval of this Agreement by the
requisite vote of the shareholders of Village, (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 Delaware Corporation Law,
(ix) the filings with the Secretary of State of Connecticut and the OTS required
in connection with the Bank Merger Agreement, (x) such filings, authorizations
and approvals as are required to be made or obtained under the securities or
"Blue Sky" laws of various states or with The Nasdaq Stock Market, Inc. (or such
other exchange as may be applicable) in connection with the issuance of the
shares of Webster Common Stock pursuant to this Agreement, and (xi) any
necessary filings, authorizations, approvals or consents of third parties, no
consents or approvals of or filings or registrations with any Governmental
Entity or with any third party are necessary in connection with (1) the
execution and delivery by Webster of this Agreement and the Option Agreement,
(2) the execution and delivery by Webster Bank of the Bank Merger Agreement, (3)
the consummation by Webster of the Merger and the other transactions
contemplated hereby, and (4) the consummation by Webster Bank of the Bank Merger
and the transactions contemplated by the Bank Merger Agreement, except, in each
case, for such consents, approvals or filings, the failure of which to obtain
will not have a Material Adverse Effect on Village, Village Bank, Webster or
Webster Bank, or materially impair the ability of Webster to consummate the
transactions contemplated hereby or thereby.
(b) Webster hereby represents to Village 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) hereof 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, 1994, with (i) the
OTS, (ii) each State Regulator, (iii) the SEC and (iv) except for such matters
as would not, individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect on Webster or Webster Bank or materially impair their
ability to consummate the transactions contemplated by this Agreement, any SRO
(with reference to Webster and Webster Bank, "SRO" shall refer to Nasdaq and any
other self-regulatory organization). Except for normal examinations conducted by
a Regulatory Agency in the regular course of 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, 1994.
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4.5 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
Webster has previously delivered to Village true, correct and complete
copies of (a) the consolidated statements of condition of Webster and its
Subsidiaries as of December 31 for the fiscal years 1996 and 1997 and the
related consolidated statements of income, comprehensive income, shareholders'
equity and cash flows for the fiscal years ended 1995 through 1997, inclusive,
as reported in Webster's Current Report on Form 8-K filed with the SEC on July
23, 1998 under the Exchange Act, in each case accompanied by the audit report of
KPMG LLP, independent public accountants with respect to Webster, and (b) the
unaudited consolidated statement of condition of Webster and its Subsidiaries as
of September 30, 1998 and the related comparative unaudited statements of
operations and cash flows for the nine month periods ended September 30, 1997
and 1998. 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 6.8 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 6.8 hereof will comply, in all material
respects, 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 6.8 hereof will be, prepared in accordance
with GAAP during the periods involved, except as indicated in such statements or
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, 1997 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 or made available to Village 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.
4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as disclosed in Webster's filings with the SEC on any of Forms 10-K,
10-Q and 8-K during 1998, true, correct and complete copies of which have
previously been delivered to Village, since December 31, 1997, no event has
occurred which has had, or is likely to have, individually or in the aggregate,
a Material Adverse Effect on Webster.
4.7 LEGAL PROCEEDINGS.
(a) Neither Webster nor Webster Bank is a party to any, and there are
no pending or, to the Knowledge of Webster or Webster Bank, threatened, legal,
administrative, arbitration or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against Webster or
Webster Bank which challenge the validity or propriety of the transactions
contemplated by this Agreement, the Bank Merger Agreement or the Option
Agreement.
(b) There is no injunction, order, judgment or decree imposed upon
Webster, Webster Bank or the assets of Webster or Webster Bank.
4.8 TAXES AND TAX RETURNS.
Each of Webster 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/or has duly
paid or made provision 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
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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 (b) which have not been finally determined. In addition, federal
and state returns which are accurate and complete in all material respects have
been filed by Webster 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 Webster in its consolidated financial statements as of December 31,
1997 and September 30, 1998.
4.9 EMPLOYEE BENEFIT PLANS.
Webster has heretofore made available for inspection, or delivered (if
requested) to Village 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. Each Webster Plan
intended to be "qualified" within the meaning of Section 401(a) of the Code is
so qualified, except that in the event that there is a disqualifying defect that
is correctable under an existing IRS program for an expenditure not in excess of
$50,000, the failure of such Webster Plan to be qualified shall not be
considered to have a Material Adverse Effect on Webster pursuant to Section
7.3(a) of this Agreement.
4.10 COMPLIANCE WITH APPLICABLE LAWS.
(a) Except for such noncompliance as would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect on Webster
or Webster Bank or materially impair their ability to consummate the
transactions contemplated by this Agreement, each of Webster and Webster Bank
has complied in all material respects with all Laws applicable to it or to the
operation of its business. Neither Webster nor Webster Bank 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.
4.11 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.
4.12 YEAR 2000 COMPLIANCE.
Webster and Webster Bank have taken all reasonable steps necessary to
address the software, accounting and record keeping issues raised in order to be
substantially Year 2000 compliant on or before the end of 1999 and Webster does
not expect the future cost of addressing such issues to be material except as
described in Webster's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997. Neither Webster nor Webster Bank has received a rating of
less than satisfactory from any bank regulatory agency with respect to Year 2000
compliance. Webster and Webster Bank are in compliance with all guidelines
provided by the OTS and the Federal Financial Institution's Examination Council
regarding Year 2000 issues, except for such noncompliance as would not,
individually or in the aggregate, be reasonably expected to have a
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Material Adverse Effect on Webster or Webster Bank or materially impair their
ability to consummate the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 COVENANTS OF VILLAGE.
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, Village and each Village Subsidiary shall carry on their
respective businesses in the ordinary course consistent with past practices and
consistent with prudent banking practices. Village will use its reasonable
efforts to (x) preserve its business organization and that of each Village
Subsidiary intact, (y) keep available to itself and Webster the present services
of the employees of Village and each Village Subsidiary and (z) preserve for
itself and Webster the goodwill of the customers of Village and each Village
Subsidiary and others with whom business relationships exist. Without limiting
the generality of the foregoing, and except as set forth in the Village
Disclosure Schedule or as otherwise contemplated by this Agreement or consented
to by Webster in writing, Village shall not, and shall not permit any Village
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 Village of $.09 per share on the Village Common
Stock with declaration, record and payment dates corresponding to the quarterly
dividends paid by Village during its fiscal year ended December 31, 1997 and
except that any Village Subsidiary may declare and pay dividends and
distributions to Village); provided, however, that under no circumstances shall
Village declare, set aside or pay any dividends if it would result in the
holders of Village Common Stock receiving more than four dividend payments in
either of 1998 or 1999, when considered with anticipated Webster dividends based
on past practice, nor shall Village be prohibited from declaring, setting aside
or paying dividends consistent herewith if the Closing Date is such that holders
of Village Common Stock would receive fewer than four dividends in fiscal 1998
or 1999, when considered with anticipated Webster dividends based on past
practice, and it being further understood that the parties hereto intend for
Village 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 Village Stock Plan 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 Village or
any Village Subsidiary, or any securities convertible into or exercisable for
any shares of the capital stock of Village or any Village 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 Village Common Stock pursuant to stock
options or similar rights to acquire Village Common Stock granted pursuant to
the Village Stock Plan 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;
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(d) amend its Articles 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).
Notwithstanding the foregoing, Village may provide information in connection
with a possible Acquisition Transaction if the Board of Directors of Village,
based upon advice of counsel, reasonably determines in the exercise of its
fiduciary duty that such information must be furnished. Village shall promptly
communicate to Webster the material terms of any proposal, whether written or
oral, which it may receive in respect of any Acquisition Transaction and whether
it is providing information in connection with, or which may lead to, an
Acquisition Transaction with a third party. Village 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 Village or any Village Subsidiary, or (iii) the acquisition in any
manner of a substantial equity interest in, or a substantial portion of the
assets and/or liabilities, out of the ordinary course of business, of, Village
or Village 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, except
for ongoing maintenance, repairs and replacements;
(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, 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, the Bank Merger Agreement or the Option Agreement, except, in every
case, as may be required by applicable law;
(j) change its methods of accounting in effect at December 31, 1997
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 other agreement, arrangement, plan or policy relating to one or more of its
current or former directors, officers, employees or independent contractors,
(ii) increase in any manner the compensation of any employee or director, except
that in connection with scheduled annual evaluations of employees, Village Bank
shall be permitted to award compensation increases not in excess of 4.5% in any
individual case in the ordinary course of business and consistent with past
practice, (iii) 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, stock units or
performance units or shares), (iv) 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, (v) hire any new employee at an
annual base
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compensation in excess of $35,000, (vi) pay expenses of any employees or
directors for attending conventions or similar meetings which conventions or
meetings are held after the date hereof, (vii) promote to a rank of vice
president or more senior any employee, (viii) pay any retention or other bonuses
or any severance, to any employee, except that Village shall be permitted to pay
year-end bonuses during December 1998 to directors, officers and employees in an
aggregate amount not to exceed $120,000 on a basis reasonably consistent with
its past practice in 1997 in accordance with the allocation set forth at Section
5.1(k) of the Village Disclosure Schedule, or (ix) make any nondeductible
contribution to any Plan;
(l) 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 Village or any Village Subsidiary without the
written consent of Webster as provided below, which shall not be unreasonably
withheld or delayed;
(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 Village Bank
based on its existing deposit and lending policies or make any equity
investments;
(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 Village
Bank lending policies, (ii) commercial business loans in excess of $500,000,
(iii) unsecured consumer loans in excess of $25,000, (iv) commercial real estate
first mortgage loans in excess of $300,000 as to any loan or $500,000 in the
aggregate as to related loans, or loans to related persons, or (v) 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 $300,000,
except in each case for loans for which written applications have been received
by Village Bank as of the date hereof and as set forth at Section 5.1(r) of the
Village Disclosure Schedule;
(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, except in
accordance with past practice; or
(u) agree or commit to do any of the actions set forth in (a) - (t)
above.
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The consent of Webster to any action by Village or any Village Subsidiary that
is not permitted by any of the preceding paragraphs shall be evidenced by a
writing signed by the Chairman, Chief Executive Officer and President or any
Executive Vice President of Webster. With respect to the foregoing, to the
extent that Village or Village Bank is required to take any action pursuant to a
requirement of a federal or state bank regulatory authority, they shall be
permitted to do so upon receipt of Webster's written consent, which shall not be
unreasonably withheld or delayed.
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 Village'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, the
Bank Merger Agreement or the Option Agreement, except, in every case, as may be
required by applicable law; or
(b) take any other action that would materially adversely affect the
ability of Webster and Webster Bank to consummate the transactions contemplated
by this Agreement.
5.3 MERGER COVENANTS.
(a) Notwithstanding that Village believes that it has established all
reserves and taken all provisions for possible loan losses required by GAAP and
applicable laws, rules and regulations, Village 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, Village 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,
Village's loan, accrual and reserve policies to those policies of Webster to the
extent appropriate, provided, that any change in Village's policies in
connection with such matters need not be effected until the parties receive all
necessary governmental and stockholder approvals and consents to consummate the
transactions contemplated hereby.
(b) If it becomes necessary under Nasdaq rules or applicable laws to
obtain Webster shareholder approval of this Agreement, the Merger or the other
transactions contemplated hereby, Webster shall take all steps necessary to
obtain the approval of its shareholders as promptly as possible. In connection
therewith, Webster shall take all steps necessary to duly call, give notice and
convene a meeting of its shareholders for such purpose.
5.4 COMPLIANCE WITH ANTITRUST LAWS.
Each of Webster and Village 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 Village shall use its
reasonable best efforts to avoid the filing of, or resist or resolve such suit.
Webster and Village 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
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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 Village.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS.
(a) Upon the execution and delivery of this Agreement, Webster and
Village (as to information to be included therein pertaining to Village) shall
promptly cause to be prepared and filed with the SEC the Registration Statement.
Webster and Village 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 Village
is discovered 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), Village 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 SEC. Upon the effectiveness of
such amendment, Village (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 Village shall furnish all information
concerning Village and the holders of Village 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
reasonable 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 and the Bank Merger). Village
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
Village or Webster, 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) Village shall, upon request, furnish Webster with all information
concerning Village 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,
29
notice or application made by or on behalf of Webster to any Governmental Entity
in connection with the Merger or the other transactions contemplated by this
Agreement.
(d) Webster and Village 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 (as 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, Village shall accord to the officers, employees,
accountants, counsel and other representatives of Webster and Webster Bank,
access, during normal business hours during the period prior to the Effective
Time, to all its and Village Bank's properties, books, contracts, commitments
and records and, during such period, Village shall make available to Webster (i)
a copy of each report, schedule, registration statement and other document filed
or received by it (including Village 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 Village Bank) business,
properties and personnel as Webster may reasonably request. Webster shall
receive notice of all meetings of Village and Village Bank's Board of Directors
and any committees thereof, and of any management committees (in all cases, at
least as timely as all Village and Village Bank, as the 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 Village or Village Bank, as the case may be) and
such meetings of committees of the Board of Directors and management of Village
and Village 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 Village dated
July 16, 1998 (the "Confidentiality Agreement").
(b) Upon reasonable notice and subject to applicable Laws relating to
the exchange of information, Webster shall, and shall cause Webster Bank to,
afford to the officers, employees, accountants, counsel and other
representatives of Village, access, during normal business hours during the
period prior to the Effective Time, to such information regarding Webster as
shall be reasonably necessary for Village to fulfill its obligations pursuant to
this Agreement or which may be reasonably necessary for Village 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. Village 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) Village shall provide Webster with true, correct and complete
copies of all financial and other information provided to directors of Village
and Village Bank in connection with meetings of their Boards of Directors or
committees thereof, which information shall be provided to Webster concurrently
with its provision to the directors of Village or Village Bank, as applicable.
(e) Village acknowledges that Webster is in or may be in the process
of acquiring other businesses, banks and financial institutions and that in
connection with such acquisitions, information concerning Village may be
required to be included in the registration statements, if any, for the sale of
securities of Webster or in SEC reports in connection with such acquisitions.
Village agrees to provide Webster with any information, certificates, documents
or other materials about
30
Village as are reasonably necessary to be included in such other SEC reports or
registration statements, including registration statements which may be filed by
Webster prior to the Effective Time. Village shall use its reasonable best
efforts to cause its attorneys and accountants to provide Webster and any
underwriters for Webster with any consents, comfort letters, opinion letters,
reports or information which are necessary to complete the registration
statements and applications for any such acquisition or issuance of securities.
Webster shall reimburse Village for reasonable expenses thus incurred by Village
should the transactions contemplated by this Agreement be terminated for any
reason.
6.3 SHAREHOLDER MEETING.
Village shall take all steps necessary to duly call, give notice of,
convene and hold the Special Meeting of its shareholders within 45 days after
the Registration Statement becomes effective for the purpose of voting upon the
approval of this Agreement, the Merger and the other transactions contemplated
hereby. Management and the Board of Directors of Village shall recommend to
Village's shareholders approval of this Agreement, the Merger, and the other
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 Village reasonably determines, based upon the
advice of Village's legal counsel, that such recommendation or opposition, as
the case may be, would constitute a breach of the exercise of its fiduciary
duty. Village and Webster shall coordinate and cooperate with respect to the
foregoing matters.
6.4 LEGAL CONDITIONS TO MERGER.
Each of Webster and Village 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 Village or
Webster in connection with the Merger and the other transactions contemplated by
this Agreement.
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 Nasdaq (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; EMPLOYMENT AND OTHER AGREEMENTS.
(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 the Webster
Bank 401(k) Plan and the Webster Bank Employee Stock Ownership Plan (but not
under the Webster Bank Defined Benefit Pension Plan), and for purposes of
determining the number of weeks of paid vacation time to which a non-officer
employee is entitled, in the case of individuals who are employees of Village
Bank at the Effective Time and who become employees of Webster Bank, periods of
service with Village Bank before the Effective Time shall be treated as if such
service had been with Webster Bank. Individuals who are employees of Village
Bank at the Effective Time and who become employees of Webster Bank shall be
eligible to participate in the Webster Bank Defined Benefit Pension Plan and in
any other employee benefit plan (within the
31
meaning of ERISA Section 3(3)) maintained by Webster Bank on the same terms and
conditions as apply generally to other employees of Webster Bank.
(b) Webster Bank will pay severance in accordance with Village Bank's
written severance policies, true, correct and complete copies of which are set
forth at Section 6.6(b) of the Village Disclosure Schedule.
(c) Webster will cause Webster Bank to offer a position of at-will
employment to each of Village Bank's non-officer or non-managerial branch office
personnel in good standing as of the Effective Time at their existing branch
location or within 20 miles of the employee's place of employment as of the
Effective Time. In addition, Webster will use its reasonable best efforts in
connection with reviewing applicants for employment positions to give Village
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 Village Bank employees who are not offered positions
at the Effective Time.
(d) 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 Village and Village Bank
that are specifically listed at Section 3.12(a) of the Village Disclosure
Schedule; provided, however, that in making the foregoing agreement, except as
otherwise required by law, 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 Village or any Village 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.
(e) Not later than 60 days after the date of this Agreement, Village
Bank will file with the IRS an application for a determination letter with
respect to the qualified status under Section 401(a) of the Code of the Village
Bank & Trust Company 401(k) Incentive Savings & Salary Reduction Plan, as
adopted effective August 1, 1996 and as amended (if applicable) thereafter, and
the tax exempt status of the trust related thereto, and Village Bank will use
its reasonable best efforts to obtain such determination letter from the IRS,
including, without limitation, adoption of such amendments and the taking of
such other actions as may be required by the IRS as a condition to the issuance
of a favorable determination letter, provided, however, that Village Bank shall
not be required to make such filing if, within 10 days after the date of this
Agreement, it provides to Webster a copy of a current determination letter from
the IRS with respect to the 401(k) Plan upon which Village Bank is entitled to
rely or establishes that the 401(k) Plan is a standardized plan and that it is
entitled to rely upon an opinion letter issued by the IRS with respect to such
plan. Village Bank will provide to Webster a copy of such determination letter
request at the time it is filed and thereafter will promptly provide Webster
with copies of any other correspondence or written communications provided to or
received from the IRS with respect to such request
(f) Not later than 10 days after the date of this Agreement, Village
will provide to Webster an estimated computation of the amount that would be
payable pursuant to Village's written 1996 change of control severance policy to
each of the directors of Village in the event of termination of their service 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
32
any time prior to the date of this Agreement, or who becomes prior to the
Effective Time, a director or officer or employee of Village (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 Village 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 to defend against and respond
thereto to the extent permitted by applicable law and the Articles of
Incorporation and By-Laws of Village. It is understood and agreed that after the
Effective Time, Webster shall indemnify and hold harmless, as and to the fullest
extent permitted by applicable law and the Certificate of Incorporation and
Bylaws of Webster or the Charter and By-Laws of Webster Bank, as the case may
be, each such Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including reasonable attorney's fees and
expenses), 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
Delaware Corporation Law and Webster's 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 Delaware Corporation Law and Webster's Certificate of
Incorporation or Bylaws. Any Indemnified Party wishing to claim indemnification
under this Section 6.7, 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 6.7 except to the extent such failure to notify materially
prejudices Webster. Webster's obligations under this Section 6.7 continue in
full force and effect for a period of two 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 Village 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
Village'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 an aggregate premium cost for the Tail Insurance of not
more than $141,000 and for a period not less than two years.
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 Village and Village 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 and Annual
Reports on Form 10-K promptly after filing such reports with the SEC.
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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 the Bank
Merger 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 Village's Subsidiaries shall take all such
necessary action as may be reasonably requested by Webster.
6.10 ADVICE OF CHANGES.
Webster and Village 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, Village will promptly supplement
or amend the Village 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) hereof, as the case may be, or the compliance by Village with
the covenants set forth in Section 5.1 hereof.
6.11 CURRENT INFORMATION.
During the period from the date of this Agreement to the Effective Time,
Village 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 Village.
Village will promptly notify Webster of any material change in the normal course
of business or in the operation of the properties of Village 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 Village, 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 and Village shall approve the Bank
Merger Agreement as the sole shareholder of Webster Bank and Village Bank,
respectively, and (b) Webster Bank and Village 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 Village shareholders as a result of such
modification, (ii) the consideration to be paid to the Village 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 Requisite 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 Village
agree to cooperate fully with each other to effect such amendments.
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6.14 TRANSACTION EXPENSES OF VILLAGE.
(a) For planning purposes, Village shall, within 15 days from the date
hereof, provide Webster with its estimated budget of transaction-related
expenses reasonably anticipated to be payable by Village in connection with this
transaction, including the fees and expenses of counsel, accountants, investment
bankers and other professionals. Village 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, Village shall ask
all of its attorneys and other professionals to render current and correct
invoices for all unbilled time and disbursements. Village shall accrue and/or
pay all of such amounts as soon as possible.
(c) Village shall advise Webster monthly of all out-of-pocket expenses
which Village has incurred in connection with this transaction.
(d) Webster, in reasonable consultation with Village, shall make all
arrangements with respect to the printing and mailing of the Proxy
Statement/Prospectus. Village, if it reasonably deems necessary, or otherwise
upon the request of Webster, also shall engage (at Webster's expense) a proxy
solicitation firm reasonably acceptable to Webster under terms and conditions
reasonably acceptable to Webster, to assist in the solicitation of proxies for
the Special Meeting of shareholders of Village. Village 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 APPROVAL.
This Agreement, the Merger and the other transactions contemplated
thereby shall have been approved and adopted by the affirmative vote of the
holders of at least two-thirds of the issued and outstanding shares of Village
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 (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, the Bank Merger Agreement, the Option 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 and Village shall have received from Hogan & Harston L.L.P,
Webster's special counsel, an opinion to Webster and Village, in form and
substance reasonably satisfactory to Webster and Village, 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 Village, Webster, their respective affiliates and others.
7.2 CONDITIONS TO OBLIGATIONS OF WEBSTER.
The obligation of Webster 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 Village 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
Village. 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
Village by each of the President and Chief Executive Officer and the Executive
Vice President and Chief Financial Officer of Village to the foregoing effect.
(B) PERFORMANCE OF COVENANTS AND AGREEMENTS.
Village 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 Village by each of the President and Chief Executive Officer and the
Executive Vice President and Chief Financial Officer of Village to such effect.
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(C) CONSENTS UNDER AGREEMENTS.
The consent, approval or waiver of each person (other than the
Requisite Regulatory Approvals) whose consent or approval shall be required in
connection with the transactions contemplated hereby or in order to permit the
succession by the Surviving Corporation or the Surviving Bank, as applicable,
pursuant to the Merger or the Bank Merger to any obligation, right or interest
of Village or Village Bank 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 Corporation or the Surviving Bank.
(D) NO PENDING GOVERNMENTAL ACTIONS.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
(E) ACCOUNTANT'S COMFORT LETTER.
Village shall have caused to be delivered on the respective dates
thereof to Webster "comfort letters" from Deloitte & Touche LLP, Village'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
Village, with respect to Village's financial data presented in the Proxy
Statement/Prospectus, which letters shall be based upon Statements on Auditing
Standards Nos. 72 and 76.
7.3 CONDITIONS TO OBLIGATIONS OF VILLAGE.
The obligation of Village to effect the Merger is also subject to the
satisfaction or waiver by Village 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 materiality qualifications in such representations and
warranties. Village shall have received a certificate signed on behalf of
Webster by each of the Chairman, Chief Executive Officer and President and the
Executive Vice President, Chief Financial Officer and Treasurer of Webster to
the foregoing effect.
(B) PERFORMANCE OF COVENANTS AND AGREEMENTS.
Webster 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. Village shall have received a certificate signed
on behalf of Webster by each of the Chairman, Chief Executive Officer and
President and the Executive Vice President, Chief Financial Officer and
Treasurer of Webster to the foregoing effect.
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(C) CONSENTS UNDER AGREEMENTS.
The consent or approval or waiver of each person (other than the
Requisite Regulatory Approvals) 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 Webster Bank is a party or is otherwise bound
shall have been obtained, except for those, the failure of which to obtain, will
not result in a Material Adverse Effect.
(D) NO PENDING GOVERNMENTAL ACTIONS.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
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 Village:
(a) by mutual consent of Webster and Village 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 Village upon written notice to the other
party (i) 30 days after the date on which any request or application for a
Requisite Regulatory Approval shall have been denied or withdrawn at the request
or recommendation of the Governmental Entity which must grant such Requisite
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;
(c) by either Webster or Village if the Merger shall not have been
consummated on or before August 31, 1999, 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 Webster or by Village (provided that Village is not in breach
of its obligations under Section 6.3 hereof) if the approval of the shareholders
of Village 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 Village (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
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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 Village (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; and
(g) by Webster, if the management of Village or its Board of
Directors, for any reason, (i) fails to call and hold within 45 days of the
effectiveness of the Registration Statement the Special Meeting of Village's
shareholders to consider and approve this Agreement, the Merger and the other
transactions contemplated hereby, (ii) fails to recommend to shareholders the
approval of this Agreement, the Merger and the other 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.
(h) by Village, upon written notice delivered to Webster, as provided
below in this subsection (h), if the Base Period Trading Price shall be less
than $17.55, unless Webster elects, as provided below in this subsection (h),
that the Exchange Ratio shall be adjusted to equal that number obtained by
dividing $21.15 by the Base Period Trading Price, rounded to four decimal places
(the "Adjusted Exchange Ratio"). If Village 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 change the Exchange Ratio to the Adjusted
Exchange Ratio. If Webster makes the election contemplated by the preceding
sentence, then within such three business-day period Webster shall give written
notice to Village of such election and the Adjusted 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
Adjusted Exchange Ratio pursuant to this subsection (h).
8.2 EFFECT OF TERMINATION.
In the event of termination of this Agreement by either Webster or Village
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 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 Village; provided, however,
that after any approval of the transactions contemplated by this Agreement by
Village'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 Village shareholders
hereunder other than as contemplated by this Agreement. This
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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 third day after the later to occur of (x) the date the last
Requisite Regulatory Approval is received and all applicable waiting periods
have expired and (y) the date the approval of Village's shareholders is
received, (ii) if elected by Webster, the last business day of the month in
which the date specified in the immediately preceding clause occurs, or (iii)
such other date, place and time as the parties may agree (the "Closing Date").
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS 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. All filing and other fees paid to the SEC in connection with this
Agreement shall be borne by Webster. In the event that this Agreement is
terminated by either Webster or Village by reason of a material breach pursuant
to Sections 8.1(e) or (f) hereof or by Webster pursuant to Section 8.1(g)
hereof, the other party shall pay all documented, reasonable costs and expenses
up to $200,000 incurred by the terminating party in connection with this
Agreement and the transactions contemplated hereby, plus a breakup fee of
$400,000. Except as set forth in the next sentence, in the event that this
Agreement is terminated by Webster under Section 8.1(d) hereof by reason of
Village shareholders not having given any required approval, Village shall pay
all documented, reasonable costs and expenses up to $200,000 incurred by Webster
in connection with this Agreement and the transactions contemplated hereby. If
this Agreement is terminated by Webster under Section 8.1(d) by reason of
Village 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), Village shall pay all documented, reasonable costs and expenses up to
$200,000 incurred by Webster in connection with this Agreement and the
transactions contemplated hereby, plus a breakup fee of $400,000. For purposes
of this Section 9.3, a "Third Party Public Event"
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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 Village or, by a public announcement or written
communication that is or becomes the subject of public disclosure, to Village'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
Village 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 Village Common Stock); or (ii) any director, officer or affiliate of Village
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 Village
shareholders against this Agreement, the Merger and the transactions
contemplated hereby.
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
(b) if to Village, to:
Village Bancorp, Inc.
25 Prospect Street
Ridgefield, CT 06877
Attn.: Robert V. Macklin
President and Chief Executive Officer
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with copies (which shall not constitute notice) to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Attn.: David W. Ferguson, Esq.
Collins, Hannafin, Garamella, Jaber & Tuozzolo, P.C.
148 Deer Hill Avenue
Danbury, CT 06810
Attn.: Edward J. Hannafin, 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 Bank Merger Agreement, the Option Agreement, the
Certificate of Merger and the Village 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.
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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 Nasdaq (or such other
exchange on which the Webster Common Stock may become listed), so long as this
Agreement is in effect, neither Webster nor Village shall, or shall permit any
of Webster's or Village'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 Bank Merger Agreement, the Option Agreement, the Certificate of
Merger or the Village 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 10% or greater shareholder,
spouse or other person living in the same household of such shareholder, or any
company, partnership or trust in which any of the foregoing persons is an
officer, 10% or greater shareholder, general partner or 10% or greater trust
beneficiary.
"Knowledge": with respect to Webster, Webster Bank, Village or Village
Bank, as the case may be, means actual knowledge of that entity's executive
officers and directors.
"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, Webster Bank, Village
or Village Bank, 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 such
entity (other than as a result of changes in laws or regulations or accounting
rules of general applicability or interpretations thereof) or (B) the ability of
such entity to perform its obligations under, and to consummate the transactions
contemplated by, this Agreement, the Bank Merger Agreement,
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the Certificate of Merger and, in the case of Village, the Option Agreement;
provided that (i) the taking of any action pursuant to this Agreement, (ii) any
adverse development caused by any action of Webster or Webster Bank (in the case
of an adverse development affecting Village or Village Bank) or Village or
Village Bank (in the case of any adverse development affecting Webster or
Webster Bank) that is not permitted by or in contravention of the covenants of
this Agreement, (iii) any changes affecting the banking industry generally or
banks conducting business in Connecticut in particular shall not be considered
in determining whether a Material Adverse Effect has occurred.
"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.
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IN WITNESS WHEREOF, Webster and Village 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/ Harriet Munrett Wolfe By: /s/ James C. Smith
---------------------------------- -------------------------------------
Harriet Munrett Wolfe James C. Smith
Senior Vice President, Counsel Chairman and Chief Executive Officer
and Secretary
VILLAGE BANCORP, INC.
ATTEST:
By: /s/ James R. Umbrager By: /s/ Robert V. Macklin
---------------------------------- -------------------------------------
James R. Umbrager Robert V. Macklin
Executive Vice President and President and Chief Executive Officer
Chief Financial Officer