Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
WEBSTER FINANCIAL CORPORATION,
AND
NEW ENGLAND COMMUNITY BANCORP, INC.
DATED AS OF
JUNE 29, 1999
TABLE OF CONTENTS
Page
----
ARTICLE I THE MERGER...........................................................................................1
1.1 The Merger...........................................................................................1
1.2 Effective Time.......................................................................................2
1.3 Effects of the Merger................................................................................2
1.4 Conversion of New England Common Stock...............................................................2
1.5 Options..............................................................................................3
1.6 Certificate of Incorporation.........................................................................3
1.7 By-Laws..............................................................................................3
1.8 Directors and Officers...............................................................................3
1.9 Tax Consequences.....................................................................................3
1.10 Accounting Treatment................................................................................3
ARTICLE II EXCHANGE OF SHARES..................................................................................4
2.1 Webster to Make Shares Available.....................................................................4
2.2 Exchange of Shares...................................................................................4
ARTICLE II-A DISCLOSURE SCHEDULE; STANDARDS FOR REPRESENTATIONS AND WARRANTIES.................................5
2A.1 Disclosure Schedule.................................................................................5
2A.2 Standards...........................................................................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF NEW ENGLAND......................................................5
3.1 Corporate Organization...............................................................................6
3.2 Capitalization.......................................................................................6
3.3 Authority; No Violation..............................................................................7
3.4 Consents and Approvals...............................................................................8
3.5 Loan Portfolio; Reports..............................................................................8
3.6 Financial Statements; Exchange Act Filings; Books and Records........................................9
3.7 Broker's Fees........................................................................................9
3.8 Absence of Certain Changes or Events.................................................................9
3.9 Legal Proceedings...................................................................................10
3.10 Taxes and Tax Returns..............................................................................10
3.11 Employee Plans.....................................................................................11
3.12 Certain Contracts..................................................................................13
3.13 Agreements with Regulatory Agencies................................................................13
3.14 State Takeover Laws; Certificate of Incorporation..................................................14
3.15 Environmental Matters..............................................................................14
3.16 Reserves for Losses................................................................................14
3.17 Properties and Assets..............................................................................15
3.18 Insurance..........................................................................................15
3.19 Compliance with Applicable Laws....................................................................15
3.20 Loans..............................................................................................15
3.21 Ownership of Webster Common Stock..................................................................16
3.22 Fairness Opinion...................................................................................17
3.23 Tax and Accounting Treatment of Merger.............................................................17
3.24 Year 2000..........................................................................................17
3.25 New England Information............................................................................17
-i-
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF WEBSTER..........................................................17
4.1 Corporate Organization..............................................................................17
4.2 Capitalization......................................................................................18
4.3 Authority; No Violation.............................................................................18
4.4 Consents and Approvals..............................................................................19
4.5 Financial Statements; Exchange Act Filings; Books and Records.......................................20
4.6 Absence of Certain Changes or Events................................................................20
4.7 Compliance with Applicable Laws.....................................................................21
4.8 Tax and Accounting Treatment of Merger..............................................................21
4.9 Legal Proceedings...................................................................................21
4.10 Year 2000..........................................................................................21
4.11 Webster Information................................................................................21
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS...........................................................21
5.1 Covenants of New England............................................................................21
5.2 Covenants of Webster................................................................................24
5.3 Merger Covenants....................................................................................25
ARTICLE VI ADDITIONAL AGREEMENTS..............................................................................25
6.1 Regulatory Matters..................................................................................25
6.2 Access to Information...............................................................................26
6.3 Stockholder Meetings................................................................................26
6.4 Legal Conditions to Merger..........................................................................27
6.5 Stock Exchange Listing..............................................................................27
6.6 Employees...........................................................................................27
6.7 Indemnification.....................................................................................27
6.8 Subsequent Interim and Annual Financial Statements..................................................29
6.9 Additional Agreements...............................................................................29
6.10 Advice of Changes..................................................................................29
6.11 Current Information................................................................................29
6.12 Change in Structure; Stockholder Approval..........................................................29
6.13 Transaction Expenses of New England................................................................29
6.14 Affiliate Agreements...............................................................................30
ARTICLE VII CONDITIONS PRECEDENT..............................................................................30
7.1 Conditions to Each Party's Obligation to Effect the Merger..........................................30
7.2 Conditions to Obligations of Webster................................................................31
7.3 Conditions to Obligations of New England............................................................31
ARTICLE VIII TERMINATION AND AMENDMENT........................................................................32
8.1 Termination.........................................................................................32
8.2 Effect of Termination...............................................................................35
8.3 Amendment...........................................................................................35
8.4 Extension; Waiver...................................................................................35
ARTICLE IX GENERAL PROVISIONS.................................................................................35
9.1 Closing.............................................................................................35
9.2 Nonsurvival of Representations, Warranties and Agreements...........................................35
9.2 Expenses............................................................................................35
9.4 Notices.............................................................................................36
9.5 Interpretation......................................................................................36
9.6 Counterparts........................................................................................36
9.7 Entire Agreement....................................................................................36
9.8 Governing Law.......................................................................................37
-ii-
9.9 Enforcement of Agreement............................................................................37
9.10 Severability.......................................................................................37
9.11 Publicity..........................................................................................37
9.12 Assignment; Limitation of Benefits.................................................................37
9.13 Additional Definitions.............................................................................37
EXHIBITS
A Form of Option Agreement
B Form of Articles of Combination and Bank Merger Agreement
C Form of Agreement of New England Affiliates
D Form of Agreement of Webster Affiliates
-iii-
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of June 29, 1999 (this
"Agreement"), is entered into by and between Webster Financial Corporation, a
Delaware corporation ("Webster") and New England Community Bancorp, Inc., a
Delaware corporation ("New England").
WHEREAS, the Boards of Directors of Webster and New England have
determined that it is in the best interests of their respective companies and
stockholders to consummate the business combination transaction provided for
herein in which New England will, subject to the terms and conditions set forth
herein, merge with and into Webster (the "Merger"), with Webster being the
surviving corporation (the "Surviving Corporation") in the Merger;
WHEREAS, prior to the consummation of the Merger, Webster and New
England will respectively cause Webster Bank ("Webster Bank"), a federally
chartered savings bank and wholly-owned subsidiary of Webster, and each of New
England Bank and Trust Company, The Equity Bank, Community Bank and, subject to
Webster's discretion, Olde Port Bank & Trust Company (collectively, the "New
England Banks") to enter into a merger agreement, in the form attached hereto as
Exhibit A (the "Bank Merger Agreement"), providing for the merger (the "Bank
Merger") of each of the New England Banks with and into Webster Bank, with
Webster Bank being the Surviving Bank of the Bank Merger, and the Bank Merger to
be consummated immediately after consummation of the Merger;
WHEREAS, as an inducement to Webster to enter into this Agreement, New
England will enter into an option agreement, in the form attached hereto as
Exhibit B (the "Option Agreement"), with Webster immediately following the
execution of this Agreement pursuant to which New England will grant Webster an
option to purchase, under certain circumstances, an aggregate number of newly
issued shares of common stock equal to 19.9% of the outstanding shares of common
stock, par value $1.00 per share, of New England ("New England Common Stock")
and otherwise upon the terms and conditions therein contained;
WHEREAS, the Merger is intended to be treated as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended, and as a "pooling of interests" under generally accepted accounting
principles; 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. (a) Subject to the terms and conditions of this
Agreement, in accordance with the Delaware General Corporation Law (the "DGCL"),
at the Effective Time (as defined in Section 1.2 hereof), New England shall
merge into Webster, with Webster being the surviving corporation (hereinafter
sometimes called the "Surviving Corporation") in the Merger. Upon consummation
of the Merger, the corporate existence of New England 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 date and
at the time set forth in the certificate of merger (the "Certificate of Merger")
which shall be filed with the Secretary of State of the State of Delaware on the
Closing Date. The term "Effective Time" shall be the date and time when the
Merger becomes effective, 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 Section 259 and 261 of the DGCL.
1.4 CONVERSION OF NEW ENGLAND COMMON STOCK. (a) At the Effective Time,
subject to Sections 1.4(b), 1.4(d) and 8.1(h) hereof, each share of New England
Common Stock issued and outstanding prior to the Effective Time shall, by virtue
of this Agreement and without any action on the part of the holder thereof, be
converted into and exchangeable for 1.06 shares of Webster common stock, par
value $.01 per share ("Webster Common Stock"). The number of shares of Webster
Common Stock to be exchanged for each share of New England Common Stock issued
and outstanding pursuant to this Agreement is hereinafter referred to as the
"Exchange Ratio."
(b) All of the shares of New England Common Stock converted into
Webster Common Stock pursuant to this Article I shall no longer be outstanding
and shall automatically be canceled and shall cease to exist, and each
certificate (each a "Certificate") previously representing any such shares of
New England Common Stock shall thereafter represent the right to receive (i) the
number of whole shares of Webster Common Stock and (ii) cash in lieu of
fractional shares into which the shares of New England Common Stock represented
by such Certificate have been converted pursuant to this Section 1.4(b) and
Section 2.2 hereof. Certificates previously representing shares of New England
Common Stock shall be exchanged for certificates representing whole shares of
Webster Common Stock and cash in lieu of fractional shares issued in
consideration therefor upon the surrender of such Certificates in accordance
with Section 2.2 hereof, without any interest thereon. If, after the date hereof
and 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 New England Common Stock that
are owned by New England as treasury stock and all shares of New England Common
Stock that are owned directly or indirectly by Webster or New England or any of
their respective Subsidiaries (other than shares of New England Common Stock
held directly or indirectly in trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity that are beneficially owned by third
parties (any such shares, and shares of Webster Common Stock which are similarly
held, whether held directly or indirectly by Webster or New England, as the case
may be, being referred to herein as "Trust Account Shares") and other than any
shares of New England Common Stock held by Webster or New England or any of
their respective Subsidiaries in respect of a debt previously contracted (any
such shares of New England Common Stock, and shares of Webster Common Stock
which are similarly held, whether held directly or indirectly by Webster or New
England, 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 New
England or any of its Subsidiaries (other than Trust Account Shares and DPC
Shares) shall become treasury stock of Webster.
(d) Certificates for fractions of shares of Webster Common Stock will
not be issued. In lieu of a fraction of a share of Webster Common Stock, each
holder of New England 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 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 twenty consecutive trading
days on which shares of Webster Common Stock are actually traded (as reported on
the Nasdaq Stock Market National Market) ending on the third trading day
preceding the Closing Date. Following consummation of the Merger,
2
no holder of New England Common Stock shall be entitled to dividends or any
other rights in respect of any such fraction.
1.5 OPTIONS. At the Effective Time, each option granted by New England
to purchase shares of New England Common Stock which is outstanding and
unexercised immediately prior thereto shall be converted automatically into an
option to purchase shares of Webster Common Stock in an amount and at an
exercise price determined as provided below (and otherwise subject to the terms
of the 1997 Non-Officer Director's Stock Option Plan, the 1996 Incentive and
Nonqualified Compensatory Stock Option Plan, and the 1990 Bank of South Windsor
Non-Qualified Stock Option Plan (the "New England Stock Plans"), in each case,
under which such option was granted):
(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 New England Common
Stock subject to the option immediately before the Effective Time,
multiplied by the Exchange Ratio, rounded 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 New England 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 with respect to any options that are
"incentive stock options" (as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code")) shall be and is intended to be effected
in a manner that is consistent with Section 424(a) of the Code. The duration and
other terms of the new option shall be the same as the original option, except
that all references to New England or any of the New England Banks in the New
England Stock Plans (and in any option agreement documenting such option) shall
be deemed to be references to Webster or Webster Bank, as applicable.
1.6 CERTIFICATE OF INCORPORATION. At the Effective Time, the
Certificate of Incorporation of Webster, as in effect at the Effective Time,
shall be the Certificate of Incorporation of the Surviving Corporation.
1.7 BY-LAWS. At the Effective Time, the By-Laws of Webster, as in
effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation.
1.8 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, provided that as of the
Effective Time Webster shall appoint one person (the "Designee") from among
those serving on the New England Board of Directors at such time to the Board of
Directors of the Surviving Corporation, such person to serve as a director for a
period to terminate at the annual meeting of Webster stockholders next following
the first anniversary of the Effective Time. Additionally, as of the Effective
Time, Webster shall, as necessary, cause Webster Bank to amend its bylaws to
increase the size of its Board of Directors by one member, and thereupon Webster
shall appoint the Designee to serve as an additional member of the Board of
Directors of Webster Bank for a period to terminate no earlier than the annual
meeting of Webster stockholders next following the third anniversary of the
Effective Time.
1.9 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.
1.10 ACCOUNTING TREATMENT. It is intended that the Merger shall be
accounted for as a "pooling of interests" under generally accepted accounting
principles ("GAAP").
3
ARTICLE II
EXCHANGE OF SHARES
2.1 WEBSTER TO MAKE SHARES AVAILABLE. At or prior to the Effective
Time, Webster shall deposit, or shall cause to be deposited, with Webster's
transfer agent, American Stock Transfer & Trust Company, or such other bank,
trust company or transfer agent as Webster may select (the "Exchange Agent"),
for the benefit of the holders of Certificates, for exchange in accordance with
this Article II, certificates representing the shares of Webster Common Stock
and the cash in lieu of fractional shares (such cash and certificates for shares
of Webster Common Stock, being hereinafter referred to as the "Exchange Fund")
to be issued pursuant to Section 1.4 and paid pursuant to Section 2.2(a) hereof
in exchange for outstanding shares of New England Common Stock.
2.2 EXCHANGE OF SHARES. (a) As soon as practicable after the Effective
Time, the Exchange Agent shall mail to each holder of record of a Certificate or
Certificates a form letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent) and instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing the shares of Webster Common Stock and the cash in
lieu of fractional shares into which the shares of New England Common Stock
represented by such Certificate or Certificates shall have been converted
pursuant to this Agreement. New England 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 New England Common Stock shall have become entitled
pursuant to the provisions of Article I hereof and (y) a check representing the
amount of cash in lieu of fractional shares, if any, which such holder has the
right to receive in respect of the Certificate surrendered pursuant to the
provisions of this Article II, and the Certificate so surrendered shall
forthwith be canceled. No interest will be paid or accrued on the cash in lieu
of fractional shares and unpaid dividends and distributions, if any, payable to
holders of Certificates.
(b) No dividends or other distributions declared after the Effective
Time with respect to Webster Common Stock and payable to the holders of record
thereof shall be paid to the holder of any unsurrendered Certificate until the
holder thereof shall surrender such Certificate in accordance with this Article
II. After the surrender of a Certificate in accordance with this Article II, the
record holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of Webster Common Stock represented by such
Certificate. No holder of an unsurrendered Certificate shall be entitled, until
the surrender of such Certificate, to vote the shares of Webster Common Stock
into which his New England Common Stock shall have been converted.
(c) If any certificate representing shares of Webster Common Stock is
to be issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed (or accompanied
by an appropriate instrument of transfer) and otherwise in proper form for
transfer, and that the person requesting such exchange shall pay to the Exchange
Agent in advance any transfer or other taxes required by reason of the issuance
of a certificate representing shares of Webster Common Stock in any name other
than that of the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not payable.
(d) After the close of business on the day immediately prior to the
Effective Time, there shall be no transfers on the stock transfer books of New
England of the shares of New England 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
4
Agent, they shall be canceled and exchanged for certificates representing shares
of Webster Common Stock as provided in this Article II.
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of New England for six months after the Effective Time shall be
returned to Webster. Any stockholders of New England who have not theretofore
complied with this Article II shall thereafter look only to Webster for payment
of their shares of Webster Common Stock, cash in lieu of fractional shares and
unpaid dividends and distributions on Webster Common Stock deliverable in
respect of each share of New England Common Stock such stockholder holds as
determined pursuant to this Agreement, in each case, without any interest
thereon. Notwithstanding the foregoing, none of Webster, New England, the
Exchange Agent or any other person shall be liable to any former holder of
shares of New England Common Stock for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
(f) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Webster,
the posting by such person of a bond in such amount as Webster may reasonably
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the shares of Webster Common Stock and cash in
lieu of fractional shares deliverable in respect thereof pursuant to this
Agreement.
ARTICLE II-A
DISCLOSURE SCHEDULE; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
2A.1 DISCLOSURE SCHEDULE. Prior to the execution and delivery hereof,
New England has delivered to Webster a schedule (the "New England Disclosure
Schedule"), and Webster has delivered to New England a schedule (the "Webster
Disclosure Schedule"), in each case setting forth, among other things, items the
disclosure of which is necessary or appropriate either in response to an express
disclosure requirement contained in a provision hereof or as an exception to one
or more of such party's representations or warranties contained in Articles III
or IV, as applicable, or to one or more of its covenants contained in Article V;
provided, however, that the mere inclusion of an item in a Disclosure Schedule
as an exception to a representation or warranty shall not be deemed an admission
by a party that such item represents a material exception or fact, event or
circumstance or that such item has had or would have a Material Adverse Effect
(as defined in Section 9.13) with respect to such party.
2A.2 STANDARDS. No representation or warranty of New England contained
in Article III or of Webster contained in Article IV shall be deemed untrue or
incorrect for any purpose under this Agreement, and no party hereto shall be
deemed to have breached a representation or warranty for any purpose under this
Agreement, as a consequence of the existence or absence of any fact,
circumstance or event unless such fact, circumstance or event, individually or
when taken together with all other facts, circumstances or events inconsistent
with any representations or warranties contained in Article III, in the case of
New England, or Article IV, in the case of Webster, has had or would be
reasonably certain to have a Material Adverse Effect with respect to New England
or Webster, respectively.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NEW ENGLAND
Subject to Article II-A, New England hereby makes the following
representations and warranties to Webster and Webster Bank as set forth in this
Article III.
5
3.1 CORPORATE ORGANIZATION. New England is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. New England has the corporate or other power and authority to own or
lease all of its properties and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of any material business conducted by it or the
character or location of any material properties or assets owned or leased by it
makes such licensing or qualification necessary. New England is duly registered
as a bank holding company with the Board of Governors of the Federal Reserve
System ("FRB") under the Bank Holding Company Act of 1956, as amended (the
"BHCA"). The Certificate of Incorporation and By-Laws of New England, 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. Other
than the New England Banks, Connecticut Mortgage Service Company, Inc. and New
England Community Mortgage Corp. ("Mortgage Corp."), and there is no subsidiary
of New England that would qualify as a "Significant Subsidiary" (as such term is
defined in Regulation S-X promulgated by the Securities and Exchange Commission
(the "SEC")). Each of the New England Banks is a Connecticut or New Hampshire
chartered commercial bank duly organized and validly existing and in good
standing under the laws of its jurisdiction of organization, and each of such
Banks has been duly organized and validly existing and in good standing
continuously for the five year period preceding the date hereof. The deposit
accounts of the New England Banks are insured by the Federal Deposit Insurance
Corporation (the "FDIC") through the Bank Insurance Fund (the "BIF") to the
fullest extent permitted by law, and all premiums and assessments required in
connection therewith have been paid by New England or the New England Banks, as
applicable.
3.2 CAPITALIZATION. (a) The authorized capital stock of New England
consists of 20,000,000 shares of New England Common Stock and 200,000 shares of
serial preferred stock, par value $.10 per share (the "New England Preferred
Stock"). As of June 25, 1999, there are (x) 7,036,446 shares of New England
Common Stock issued and outstanding and 135,500 shares of New England Common
Stock are held in New England's treasury, (y) no shares of New England Common
Stock reserved for issuance upon exercise of outstanding stock options or
otherwise, except for (i) 1,243,000 shares of New England Common Stock reserved
for issuance pursuant to the New England Stock Plans (of which options for
562,000 shares are currently outstanding) and (ii) 1,400,252 shares of New
England Common Stock reserved for issuance upon exercise of the option to be
issued to Webster pursuant to the Option Agreement, and (z) no shares of New
England's Preferred Stock issued or outstanding, held in New England's treasury
or reserved for issuance upon exercise of outstanding stock options or
otherwise. All of the issued and outstanding shares of New England Common Stock
have been duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. Except for the Option Agreement and the New England Stock
Plans, New England 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 New England
Common Stock or New England Preferred Stock or any other equity security of New
England or any securities representing the right to purchase or otherwise
receive any shares of New England Common Stock or any other equity security of
New England. The names of the optionees, the date of each option to purchase New
England 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 New England Stock Plans are set forth in Section
3.2(a)(i) of the New England Disclosure Schedule. Since June 25, 1999, New
England 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 under the
New England Stock Plans.
(b) Section 3.2(b) of the New England Disclosure Schedule sets forth a
true, correct and complete list of all Subsidiaries of New England as of the
date of this Agreement. New England 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
6
thereof. No New England 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. Section 3.2(b) of the New England Disclosure
Schedule sets forth a list of the material investments of New England in
corporations, joint ventures, partnerships, limited liability companies and
other entities other than its Subsidiaries.
3.3 AUTHORITY; NO VIOLATION. (a) New England has full corporate or
other power and authority to execute and deliver this Agreement and the Option
Agreement and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Option Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly approved by the Board of Directors of New England. The Board of
Directors of New England has directed that this Agreement and the transactions
contemplated hereby be submitted to New England's stockholders for approval at a
special meeting of such stockholders and, except for the adoption of this
Agreement by the requisite vote of New England's stockholders, no other
corporate proceedings on the part of New England (except for matters related to
setting the date, time, place and record date for the special meeting) are
necessary to approve this Agreement or the Option Agreement or to consummate the
transactions contemplated hereby or thereby. This Agreement and the Option
Agreement have been duly and validly executed and delivered by New England and
(assuming due authorization, execution and delivery by Webster of this Agreement
and of the Option Agreement) this Agreement and the Option Agreement constitute
valid and binding obligations of New England, enforceable against New England 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) Each of the New England Banks has full corporate power and
authority to execute and deliver the Bank Merger Agreement and to consummate the
transactions contemplated thereby. The execution and delivery of the Bank Merger
Agreement and the consummation of the transactions contemplated thereby have
been, or will have been prior to the Closing Date, duly and validly approved by
the Board of Directors of each of the New England Banks and by New England as
the sole shareholder of each of the New England Banks. No other corporate
proceedings on the part of any of the New England Banks will be necessary to
consummate the transactions contemplated thereby. The Bank Merger Agreement,
upon execution and delivery by each of the New England Banks, will be duly and
validly executed and delivered by each of the New England Banks and will
(assuming due authorization, execution and delivery by Webster Bank) constitute
a valid and binding obligation of each of the New England Banks, enforceable
against each of the New England Banks 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) None of the execution and delivery of this Agreement and the
Option Agreement by New England or of the Bank Merger Agreement by the New
England Banks, nor the consummation by New England or the New England Banks of
the transactions contemplated hereby or thereby, nor compliance by New England
or the New England Banks with any of the terms or provisions hereof or thereof,
will (i) violate any provision of the Certificate of Incorporation or By-Laws of
New England or any similar governing document of any of the New England Banks,
or (ii) assuming that the consents and approvals referred to in Section 3.4
hereof are duly obtained, (x) violate any Laws (as defined in Section 9.13)
applicable to New England or the New England Banks, or any of their 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 New England or the New England Banks under, any of the
terms, conditions or provisions
7
of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement
or other instrument or obligation to which New England or any of the New England
Banks is a party, or by which they or any of their respective properties or
assets may be bound or affected.
3.4 CONSENTS AND APPROVALS. (a) Except for (i) the filing of
applications and notices, as applicable, as to the Merger and the Bank Merger
with the FRB under the BHCA, the Office of Thrift Supervision ("OTS") under the
Home Owners Loan Act of 1933, as amended ("HOLA"), and the Bank Merger Act; (ii)
the filing of applications and notices with the Banking Commissioner of the
State of Connecticut (the "Connecticut Commissioner") and the New Hampshire Bank
Commissioner (the "New Hampshire Commissioner"), as well as any other
applications and notices to or filings with state officials related to the
Merger and the Bank Merger (the "State Banking Approvals"), and approval of the
applications and notices described in clause (i) and this clause (ii); (iii) the
filing of any required applications or notices with the FDIC and OTS as to the
subsidiary activities of each of the New England Banks that become service
corporations or operating subsidiaries of Webster Bank and approval of such
applications and notices; (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 New England Common Stock
pursuant to the Option Agreement, if not exempt; (v) the filing with the SEC of
a registration statement on Form S-4 to register the shares of Webster Common
Stock to be issued or to become issuable in connection with the Merger, which
will include the joint proxy statement/prospectus to be used in soliciting the
approval of New England's stockholders and Webster's stockholders at special
meetings of such stockholders to be held in connection with this Agreement and
the transactions contemplated hereby (the "Joint Proxy Statement/Prospectus"),
and the approval of such stockholders; (vi) the filing of the Certificate of
Merger with the Secretary of State of Delaware pursuant to the DGCL; (vii) the
filings required by the Bank Merger Agreement; (viii) such filings,
authorizations or approvals as may be set forth in Section 3.4 of the New
England Disclosure Schedule; (ix) such filings and approvals as are required to
be made or obtained under the securities or "Blue Sky" laws of various states or
with Nasdaq (or such other exchange as may be applicable); or (x) any necessary
filing, authorization, approvals or consents of third parties other than any
court, administrative agency or commission or other governmental authority or
instrumentality (each a "Governmental Entity"), 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 New England
of this Agreement and the Option Agreement, (2) the consummation by New England
of the Merger and the other transactions contemplated hereby, (3) the execution
and delivery by each of the New England Banks of the Bank Merger Agreement, (4)
the consummation by New England of the Option Agreement; and (5) the
consummation by each of the New England Banks of 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 the ability of Webster, New England, Webster Bank or the New England
Banks to consummate the transactions contemplated hereby.
(b) New England hereby represents to Webster that, as of the date of
this Agreement, it has no knowledge of any reason why approval or effectiveness
of any of the applications, notices or filings referred to in Section 3.4(a)
cannot be obtained or granted on a timely basis.
3.5 LOAN PORTFOLIO; REPORTS. (a) Except as disclosed in Section 3.5(a)
of the New England Disclosure Schedule, New England is not 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 stockholder of New England or any of its Subsidiaries,
or any Affiliated Person (as defined in Section 9.13) of the foregoing. New
England has made available to Webster a complete and accurate list of each
employee of New England or its Subsidiaries with which New England is a party to
any Loan.
(b) New England and its Subsidiaries have timely filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that they
8
were required to file since December 31, 1996 with, as applicable, all
Government Entities (including the SEC, the FRB, the FDIC, the Connecticut
Commissioner, the New Hampshire Commissioner and any other state banking
commissions or regulatory authorities (each, a "State Regulator")) and any
self-regulatory organization ("SRO") (collectively, the "Regulatory Agencies").
As of its respective date, each such report, registration, statement and
amendment complied in all material respects with all rules and regulations
promulgated by the applicable Regulatory Agency and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that
information as of a later date shall be deemed to modify information as of an
earlier date. Except for normal examinations conducted by a Regulatory Agency in
the regular course of the business of New England and its Subsidiaries, no
Regulatory Agency is conducting, or has conducted, any proceeding or
investigation into the business or operations of New England or the New England
Banks since December 31, 1996.
3.6 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS. New
England has previously delivered to Webster true, correct and complete copies of
the consolidated statements of position of New England and its Subsidiaries as
of December 31 for the fiscal years 1997 and 1998, and the related consolidated
statements of earnings, shareholders' equity and cash flows for the fiscal years
1996 through 1998, inclusive, as reported in New England's Annual Report on Form
10-K for the fiscal year ended December 31, 1998 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 Shatswell, MacLeod & Company, P.C.,
independent public accountants with respect to New England, and the interim
financial statements of New England as of and for the three months ended March
31, 1999, as included in the New England quarterly report on Form 10-Q for the
period ended March 31, 1999 as filed with the SEC. The financial statements
referred to in this Section 3.6 (including the related notes, where applicable)
fairly present, and the financial statements referred to in Section 6.8 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 New England 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, 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 consistently applied during the periods involved, except in
each case as indicated in such statements or in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q. New England's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 and all reports
filed under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act since
December 31, 1993 comply in all material respects with the appropriate
requirements for such reports under the Exchange Act, and New England has
previously delivered or made available to Webster true, correct and complete
copies of such reports. The books and records of New England and each of the New
England Banks have been, and are being, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting requirements.
3.7 BROKER'S FEES. Neither New England nor any New England 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 Option Agreement or the Bank Merger Agreement, except that New England has
engaged, and will pay a fee or commission to each of A.G. Edwards & Sons, Inc.
and HAS Associates, Inc. in accordance with the terms of letter agreements
between each of them, on the one hand, and New England, on the other, dated May
21, 1999, true, complete and correct copies of which has been previously
delivered by New England to Webster.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Except as disclosed in
any New England report publicly filed with the SEC under the Exchange Act prior
to the date of this
9
Agreement, since December 31, 1998 (i) neither New England nor any of its
Subsidiaries has incurred any material liability, except as contemplated by this
Agreement or in the ordinary course of its business consistent with past
practice; (ii) neither New England nor any of its Subsidiaries has discharged or
satisfied any material lien or paid any material obligation or liability
(absolute or contingent), other than in the ordinary course of business; (iii)
neither New England nor any of its Subsidiaries has sold, assigned, transferred,
leased, exchanged or otherwise disposed of any of its material properties or
assets other than in the ordinary course of business; (iv) neither New England
nor any of its Subsidiaries has suffered any material damage, destruction, or
loss, whether as a result of fire, explosion, earthquake, accident, casualty,
labor trouble, requisition or taking of property by any Regulatory Authority,
flood, windstorm, embargo, riot, act of God or other casualty or event, whether
or not covered by insurance; (v) neither New England nor any of its Subsidiaries
has canceled or compromised any debt, except for debts charged off or
compromised in accordance with the past practice of New England or such
Subsidiary, as the case may be; and (vi) no event has occurred which has had or
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on New England.
(b) Since December 31, 1998, New England and its Subsidiaries have
carried on their respective businesses in the ordinary and usual course
consistent with their past practices.
3.9 LEGAL PROCEEDINGS. (a) Neither New England nor any of its
Subsidiaries is a party to any, and there are no pending or threatened, legal,
administrative, arbitration or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against New England or
any of its Subsidiaries in which there is a reasonable probability of any
material recovery against or other material adverse effect upon New England or
any of its Subsidiaries or which challenge the validity or propriety of the
transactions contemplated by this Agreement, the Option Agreement or the Bank
Merger Agreement as to which there is a reasonable probability of success.
(b) There is no injunction, order, judgment or decree imposed upon New
England, any of its Subsidiaries or the assets of New England or any of its
Subsidiaries.
3.10 TAXES AND TAX RETURNS. (a) Each of New England and its
Subsidiaries has duly filed all Tax Returns, as hereinafter defined, required to
be filed by it (all such returns being accurate and complete in all material
respects) and has duly paid or made provision (or will make provision) on the
financial statements referred to in Sections 3.6 and 6.8 hereof in accordance
with GAAP for the payment of all Taxes, as hereinafter defined, which have been
incurred or are due or claimed to be due from it by Taxing Authorities, as
hereinafter defined. All liability with respect to the Tax Returns of New
England and its Subsidiaries has been satisfied for all years to and including
1998. The Internal Revenue Service ("IRS") has not notified New England of, or
otherwise asserted, that there are any deficiencies with respect to the federal
income Tax Returns of New England subsequent to 1993. There are no disputes
pending, or claims asserted for, Taxes or assessments upon New England or any of
its Subsidiaries, nor has New England 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, Tax Returns which are accurate and complete in all material
respects have been filed by New England and its Subsidiaries for all periods for
which Tax Returns were due with respect to income tax withholding, Social
Security and unemployment taxes and the amounts shown on such Tax Returns to be
due and payable have been paid in full. All New England Tax Returns have been
examined by the relevant Taxing Authorities, or closed without audit by
applicable statutes of limitations, and all deficiencies proposed as a result of
such examinations have been paid or settled, for all periods before and
including the taxable year ended 1993. Neither New England nor any of its
Subsidiaries has consented to any waiver or extension of any statute of
limitations with respect to any Tax. Neither New England nor any New England
Subsidiary has made an election under Section 341(f) of the IRC. New England has
provided or made available to Webster complete and correct copies of its Tax
Returns and all material correspondence and documents, if any, relating directly
or indirectly to Taxes for each taxable year or other relevant period as to
which the applicable statute of limitations has not run on the date hereof. For
this purpose, "correspondence and documents" include, without
10
limitation, amended Tax Returns, claims for refunds, notices from Taxing
Authorities of proposed changes or adjustments to Taxes or Tax Returns, consents
to assessment or collection of Taxes, acceptances of proposed adjustments,
closing agreements, rulings and determination letters and requests therefor, and
all other written communications to or from Taxing Authorities relating to any
material Tax liability of New England or any New England Subsidiary. New England
is not a "United States real property holding corporation" within the meaning of
Section 897 of the IRC and was not a "United States real property holding
corporation" on any "determination date" (as defined in Section 1.897-2(c) of
such Regulations) that occurred during any relevant period. Neither New England
nor any of its Subsidiaries (i) has ever been a member of an affiliated group
(within the meaning of Section 1504(a) of the IRC) filing a consolidated federal
income tax return (other than an affiliated group the common parent of which was
New England), (ii) has any liability for the Taxes of any person (other than New
England and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
comparable provision of state, local or foreign law), as a successor or
transferee, by contract or otherwise or (iii) is a party to or is bound by any
Tax sharing, allocation or indemnification agreement or arrangement (other than
with each other).
(b) For purposes of this Agreement:
"Tax" means any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Taxing Authority or payable pursuant to any tax-sharing agreement or any
other contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"Tax Return" means any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Taxing Authority in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any law, regulation or other legal
requirement relating to any Tax.
"Taxing Authority" means any:
(i) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(ii) federal, state, local, municipal, foreign, or other
government;
(iii) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal);
(iv) multi-national organization or body; or
(v) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory,
or taxing authority or power of any nature.
3.11 EMPLOYEE PLANS. (a) Section 3.11(a) of the New England 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 New England or any of its
Subsidiaries or any other entity which together with New England would be deemed
a "single
11
employer" within the meaning of Section 4001 of ERISA or Code Sections 414(b),
(c), (m) or (o) (an "ERISA Affiliate") or under which New England or any
Subsidiary or ERISA Affiliate has any liability (collectively, the "Plans").
(b) New England has heretofore delivered or made available to Webster
true, correct and complete copies of each of the Plans and all related
documents, including but not limited to (i) the actuarial report for such Plan
(if applicable) for the last five years, (ii) the most recent determination
letter from the Internal Revenue Service (if applicable) for such Plan, (iii)
the current summary plan description and any summaries of material modification,
(iv) all annual reports (Form 5500 series) for each Plan filed for the preceding
three plan years, (v) all agreements with fiduciaries and service providers
relating to the Plan, and (vi) all substantive correspondence relating to any
such Plan addressed to or received from the Internal Revenue Service, the
Department of Labor, the Pension Benefit Guaranty Corporation or any other
governmental agency.
(c) Except as set forth at Section 3.11(c) of the New England
Disclosure Schedule, (i) each of the Plans has been operated and administered in
all material respects in compliance with applicable Laws, including but not
limited to ERISA and the Code, (ii) each of the Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified, (iii) with
respect to each Plan which is subject to Title IV of ERISA, the present value of
accrued benefits under such Plan (whether or not vested), based upon the
actuarial assumptions used for funding purposes in the most recent actuarial
report prepared by such Plan's actuary with respect to such Plan, did not, as of
its latest valuation date, exceed the then current value of the assets of such
Plan allocable to such accrued benefits, and there has not been a material
adverse change in the financial condition of such Plans, (iv) no Plan provides
benefits, including, without limitation, death or medical benefits (whether or
not insured), with respect to current or former employees of New England or any
New England Subsidiary beyond their retirement or other termination of service,
other than (w) coverage mandated by applicable Law, (x) death benefits or
retirement benefits under a Plan that is an "employee pension plan," as that
term is defined in Section 3(2) of ERISA, (y) deferred compensation benefits
under a Plan that are accrued as liabilities on the books of New England or any
New England Subsidiary, or (z) benefits the full cost of which is borne by the
current or former employee (or his beneficiary), (v) all Plans (other than Plans
providing for the payment of benefits from the general assets of New England or
any of its Subsidiaries) could be terminated as of the Effective Time without
material liability, (vi) no liability under Title IV of ERISA has been incurred
by New England, any New England Subsidiary or any ERISA Affiliate that has not
been satisfied in full, and no condition exists that presents a material risk to
New England, any New England Subsidiary or any ERISA Affiliate incurring a
material liability thereunder, (vii) no Plan is a "multiemployer plan" (as such
term is defined in Section 3(37) of ERISA), (viii) all contributions or other
amounts payable by New England or any New England Subsidiary as of the Effective
Time with respect to each Plan and all other liabilities of each such entity
with respect to each Plan in respect of current or prior plan years have been
paid or accrued in accordance with generally accepted accounting practices and
Section 412 of the Code, (ix) neither New England nor any New England Subsidiary
has engaged in a transaction in connection with which New England or any New
England Subsidiary is 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, (x) to the knowledge of New England, there are
no pending, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Plans or any trusts related
thereto, (xi) no Plan, program, agreement or other arrangement, either
individually or collectively, provides for any payment by New England or any New
England Subsidiary that would not be deductible under Code Sections 162(a)(1),
162(m) or 404, (xii) no "accumulated funding deficiency," as defined in Section
302(a)(2) of ERISA or Section 412 of the Code, whether or not waived, and no
"unfunded current liability," as determined under Section 412(l) of the Code,
exists with respect to any Plan, and (xiii) no Plan has experienced a
"reportable event" (as such term is defined in Section 4043(c) of ERISA) that is
not subject to an administrative or statutory waiver from the reporting
requirement.
(d) Except as set forth at Section 3.11(d) of the New England
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the consummation of the
12
transactions contemplated hereby (either alone or in conjunction with any other
event) will (w) restrict or prohibit New England or any New England Subsidiary
from amending any Plan, (x) result in any material payment (including, without
limitation, severance, unemployment compensation, "excess parachute payment"
(within the meaning of Section 280G of the Code), forgiveness of indebtedness or
otherwise) becoming due to any director, officer or employee of New England or
any New England Subsidiary under any Plan or otherwise, (y) materially increase
any benefits otherwise payable under any Plan or (z) result in any acceleration
of the time of payment or vesting of any benefits under Plan or otherwise.
3.12 CERTAIN CONTRACTS. (a) Except as set forth at Section 3.12 of the
New England Disclosure Schedule, neither New England 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 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, New England, 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 New England or of any current or future
affiliates thereof, (iv) with or to a labor union or guild (including any
collective bargaining agreement), (v) (including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan) any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement, or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement, (vi) that is material and is not made in the ordinary course of
business or pursuant to which New England or any of its Subsidiaries is or may
become obligated to invest in or contribute capital to any New England
Subsidiaries, (vii) not fully disclosed in the financial statements contemplated
by Section 3.6 that relates to borrowings of money (or guarantees thereof by New
England, or any New England Subsidiary), other than in the ordinary course of
business, or (viii) is a lease or similar arrangement with annual rental
payments of $100,000 or more. New England has previously delivered or made
available to Webster true, correct and complete copies of all employment,
consulting and deferred compensation agreements to which New England or any of
its Subsidiaries is a party. Section 3.12(a) of the New England Disclosure
Schedule sets forth a list of all material contracts (as defined in Item
601(b)(10) of Regulation S-K) of New England. Each contract, arrangement or
commitment of the type described in this Section 3.12(a), whether or not set
forth in Section 3.12(a) of the New England Disclosure Schedule, is referred to
herein as a "New England Contract," and neither New England nor any of its
Subsidiaries has received notice of, nor do any executive officers of such
entities know of, any violation or imminent violation of any New England
Contract by any other party thereto.
(b) (i) Each New England Contract is valid and binding and in full
force and effect, (ii) New England and each of its Subsidiaries has in all
material respects performed all obligations required to be performed by it to
date under each New England 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 New England or any of its Subsidiaries under any
such New England Contract.
3.13 AGREEMENTS WITH REGULATORY AGENCIES. New England is not 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 is a party
to any commitment letter or similar undertaking to, or is subject to any order
or directive by, or has been a recipient of any extraordinary supervisory letter
from, or, except as set forth at Section 3.13 of the New England Disclosure
Schedule, has adopted any board resolutions at the request of (each, whether or
not set forth on Section 3.13 of the New England Disclosure Schedule, a
"Regulatory Agreement"), any Governmental Entity that restricts the conduct of
its business or that in any manner relates to its capital adequacy, its credit
policies, its management or its business, nor has New England been advised by
any Governmental Entity that it is considering issuing or requesting any
Regulatory Agreement.
13
3.14 STATE TAKEOVER LAWS; CERTIFICATE OF INCORPORATION. The Board of
Directors of New England has approved the offer of Webster to enter into this
Agreement, the Bank Merger Agreement and the Option Agreement, and has approved
New England entering into this Agreement, the Bank Merger Agreement and the
Option Agreement, and the transactions contemplated thereby, such that under
applicable law and New England's Certificate of Incorporation the only vote of
New England stockholders necessary to consummate the transactions contemplated
hereby (including the Bank Merger and issuance under the Option Agreement) is
the approval of at least a majority of the outstanding shares of New England
Common Stock.
3.15 ENVIRONMENTAL MATTERS. (a) Each of New England and the New
England Subsidiaries is in compliance in all material respects with all
applicable federal and state laws and regulations relating to pollution or
protection of the environment (including without limitation, laws and
regulations relating to emissions, discharges, releases and threatened releases
of Hazardous Material (as hereinafter defined)), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials;
(b) There is no suit, claim, action, proceeding, investigation or
notice pending or to the knowledge of New England officers threatened (or to the
knowledge of New England's executive officers past or present actions or events
that could reasonably be expected to form the basis of any such suit, claim,
action, proceeding, investigation or notice), in which New England or any New
England Subsidiary has been or, with respect to threatened suits, claims,
actions, proceedings, investigations or notices may be, named as a defendant (x)
for alleged material noncompliance (including by any predecessor), with any
environmental law, rule or regulation or (y) relating to any material release or
threatened release into the environment of any Hazardous Material, whether or
not occurring at or on a site owned, leased or operated (directly or indirectly
in a fiduciary capacity) by New England or any New England Subsidiary;
(c) To the knowledge of New England, there has not been any release of
Hazardous Materials in, on, under or affecting any such property;
(d) To the knowledge of New England, neither New England nor any New
England Subsidiary has made or participated in any loan to any person who is
subject to any suit, claim, action, proceeding, investigation or notice, pending
or threatened, with respect to (i) any alleged material noncompliance as to any
property securing such loan with any environmental law, rule or regulation, or
(ii) the release or the threatened release into the environment of any Hazardous
Material at 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, lead paint
or other toxic material, or other material or substance (in each such case,
other than small quantities of such substances in retail containers) regulated
under any applicable environmental or public health statute, law, ordinance,
rule or regulation.
3.16 RESERVES FOR LOSSES. All reserves or other allowances for
possible losses reflected in New England's most recent financial statements
referred to in Section 3.6 complied with all Laws and are adequate under GAAP.
Except as set forth at Section 3.16 of the New England Disclosure Schedule, New
England has not been notified by any regulatory authority or by New England's
independent auditor, in writing or otherwise, that such reserves are inadequate
or that the practices and policies of New England in establishing such reserves
and in accounting for delinquent and classified assets generally fail to comply
with applicable accounting or regulatory requirements, or that any regulatory
authority or New England's independent auditor believes such reserves to be
inadequate or inconsistent with the historical loss experience of New England.
New England has previously furnished or made available to Webster a complete
list of all extensions of credit and other real estate owned ("OREO") that have
been classified by any bank examiner (regulatory or internal) as other loans
specially mentioned, special mention, substandard, doubtful,
14
loss, classified or criticized, credit risk assets, concerned loans or words of
similar import. All OREO held by New England 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 New England Disclosure
Schedule lists as of the date of this Agreement (i) all real property owned by
New England and each New England Subsidiary; (ii) each real property lease,
sublease or installment purchase arrangement to which New England or any New
England Subsidiary is a party; (iii) a description of each contract for the
purchase, sale, or development of real estate to which New England or any New
England Subsidiary is a party; and (iv) all items of New England's or any New
England Subsidiary's tangible personal property and equipment with a book value
of $50,000 or more or having any annual lease payment of $25,000 or more. Except
for (a) items reflected in New England's consolidated financial statements as of
March 31, 1999 referred to in Section 3.6 hereof, (b) exceptions to title that
do not interfere materially with New England's or any New England 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, (d) properties and assets sold or transferred
in the ordinary course of business consistent with past practices since March
31, 1999, and (e) items listed in Section 3.17 of the New England Disclosure
Schedule, New England and each New England 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 New England as of
March 31, 1999, free and clear of all liens, claims, charges and other
encumbrances. New England and each New England Subsidiary, as lessees, have the
right under valid and subsisting leases to occupy, use and possess all property
leased by them. All properties and assets used by New England and each New
England Subsidiary are in good operating condition and repair (subject to
ordinary wear and tear) suitable for the purposes for which they are currently
utilized and comply in all material respects with all Laws relating thereto now
in effect. New England and each New England Subsidiary enjoy peaceful and
undisturbed possession under all leases for the use of all property under which
they are the lessees, and all leases to which New England or any New England
Subsidiary is a party are valid and binding obligations in accordance with the
terms thereof. Neither New England nor any New England Subsidiary is in material
default with respect to any such lease, and there has occurred no default by New
England or any New England Subsidiary or event which with the lapse of time or
the giving of notice, or both, would constitute a material default under any
such lease. There are no Laws, conditions of record, or other impediments which
interfere with the intended use by New England or any New England Subsidiary of
any of the property owned, leased, or occupied by them.
3.18 INSURANCE. Section 3.18 of the New England Disclosure Schedule
contains a true, correct and complete list of all insurance policies and bonds
maintained by New England and any New England Subsidiary, including the name of
the insurer, the policy number, the type of policy and any applicable
deductibles. The existing insurance carried by New England and New England
Subsidiaries is and will continue to be, in respect of the nature of the risks
insured against and the amount of coverage provided, substantially similar in
kind and amount to that customarily carried by parties similarly situated who
own properties and engage in businesses substantially similar to that of New
England and the New England Subsidiaries, and is sufficient for compliance by
New England and the New England Subsidiaries with all requirements of Law and
agreements to which New England or any of the New England Subsidiaries is
subject or is party. True, correct and complete copies of all such policies and
bonds reflected at Section 3.18 of the New England Disclosure Schedule, as in
effect on the date hereof, have been delivered or made available to Webster.
3.19 COMPLIANCE WITH APPLICABLE LAWS. Each of New England and any New
England Subsidiary has complied in all material respects with all Laws
applicable to it or to the operation of its business. Neither New England nor
any New England Subsidiary has received any notice of any material alleged or
threatened claim, violation, or liability under any such Laws that has not
heretofore been cured and for which there is no remaining liability.
3.20 LOANS. As of the date hereof:
15
(a) All loans owned by New England or any New England
Subsidiary, or in which New England or any New England Subsidiary has
an interest, comply in all material respects with all Laws, including,
but not limited to, applicable usury statutes, underwriting and record
keeping requirements and the Truth in Lending Act, the Equal Credit
Opportunity Act and the Real Estate Procedures Act, and other
applicable consumer protection statutes and the regulations
thereunder.
(b) All loans owned by New England or any New England
Subsidiary, or in which New England or any New England Subsidiary has
an interest, have been made or acquired by New England in all material
respects in accordance with board of director-approved loan policies.
Each of New England and each New England Subsidiary holds mortgages
contained in its loan portfolio for its own benefit to the extent of
its interest shown therein; such mortgages evidence liens having the
priority indicated by their terms, subject, as of the date of
recordation or filing of applicable security instruments, only to such
exceptions as are discussed in attorneys' opinions regarding title or
in title insurance policies in the mortgage files relating to the
loans secured by real property or are not material as to the
collectability of such loans; and, except as set forth in Section
3.20(b) of the New England Disclosure Schedule, all loans owned by New
England and each New England Subsidiary are with full recourse to the
borrowers, and each of New England and any New England Subsidiary has
taken no action which would result in a waiver or negation of any
rights or remedies available against the borrower or guarantor, if
any, on any loan, other than in the ordinary course of business. All
applicable remedies against all borrowers and guarantors are
enforceable except as may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting creditors' rights and
except as may be limited by the exercise of judicial discretion in
applying principles of equity. Except as set forth at Section 3.20(b)
of the New England Disclosure Schedule, all loans purchased or
originated by New England or any New England Subsidiary and
subsequently sold by New England or any New England Subsidiary have
been sold without recourse to New England or any New England
Subsidiary and without any liability under any yield maintenance or
similar obligation. True, correct and complete copies of loan
delinquency reports as of March 31, 1999 prepared by New England and
each New England Subsidiary, which reports include all loans
delinquent or otherwise in default, have been furnished or made
available to Webster. True, correct and complete copies of the
currently effective lending policies and practices of New England and
each New England Subsidiary also have been furnished or made available
to Webster.
(c) Except as set forth in Section 3.20(c) of the New
England Disclosure Schedule, each outstanding loan participation sold
by New England or any New England 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 New England or any New England
Subsidiary) proportionately to the share of such loan represented by
such participation without any recourse of such other lender or
participant to New England or any New England Subsidiary for payment
or repurchase of the amount of such loan represented by the
participation or liability under any yield maintenance or similar
obligation. New England and any New England Subsidiary have properly
fulfilled in all material respects its contractual responsibilities
and duties in any loan in which it acts as the lead lender or servicer
and has complied in all material respects with its duties as required
under applicable regulatory requirements.
(d) New England and each New England 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.
3.21 OWNERSHIP OF WEBSTER COMMON STOCK. Except as set forth at Section
3.21 of the New England Disclosure Schedule, neither New England nor any of its
10% or greater stockholders or affiliates (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
16
case, any shares of outstanding capital stock of Webster (other than those
agreements, arrangements or understandings specifically contemplated hereby).
3.22 FAIRNESS OPINION. New England has received an opinion from each
of AG Edwards & Sons, Inc. and HAS Associates, Inc., in each case to the effect
that, in its opinion, the Exchange Ratio pursuant to this Agreement is fair to
the holders of New England Common Stock from a financial point of view.
3.23 TAX AND ACCOUNTING TREATMENT OF MERGER. As of the date of this
Agreement, New England is not aware of any fact or state of affairs that could
cause the Merger not to be treated as a "reorganization" under Section 368(a) of
the Code or to qualify for "pooling-of-interests" accounting treatment.
3.24 YEAR 2000. None of New England or any New England Subsidiary has
received, or reasonably expects to receive, a "Year 2000 Deficiency Notification
Letter" (as such term is employed in the Federal Reserve Board's Supervision and
Regulation Letter No. SR 98-3(SUP), dated March 4, 1998). New England has made
available to Webster a complete and accurate copy of New England's plan,
including an estimate of the anticipated associated costs, for addressing the
issues ("Year 2000 Issues") set forth in the interagency statements of the
Federal Financial Institutions Examination Council addressed to the boards of
directors and chief executive officers of all federally supervised financial
institutions regarding Year 2000 safety and soundness for insured depository
institutions. Between the date of this Agreement and the Effective Time, New
England shall use reasonable best efforts to implement such plan. New England
and its Subsidiaries have complied in all material respects with the
"Interagency Guidelines Establishing Year 2000 Standards for Safety and
Soundness" issued pursuant to section 39 of the Federal Deposit Insurance Act
and effective October 15, 1998.
3.25 NEW ENGLAND INFORMATION. The information relating to New England
and its Subsidiaries to be provided by New England to be contained in the Joint
Proxy Statement/Prospectus and the Registration Statement will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances in which they are
made, not misleading. The Joint Proxy Statement/Prospectus (except for such
portions thereof that relate only to Webster or any of its Subsidiaries) will
comply in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF WEBSTER
Subject to Article II-A, Webster hereby makes the following
representations and warranties to New England as set forth in this Article IV:
4.1 CORPORATE ORGANIZATION. (a) Webster is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Webster has the corporate power and authority to own or lease all of
its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary. Webster is duly registered as a savings and loan
holding company with the OTS under HOLA. The Restated Certificate of
Incorporation and By-Laws of Webster, copies of which have previously been made
available to New England, 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
17
power and authority to own or lease all of its properties and assets and to
carry on business as is now being conducted, and is duly licensed or qualified
to do business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and assets owned
or leased by it makes such licensing or qualification necessary. The Charter and
By-Laws of Webster Bank, copies of which have previously been made available to
New England, 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 as of
the date hereof consists of 50,000,000 shares of Webster Common Stock, of which
38,008,607 shares were outstanding (net of 470,815 treasury shares) at June 28,
1999, and 3,000,000 shares of serial preferred stock, par value $.01 per share
("Webster Preferred Stock"), 14,000 of which are designated as Series C
Preferred Stock, none of which were outstanding at June 28, 1999. At such date,
there were options outstanding to purchase 2,303,541 shares of Webster Common
Stock. All of the issued and outstanding shares of Webster Common Stock have
been duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the ownership
thereof. As of the date of this Agreement, except as set forth above, Webster
does not have and is not bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of Webster Common Stock or Webster Preferred
Stock or any other equity securities of Webster or any securities representing
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 duly
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 preferred stock, par value $.01 per share, none
of which is issued or outstanding. The outstanding shares of common stock of
Webster Bank are owned by Webster free and clear of all liens, charges,
encumbrances and security interests whatsoever, and all of such shares are duly
authorized and validly issued and fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to ownership thereof.
4.3 AUTHORITY; NO VIOLATION. (a) Webster has full corporate power and
authority to execute and deliver this Agreement and the Option Agreement and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly approved
by the Board of Directors of Webster and by Webster as the sole stockholder of
Webster Bank. The Board of Directors of Webster has directed that this Agreement
and the transactions contemplated hereby be submitted to Webster's stockholders
for approval at a special meeting of such stockholders and, except for the
adoption of this Agreement by the requisite vote of Webster's stockholders, no
other corporate proceedings on the part of Webster are necessary to consummate
the transactions contemplated hereby. This Agreement and the Option Agreement
have been duly and validly executed and delivered by Webster and (assuming due
authorization, execution and delivery by New England) this Agreement constitutes
a valid and binding obligation of Webster, enforceable against Webster 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.
(b) Webster Bank has full corporate power and authority to execute and
deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby will be duly and
validly approved by the Board of Directors of Webster Bank, and by Webster as
the sole stockholder of Webster Bank, prior to the Effective Time. All corporate
proceedings on the part of Webster Bank necessary to consummate the transactions
contemplated by the Bank Merger Agreement will have been taken prior to the
Effective Time. The Bank Merger
18
Agreement, upon due authorization, execution and delivery by Webster Bank and
the New England Banks, 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 of 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, as applicable, nor compliance by Webster or
Webster Bank, as the case may be, with any of the terms or provisions hereof or
thereof, as applicable, will (i) violate any provision of the Restated
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 are duly obtained, (x) violate any Laws
applicable to Webster or 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 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.
4.4 CONSENTS AND APPROVALS. (a) Except for (i) the filing of
applications and notices, as applicable, as to the Merger and the Bank Merger
with the FRB and the OTS; (ii) the filing of applications and notices with the
Connecticut Commissioner and the New Hampshire Commissioner, as well as the
State Banking Approvals, and approval of the applications and notices described
in clause (i) and this clause (ii); (iii) the filing of any required
applications or notices with the FDIC and the OTS as to the subsidiary
activities of each of the New England Banks which become service corporations or
operating subsidiaries of Webster Bank and approval of such applications and
notices; (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 New England Common Stock pursuant to the
Option Agreement, if not exempt; (v) the filing with the SEC of a registration
statement on Form S-4 to register the shares of Webster Common Stock to be
issued or become issuable in connection with the Merger, which will include the
Joint Proxy Statement/Prospectus to be used in soliciting the approval of New
England's stockholders and Webster's stockholders at special meetings of such
stockholders to be held in connection with this Agreement and the transactions
contemplated hereby, and the approval of such stockholders; (vi) the filing of
the Certificate of Merger with the Secretary of State of Delaware pursuant to
the DGCL; (vii) the filings required by the Bank Merger Agreement; (viii) such
filings, authorizations or approvals as may be set forth in Section 3.4 of the
Webster Disclosure Schedule; (ix) such filings and approvals as are required to
be made or obtained under the securities or "Blue Sky" laws of various states or
with Nasdaq (or such other exchange as may be applicable) in connection with the
issuance of the shares of Webster Common Stock pursuant to this Agreement; or
(x) any necessary filing, authorization, approvals or consents of third parties
other than any Government Entity, 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 consummation by Webster of the Merger and the
other transactions contemplated hereby, (3) the execution and delivery by
Webster Bank of the Bank Merger Agreement, and (4) the consummation by Webster
Bank of the transactions contemplated by the Bank Merger Agreement except for
such consents, approvals or filings the failure of which to obtain will not have
a material adverse effect on the ability of New England, Webster, the New
England Banks or Webster Bank to consummate the transactions contemplated
thereby.
19
(b) Webster hereby represents to New England that, as of the date of
this Agreement, it has no knowledge of any reason why approval or effectiveness
of any of the applications, notices or filings referred to in Section 4.4(a)
cannot be obtained or granted on a timely basis.
(c) Webster and Webster Bank have timely filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that they were required to file since December 31, 1996,
with any Regulatory Agencies. As of its respective date, each such report,
registration, statement and amendment complied in all material respects with all
rules and regulations promulgated by the applicable Regulatory Agency and did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except for normal examinations conducted by a Regulatory Agency in
the regular course of the business of Webster and its Subsidiaries, no
Governmental Entity is conducting, or has conducted, any proceeding or
investigation into the business or operations of Webster since December 31,
1996.
4.5 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
Webster has previously delivered to New England true, correct and complete
copies of (i) the audited consolidated statements of condition of Webster and
its Subsidiaries as of December 31 for the fiscal years 1997 and 1998 and the
related audited consolidated statements of income, changes in shareholders'
equity and cash flows for the fiscal years 1996 through 1998, inclusive, as
reported in Webster's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 filed with the SEC under the Exchange Act, in each case
accompanied by the audit report of KPMG LLP, independent public accountants with
respect to Webster; and (ii) the unaudited consolidated statements of condition
of Webster and its Subsidiaries as of March 31, 1999 and 1998 and the related
unaudited consolidated statements of income, changes in shareholders' equity and
cash flows for the interim periods ended March 31, 1999 and 1998, as reported on
Webster's Quarterly Report on Form 10-Q for the period ended March 31, 1999
filed with the SEC under the Exchange Act. 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, 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 consistently applied during the periods involved, except as indicated
in the notes thereto or, in the case of unaudited statements, as permitted by
Form 10-Q. Webster's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 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 New England true, correct and
complete copies of such reports. The books and records of Webster and Webster
Bank have been, and are being, maintained in all material respects in accordance
with GAAP and any other applicable legal and accounting requirements and reflect
only actual transactions.
4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Except as disclosed in
Webster's Annual Report on Form 10-K for the fiscal year ended December 31, 1998
and all reports subsequently filed by Webster under Sections 13(a), 13(e), 14 or
15(d) of the Exchange Act, true, correct and complete copies of which have
previously been delivered or made available to New England, since December 31,
1998, no event has occurred which has had, individually or in the aggregate, a
Material Adverse Effect on Webster.
20
(b) Since December 31, 1998, Webster and its Subsidiaries have carried
on their respective businesses in the ordinary and usual course consistent with
their past practices.
4.7 COMPLIANCE WITH APPLICABLE LAWS. Webster and each Webster
Subsidiary has complied in all material respects with all Laws applicable to it
or to the operation of its business. Neither Webster nor any Webster Subsidiary
has received any notice of any alleged or threatened claim, violation of or
liability or potential responsibility under any such Laws that has not
heretofore been cured and for which there is no remaining liability.
4.8 TAX AND ACCOUNTING TREATMENT OF MERGER. As of the date of this
Agreement, Webster is not aware of any fact or state of affairs that could cause
the Merger not to be treated as a "reorganization" under Section 368(a) of the
Code or to qualify for "pooling-of-interests" accounting treatment.
4.9 LEGAL PROCEEDINGS. (a) Neither Webster nor any of its Subsidiaries
is a party to any, and there are no pending or threatened, legal,
administrative, arbitration or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against Webster or any
of its Subsidiaries in which there is a reasonable probability of any material
recovery against or other material adverse effect upon Webster or any of its
Subsidiaries or which challenge the validity or propriety of the transactions
contemplated by this Agreement or the Option Agreement as to which there is a
reasonable probability of success.
(b) There is no injunction, order, judgment or decree imposed upon
Webster, any of its Subsidiaries or the assets of Webster or any of its
Subsidiaries.
4.10 YEAR 2000. None of Webster or any Webster Subsidiary has
received, or reasonably expects to receive, a "Year 2000 Deficiency Notification
Letter". Webster has made available to New England a complete and accurate copy
of Webster's plan, including an estimate of the anticipated associated costs,
for addressing Year 2000 Issues. Between the date of this Agreement and the
Effective Time, Webster shall use reasonable best efforts to implement such
plan. Webster and its Subsidiaries have complied in all material respects with
the "Interagency Guidelines Establishing Year 2000 Standards for Safety and
Soundness" issued pursuant to section 39 of the Federal Deposit Insurance Act
and effective October 15, 1998.
4.11 WEBSTER INFORMATION. The information relating to Webster and its
Subsidiaries to be provided by Webster to be contained in the Joint Proxy
Statement/Prospectus and the Registration Statement will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances in which they are made,
not misleading. The Joint Proxy Statement/Prospectus (except for such portions
thereof that relate only to New England or any of its Subsidiaries) will comply
in all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 COVENANTS OF NEW ENGLAND. 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 Option Agreement or the Bank
Merger Agreement, or with the prior written consent of Webster, New England and
each New England Subsidiary shall carry on their respective businesses in the
ordinary course consistent with past practices and consistent with prudent
banking practices. New England shall use its reasonable best efforts to (x)
preserve its business organization and that of each New England Subsidiary
intact, (y) keep available to itself and Webster the present services of the
employees of New England and each New England Subsidiary and (z) preserve for
itself and Webster the goodwill of the customers of New England and each New
England Subsidiary and others with whom business relationships exist. Without
limiting the generality of the foregoing,
21
and except as set forth in the New England Disclosure Schedule or as otherwise
expressly contemplated by this Agreement or consented to by Webster in writing,
New England shall not, and shall not permit any New England 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 New England of $0.12
per share on the New England Common Stock with declaration, record and
payment dates corresponding to the quarterly dividends paid by New
England during its fiscal year ended December 31, 1998 and except that
any New England Subsidiary may declare and pay dividends and
distributions to New England). Until the Effective Time, New England
and Webster shall coordinate with the other declaration of any
dividends or other distributions with respect to the New England
Common Stock and the Webster Common Stock and the record dates and
payment dates relating thereto, it being the intention of the parties
that holders of shares of New England Common Stock or Webster Common
Stock shall not receive more than one dividend, or fail to receive one
dividend, for any single calendar quarter on their shares of New
England Common Stock (including any shares of Webster Common Stock
received in exchange therefor in the Merger) or Webster Stock, as the
case may be.
(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 and outstanding as of the date hereof pursuant to the
New England Stock Plans in accordance with their present terms, and
except pursuant to the Option Agreement, or (ii) repurchase, redeem or
otherwise acquire any shares of the capital stock of New England
(except in connection with the exercise of options issued and
outstanding as of the date hereof pursuant to the New England Stock
Plans) or any New England Subsidiary, or any securities convertible
into or exercisable for any shares of the capital stock of New England
or any New England 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 New England Common Stock pursuant to stock options or
similar rights to acquire New England Common Stock granted pursuant to
the New England Stock Plans outstanding prior to the date of this
Agreement in accordance with their present terms and (ii) pursuant to
the Option Agreement;
(d) amend its Certificate of Incorporation, By-Laws or other
similar governing documents;
(e) authorize or permit any of its or its Subsidiaries'
officers, directors, employees, agents, advisors and affiliates to,
directly or indirectly, solicit or encourage inquiries or proposals
with respect to, or engage in any negotiations concerning, or provide
any confidential information to, or have any discussions with, any
such person relating to, any tender offer or exchange offer for, or
any proposal for the acquisition of a substantial equity interest in,
or a substantial portion of the assets of, or any merger or
consolidation with, New England or any of its Significant
Subsidiaries; provided, however, that New England may, and may
authorize and permit its officers, directors, employees or agents to,
furnish or cause to be furnished confidential information and may
participate in such discussions and negotiations if New England's
Board of Directors, after having consulted with and considered the
advice of outside counsel, has determined that the failure to provide
such information or participate in such negotiations and discussion
could cause the members of such Board of Directors to breach their
fiduciary duties under applicable laws. New England shall promptly
(within 24 hours) advise Webster of its receipt of any such proposal
22
or inquiry, of the substance thereof, and of the identity of the
person making such proposal or inquiry;
(f) make capital expenditures aggregating in excess of
$100,000;
(g) enter into any new line of business;
(h) acquire or agree to acquire, by merging or consolidating
with, or by purchasing an equity interest in or the assets of, or by
any other manner, any business or any corporation, 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;
(j) change its methods of accounting in effect at December
31, 1998 except as required by changes in GAAP as concurred to by New
England's independent auditors;
(k) (i) except as required by applicable law or to maintain
qualification pursuant to the Code, adopt, amend, renew or terminate
any Plan or any agreement, arrangement, plan or policy between New
England or any New England Subsidiary and one or more of its current
or former directors, officers or employees, (ii) other than merit and
promotional increases in the ordinary course of business consistent
with past practices and in any event not to exceed 5% of base pay for
any individual or, in the aggregate, of New England's total payroll as
of the date hereof, increase in any manner the compensation of any
officer, employee or director or pay any benefit not required by any
Plan or agreement as in effect as of the date hereof (including,
without limitation, the granting of stock options, stock appreciation
rights, restricted stock, restricted stock units or performance units
or shares), (iii) enter into, modify or renew any contract, agreement,
commitment or arrangement providing for the payment to any director,
officer or employee of compensation or benefits, (iv) except as set
forth in Section 5.1 of the New England Disclosure Schedule, hire any
new employee at an annual compensation in excess of $35,000, (v)
except as set forth in Section 5.1 of the New England Disclosure
Schedule, pay expenses of any officers, employees or directors for
attending conventions or similar meetings which conventions or
meetings are held after the date hereof, (vi) promote to a rank of
vice president or more senior any employee, (vii) pay any retention or
other bonuses or any severance to any employees, except for bonuses
totaling no more than $250,000 in the aggregate awarded to such
persons and at such times as shall be agreed in advance with Webster,
or (viii) make any non-deductible 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 other than the incurrence of deposit liabilities in the
ordinary course of business consistent with past practice;
(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;
23
(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 New England or
any New England Subsidiary;
(p) make any investment, other than in the ordinary course
of business consistent with past practices, or make any equity
investments or investments in callable securities;
(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 New England lending policies, (ii) nonconforming residential
mortgage loans in excess of $250,000, (iii) unsecured consumer loans
in excess of $25,000, (iv) commercial real estate first mortgage loans
or other commercial loans in excess of $1,000,000 as to any loan or
$1,500,000 in the aggregate as to related loans, or loans to related
persons (provided that in the case of loans covered by this clause
(iv) the consent of Webster shall not be unreasonably withheld), 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 $250,000, except in each case for (A) loans for
which written commitments have been issued by New England as of the
date hereof and (B) renewals of loans existing as of the date of this
Agreement or loans permitted pursuant to this Section 5.1(r);
(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
other than by Mortgage Corp. in the ordinary course consistent with
past practice;
(u) make any Tax election, or settle or compromise any Tax
liability; or
(v) agree or commit to do any of the actions set forth in
clauses (a) - (u) of this Section 5.1.
The consent of Webster to any action by New England or any New England
Subsidiary that is not permitted by any of the preceding paragraphs shall be
evidenced only by a writing signed by the Chief Executive Officer or any
Executive Vice President of Webster.
5.2 COVENANTS OF WEBSTER. During the period from the date of this
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement or with New England's prior written
consent, Webster shall not, and shall not permit Webster Bank to:
(a) take any action that will result in any of Webster's
representations and warranties set forth in this Agreement being or
becoming untrue or 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, except, in every case, as may be required by
applicable Law; or
(b) take any other action that would materially adversely
affect or materially delay the ability of Webster to obtain the
Requisite Regulatory Approvals or otherwise materially adversely
affect Webster's and Webster Bank's ability to consummate the
transactions contemplated by this Agreement.
24
5.3 MERGER COVENANTS. Notwithstanding that New England believes that
it has established all reserves and taken all provisions for possible loan
losses required by GAAP and applicable laws, rules and regulations, New England
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, New England 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, New England's loan, accrual and reserve policies to those
policies of Webster to the extent appropriate.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS. (a) Upon the execution and delivery of this
Agreement, Webster and New England (as to information to be included therein
pertaining to New England) shall promptly cause to be prepared and filed with
the SEC a registration statement of Webster on Form S-4, including the Joint
Proxy Statement/Prospectus (the "Registration Statement") for the purpose of
registering the Webster Common Stock to be issued in the Merger, and for
soliciting, pursuant to Delaware law, the adoption and approval of this
Agreement and the Merger by the stockholders of New England and Webster. Webster
and New England shall use their reasonable best efforts to have the Registration
Statement declared effective by the SEC as soon as possible after the filing
thereof. 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 a party
hereto is discovered by such party that should be set forth in an amendment of,
or a supplement to, the Registration Statement, including the Joint Proxy
Statement/Prospectus, such party shall promptly inform the other party, and
shall furnish such other party 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, each of Webster and New England (if prior to the meeting of its
respective stockholders 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 stockholders 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 New England shall furnish all
information concerning New England and the holders of New England Common Stock
as may be reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use their
best efforts to promptly prepare and file all necessary documentation, to effect
all applications, notices, petitions and filings, and to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable to consummate
the transactions contemplated by this Agreement (including without limitation
the Merger); provided, however, that neither Webster nor Webster Bank will be
obligated to agree to any unduly burdensome condition sought to be imposed by
any Governmental Entity. New England 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 New England 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
25
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 consummation of the transactions
contemplated herein.
(c) New England shall, upon request, furnish Webster with all
information concerning New England and its directors, officers and stockholders
and such other matters as may be reasonably necessary or advisable in connection
with the Registration Statement or any other statement, filing, notice or
application made by or on behalf of Webster to any Governmental Entity in
connection with the Merger or the other transactions contemplated by this
Agreement.
(d) Webster and New England 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, New England shall
accord to the officers, employees, accountants, counsel and other
representatives of Webster, access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, New England shall make
available to Webster (i) a copy of each report, schedule, registration statement
and other document filed or received by it during such period pursuant to the
requirements of federal securities laws or federal or state banking laws and
(ii) all other information concerning its business, properties and personnel as
Webster may reasonably request. Webster shall receive notice of all meetings of
the New England Board of Directors and any committees thereof, and of any
management committees (in all cases, at least as timely as all New England
representatives to such meetings are required to be provided notice), and, to
the extent not prohibited by law, New England shall keep Webster apprised of all
resolutions passed or other actions taken by the New England Board of Directors
and any committees thereof. 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 New England dated May
18, 1999 (the "Confidentiality Agreement").
(b) Upon reasonable notice and subject to applicable Laws relating to
the exchange of information, Webster shall afford to the officers, employees,
accountants, counsel and other representatives of New England, access, during
normal business hours during the period prior to the Effective Time, to such
information regarding Webster as shall be reasonably necessary for New England
to fulfill its obligations pursuant to this Agreement or which may be reasonably
necessary for New England 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. New England 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) New England shall provide Webster with true, correct and complete
copies of all financial and other information provided to directors of New
England in connection with meetings of their Boards of Directors or committees
thereof.
6.3 STOCKHOLDER MEETINGS. Each of Webster and New England shall take
all steps necessary to duly call, give notice of, convene and hold a meeting of
its stockholders within 40 days after the Registration Statement becomes
effective for the purpose of voting upon the approval of this Agreement and the
Merger. The Board of Directors of each of Webster and New England shall declare
advisable and recommend to such company's stockholders approval of this
Agreement, including the Merger, and the transactions contemplated hereby,
together with any matters incident
26
thereto; and in each case shall oppose any third party proposal or other action
that is inconsistent with this Agreement or the consummation of the transactions
contemplated hereby; provided, however, that the New England Board of Directors
shall not be required to make or maintain such recommendation, or to continue
such opposition, if such Board of Directors reasonably determines, based upon
and consistent with the written advice of outside counsel to New England, as the
case may be, that such recommendation or opposition would constitute a breach of
its fiduciary duties to New England's stockholders. New England and Webster
shall coordinate and cooperate with respect to the foregoing matters.
6.4 LEGAL CONDITIONS TO MERGER. Each of Webster and New England shall
use its reasonable best efforts (a) to take, or cause to be taken, all actions
reasonably necessary, proper or advisable to comply promptly with all legal
requirements which may be imposed on such party with respect to the Merger and
the Bank 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 New England or Webster or any of
their respective Subsidiaries in connection with the Merger and the other
transactions contemplated by this Agreement, the Option Agreement and the Bank
Merger Agreement; provided, however, that Webster shall not be obligated to
agree to any unduly burdensome condition sought to be imposed by any
Governmental Entity.
6.5 STOCK EXCHANGE LISTING. Webster shall cause the shares of Webster
Common Stock to be issued in the Merger and pursuant to options referred to
herein to be approved for quotation on the Nasdaq Stock Market National Market
(or such other exchange on which the Webster Common Stock has become listed, or
approved for listing) prior to or at the Effective Time.
6.6 EMPLOYEES. (a) Following the Effective Time and until such time as
Webster in its reasonable discretion and in accordance with applicable law
determines that the employees of New England as of the Effective Time (the "New
England Employees") shall participate in the employee benefit plans and programs
provided to similarly situated employees of Webster Bank, the benefits to be
provided to the New England Employees shall be the benefit plans and programs
that were provided by New England to such employees immediately before the
Effective Time.
(b) To the extent permissible under the applicable provisions of the
Code and ERISA, at such time as the New England Employees are integrated into
the employee benefit plans of Webster Bank, Webster shall, or shall cause
Webster Bank to, recognize the prior service with New England or its
subsidiaries (to the extent such service was recognized by New England or its
subsidiaries under any comparable New England Plan) of each New England
Employee, as if such service had been with Webster or Webster Bank, (i) for
purposes of eligibility to participate in and the satisfaction of vesting and
service requirements for retirement benefits, such as early, normal and
disability retirement benefits, but not for benefit accrual purposes, under the
Webster Bank 401(k) savings plan and the Webster Bank defined benefit pension
plan (and not for any purpose under the Webster employee stock ownership plan)
and (ii) for purposes of eligibility to participate in and levels of benefits
under the Webster welfare benefit and vacation plans. In addition, following the
Effective Time, Webster shall provide New England Employees with severance
benefits on the terms and conditions set forth on Schedule 6.6(b) hereof.
(c) 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 New England that are listed
at Section 3.11 of the New England Disclosure Schedule.
6.7 INDEMNIFICATION. (a) In the event of any threatened or actual
claim, action, suit, proceeding or investigation, whether civil, criminal or
administrative, in which any person who is now, or has been at any time prior to
the date of this Agreement, or who becomes prior to the Effective Time, a
director or officer or employee of New England or any of its Subsidiaries (the
"Indemnified Parties") is, or is threatened to be, made a party based in whole
or in part on, or arising
27
in whole or in part out of, or pertaining to (i) the fact that he is or was a
director, officer or employee of New England or any of its Subsidiaries or any
of their respective predecessors or (ii) this Agreement or the Option Agreement
or any of the transactions contemplated hereby or thereby, whether in any case
asserted or arising before or after the Effective Time, the parties hereto agree
to cooperate and use their best efforts to defend against and respond thereto.
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, each such Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including reasonable attorney's fees and expenses
in advance of the final disposition of any claim, suit, proceeding or
investigation to each Indemnified Party to the fullest extent permitted by law
upon receipt of any undertaking required by applicable law), judgments, fines
and amounts paid in settlement in connection with any such threatened or actual
claim, action, suit, proceeding or investigation, and in the event of any such
threatened or actual claim, action, suit, proceeding or investigation (whether
asserted or arising before or after the Effective Time), the Indemnified Parties
may retain counsel reasonably satisfactory to Webster; provided, however, that
(1) Webster shall have the right to assume the defense thereof and upon such
assumption Webster shall not be liable to any Indemnified Party for any legal
expenses of other counsel or any other expenses subsequently incurred by any
Indemnified Party in connection with the defense thereof, except that if Webster
elects not to assume such defense or counsel for the Indemnified Parties
reasonably advises the Indemnified Parties that there are issues which raise
conflicts of interest between Webster and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to Webster, and
Webster shall pay the reasonable fees and expenses of such counsel for the
Indemnified Parties, (2) Webster shall be obligated pursuant to this paragraph
to pay for only one firm of counsel for each Indemnified Party, and (3) Webster
shall not be liable for any settlement effected without its prior written
consent (which consent shall not be unreasonably withheld or delayed). Any
Indemnified Party wishing to claim indemnification under this Section 6.7, upon
learning of any such claim, action, suit, proceeding or investigation, shall
promptly 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 six years from the Effective Time; provided, however, that all rights
to indemnification in respect of any claim asserted or made within such period
shall continue until the final disposition of such claim.
(b) Webster shall use its reasonable best efforts to cause the persons
serving as officers and directors of New England immediately prior to the
Effective Time to be covered for a period of two years from the Effective Time
by the directors' and officers' liability insurance policy maintained by the New
England (provided that Webster may substitute therefore policies of at least the
same coverage and amounts containing terms and conditions which are not less
advantageous than such policy) with respect to acts or omissions occurring prior
to the Effective Time (including, without limitation, actions or omissions
relating to the transactions contemplated hereby) which were committed by such
officers and directors in their capacity as such; provided, however, that in no
event shall Webster be required to expend more than 200% of the current amount
expended by New England (the "Insurance Amount") to maintain or procure
insurance coverage pursuant hereto; and provided further, that if Webster is
unable to maintain or obtain the insurance called for by this Section 6.7(b),
Webster shall use its reasonable best efforts to obtain as much comparable
insurance as available for the Insurance Amount.
(c) In the event Webster or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Webster
assume the obligations set forth in this section.
(d) The provisions of this Section 6.7 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
28
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
New England and New England will deliver to Webster their respective Quarterly
Reports on Form 10-Q, as filed with the SEC under the Exchange Act. Each party
shall deliver to the other any Current Reports on Form 8-K promptly after filing
such reports with the SEC.
6.9 ADDITIONAL AGREEMENTS. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of New England,
the proper officers and directors of each party to this Agreement, and Webster's
and New England's Subsidiaries, shall take all such necessary action as may be
reasonably requested by Webster.
6.10 ADVICE OF CHANGES. Webster and New England shall promptly advise
the other party of any change or event that, individually or in the aggregate,
has had or would be reasonably certain to have a Material Adverse Effect on it
or to cause or constitute a material breach of any of its representations,
warranties or covenants contained herein. From time to time prior to the
Effective Time, each party will promptly supplement or amend its disclosure
schedule delivered in connection with the execution of this Agreement to reflect
any matter which, if existing, occurring or known at the date of this Agreement,
would have been required to be set forth or described in such disclosure
schedule or which is necessary to correct any information in such disclosure
schedule which has been rendered inaccurate thereby. No supplement or amendment
to such disclosure schedule shall have any effect for the purpose of determining
satisfaction of the conditions set forth in Sections 7.2(a) or 7.3(a) hereof, as
the case may be, or the compliance by New England or Webster, as the case may
be, with the respective covenants set forth in Sections 5.1 and 5.2 hereof.
6.11 CURRENT INFORMATION. During the period from the date of this
Agreement to the Effective Time, New England 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 New England. New England will promptly notify
Webster of any material change in the normal course of business or in the
operation of the properties of New England 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 New
England, and will keep Webster fully informed of such events.
6.12 CHANGE IN STRUCTURE; STOCKHOLDER APPROVAL. Webster may elect (x)
to modify the structure of the transactions contemplated by this Agreement as
noted herein so long as (i) there are no adverse tax consequences to the New
England stockholders as a result of such modification, (ii) the consideration to
be paid to the New England stockholders under this Agreement is not thereby
changed or reduced in amount, and (iii) such modification will not materially
delay or jeopardize receipt of any required regulatory approvals or (y) upon a
determination by Webster that the approval or adoption of this Agreement by
Webster stockholders is not required by applicable law or SRO rule, and
notwithstanding any other provision of this Agreement to the contrary, to not
solicit such approval or adoption. In the event that Webster determines to do
either or both of the foregoing, the parties agree to modify this Agreement and
the various exhibits hereto to reflect such revised terms. In any such event,
Webster shall prepare appropriate amendments to this Agreement and the exhibits
hereto for execution by the parties hereto. New England agrees to cooperate
fully with Webster to effect such amendments.
6.13 TRANSACTION EXPENSES OF NEW ENGLAND. As promptly as practicable
after the execution of this Agreement, New England will provide to Webster an
estimate of the expenses New England expects to incur in connection with the
Merger, and shall keep Webster reasonably informed of material changes in such
estimate.
29
6.14 AFFILIATE AGREEMENTS. (a) Not later than the 15th day prior to
the mailing of the Joint Proxy Statement/Prospectus, (i) Webster shall deliver
to New England a schedule of each person that, to the best of its knowledge, is
or is reasonably likely to be, as of the date of the Webster stockholder meeting
called pursuant to Section 6.3, deemed to be an "affiliate" of it (each, a
"Webster Affiliate") as that term is used in SEC Accounting Series Releases 130
and 135; and (ii) New England shall deliver to Webster a schedule of each person
that, to the best of its knowledge, is or is reasonably likely to be, as of the
date of the New England stockholder meeting called pursuant to Section 6.3,
deemed to be an "affiliate" of it (each, an "New England Affiliate") as that
term is used in Rule 145 under the Securities Act or SEC Accounting Series
Releases 130 and 135.
(b) Each of Webster and New England shall use its reasonable best
efforts to cause each person who may be deemed to be an New England Affiliate or
a Webster Affiliate, as the case may be, to execute and deliver to New England
and Webster on or before the date of mailing of the Joint Proxy
Statement/Prospectus an agreement in the form attached hereto as Exhibit C or
Exhibit D, respectively.
(c) Webster shall use its best efforts to publish as promptly as
reasonably practical, but in no event later than 45 days after the end of the
first month after the Effective Time in which there are at least 30 days of
post-Merger combined operations (which month may be the month in which the
Effective Time occurs), combined sales and net income figures as contemplated by
and in accordance with the terms of SEC Accounting Series Release No. 135.
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) Stockholder Approval. This Agreement and the Merger shall have
been approved and adopted by the requisite votes of the New England stockholders
and the Webster Stockholders.
(b) Stock Exchange Listing. The shares of Webster Common Stock which
shall be issued or become issuable in or in connection with the Merger upon
consummation thereof shall have been authorized, subject to official notice of
issuance, for quotation on the Nasdaq Stock Market National Market (or such
other national securities market or exchange on which the Webster Common Stock
may have become listed or authorized for quotation).
(c) Other Approvals. All regulatory approvals required to consummate
the transactions contemplated hereby shall have been obtained (consistent with
the provisions of Sections 6.1(b) and 6.4 hereof) 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").
(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 or the Certificate of Merger shall be in effect. No statute,
rule, regulation, order, injunction or decree shall have been enacted, entered,
30
promulgated or enforced by any Governmental Entity which prohibits, restricts or
makes illegal consummation of the Merger of the Bank Merger. No proceeding
initiated by any Governmental Entity seeking an Injunction shall be pending.
(f) Federal Tax Opinion. Webster and New England shall have received
an opinion from Day, Berry and Howard, LLP, counsel to New England, in form and
substance reasonably satisfactory to Webster and New England, respectively,
dated the date of the Effective Time, in each case, 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 Effective
Time, each of the Merger and each of the mergers included in the Bank Merger
will be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and each of Webster and New England will
be a party to the reorganization in respect of the Merger with the meaning of
Section 368(b) of the Code and that, accordingly, for federal income tax
purposes, (i) no gain or loss will be recognized by Webster or New England as a
result of the Merger or by the constituent banks as a result of the Bank Merger,
(ii) no gain or loss will be recognized by the stockholders of New England who
exchange all of their New England Common Stock solely for Webster Common Stock
pursuant to the Merger (except with respect to cash received in lieu of a
fractional share interest in Webster Common Stock), and (iii) the aggregate tax
basis of the Webster Common Stock received (including a fractional share
interest deemed received) by stockholders who exchange all of their New England
Common Stock solely for Webster Common Stock pursuant to the Merger will be the
same as the aggregate tax basis of the New England Common Stock surrendered in
exchange therefor. In rendering such opinion, such counsel may require and rely
upon representations contained in certificates of officers of New England,
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. Subject to the standard set forth
in Section 2A.2, the representations and warranties of New England 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.
Webster shall have received a certificate signed on behalf of New England by
each of the President and Chief Executive Officer and the Chief Financial
Officer of New England to the foregoing effect.
(b) Performance of Covenants and Agreements of New England. New
England 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
New England by each of the President and Chief Executive Officer and the Chief
Financial Officer of New England to such effect.
(c) Pooling of Interests. Webster shall have received, as of the
Effective Time, a written opinion of KPMG LLP to the effect that the Merger will
be accounted for as a pooling-of-interests.
7.3 CONDITIONS TO OBLIGATIONS OF NEW ENGLAND. The obligation of New
England to effect the Merger is also subject to the satisfaction or waiver by
New England at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. Subject to the standard set forth
in Section 2A.2, 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. New England
shall have received a certificate signed on behalf of Webster by each of
31
the President and Chief Executive Officer and the Chief Financial Officer of
Webster to the foregoing effect.
(b) Performance of Covenants and Agreements of Webster. Webster 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. New
England shall have received a certificate signed on behalf of Webster by each of
the President and Chief Executive Officer and the Chief Financial Officer of
Webster to such effect.
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 this Agreement by the
stockholders of Webster or New England:
(a) by mutual consent of Webster and New England 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 New England 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, 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 New England if the Merger shall not
have been consummated on or before the first anniversary of the date
hereof, unless the failure of the Closing to occur by such date shall
be due to the failure of the party seeking to terminate this Agreement
to perform or observe the covenants and agreements of such party set
forth herein;
(d) by either Webster or New England, if the approval of the
stockholders of either party required for the consummation of the
Merger shall not have been obtained by reason of the failure to obtain
the required vote at the duly held meeting of such party's
stockholders or at any adjournment or postponement thereof;
(e) by either Webster or New England (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, would entitle the terminating party not to consummate the
Merger pursuant to Article VII if such breach were to occur or
continue on the Closing Date, and such breach shall not have been
cured within 30 days following receipt by the breaching party of
written notice of such breach from the other party hereto or such
breach, by its nature, cannot be cured prior to the Closing;
(f) by either Webster or New England (provided that the
terminating party is not then in breach of any representation,
warranty, covenant or other agreement contained
32
herein that, individually or in the aggregate, would give the other
party the right to terminate this Agreement) if there shall have been
a material breach of any of the covenants or agreements set forth in
this Agreement on the part of the other party, and such breach shall
not have been cured within 30 days following receipt by the breaching
party of written notice of such breach from the other party hereto or
such breach, by its nature, cannot be cured prior to the Closing;
(g) by the Board of Directors of Webster or the Board of
Directors of New England, if the Board of Directors of the other shall
have withdrawn, modified or changed in a manner adverse to the
terminating party its approval or recommendation of this Agreement;
and
(h) by the Board of Directors of New England, upon written
notice to Webster at any time during the ten-day period commencing two
days after the Determination Date (as defined below), if both of the
following conditions are satisfied:
(i) the Average Closing Price shall be less than
the product of 0.80 and the Starting Price; and
(ii) (A) the quotient obtained by dividing the
Average Closing Price by the Starting Price (such number
being referred to herein as the "Webster Ratio") shall be
less than (B) the quotient obtained by dividing the Average
Index Price by the Index Price on the Starting Date and
subtracting 0.15 from the quotient in this clause (ii)(B)
(such number being referred to herein as the "Index Ratio");
subject, however, to the following provisions. If New England elects to exercise
its termination right pursuant to the immediately preceding sentence, it shall
give prompt written notice to Webster; provided, however, that such notice of
election to termination may be withdrawn at any time within the aforementioned
ten-day period. During the five-day period commencing with its receipt of such
notice, Webster shall have the option to elect to increase the Exchange Ratio to
equal the lesser of (i) the quotient obtained by dividing (A) the product of
0.80, the Starting Price and the Exchange Ratio (as then in effect) by (B) the
Average Closing Price, and (ii) the quotient obtained by dividing (A) the
product of the Index Ratio and the Exchange Ratio (as then in effect) by (B) the
Webster Ratio. If Webster makes such an election within such five-day period, it
shall give prompt written notice to New England of such election and of the
revised Exchange Ratio, whereupon no termination shall have occurred pursuant to
this Section 8.1(h) and this Agreement shall remain in effect in accordance with
its terms (except as the Exchange Ratio shall have been so modified), and any
references in this Agreement to "Exchange Ratio" shall thereafter be deemed to
refer to the Exchange Ratio as adjusted pursuant to this Section 8.1(h) (and
corresponding a corresponding modification shall be made to the Maximum Share
Amount).
For purposes of this Section 8.1(h), the following terms shall have
the meanings indicated:
"Average Closing Price" means the average of the daily last
sale prices of Webster Common Stock as reported on Nasdaq (as reported
in The Wall Street Journal or, if not reported therein, in another
mutually agreed upon authoritative source) for the twenty consecutive
full trading days in which such shares are traded on Nasdaq ending at
the close of trading on the Determination Date.
"Average Index Price" means the average of the Index Prices
for the twenty consecutive full trading days ending at the close of
trading on the Determination Date.
"Determination Date" means the date on which the approval of
the OTS required for consummation of the Merger shall be received.
33
"Index Group" means the 16 savings and loan holding
companies and thrifts listed below, the common stocks of all of which
shall be publicly traded and as to which there shall not have been,
since the Starting Date and before the Determination Date, an
announcement of a proposal for such company to be acquired or for such
company to acquire another company or companies in transactions with a
value exceeding 25% of the acquiror's market capitalization as of the
Starting Date. In the event that the common stock of any such company
ceases to be publicly traded or any such announcement is made with
respect to any such company, such company shall be removed from the
Index Group, and the weights (which have been determined based on the
number of outstanding shares of common stock) redistributed
proportionately for purposes of determining the Index Price. The 16
savings and loan holding companies and the weights attributed to them
are as follows:
COMPANY WEIGHTING (%)
------- -------------
Sovereign Bancorp, Inc. 16.13
Dime Bancorp, Incorporated 10.93
Peoples Heritage Financial Group, Inc. 10.22
Roslyn Bancorp, Inc. 7.55
Fulton Financial Corporation 6.79
Independence Community Bank Corp. 6.58
People's Bank (MHC) 6.16
Valley National Bancorp 5.70
Astoria Financial Corporation 5.48
Keystone Financial, Inc. 4.78
Staten Island Bancorp, Inc. 4.15
Hudson United Bancorp 3.88
Suquehanna Bancshares, Inc. 3.63
Richmond County Financial Corp. 3.21
Commerce Bancorp, Inc. 2.70
Queens County Bancorp, Inc. 2.12
"Index Price" on a given date means the weighted average
(weighted in accordance with the factors listed above) of the closing
prices on such date of the companies comprising the Index Group.
"Starting Date" means the last full day on which Nasdaq was
open for trading prior to the execution of this Agreement.
"Starting Price" shall mean the last sale price per share of
Webster Common Stock on the Starting Date, as reported on Nasdaq (as
reported in The Wall Street Journal or, if not reported therein, in
another mutually agreed upon authoritative source).
If Webster or any company belonging to the Index Group declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between the Starting Date
and the Determination Date, the prices for the common stock of such company
shall be appropriately adjusted for the purposes of applying this Section
8.1(h).
34
8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Webster or New England 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 stockholders of New
England; provided, however, that after any approval of the transactions
contemplated by this Agreement by New England's stockholders, there may not be,
without further approval of such stockholders, any amendment of this Agreement
which reduces the amount or changes the form of the consideration to be
delivered to New England stockholders hereunder other than as contemplated by
this Agreement. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
8.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 CLOSING. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") will take place at 10:00 a.m. at the
main offices of Webster on (i) the fifteenth day after the last Requisite
Regulatory Approval is received and all applicable waiting periods have expired,
or (ii) such other date, place and time as the parties may agree (the "Closing
Date").
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None of
the representations, warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement (other than pursuant to
the Option Agreement, which shall terminate in accordance with its terms) shall
survive the Effective Time, except for those covenants and agreements contained
herein and therein which by their terms apply in whole or in part after the
Effective Time.
9.3 EXPENSES. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense, except that all filing and other fees paid to the SEC in
connection with this Agreement and printing fees in connection with the Joint
Proxy Statement/Prospectus shall be borne equally by Webster and New England.
Notwithstanding the foregoing and without limitation of any party's rights under
clause (ii) of Section 8.2, in the event that this Agreement is terminated by
either Webster or New England by reason of a material breach pursuant to
Sections 8.1(e) or (f) hereof, the other party shall pay all documented and
reasonable costs and expenses up to $1,500,000 incurred by the terminating party
in connection with this Agreement and the transactions contemplated hereby.
35
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 TO:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attn.: Craig M. Wasserman, Esq.
and
(b) if to New England, to:
New England Community Bancorp, Inc.
176 Broad Street, P.O. Box 130
Windsor, Connecticut 06095
Attn.: David A. Lentini
Chairman, President and
Chief Executive Officer
WITH A COPY TO:
Day, Berry & Howard, LLP
City Place I
Hartford, CT 06103-3499
Attn: Robert M. Taylor, III, 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 and the Option Agreement.
36
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.
9.10 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
9.11 PUBLICITY. Except as otherwise required by law or the rules of
the Nasdaq Stock Market National Market (or such other national securities
market or exchange on which the Webster Common Stock may become listed), so long
as this Agreement is in effect, neither Webster nor New England shall, or shall
permit any of Webster's or New England'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 Option Agreement or the Bank Merger Agreement without the
consent of the other party, which consent shall not be unreasonably withheld.
9.12 ASSIGNMENT; LIMITATION OF BENEFITS. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. Except as otherwise
specifically provided in Section 6.7 hereof, this Agreement (including the
documents and instruments referred to herein) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder, and the
covenants, undertakings and agreements set out herein shall be solely for the
benefit of, and shall be enforceable only by, the parties hereto and their
permitted assigns.
9.13 ADDITIONAL DEFINITIONS. In addition to any other definitions
contained in this Agreement, the following words, terms and phrases shall have
the following meanings when used in this Agreement.
"Affiliated Person": any director, officer or 5% or greater
stockholder, spouse or other person living in the same household of such
director, officer or stockholder, or any company, partnership or trust in which
any of the foregoing persons is an officer, 10% or greater stockholder, general
partner or 10% or greater trust beneficiary.
"Laws": any and all statutes, laws, ordinances, rules, regulations,
orders, permits, judgments, injunctions, decrees, case law and other rules of
law enacted, promulgated or issued by any Governmental Entity.
"Material Adverse Effect": with respect to Webster or New England, as
the case may be, means a condition, event, change or occurrence that has had or
is reasonably expected to have a material adverse effect upon (A) the financial
condition, results of operations or business of such party and its Subsidiaries,
taken as a whole, or (B) the ability of Webster, Webster Bank or
37
New England to timely perform its obligations under, and to consummate the
transactions contemplated by, this Agreement, the Option Agreement or the Bank
Merger Agreement.
"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.
38
IN WITNESS WHEREOF, Webster and New England 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
By: /s/ James C. Smith
-------------------------------------------
Name: James C. Smith
Title: Chairman and Chief Executive Officer
NEW ENGLAND COMMUNITY BANCORP, INC.
By: /s/ David A. Lentini
-------------------------------------------
Name: David A. Lentini
Title: Chairman, President and Chief
Executive Officer
39