Exhibit 2.4
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
NEWALLIANCE BANCSHARES, INC.
AND
NEWALLIANCE BANK
AND
WESTBANK CORPORATION
AND
WESTBANK
DATED AS OF
July 18, 2006
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER....................................................................... 1
ARTICLE I.......................................................................................... 2
CERTAIN DEFINITIONS............................................................................. 2
1.1 Certain Definitions................................................................. 9
ARTICLE II......................................................................................... 9
THE MERGER ..................................................................................... 9
2.1 The Merger.......................................................................... 9
2.2 The Bank Merger..................................................................... 9
2.3 Effective Time...................................................................... 9
2.4 Certificate of Incorporation and Bylaws............................................. 9
2.5 Directors and Officers of Surviving Corporation..................................... 9
2.6 Directors and Officers of Surviving Bank............................................ 10
2.7 Additional Actions.................................................................. 10
2.8 Effects of the Merger............................................................... 10
2.9 Possible Alternative Structures..................................................... 10
ARTICLE III........................................................................................ 11
CONVERSION OF SHARES AND OPTIONS................................................................ 11
3.1 Exchange of Westbank Common Stock; Merger Consideration............................. 11
3.2 Proration and Election Procedures................................................... 12
3.3 Procedures for Exchange of Westbank Common Stock.................................... 14
ARTICLE IV......................................................................................... 17
REPRESENTATIONS AND WARRANTIES OF WESTBANK AND WB............................................... 17
4.1 Capital Structure................................................................... 17
4.2 Organization, Standing and Authority of Westbank.................................... 17
4.3 Ownership of Westbank Subsidiaries.................................................. 18
4.4 Organization, Standing and Authority of Westbank Subsidiaries....................... 18
4.5 Authorized and Effective Agreement.................................................. 18
4.6 Securities Documents and Regulatory Reports......................................... 20
4.7 Financial Statements................................................................ 20
4.8 Material Adverse Change............................................................. 21
4.9 Environmental Matters............................................................... 21
4.10 Tax Matters......................................................................... 23
4.11 Legal Proceedings................................................................... 24
4.12 Compliance with Laws................................................................ 24
4.13 Certain Information................................................................. 25
4.14 Employee Benefit Plans.............................................................. 25
4.15 Certain Contracts................................................................... 28
4.16 Brokers and Finders................................................................. 29
4.17 Insurance........................................................................... 29
4.18 Properties.......................................................................... 30
4.19 Labor............................................................................... 30
4.20 Certain Transactions................................................................ 30
4.21 Fairness Opinion.................................................................... 30
4.22 Loan Portfolio...................................................................... 30
4.23 Required Vote; Inapplicability of Anti-takeover Statutes............................ 31
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4.24 Material Interests of Certain Persons............................................... 32
4.25 Joint Ventures...................................................................... 32
4.26 Intellectual Property............................................................... 32
4.27 Disclosures......................................................................... 33
ARTICLE V.......................................................................................... 33
REPRESENTATIONS AND WARRANTIES OF NEWALLIANCE AND NAB........................................... 33
5.1 Capital Structure................................................................... 33
5.2 Organization, Standing and Authority of NewAlliance................................. 33
5.3 Organization, Standing and Authority of NewAlliance Subsidiaries.................... 34
5.4 Authorized and Effective Agreement.................................................. 34
5.5 Regulatory Reports.................................................................. 35
5.6 Financial Statements................................................................ 35
5.7 Material Adverse Change............................................................. 36
5.8 Compliance with Laws................................................................ 36
5.9 Brokers and Finders................................................................. 37
5.10 Labor............................................................................... 37
5.11 Certain Transactions................................................................ 37
5.12 Disclosures......................................................................... 38
5.13 Tax Matters......................................................................... 38
5.14 Legal Proceedings................................................................... 39
5.15 NewAlliance Common Stock............................................................ 39
5.16 Employee Benefit Plans.............................................................. 39
ARTICLE VI......................................................................................... 40
COVENANTS OF WESTBANK AND WB.................................................................... 40
6.1 Conduct of Business................................................................. 40
6.2 Current Information................................................................. 45
6.3 Access to Properties and Records.................................................... 45
6.4 Financial and Other Statements...................................................... 46
6.5 Maintenance of Insurance............................................................ 46
6.6 Disclosure Supplements.............................................................. 46
6.7 Consents and Approvals of Third Parties............................................. 46
6.8 Reasonable Best Efforts............................................................. 46
6.9 Failure to Fulfill Conditions....................................................... 46
6.10 Acquisition Proposals............................................................... 46
6.11 Board of Directors and Committee Meetings........................................... 49
6.12 Reserves and Merger-Related Costs................................................... 49
6.13 Transaction Expenses of Westbank.................................................... 50
6.14 Certain Policies of Westbank........................................................ 50
6.15 Amendments to Plans................................................................. 50
6.16 Acceleration of Restricted Stock Awards............................................. 51
6.17 WB Severance Payments............................................................... 51
ARTICLE VII........................................................................................ 51
COVENANTS OF NEWALLIANCE AND NAB................................................................... 51
7.1 Disclosure Supplements.............................................................. 51
7.2 Consents and Approvals of Third Parties............................................. 51
7.3 Reasonable Best Efforts............................................................. 51
7.4 Failure to Fulfill Conditions....................................................... 51
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7.5 Employees and Employee Benefits..................................................... 51
7.6 Directors and Officers Indemnification and Insurance................................ 55
7.7 Conduct of Business................................................................. 56
7.8 Financial and Other Statements...................................................... 56
7.9 Current Information................................................................. 57
7.10 Negative Covenants.................................................................. 57
7.11 Access to Properties and Records.................................................... 58
7.12 Stock Listing....................................................................... 58
7.13 Stock and Cash Reserve.............................................................. 58
ARTICLE VIII....................................................................................... 58
REGULATORY AND OTHER MATTERS.................................................................... 58
8.1 Westbank Special Meeting............................................................ 58
8.2 Proxy Statement - Prospectus........................................................ 59
8.3 Regulatory Approvals................................................................ 60
8.4 Affiliates.......................................................................... 60
8.5 Compliance with Anti-Trust Laws..................................................... 61
8.6 Execution of Bank Merger Agreement.................................................. 61
ARTICLE IX......................................................................................... 61
CLOSING CONDITIONS.............................................................................. 61
9.1 Conditions to Each Party's Obligations under this Agreement......................... 61
9.2 Conditions to the Obligations of NewAlliance under this Agreement................... 62
9.3 Conditions to the Obligations of Westbank under this Agreement...................... 63
ARTICLE X.......................................................................................... 64
THE CLOSING .................................................................................... 64
10.1 Time and Place...................................................................... 64
10.2 Deliveries at the Closing........................................................... 64
ARTICLE XI......................................................................................... 65
TERMINATION, AMENDMENT AND WAIVER............................................................... 65
11.1 Termination......................................................................... 65
11.2 Effect of Termination............................................................... 67
11.3 Amendment, Extension and Waiver..................................................... 68
ARTICLE XII........................................................................................ 69
MISCELLANEOUS .................................................................................. 69
12.1 Confidentiality..................................................................... 69
12.2 Public Announcements................................................................ 69
12.3 Survival............................................................................ 69
12.4 Notices............................................................................. 69
12.5 Parties in Interest................................................................. 70
12.6 Complete Agreement.................................................................. 70
12.7 Counterparts........................................................................ 70
12.8 Severability........................................................................ 70
12.9 Governing Law....................................................................... 71
12.10 Interpretation...................................................................... 71
12.11 Specific Performance................................................................ 71
EXHIBIT A.......................................................................................... 1
FORM OF BANK MERGER AGREEMENT................................................................... A-1
EXHIBIT B.......................................................................................... 1
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FORM OF VOTING AGREEMENT........................................................................ B-1
EXHIBIT C.......................................................................................... 1
FORM OF TERMINATION, RELEASE AND NONCOMPETITION AGREEMENT....................................... C-1
EXHIBIT D.......................................................................................... 1
FORM OF TERMINATION AND RELEASE AGREEMENT....................................................... D-1
EXHIBIT E.......................................................................................... 1
FORM OF AFFILIATES AGREEMENT.................................................................... E-1
ANNEX I ........................................................................................... 1
Shareholder Agreement........................................................................... 1
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement") dated as of July
18, 2006 is by and among NEWALLIANCE BANCSHARES, INC., a Delaware corporation
("NewAlliance"), NEWALLIANCE BANK, a Connecticut-chartered savings bank and
wholly owned subsidiary of NewAlliance ("NAB"), WESTBANK CORPORATION, a
Massachusetts corporation ("Westbank"), and WESTBANK, a Massachusetts-chartered
bank and trust company and wholly-owned subsidiary of Westbank ("WB").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Boards of Directors of NewAlliance, NAB, Westbank and WB
have determined that it is in the best interest of their respective companies
and shareholders to consummate the business combination transactions provided
for herein whereby, subject to the terms and conditions set forth herein:
Westbank will merge with and into NewAlliance, with NewAlliance being
the surviving entity (the "Merger");
Prior to the consummation of the Merger, NAB and WB will enter into a
merger agreement, in the form attached hereto as Exhibit A (the "Bank Merger
Agreement") pursuant to which WB will merge with and into NAB, with NAB being
the surviving entity (the "Bank Merger"), which Bank Merger shall be consummated
immediately following the Merger;
WHEREAS, all of the directors and Gary L. Briggs, Executive Vice
President, and John M. Lilly, Treasurer and Chief Financial Officer of Westbank
have agreed, in their capacities as shareholders of Westbank, to vote their
shares of Westbank Common Stock in favor of this Agreement pursuant to separate
voting agreements entered into by and between each such director and NewAlliance
prior to or on the date hereof in the form attached hereto as Exhibit B;
WHEREAS, it is the intention of the parties to this Agreement that the
Merger be treated as a "reorganization" within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), and this Agreement
shall constitute a plan of reorganization within the meaning of Treasury
Regulations Section 1.368-2(g); and
WHEREAS, the parties hereto desire to make certain representations,
warranties and agreements in connection with the business combination
transactions described in this Agreement and to prescribe certain conditions
thereto.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
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ARTICLE I
CERTAIN DEFINITIONS
1.1 CERTAIN DEFINITIONS. As used in this Agreement, the following
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terms have the following meanings, unless the context otherwise requires (both
here and throughout this Agreement, references to Articles and Sections refer to
Articles and Sections of this Agreement).
"Acquisition Agreement" shall have the meaning set forth in Section
11.1.9 hereof.
"Acquisition Proposal" shall mean any proposal or offer with respect to
any of the following (other than the transactions contemplated hereunder)
involving Westbank or WB: (i) any merger, consolidation, share exchange,
business combination or other similar transaction; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 25% or more of its
consolidated assets in a single transaction or series of transactions; (iii) any
tender offer or exchange offer for 25% or more of the outstanding shares of its
capital stock or the filing of a registration statement under the Securities Act
in connection therewith; or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing.
"Acquisition Transaction" shall mean any of the following (other than
the transactions contemplated hereunder) involving Westbank or any Westbank
Subsidiaries: (i) any merger, consolidation, share exchange, business
combination or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 25% or more of its
consolidated assets in a single transaction or series of transactions; or (iii)
any tender offer or exchange offer for 25% or more of the outstanding shares of
its capital stock or the filing of a registration statement under the Securities
Act in connection therewith.
"Affiliate" shall mean, with respect to a Person, any Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person.
"Bank Merger" shall have the meaning set forth in the Recitals hereto.
"Bank Merger Agreement" shall have the meaning set forth in the
Recitals hereto.
"Bank Regulator" shall mean any federal or state banking regulator that
regulates NAB or WB, or any of their respective holding companies or
subsidiaries, as the case may be, including but not limited to the FDIC, the
Department, the Division and the FRB.
"BHCA" shall mean Bank Holding Company Act of 1956, as amended.
"Board of Bank Incorporation" shall mean the Massachusetts Commissioner
of Banks, the Massachusetts Commissioner of Revenue and the Treasurer of the
Commonwealth of Massachusetts.
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"Business Day" means Monday through Friday of each week, except a legal
holiday recognized as such by the U.S. Government or any day on which banking
institutions in the State of Connecticut or the Commonwealth of Massachusetts
are authorized or obligated to close.
"Cash Election Consideration" shall have the meaning set forth in
Section 3.1.3 hereof.
"Cash Election Price" shall have the meaning set forth in Section 3.1.3
hereof.
"Certificate" shall mean certificates evidencing shares of Westbank
Common Stock.
"CGS" shall mean the Connecticut General Statutes, as amended.
"Closing" shall have the meaning set forth in Section 2.3 hereof
"Closing Date" shall have the meaning set forth in Section 2.3 hereof.
"Code" shall have the meaning set forth in the Recitals hereto.
"Confidentiality Agreement" shall mean the confidentiality agreement
referred to in Section 12.1 of this Agreement.
"Connecticut Banking Law" shall mean the Banking Law of Connecticut,
CGS Section 36a-1 et seq., as amended.
"Continuing Employee" shall have the meaning set forth in Section 7.5.2
hereof.
"DGCL" shall mean the Delaware General Corporation Law, as amended.
"Department" shall mean the Connecticut Department of Banking.
"Determination Date" shall mean the date on which the last required
approval of a Governmental Entity is obtained with respect to the Merger,
without regard to any requisite waiting period.
"DIF" shall mean Deposit Insurance Fund administered by the FDIC.
"Division" shall mean the Massachusetts Division of Banks.
"DOJ" shall mean the United States Department of Justice.
"Effective Date" shall mean the date on which the Effective Time
occurs.
"Effective Time" shall mean the date and time specified pursuant to
Section 2.3 hereof as the effective time of the Merger.
"Environmental Laws" means any applicable federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with any
Governmental Entity relating to
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(1) the protection, preservation or restoration of the environment (including,
without limitation, air, water vapor, surface water, groundwater, drinking water
supply, surface soil, subsurface soil, plant and animal life or any other
natural resource), and/or (2) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production, release
or disposal of Materials of Environmental Concern. The term Environmental Law
includes without limitation (a) the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. Section 9601, et seq.; the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901, et
seq.; the Clean Air Act, as amended, 42 U.S.C. Section 7401, et seq.; the
Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251, et
seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 9601, et
seq.; the Emergency Planning and Community Right to Know Act, 42 U.S.C. Section
1101, et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f, et seq., the
Connecticut Transfer Act, C.G.S. Section 22a-134, et seq.; Chapter 21E of the
Massachusetts General Laws and all applicable comparable state and local laws,
and (b) any common law (including without limitation common law that may impose
strict liability) that may impose liability or obligations for injuries or
damages due to the presence of or exposure to any Materials of Environmental
Concern as in effect at or prior to the Effective Time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Agent" shall mean American Stock Transfer and Trust Company
or another reputable exchange agent designated by NewAlliance and reasonably
acceptable to Westbank, which shall act as agent for NewAlliance in connection
with the exchange procedures for converting Certificates and Options into the
Merger Consideration.
"Exchange Fund" shall have the meaning set forth in Section 3.3.1
hereof.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"Fractional Share Consideration" shall have the meaning set forth in
Section 3.1.5 hereof.
"FRB" shall mean the Board of Governors of the Federal Reserve System
or any successor thereto.
"GAAP" shall mean accounting principles generally accepted in the
United States of America.
"Governmental Entity" shall mean any federal or state court,
administrative agency or commission or other governmental authority or
instrumentality.
"Intellectual Property" shall have the meaning set forth in Section
4.26 hereof.
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"Joint Venture" shall mean any limited partnership, joint venture,
corporation, or venture capital investment.
"Knowledge" as used with respect to a Person (including references to
such Person being aware of a particular matter) shall mean those facts that are
known, or reasonably should have been known, by the executive officers and
directors of such Person (in the ordinary performance of their duties without
additional inquiry specific to this Agreement), and includes any facts, matters
or circumstances set forth in any written notice from any bank regulatory
agencies or any other material written notice received by that Person.
"Loan Property" shall have the meaning set forth in Section 4.9.2
hereof.
"Massachusetts Banking Law" shall mean Massachusetts General Laws,
Chapter 167, Chapters 167A through 167H, and Chapter 172, as amended.
"Massachusetts Division Advisory Board" shall have the meaning set
forth in Section 2.6 hereof.
"Material Adverse Effect" shall mean, with respect to Westbank or
NewAlliance, respectively, any effect that (i) is material and adverse to the
financial condition, results of operations or business of Westbank and its
Subsidiaries taken as a whole, or NewAlliance and its Subsidiaries taken as a
whole, respectively, or (ii) materially impairs the ability of either Westbank,
on the one hand, or NewAlliance, on the other hand, to consummate the
transactions contemplated by this Agreement; provided that "Material Adverse
Effect" shall not be deemed to include the impact of (a) changes in laws and
regulations affecting banks generally, (b) changes in GAAP or regulatory
accounting principles generally applicable to banks and their holding companies,
(c) actions and omissions of a party (or any of its Subsidiaries) taken with the
prior written consent of the other party, (d) the direct effects of compliance
with this Agreement on the operating performance of the parties, including
expenses incurred by the parties hereto in consummating the transactions
contemplated in this Agreement, (e) changes after the date of this Agreement in
general economic or capital market conditions affecting banks or their holding
companies or their market prices generally, and (f) changes or events after the
date of this Agreement affecting the financial services industry generally and
not specifically relating to Westbank or any of the Westbank Subsidiaries.
"Materials of Environmental Concern" shall mean petroleum and petroleum
products, byproducts or breakdown products, radioactive materials,
asbestos-containing materials and polychlorinated biphenyls and any other
chemicals, materials or substances regulated at the Effective Time as toxic or
hazardous or as a pollutant, contaminant or waste under any applicable
Environmental Laws.
"Maximum Premium Amount" shall have the meaning set forth in Section
7.6.1 hereof.
"Merger" shall have the meaning set forth in the Recitals hereto.
"Merger Consideration" shall mean the consideration paid by NewAlliance
to holders of Westbank Common Stock under Section 3.1 hereof.
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"Merger Registration Statement" shall have the meaning set forth in
Section 8.2 hereto.
"NAB" shall mean NewAlliance Bank, a Connecticut-chartered stock
savings bank with its principal offices located at 195 Church Street, New Haven,
Connecticut 06510, and shall include the predecessor financial institution to
NewAlliance Bank, namely, New Haven Savings Bank, a Connecticut-chartered mutual
savings bank, which converted from mutual to stock form and changed its name to
NewAlliance Bank, effective April 1, 2004.
"NASDAQ" shall mean the National Association of Securities Dealers
Automatic Quotation System, f/k/a "National Market", and now known as "The
NASDAQ Global Market."
"NewAlliance" shall mean NewAlliance Bancshares, Inc., a Delaware
corporation with its principal office at 195 Church Street, New Haven,
Connecticut 06510 which shall be the surviving corporation in the Merger.
"NewAlliance Amendment" shall have the meaning set forth in Section
6.10(b) hereof.
"NewAlliance Base Period Trading Price" of NewAlliance Common Stock
shall mean the arithmetic mean of the daily closing sales prices per share of
NewAlliance Common Stock reported on the NYSE Composite Transaction Tape (as
reported by the Wall Street Journal or, if not reported thereby, another
authoritative source) for the twenty (20) consecutive NYSE trading days ending
at the close of trading on the fifth trading date prior to the Determination
Date.
"NewAlliance Common Stock" shall mean the common stock, par value $0.01
per share, of NewAlliance.
"NewAlliance DISCLOSURE SCHEDULE" shall mean a written, signed
disclosure schedule delivered by NewAlliance specifically referring to the
appropriate section of this Agreement and describing in reasonable detail the
matters contained therein.
"NewAlliance Employee Plan(s)" shall mean all qualified pension or
profit-sharing plans, any deferred compensation, non-qualified plan or
arrangement, supplemental retirement, consultant, bonus or group insurance
contract or any other incentive, health and welfare or employee benefit plan or
agreement maintained for the benefit of any of the employees or former employees
or directors of NewAlliance or any NewAlliance Subsidiary, whether written or
oral as in effect at the time of the execution of this Agreement.
"NewAlliance Financial Statements" shall mean the audited consolidated
balance sheets (including related notes and schedules, if any) of NewAlliance as
of December 31, 2005 and 2004; the consolidated statements of operations,
changes in shareholders' equity and cash flows (including related notes and
schedules, if any) of NewAlliance for each of the two (2) years ended 2005 and
2004 as filed by NewAlliance in its Securities Documents; the audited
consolidated balance sheets (including related notes and schedules, if any) of
NAB, then known as New Haven Savings Bank, for the year ended 2003 and the
consolidated statements of operations, and changes in cash flows (including
related notes and schedules, if any) of NAB, then known as New Haven Savings
Bank, for the year ended 2003.
"NewAlliance Subsidiary" shall mean a Subsidiary controlled by
NewAlliance.
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"NYSE" shall mean the New York Stock Exchange, Inc.
"Option Consideration" shall have the meaning set forth in Section
3.1.4 hereof.
"Options" shall mean options to purchase shares of Westbank Common
Stock granted pursuant to the Westbank Option Plans as set forth in Section 4.1
of the Westbank DISCLOSURE SCHEDULE.
"Participation Facility" shall have the meaning set forth in Section
4.9.2 hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PCAOB" shall mean the Public Company Accounting Oversight Board.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, trust or "group" (as that term is defined under the
Exchange Act).
"Proxy Statement-Prospectus" shall have the meaning set forth in
Section 8.2.1 hereof.
"Rights" shall mean warrants, options, rights, convertible securities,
stock appreciation rights and other arrangements or commitments that obligate an
entity to issue or dispose of any of its capital stock or other ownership
interests or that provide for compensation based on the equity appreciation of
its capital stock.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, offering circulars,
proxy statements, registration statements and all similar documents filed, or
required to be filed, pursuant to the Securities Laws, provided, however, that
SEC Forms 3, 4, 5 and 144 and Schedules 13D and 13G shall not be deemed to be
Securities Documents.
"Securities Laws" shall mean the Securities Act, the Exchange Act and
the rules and regulations of the SEC promulgated thereunder.
"Severance Plan" shall have the meaning set forth in Section 7.5.4
hereof.
"Stock Conversion Number" shall have the meaning set forth in Section
3.2 hereof.
"Stock Election Price" shall have the meaning set forth in Section
3.1.2 hereof.
"Stock Election Consideration" shall have the meaning set forth in
Section 3.1.2 hereof.
"Stock Merger Consideration" shall have the meaning set forth in
Section 3.1.5 hereof.
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"Subsidiary" shall have the meaning set forth in Rule 1-02 of
Regulation S-X of the SEC.
"Superior Proposal" shall have the meaning set forth in Section 6.10
hereof.
"Surviving Bank" shall mean NAB as the resulting institution of the
Bank Merger.
"Surviving Corporation" shall have the meaning set forth in Section 2.1
hereof.
"Tax" shall have the meaning set forth in Section 4.10.5 hereof.
"Tax Return" shall have the meaning set forth in Section 4.10.5 hereof.
"Terminated Employees" shall have the meaning set forth in Section 6.17
hereof.
"Termination Date" shall mean May 1, 2007.
"WB" shall mean WB, a Massachusetts-chartered bank and trust company
with its principal offices located at 225 Park Avenue, West Springfield,
Massachusetts 01090-0149.
"Westbank" shall mean Westbank, a Massachusetts corporation with its
principal office located at 225 Park Avenue, West Springfield, Massachusetts
01090-0149.
"Westbank Common Stock" shall mean the common stock, par value $2.00
per share, of Westbank.
"Westbank DISCLOSURE SCHEDULE" shall mean a written, signed disclosure
schedule delivered by Westbank to NewAlliance specifically referring to the
appropriate section of this Agreement and describing in reasonable detail the
matters contained therein.
"Westbank Employee Plan(s)" shall mean all stock option, employee stock
purchase, stock bonus and any other stock-based plans, qualified pension or
profit-sharing plans, any deferred compensation, non-qualified plan or
arrangement, (including employment, change of control or other severance
agreements), supplemental retirement, consultant, bonus, retiree, medical or
group insurance contract or any other material incentive, health and welfare or
employee benefit plan or agreement maintained for the benefit of any of the
employees or former employees or directors of Westbank or any Westbank
Subsidiary, whether written or oral as in effect at the time of the execution of
this Agreement.
"Westbank Financial Statements" shall mean (i) the audited consolidated
balance sheets (including related notes and schedules, if any) of Westbank as of
December 31, 2005, 2004 and 2003 and the consolidated statements of operations,
changes in shareholders' equity and cash flows (including related notes and
schedules, if any) of Westbank for each of the three (3) years ended 2005, 2004
and 2003 as filed by Westbank in its Securities Documents.
"Westbank Option Plans" shall mean the Westbank 1995 Directors Stock
Incentive Plan, the Westbank 1996 Stock Incentive Plan and the Westbank 2006
Equity Incentive Plan.
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"Westbank Shareholder Rights Agreement" shall mean the Westbank Amended
and Restated Shareholder Rights Agreement dated as of November 19, 1997 by and
between Westbank and State Street Bank and Trust Company, as Rights Agent.
"Westbank Stock Plan" shall mean the Westbank 2004 Recognition and
Retention Plan and the Westbank 2006 Equity Incentive Plan.
"Westbank Subsidiary" shall mean a Subsidiary controlled by Westbank.
Other terms used herein are defined in the preamble and elsewhere in this
Agreement.
ARTICLE II
THE MERGER
2.1 THE MERGER. As promptly as practicable following the
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satisfaction or waiver of the conditions to each party's respective obligations
hereunder, and subject to the terms and conditions of this Agreement, at the
Effective Time the Merger will be consummated by the merger of Westbank with and
into NewAlliance, with NewAlliance as the surviving corporation (the "Surviving
Corporation") in accordance with the provisions of the DGCL. At the Effective
Time of the Merger, each share of Westbank Common Stock and each Option will be
converted into the right to receive the Merger Consideration, as applicable,
pursuant to the terms of Article III hereof. The parties agree that the target
date for the Effective Time is January 2, 2007.
2.2 THE BANK MERGER. The Bank Merger shall be consummated
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immediately following the Merger.
2.3 EFFECTIVE TIME. The Merger shall be effected by the filing of
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a certificate of merger with the Delaware Office of the Secretary of State on
the day of the closing ("Closing Date"), in accordance with the DGCL (the
"Closing"). The "Effective Time" of the Merger shall be the close of business on
the date that the certificate of merger as to the Merger is filed with the
Delaware Office of the Secretary of State, or as otherwise stated in such
certificate of merger, provided that the Effective Time shall not occur prior to
January 1, 2007. NewAlliance and Westbank each will use reasonable best efforts
to cause the Effective Time to occur on January 2, 2007.
2.4 CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate of
---------------------------------------
Incorporation and Bylaws of NewAlliance as in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation and Bylaws of the
Surviving Corporation until thereafter amended as provided therein and by
applicable law.
2.5 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION. The directors
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of the Surviving Corporation immediately after the Effective Time shall be the
directors of NewAlliance immediately prior to the Effective Time. The officers
of NewAlliance immediately prior to the Effective Time shall be the officers of
the Surviving Corporation immediately after the Effective Time.
9
2.6 DIRECTORS AND OFFICERS OF SURVIVING BANK. The directors of NAB
----------------------------------------
immediately after the Effective Time shall be the directors of NAB immediately
prior to the Effective Time. The officers of NAB immediately prior to the
Effective Time, together with any additional officers of WB as the directors of
NAB may appoint consistent with Massachusetts Banking Law, shall be the officers
of NAB immediately after the Effective Time. NAB shall, effective as of the
Effective Time, establish a Massachusetts Division Advisory Board (the
"Massachusetts Division Advisory Board"), which shall operate pursuant to a
written Charter consistent with this Section 2.6, and on or prior to the Closing
Date, all of the directors of Westbank as of the date immediately prior to the
Closing Date and the Treasurer and Chief Financial Officer of Westbank, John M.
Lilly, shall be invited to serve as members of such Massachusetts Division
Advisory Board until at least the first anniversary of the Closing Date.
Massachusetts Division Advisory Board members will not perform policy making
functions but will meet periodically to make recommendations to NAB's management
concerning the operations of its Massachusetts operations. Each member of the
Massachusetts Division Advisory Board shall receive an annual retainer of
$12,000.
2.7 ADDITIONAL ACTIONS. If, at any time after the Effective Time,
------------------
the Surviving Corporation or the Surviving Bank shall consider or be advised
that any further assignments or assurances in law or any other acts are
necessary or desirable (a) to vest, perfect or confirm, of record or otherwise,
in the Surviving Corporation or the Surviving Bank, title to and possession of
any property or right of Westbank (or WB) acquired or to be acquired by reason
of, or as a result of, the Merger or Bank Merger, or (b) otherwise to carry out
the purposes of this Agreement, Westbank, WB and their officers and directors
shall be deemed to have granted to the Surviving Corporation and Surviving Bank
an irrevocable power of attorney to execute and deliver all such proper deeds,
assignments and assurances in law and to do all acts necessary or proper to
vest, perfect or confirm title to and possession of such property or rights in
the Surviving Corporation or the Surviving Bank and otherwise to carry out the
purposes of this Agreement; and the officers and directors of the Surviving
Corporation and the Surviving Bank are fully authorized in the name of Westbank,
WB or otherwise to take any and all such action.
2.8 EFFECTS OF THE MERGER. At and after the Effective Time, the
---------------------
Merger shall have the effects set forth in the DGCL with respect to NewAlliance
and Westbank, and the Bank Merger shall have the effects set forth in
Connecticut Banking Law with respect to NAB and WB.
2.9 POSSIBLE ALTERNATIVE STRUCTURES. Prior to the Effective Time,
-------------------------------
NAB shall be entitled to revise the structure of the Merger and/or the Bank
Merger described in Section 2.1 hereof and the Recitals hereto, provided that
(i) there are no adverse federal or state income tax consequences to Westbank
and its shareholders as a result of the modification; (ii) the consideration to
be paid to the holders of Westbank Common Stock and Options under this Agreement
is not thereby changed in kind or reduced in amount; (iii) there are no adverse
changes to the benefits and other arrangements provided to or on behalf of
Westbank's directors, officers and other employees; and (iv) such modification
will not delay materially or jeopardize receipt of any required regulatory
approvals or non-objection of any Governmental Entity or otherwise cause any
condition to Closing set forth in Article IX not to be capable of being
fulfilled.
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ARTICLE III
CONVERSION OF SHARES AND OPTIONS
3.1 EXCHANGE OF WESTBANK COMMON STOCK; MERGER CONSIDERATION. At
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the Effective Time, by virtue of the Merger and without any action on the part
of NewAlliance, NAB, Westbank, WB or the holders of any of the shares of
Westbank Common Stock, the Merger shall be effected in accordance with the
following terms:
3.1.1 All shares of Westbank Common Stock held in the
treasury of Westbank and each share of Westbank Common Stock owned by
NewAlliance or any direct or indirect wholly owned subsidiary of NewAlliance or
of Westbank immediately prior to the Effective Time (other than shares held in a
fiduciary capacity or in connection with debts previously contracted) shall, at
the Effective Time, cease to exist, and the Certificates for such shares shall
be canceled as promptly as practicable thereafter, and no payment or
distribution shall be made in consideration therefor.
3.1.2 Each outstanding share of Westbank Common Stock that
under the terms of Section 3.2 is to be converted into the right to receive
shares of NewAlliance Common Stock (the "Stock Election Consideration") shall,
subject to the provisions of Section 3.3 generally, be converted into and become
the right to receive from NewAlliance that number of shares of NewAlliance
Common Stock (the "Stock Election Price") determined by dividing $23.00 by the
NewAlliance Base Period Trading Price, as may be adjusted as provided below,
computed to four decimal places (the "Exchange Ratio"); provided, however, if
the NewAlliance Base Period Trading Price shall be greater than $14.70, the
Exchange Ratio shall be fixed at 1.5646; provided, further, however, that if the
NewAlliance Base Period Trading Price is less than $13.30, then the Exchange
Ratio shall be fixed at 1.7293.
3.1.3 Each outstanding share of Westbank Common Stock that
under the terms of Section 3.2 is to be converted into the right to receive cash
(the "Cash Election Consideration") shall, subject to the provisions of Section
3.1.7, be converted into the right to receive a cash payment of twenty-three
($23.00) dollars (the "Cash Election Price").
3.1.4. Each Option which remains issued and outstanding as
of the Business Day immediately prior to the Effective Date shall, by virtue of
the Merger and without regard to any future vesting date thereof, be cancelled
and converted into the right to receive a cash payment from Westbank or WB on
the Business Day immediately prior to the Effective Date in an amount determined
by multiplying (i) the positive difference, if any, between the Cash Election
Price and the exercise price of such Option for each share of Westbank Common
Stock subject to such Option (the "Option Price") by (ii) the number of shares
of Westbank Common Stock subject to such Option (this product shall be referred
to as the "Option Consideration").
The payment of the Option Consideration, referred to in this Section
3.1.4, to each holder of an Option shall be made by Westbank or WB on the
Business Day immediately prior to the Effective Date, subject to a review of the
calculation by NewAlliance. Each of Westbank and WB shall use its reasonable
best efforts to obtain the written acknowledgement of each holder of a
then-outstanding Option with regard to the cancellation of such Option and the
payment therefor in accordance with the terms of this Agreement. Westbank or WB
shall make necessary tax withholdings from the Option Consideration, as they
deem appropriate.
11
3.1.5 Notwithstanding anything to the contrary contained
herein, no certificates or scrip representing fractional shares of NewAlliance
Common Stock shall be issued upon the surrender for exchange of Certificates, no
dividend or distribution with respect to NewAlliance Common Stock shall be
payable on or with respect to any fractional share interest, and such fractional
share interests shall not entitle the owner thereof to vote or to any other
rights of a stockholder of NewAlliance. In lieu of the issuance of any such
fractional share, NewAlliance shall pay to each former holder of Westbank Common
Stock who otherwise would be entitled to receive a fractional share of
NewAlliance Common Stock, an amount in cash determined by multiplying the Cash
Election Price by the fraction of a share of NewAlliance Common Stock which such
holder would otherwise be entitled to receive pursuant to Section 3.1.3 hereof
(the "Fractional Share Consideration"). No interest will be paid on the cash
that the holders of such fractional shares shall be entitled to receive upon
such delivery. For purposes of determining any fractional share interest, all
shares of Westbank Common Stock owned by a Westbank shareholder shall be
combined so as to calculate the maximum number of whole shares of NewAlliance
Common Stock issuable to such Westbank shareholder.
The Stock Election Consideration, the Cash Election Consideration and
the Fractional Share Consideration shall be referred to as the "Stock Merger
Consideration," and the Stock Merger Consideration and the Option Consideration
are sometimes referred to collectively as the "Merger Consideration."
3.1.6 After the Effective Time, shares of Westbank Common
Stock shall be no longer outstanding and shall automatically be canceled and
shall cease to exist, and shall thereafter by operation of this Section 3.1.6 be
a right to receive the Merger Consideration.
3.1.7 Notwithstanding any other provision of this Agreement
to the contrary, if either of the tax opinions referred to in Section 9.1.5
cannot be rendered because the counsel charged with providing either of such
opinions reasonably determines that the Merger may not satisfy the continuity of
interest requirements applicable to reorganizations under Section 368(a) of the
Code, then NewAlliance shall reduce the aggregate number of Cash Election
Shares, and thereby the aggregate Cash Election Consideration, by the minimum
extent necessary to enable each of such tax opinions to be rendered, and
correspondingly increase the aggregate number of shares of Westbank Common Stock
to be converted into the Stock Election Price.
3.1.8 Each unvested restricted share of Westbank Common
Stock granted under the Westbank Stock Plan which is outstanding immediately
prior to the date the Westbank shareholders approve the transactions
contemplated by this Agreement shall vest and become free of restrictions at the
close of business on the day the Westbank shareholders approve the transactions
contemplated by this Agreement or such earlier date as may be agreed to by
NewAlliance or provided under the terms of the Westbank Stock Plan.
3.2 PRORATION AND ELECTION PROCEDURES. The Parties acknowledge
---------------------------------
that for United States federal income tax purposes it is intended that the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the Code, and this Agreement is intended to be and is adopted as a plan of
reorganization within the meaning of Section 368 of the Code.
12
Consistent with that intent, notwithstanding any provision of this Agreement to
the contrary, the aggregate Merger Consideration payable to all holders of
Westbank Common Stock shall include such number of shares of NewAlliance Common
Stock as is necessary in order that the aggregate number of shares of Westbank
Common Stock exchanged through the Merger for shares of NewAlliance Common Stock
is fifty percent (50%) of the total number of shares of Westbank Common Stock
issued and outstanding immediately prior to the Effective Time (the "Stock
Conversion Number"). Subject to the Stock Conversion Number, holders of Westbank
Common Stock may elect to receive shares of NewAlliance Common Stock or the Cash
Election Price in exchange for their shares of Westbank Common Stock in
accordance with the following procedures.
3.2.1 An election form ("Election Form") will be sent by
NewAlliance no later than fifteen (15) Business Days and no earlier than thirty
(30) Business Days prior to the expected Effective Time (provided that it need
not be sent until the approvals from the Bank Regulators as set forth in Section
8.3 have been obtained) to each holder of record of Westbank Common Stock
permitting such holder (or in the case of nominee record holders, the beneficial
owner through proper instructions and documentation) to elect to receive,
subject to the pro-ration procedures described in Section 3.2.2, (i) all
NewAlliance Common Stock with respect to each share of such holder's Westbank
Common Stock, as provided herein (the "Stock Election Shares"); (ii) all cash
with respect to each share of such holder's Westbank Common Stock, as provided
herein (the "Cash Election Shares") or (iii) a combination of Stock Merger
Consideration consisting of a mixture of Stock Election Consideration and Cash
Election Consideration with respect to each share of such holder's Westbank
Common Stock, as provided herein. Any shares of Westbank Common Stock with
respect to which the holder thereof shall not, as of the Election Deadline, have
made such an election by submission to the Exchange Agent on an effective,
properly completed Election Form shall be deemed Non-Election Shares
("Non-Election Shares").
3.2.2 The term "Election Deadline", as used below, shall
mean 5:00 p.m., Eastern time, on a date determined by NewAlliance, which date
shall not be earlier than the fifteenth (15th) Business Day following but not
including the date of mailing of the Election Form or such other date as
NewAlliance and Westbank shall mutually agree upon, provided in any event, the
Election Deadline shall be at or before the Effective Time. Any election to
receive NewAlliance Common Stock or cash shall have been properly made only if
the Exchange Agent shall have actually received a properly completed Election
Form by the Election Deadline. Any Election Form may be revoked or changed by
the Person submitting such Election Form to the Exchange Agent by written notice
to the Exchange Agent only if such notice is actually received, including by
facsimile, by the Exchange Agent at or prior to the Election Deadline. The
Certificate or Certificates representing Westbank Common Stock relating to any
revoked Election Form shall be promptly returned without charge to the Person
submitting the Election Form to the Exchange Agent. The Exchange Agent shall
have discretion to determine when any election, modification or revocation is
received and whether any such election, modification or revocation has been
properly made. The Exchange Agent shall promptly calculate the allocation, if
any, among holders of Westbank Common Stock of rights to receive the Stock
Election Price and the Cash Election Price as follows:
13
If the number of Stock Election Shares does not equal the Stock
Conversion Number, then the Stock Election Shares and the Cash Election Shares
will be converted into the right to receive NewAlliance Common Stock and cash in
the following manner:
(a) If the aggregate number of Stock Election
Shares (the "Stock Election Number") exceeds the Stock Conversion Number, then
all Westbank Cash Election Shares and all Non-Election Shares of each holder
thereof shall be converted into the right to receive the Cash Consideration, and
Stock Election Shares of each holder thereof will be converted into the right to
receive the Stock Consideration in respect of that number of Stock Election
Shares equal to the product obtained by multiplying (x) the number of Stock
Election Shares held by such holder by (y) a fraction, the numerator of which is
the Stock Conversion Number and the denominator of which is the Stock Election
Number, with the remaining number of such holder's Stock Election Shares being
converted into the right to receive the Cash Election Consideration; and
(b) If the Stock Election Number is less than
the Stock Conversion Number (the amount by which the Stock Conversion Number
exceeds the Stock Election Number being referred to herein as the "Shortfall
Number"), then all Stock Election Shares shall be converted into the right to
receive the Stock Consideration and the Non-Election Shares and Cash Election
Shares shall be treated in the following manner:
(i) If the Shortfall Number is less than or
equal to the number of Non-Election Shares, then all Cash Election
Shares shall be converted into the right to receive the Cash Election
Consideration and the Non-Election Shares of each holder thereof shall
be converted into the right to receive the Stock Consideration in
respect of that number of Non-Election Shares equal to the product
obtained by multiplying (x) the number of Non-Election Shares held by
such holder by (y) a fraction, the numerator of which is the Shortfall
Number and the denominator of which is the total number of Non-Election
Shares, with the remaining number of such holder's Non-Election Shares
being converted into the right to receive the Cash Election
Consideration; or
(ii) If the Shortfall Number exceeds the number
of Non-Election Shares, then all Non-Election Shares shall be converted
into the right to receive the Stock Election Consideration, and Cash
Election Shares of each holder thereof shall be converted into the
right to receive the Stock Election Consideration in respect of that
number of Cash Election Shares equal to the product obtained by
multiplying (x) the number of Cash Election Shares held by such holder
by (y) a fraction, the numerator of which is the amount by which (1)
the Shortfall Number exceeds (2) the total number of Non-Election
Shares and the denominator of which is the total number of Cash
Election Shares, with the remaining number of such holder's Cash
Election Shares being converted into the right to receive the Cash
Election Consideration.
3.3 PROCEDURES FOR EXCHANGE OF WESTBANK COMMON STOCK.
------------------------------------------------
3.3.1 NewAlliance to Make Merger Consideration Available.
At or before the Effective Time, NewAlliance shall deposit, or shall cause to be
deposited, with the Exchange Agent for the benefit of the holders of Westbank
Common Stock, for exchange in accordance with this Section 3.3, certificates
representing the shares of NewAlliance Common Stock sufficient to pay the Stock
Election Price and an estimated amount of cash sufficient to pay the aggregate
Cash Election Consideration and the aggregate Fractional Share Consideration
payable hereunder (such cash and certificates for shares of NewAlliance Common
Stock, together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund").
14
3.3.2 Exchange of Certificates. No later than 3 Business
Days after the Effective Time, NewAlliance shall take all steps necessary to
cause the Exchange Agent to mail to each holder of a Certificate or
Certificates, a form letter of transmittal for return to the Exchange Agent and
instructions for use in effecting the surrender of the Certificates for, as the
case may be, certificates representing the shares of NewAlliance Common Stock,
cash in respect of the Cash Election Price, and cash in respect of the
Fractional Share Price. The letter of transmittal (which shall be subject to the
reasonable approval of Westbank) 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. Upon proper surrender of a Certificate
for exchange and cancellation to the Exchange Agent, together with a properly
completed letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor, as applicable, (i) a
certificate representing that number of shares (if any) of NewAlliance Common
Stock to which such former holder of Westbank Common Stock shall have become
entitled pursuant to the provisions of Section 3.1.2 hereof, (ii) a check
representing that amount of cash (if any) to which such former holder of
Westbank Common Stock shall have become entitled in respect of the Cash Election
Price pursuant to the provisions of Section 3.1.3 hereof, and (iii) a check
representing the amount of cash (if any) payable in respect of the Fractional
Share Price, which such former holder has the right to receive in respect of the
Certificate surrendered pursuant to the provisions of Section 3.1.5, and the
Certificate so surrendered shall forthwith be cancelled. No interest will be
paid or accrued on the cash payable in lieu of fractional shares. Certificates
surrendered for exchange by any person who is an "affiliate" of Westbank for
purposes of Rule 145(c) under the Securities Act shall not be exchanged for
certificates representing shares of NewAlliance Common Stock until NewAlliance
has received the written agreement of such Person contemplated by Section 8.4
hereof.
3.3.3 Rights of Certificate Holders after the Effective
Time. The holder of a Certificate that prior to the Merger represented issued
and outstanding Westbank Common Stock shall have no rights, after the Effective
Time, with respect to such Westbank Common Stock except to surrender the
Certificate in exchange for the Merger Consideration as provided in this
Agreement. No dividends or other distributions declared after the Effective Time
with respect to NewAlliance Common Stock shall be paid to the holder of any
unsurrendered Certificate until the holder thereof shall surrender such
Certificate in accordance with Section 3.3. After the surrender of a Certificate
in accordance with Section 3.3, 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 NewAlliance
Common Stock represented by such Certificate.
15
3.3.4 Surrender by Person Other than Record Holders. If the
Person surrendering a Certificate and signing the accompanying letter of
transmittal is not the record holder thereof, then it shall be a condition of
the payment of the Stock Merger Consideration that: (i) such Certificate is
properly endorsed to such Person or is accompanied by appropriate stock powers,
in either case signed exactly as the name of the record holder appears on such
Certificate, and is otherwise in proper form for transfer, or is accompanied by
appropriate evidence of the authority of the Person surrendering such
Certificate and signing the letter of transmittal to do so on behalf of the
record holder; and (ii) the Person requesting such exchange shall pay to the
Exchange Agent in advance any transfer or other taxes required by reason of the
payment to a Person other than the registered holder of the Certificate
surrendered, or required for any other reason, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
3.3.5 Closing of Transfer Books. From and after the
Effective Time, there shall be no transfers on the stock transfer books of
Westbank of the Westbank Common Stock that was outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates representing such
shares are presented for transfer to the Exchange Agent, they shall be exchanged
for the Merger Consideration and canceled as provided in this Section 3.3.
3.3.6 Return of Exchange Fund. At any time following the
six (6) month period after the Effective Time, NewAlliance shall be entitled to
require the Exchange Agent to deliver to it any portions of the Exchange Fund
which had been made available to the Exchange Agent and not disbursed to holders
of Certificates (including, without limitation, all interest and other income
received by the Exchange Agent in respect of all funds made available to it),
and thereafter such holders shall be entitled to look to NewAlliance (subject to
abandoned property, escheat and other similar laws) with respect to any Merger
Consideration that may be payable upon due surrender of the Certificates held by
them. Notwithstanding the foregoing, neither NewAlliance nor the Exchange Agent
shall be liable to any holder of a Certificate for any Merger Consideration
delivered in respect of such Certificate to a public official pursuant to any
abandoned property, escheat or other similar law.
3.3.7 Lost, Stolen or Destroyed Certificates. 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 NewAlliance, the posting by such person
of a bond in such amount as NewAlliance may reasonably direct as indemnity
against any claim that may be made against it with respect to such Certificate,
NewAlliance or the Exchange Agent will issue in exchange for such lost, stolen
or destroyed Certificate the Merger Consideration deliverable in respect
thereof.
3.3.8 Withholding. NewAlliance or the Exchange Agent will
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement or the transactions contemplated hereby to any holder
of Westbank Common Stock such amounts as NewAlliance (or any Affiliate thereof)
or the Exchange Agent are required to deduct and withhold with respect to the
making of such payment under the Code, or any applicable provision of U.S.
federal, state, local or non-U.S. tax law. To the extent that such amounts are
properly withheld by NewAlliance or the Exchange Agent, such withheld amounts
will be treated for all purposes of this Agreement as having been paid to the
holder of the Westbank Common Stock in respect of whom such deduction and
withholding were made by NewAlliance or the Exchange Agent.
16
3.3.9 Reservation of Shares. Effective upon the date of
this Agreement, NewAlliance shall reserve for issuance a sufficient number of
shares of the NewAlliance Common Stock for the purpose of issuing shares of
NewAlliance Common Stock to the Westbank shareholders in accordance with this
Article III.
3.3.10 Listing of Additional Shares. Prior to the Effective
Time, NewAlliance shall notify the NYSE of the additional shares of NewAlliance
Common Stock to be issued by NewAlliance in exchange for the shares of Westbank
Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
WESTBANK AND WB
Westbank and WB represent and warrant to NewAlliance and NAB that the
statements contained in this Article IV are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article IV), except as set forth in the Westbank
DISCLOSURE SCHEDULE delivered by Westbank to NewAlliance on the date hereof, and
except as to any representation or warranty which specifically relates to an
earlier date, provided, however, that WB's representations and warranties made
herein are limited to only representations and warranties with respect to WB.
4.1 CAPITAL STRUCTURE. The authorized capital stock of Westbank
-----------------
consists of nine million shares of common stock, par value $2.00 per share, and
one hundred thousand shares of preferred stock, par value $5.00 per share. As of
the date of this Agreement, 4,817,714 shares of Westbank Common Stock are issued
and outstanding and 32,298 shares of Westbank Common Stock are directly or
indirectly held by Westbank as treasury stock. As of the date of this Agreement
there are no shares of Westbank preferred stock issued or outstanding. All
outstanding shares of Westbank Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable, and none of the
outstanding shares of Westbank Common Stock has been issued in violation of the
preemptive rights of any Person. Except for (a) the Westbank Option Plans
pursuant to which there are outstanding options to acquire 471,355 shares of
Westbank Common Stock, (b) the Westbank Stock Plan pursuant to which 92,505
restricted shares of Westbank Common Stock have been granted, all of which are
included in the 4,817,714 shares of Westbank Common Stock set forth above as
issued and outstanding and (c) the Westbank Shareholder Rights Agreement,
pursuant to which there are 4,817,714 Units (as defined in the Westbank
Shareholder Rights Agreement) outstanding, a schedule as to all of which is set
forth in Section 4.1 of the Westbank DISCLOSURE SCHEDULE, there are no Rights
authorized, issued or outstanding with respect to or relating to the capital
stock of Westbank.
4.2 ORGANIZATION, STANDING AND AUTHORITY OF WESTBANK. Westbank is
------------------------------------------------
a corporation duly organized, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts with full corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as now conducted, and is duly licensed or qualified to do business and
is in good standing in each jurisdiction in which its ownership or leasing of
property or the conduct of its business requires such licensing or qualification
except where the failure to be so licensed or qualified would not have a
Material Adverse Effect on Westbank. Westbank is duly registered as a bank
holding company under the BHCA. Westbank has heretofore delivered to NewAlliance
and has included as Section 4.2 of the Westbank DISCLOSURE SCHEDULE true,
complete and correct copies of the Articles of Organization and Bylaws of
Westbank as in effect as of the date hereof.
17
4.3 OWNERSHIP OF WESTBANK SUBSIDIARIES. Set forth in Section 4.3
----------------------------------
of the Westbank DISCLOSURE SCHEDULE is the name, jurisdiction of incorporation
and percentage ownership of each direct or indirect Westbank Subsidiary. Except
for (a) capital stock of the Westbank Subsidiaries, (b) securities and other
interests held in a fiduciary capacity and beneficially owned by third parties
or taken in consideration of debts previously contracted, and (c) securities and
other interests which are set forth in Section 4.3 of the Westbank DISCLOSURE
SCHEDULE, Westbank does not own or have the right or obligation to acquire,
directly or indirectly, any outstanding capital stock or other voting securities
or ownership interests of any corporation, bank, savings association,
partnership, joint venture or other organization, other than investment
securities representing not more than five percent (5%) of the outstanding
capital stock of any entity. The outstanding shares of capital stock or other
ownership interests of each Westbank Subsidiary that are owned by Westbank or
any Westbank Subsidiary have been duly authorized and validly issued, are fully
paid and non-assessable and are directly or indirectly owned by Westbank free
and clear of all liens, claims, encumbrances, charges, pledges, restrictions or
rights of third parties of any kind whatsoever. No Rights are authorized, issued
or outstanding with respect to the capital stock or other ownership interests of
any Westbank Subsidiary and there are no agreements, understandings or
commitments relating to the right of Westbank to vote or to dispose of such
capital stock or other ownership interests.
4.4 ORGANIZATION, STANDING AND AUTHORITY OF WESTBANK SUBSIDIARIES.
-------------------------------------------------------------
Each Westbank Subsidiary is a banking organization, or corporation or
partnership duly organized, validly existing and in good standing or legal
existence, as appropriate, under the laws of the jurisdiction in which it is
organized. Each Westbank Subsidiary (i) has full power and authority to own or
lease all of its properties and assets and to carry on its business as now
conducted, and (ii) is duly licensed or qualified to do business and is in good
standing or legal existence, as appropriate, in each jurisdiction in which its
ownership or leasing of property or the conduct of its business requires such
qualification except where the failure to be so licensed or qualified would not
have a Material Adverse Effect on Westbank. Westbank is authorized to own each
Westbank Subsidiary under the BHCA. The deposit accounts of WB are insured by
the FDIC through the DIF to the maximum extent permitted by the FDIA. WB has
paid all premiums and assessments required by the FDIC. Westbank has heretofore
delivered or made available to NewAlliance and has included as Section 4.4 of
the Westbank DISCLOSURE SCHEDULE true, complete and correct copies of the
Articles of Organization and Bylaws of WB and each other Westbank Subsidiary as
in effect as of the date hereof.
4.5 AUTHORIZED AND EFFECTIVE AGREEMENT.
----------------------------------
4.5.1 Each of Westbank and WB has all requisite corporate
power and authority to enter into this Agreement and the Bank Merger Agreement,
as applicable, and (subject to receipt of all necessary governmental approvals
and the approval of Westbank's shareholders of this Agreement) to perform all of
its obligations under this Agreement and the Bank Merger Agreement, as
applicable.
18
The execution and delivery of this Agreement and the Bank Merger Agreement and
the consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary corporate action in respect thereof
on the part of Westbank and WB, except for the approval of this Agreement by
Westbank's shareholders. This Agreement has been duly and validly executed and
delivered by Westbank and WB and, assuming due authorization and execution by
NewAlliance and NAB, constitutes the legal, valid and binding obligations of
Westbank and WB, enforceable against Westbank and WB in accordance with its
terms, subject, as to enforceability, to bankruptcy, insolvency and other laws
of general applicability relating to or affecting creditors' rights and to
general equity principles. The Bank Merger Agreement, upon execution and
delivery by WB, will have been duly and validly executed and delivered by WB
and, assuming due authorization and execution by NAB, will constitute the legal,
valid and binding obligation of WB, enforceable against WB in accordance with
its terms, subject, as to enforceability, to bankruptcy, insolvency, and other
laws of general applicability relating to or affecting creditors' rights and to
general equity principles.
4.5.2 Neither the execution and delivery of this Agreement
by Westbank or WB, the execution and delivery of the Bank Merger Agreement by
WB, nor consummation of the transactions contemplated hereby or thereby, nor
compliance by Westbank and WB with any of the provisions hereof or thereof (i)
does or will conflict with or result in a breach of any provisions of the
Articles of Organization or Bylaws of Westbank or the equivalent documents of
any Westbank Subsidiary, (ii) except as set forth in Section 4.5.2(ii) of the
Westbank DISCLOSURE SCHEDULE, violate, conflict with or result in a breach of
any term, condition or provision of, or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, or
give rise to any right of termination, cancellation or acceleration with respect
to, or result in the creation of any lien, charge or encumbrance upon any
property or asset of Westbank or any Westbank Subsidiary pursuant to, any
material note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Westbank or any Westbank
Subsidiary is a party, or by which any of their respective properties or assets
may be bound or affected, or (iii) subject to receipt of all required
governmental and shareholder approvals, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Westbank or any Westbank
Subsidiary.
4.5.3 Except as set forth in Section 4.5.3 of the Westbank
DISCLOSURE SCHEDULE and except for (i) filings of applications, notices or other
forms with, and consents, approvals or waivers by, the Federal Reserve Board,
the Department, the FDIC, the Division, the Board of Bank Incorporation, the
Connecticut Secretary of the State, the Delaware Secretary of State and the
Secretary of the Commonwealth of Massachusetts; (ii) the filing and
effectiveness of the Merger Registration Statement with the SEC; and (iii) the
approval of this Agreement by the requisite vote of the shareholders of
Westbank, no consents or approvals of, or filings or registrations with, any
Governmental Entity or with any third party are necessary on the part of
Westbank or WB in connection with the execution and delivery by Westbank and WB
of this Agreement, the execution and delivery by WB of the Bank Merger
Agreement, the consummation of the Merger by Westbank, and the consummation of
the Bank Merger by WB.
4.5.4 As of the date hereof, neither Westbank nor WB has
Knowledge of any reasons relating to Westbank or WB (including without
limitation Community Reinvestment Act compliance) why all material consents and
approvals shall not be procured from all regulatory agencies having jurisdiction
over the Merger or the Bank Merger as shall be necessary for (i) consummation of
the Merger and the Bank Merger, and (ii) the continuation by NewAlliance and NAB
after the Effective Time of the business of Westbank and WB as such business is
carried on immediately prior to the Effective Time, free of any conditions or
requirements which, in the reasonable opinion of Westbank, could have a Material
Adverse Effect on the business of Westbank or WB or materially impair the value
of Westbank and WB to NewAlliance or NAB.
19
4.6 SECURITIES DOCUMENTS AND REGULATORY REPORTS.
-------------------------------------------
4.6.1 Except as set forth in Section 4.6.1 of the Westbank
DISCLOSURE SCHEDULE, since December 31, 2002, Westbank has timely filed with the
SEC and NASDAQ all Securities Documents required by the Securities Laws, and
such Securities Documents, as the same may have been amended, complied, at the
time filed with the SEC, in all material respects with the Securities Laws.
4.6.2 Since December 31, 2002, each of Westbank and WB has
duly filed with the Bank Regulators in correct form the reports required to be
filed under applicable laws and regulations and such reports, as the same may
have been amended, were complete and accurate and in compliance with the
requirements of applicable laws and regulations in all material respects. Except
as set forth in Section 4.6.2 of the Westbank DISCLOSURE SCHEDULE, in connection
with the most recent federal and state Bank Regulator examinations of Westbank
and WB, neither Westbank nor WB was required to correct or change any action,
procedure or proceeding which Westbank or WB believes has not been corrected or
changed as required as of the date hereof.
4.7 FINANCIAL STATEMENTS.
--------------------
4.7.1 Westbank has previously delivered or made available
to NewAlliance complete and accurate copies of the Westbank Financial
Statements. The Westbank Financial Statements have been prepared in accordance
with GAAP (including related notes where applicable) and fairly present in each
case in all material respects, the consolidated financial condition, results of
operations, shareholders' equity and cash flows of Westbank for the respective
periods or as of the respective dates set forth therein, except as indicated in
the notes thereto or in the case of unaudited statements, as permitted by Form
10-Q.
4.7.2 Each of the Westbank Financial Statements referred to
in Section 4.7.1 has been prepared in accordance with GAAP and, if applicable,
the accounting pronouncements of the PCAOB, during the periods involved (except
for the absence of footnotes and customary year-end adjustments in the case of
unaudited interim Westbank Financial Statements). To Westbank's Knowledge, the
audits of Westbank and Westbank Subsidiaries have been conducted in accordance
with generally accepted auditing standards. The books and records of Westbank
and the Westbank Subsidiaries are being maintained in compliance with applicable
legal and accounting requirements, and such books and records accurately reflect
in all material respects all dealings and transactions in respect of the
business, assets, liabilities and affairs of Westbank and its Subsidiaries. The
minute books of Westbank and each Westbank Subsidiary contain complete and
accurate records of all meetings and other corporate actions of their respective
shareholders and Boards of Directors (including all committees for which minutes
are customarily kept) authorized at such meetings held or taken since December
31, 2002 through the date of this Agreement.
20
4.7.3 Except (i) as set forth in Section 4.7.3(i) of the
Westbank DISCLOSURE SCHEDULE, (ii) as reflected, disclosed or provided for in
the Westbank Financial Statements as of December 31, 2005, 2004 and 2003
(including related notes), (iii) for liabilities incurred since December 31,
2005 in the ordinary course of business and (iv) for liabilities incurred in
connection with this Agreement and the transactions contemplated hereby, neither
Westbank nor any Westbank Subsidiary has any liabilities, whether absolute,
accrued, contingent or otherwise, material to the financial condition, results
of operations or business of Westbank on a consolidated basis that would be
required in accordance with GAAP to be reflected on an audited consolidated
balance sheet of Westbank or the notes thereto.
4.8 MATERIAL ADVERSE CHANGE. Since December 31, 2005 to the date
-----------------------
hereof (i) Westbank and each Westbank Subsidiary has conducted its respective
business in the ordinary and usual course (excluding the incurrence of expenses
in connection with this Agreement, and excluding the transactions contemplated
hereby), and (ii) no event has occurred or circumstance arisen that,
individually or in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect on Westbank.
4.9 ENVIRONMENTAL MATTERS.
---------------------
4.9.1 Except as set forth in Section 4.9.1 of the Westbank
DISCLOSURE SCHEDULE, with respect to Westbank and each Westbank Subsidiary:
(a) To Westbank's Knowledge, each of Westbank
and the Westbank Subsidiaries, the Participation Facilities and the Loan
Properties are, and for the past five (5) years have been, in full compliance
with, and are not in violation of or liable under, any Environmental Laws;
(b) Westbank has received no written notice that
there is any suit, claim, action, demand, executive or administrative order,
directive, investigation or proceeding pending and, to Westbank's Knowledge,
there is no such action threatened, and there is no basis to expect any action
before any court, governmental agency or other forum against it or any of the
Westbank Subsidiaries or any Participation Facility (x) for alleged
noncompliance (including by any predecessor) with, and liability under, any
Environmental Law or (y) relating to the presence of or release (as defined
herein) into the environment of any Materials of Environmental Concern (as
defined herein), whether or not occurring at or on a site currently or formerly
owned, leased or operated by it or any of the Westbank Subsidiaries or any
Participation Facility or (z) with respect to any property at or to which
Materials of Environmental Concern were generated, manufactured, refined,
transported, transferred, imported, used, disposed, treated, or processed by
Westbank or any Westbank Subsidiary or any Participation Facility or from which
Materials of Environmental Concern have been transported, treated, stored,
handled, transferred, disposed, recycled, or received;
(c) Westbank has received no written notice that
there is any suit, claim, action, demand, executive or administrative order,
directive, investigation or proceeding pending and, to Westbank's Knowledge, no
such action is threatened, and to Westbank's Knowledge there is no basis to
expect any action before any court, governmental agency or other forum relating
to or against any Loan Property (or Westbank or any of the Westbank Subsidiaries
in respect of such Loan Property) (x) relating to alleged noncompliance
(including by any predecessor) with, and liability under, any Environmental Law
or (y) relating to the presence of or release into the environment of any
Materials of Environmental Concern;
21
(d) To Westbank's Knowledge, the real
properties, leasehold or other interest in real property currently or formerly
owned or operated by Westbank or any Westbank Subsidiary (including, without
limitation, soil, groundwater or surface water on, or under the properties, and
buildings thereon) are not contaminated with and do not otherwise contain any
Materials of Environmental Concern other than in amounts permitted under
applicable Environmental Law;
(e) Neither Westbank nor any Westbank Subsidiary
has received (and to Westbank's knowledge there is no reasonable basis to
expect) any written notice, demand, letter, executive or administrative order,
directive or request for information from any federal, state, local or foreign
governmental entity or any third party indicating that it may be in violation
of, or liable under, any Environmental Law;
(f) To Westbank's Knowledge, there are no
underground storage tanks on, in or under any properties currently or formerly
owned or operated by Westbank or any of the Westbank Subsidiaries or any
Participation Facility, and no underground storage tanks have been closed or
removed from any properties currently owned or operated by Westbank or any of
the Westbank Subsidiaries or any Participation Facility, and all underground
storage tanks previously existing on any such properties located in
Massachusetts have been removed in accordance with the Massachusetts Contingency
Plan; and
(g) To Westbank's Knowledge during the period of
(s) Westbank's or any of the Westbank Subsidiaries' ownership or operation of
any of their respective currently owned or operated properties or (t) Westbank's
or any of the Westbank Subsidiaries' participation in the management of any
Participation Facility, there has been no contamination by or release of
Materials of Environmental Concern in, on, under or affecting such properties,
other than in amounts permitted under Environmental Law. To Westbank's
Knowledge, prior to the period of (x) Westbank's or any of the Westbank
Subsidiaries' ownership or operation of any of their respective currently owned
or operated properties or (y) Westbank's or any of Westbank Subsidiaries'
participation in the management of any Participation Facility, there was no
contamination by or release of Materials of Environmental Concern in, on, under
or affecting such properties, other than in amounts permitted under
Environmental Law.
4.9.2 "Loan Property" means any property in which the
applicable party (or a Subsidiary of it) currently holds a direct security
interest or has held a direct security interest within the past five (5) years.
"Participation Facility" means any facility in which the applicable party (or a
Subsidiary of it) currently participates or formerly participated in the
management (including all property held as trustee or in any other fiduciary
capacity) and, where required by the context, includes the owner or operator of
such property, but only with respect to such property.
22
4.9.3 Except as set forth in Section 4.9.3 of the Westbank
DISCLOSURE SCHEDULE, Westbank does not possess and has not conducted or arranged
for the conduct of any environmental studies, reports, analyses, tests or
monitoring during the past five (5) years (other than so-called "Phase I
Environmental Site Assessments" and/or "Phase II Environmental Site Assessments"
which did not indicate any contamination of the environment by Materials of
Environmental Concern above reportable levels) with respect to any properties
currently or formerly owned or leased by Westbank or any Westbank Subsidiary or
any Participation Facility. Westbank has delivered to NAB true and complete
copies and results of any and all such schedules, reports, analyses, tests or
monitoring in its possession.
4.9.4 Except as set forth in Section 4.9.4 of the Westbank
DISCLOSURE SCHEDULE, no real property located in Connecticut and currently or
formerly owned or leased by Westbank or any Westbank Subsidiary, and, to
Westbank's Knowledge, no Loan Property located in Connecticut and no
Participation Facility located in Connecticut meets the statutory criteria of an
"Establishment" as such term is defined pursuant to the Connecticut Transfer
Act, CGS Section 22a-134 et seq. No condition exists at any real property
located in Connecticut and currently or formerly owned or leased by Westbank or
any Westbank Subsidiary, or, to Westbank's Knowledge any Loan Property located
in Connecticut or any Participation Facility located in Connecticut that would
require investigation, remediation, or post-remediation or natural attenuation
monitoring under the Connecticut Department of Environmental Protection's
Remediation Standard Regulations, Regulations of Connecticut State Agencies
Sections 22a-133k-1 et seq.
4.10 TAX MATTERS.
-----------
4.10.1 Westbank and each Westbank Subsidiary has duly filed
all Tax Returns required by applicable law to be filed by them in respect of all
applicable Taxes required to be paid through the date hereof and will timely
file any such Tax Returns required to be filed prior to the Effective Time with
respect to Taxes required to be paid through the Effective Time. Westbank and
each Westbank Subsidiary have paid, or where payment is not required to have
been made, have set up an adequate reserve or accrual for the payment of, all
Taxes required to be paid in respect of the periods covered by such Tax Returns
and, as of the Effective Time, will have paid, or where payment is not required
to have been made, will have set up an adequate reserve or accrual for the
payment of, all Taxes for any subsequent periods ending on or prior to the
Effective Time. Neither Westbank nor any Westbank Subsidiary will have any
liability for any such Taxes in excess of the amounts so paid or reserves or
accruals so established other than Taxes being contested in good faith as
described in Section 4.10.1 of the Westbank DISCLOSURE SCHEDULE. Except as
further set forth in Section 4.10.1 of the Westbank DISCLOSURE SCHEDULE, as of
the date hereof, no audit, examination or deficiency or refund litigation with
respect to any Tax Returns filed by Westbank or any Westbank Subsidiary is
pending or, to Westbank's Knowledge, threatened and to Westbank's Knowledge,
there is no basis for any Tax authority to assess any additional Taxes for any
period for which Tax Returns have been filed.
4.10.2 Westbank and each Westbank Subsidiary has withheld
and paid all Taxes required to be paid in connection with amounts paid to any
employee, independent contractor, creditor, stockholder or other third party.
23
4.10.3 Except as set forth in Section 4.10.3 of the Westbank
DISCLOSURE SCHEDULE, all Tax Returns filed by Westbank and its Subsidiaries are
complete and accurate. Neither Westbank nor any Westbank Subsidiary is
delinquent in the payment of any Tax, assessment or governmental charge, or has
requested any extension of time within which to file any Tax Returns in respect
of any fiscal year or portion thereof which have not since been filed. Except as
set forth in Section 4.10.3 of the Westbank DISCLOSURE SCHEDULE, there is no
pending Tax audit examination, Tax deficiency assessment or Tax or governmental
charges investigation with respect to Westbank or any Westbank Subsidiary, and
there are no deficiencies for any Tax, assessment or governmental charge that,
to Westbank's Knowledge, have been proposed, asserted or assessed (tentatively
or otherwise) against Westbank or any Westbank Subsidiary as a result of any Tax
audit examination, Tax deficiency assessment, or Tax or governmental charges
investigation which have not been settled and paid. There are currently no
agreements in effect with respect to Westbank or any Westbank Subsidiary to
extend the period of limitations for the assessment or collection of any Tax and
no power of attorney has been granted by Westbank and its Subsidiaries with
respect to any Tax matter currently in force.
4.10.4 Except as set forth in Section 4.10.4 of the Westbank
DISCLOSURE SCHEDULE, neither Westbank nor any Westbank Subsidiary (i) is a party
to any agreement providing for the allocation or sharing of Taxes (other than a
Tax allocation agreement between Westbank and WB), or (ii) is required to
include in income any adjustment pursuant to Section 481(a) of the Code by
reason of a voluntary change in accounting method initiated by Westbank or any
Westbank Subsidiary (nor does Westbank have any Knowledge that the Internal
Revenue Service has proposed any such adjustment or change of accounting
method).
4.10.5 As used in this Agreement, "Tax" means any federal,
state, local or foreign income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, windfall profits, environmental,
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, highway, estimated or other tax of any
kind whatsoever, including any interest, penalties or addition thereto, whether
disputed or not, imposed by any government or quasi-government authority; and
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
4.11 LEGAL PROCEEDINGS. Except as set forth in Section 4.11 of the
-----------------
Westbank DISCLOSURE SCHEDULE, there are no actions, suits, claims, governmental
investigations or proceedings instituted, pending or, to the Knowledge of
Westbank or any Westbank Subsidiary, threatened against Westbank or any Westbank
Subsidiary or against any asset, interest or right of Westbank or any Westbank
Subsidiary, or against any officer, director or employee of any of them, and
neither Westbank nor any Westbank Subsidiary is a party to any unsatisfied
order, judgment or decree.
4.12 COMPLIANCE WITH LAWS.
--------------------
4.12.1 Each of Westbank and the Westbank Subsidiaries has
all permits, licenses, certificates of authority, orders and approvals of, and
has made all filings, applications and registrations with, federal, state, local
and foreign governmental or regulatory bodies that are required in order to
permit it to carry on its business in all material respects as it is currently
being conducted; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect; and to the Knowledge of Westbank, no
suspension or cancellation of any of the same is threatened.
24
4.12.2 Except as set forth in Section 4.12.2, or 4.9 as to
Environmental Laws, of the Westbank DISCLOSURE SCHEDULE, neither Westbank nor
any Westbank Subsidiary is in violation of its respective Articles of
Organization, Charter or other chartering instrument or Bylaws, has received
written notice of any material uncured violation of any applicable federal,
state or local law or ordinance or any order, rule or regulation of any federal,
state, local or other governmental agency or body (including, without
limitation, all banking (including without limitation all regulatory capital
requirements), municipal securities, insurance, safety, health, Environmental
Law, zoning, anti-discrimination, antitrust, and wage and hour laws, ordinances,
orders, rules and regulations), or is in default with respect to any order,
writ, injunction or decree of any court, or is in default under any order,
license, regulation or demand of any governmental agency and, to the Knowledge
of Westbank, Westbank along with its executive officers and directors is not in
violation of any Securities Laws; and neither Westbank nor any Westbank
Subsidiary has received any written notice or communication from any federal,
state or local governmental authority asserting that Westbank or any Westbank
Subsidiary is in violation of any of the foregoing, which violation has not been
corrected on a prospective basis in all respects. Neither Westbank nor any
Westbank Subsidiary is subject to any regulatory or supervisory cease and desist
order, agreement, written directive, memorandum of understanding or written
commitment (other than those of general applicability to all banks or holding
companies), and none of them has received any written communication requesting
that it enter into any of the foregoing, except as set forth in Section 4.12.2
of the Westbank DISCLOSURE SCHEDULE. Since December 31, 2002, no regulatory
agency has initiated or continued any proceeding or, to the Knowledge of
Westbank, investigation into the business or operations of Westbank, or any
Westbank Subsidiary. Westbank has not received any objection from any regulatory
agency to Westbank's response to any violation, criticism or exception with
respect to any report or statement relating to any examination of Westbank or
any of the Westbank Subsidiaries.
4.13 CERTAIN INFORMATION. None of the information supplied by
-------------------
Westbank, any Westbank Subsidiary or their agents or representatives relating to
Westbank and its Subsidiaries for the purpose of being included or incorporated
by reference in the Proxy Statement-Prospectus, as of the date(s) such Proxy
Statement-Prospectus is mailed to shareholders of Westbank, and up to and
including the date of the meeting of shareholders to which such Proxy
Statement-Prospectus relates, will contain any untrue statement of material fact
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, provided
that information as of a later date shall be deemed to modify the information as
of the earlier date.
4.14 EMPLOYEE BENEFIT PLANS.
----------------------
4.14.1 Westbank has set forth in Section 4.14.1 of the
Westbank DISCLOSURE SCHEDULE all Westbank Employee Plans, and Westbank has
previously furnished or made available to NewAlliance accurate and complete
copies of the same together with (i) the actuarial and audited financial reports
prepared with respect to any qualified plans for the last three (3) plan years,
(ii) the annual reports filed with any governmental agency for any qualified
plans for the last three (3) plan years, (iii) the Summary Annual Report
provided to Participants for the last three (3) plan years; and (iv) all rulings
and determination letters and any open requests for rulings or letters that
pertain to any qualified plan.
25
4.14.2 None of Westbank, any Westbank Subsidiary, any
employee pension benefit plan (as defined in Section 3(2) of ERISA) maintained
by any of them and intended to be qualified under Section 401 of the Code or, to
Westbank's Knowledge, any fiduciary of such plan has incurred any liability to
the PBCG (except for premiums payable in the ordinary course) or the Internal
Revenue Service with respect to any employee pension plan of Westbank or any
Westbank Subsidiary. In the last five (5) years, no reportable event under
Section 4043(b) of ERISA has occurred with respect to any such employee pension
benefit plan, other than the transactions contemplated by this Agreement or
events notice of which has been waived by regulations under Section 4043 of
ERISA.
4.14.3 Except as set forth in Section 4.14.3 of the Westbank
DISCLOSURE SCHEDULE: (a) neither Westbank nor any Westbank Subsidiary
participates in or has incurred any liability under Section 4201 of ERISA for a
complete or partial withdrawal from a multi-employer plan (as such term is
defined in ERISA); (b) no liability under Title IV of ERISA has been incurred by
Westbank or any Westbank Subsidiary with respect to any Westbank Employee Plan
which is subject to Title IV of ERISA, or with respect to any "single-employer
plan" (as defined in Section 4001(a) of ERISA and which is subject to Title IV
of ERISA) ("Westbank Defined Benefit Plan") currently or formerly maintained by
Westbank or any entity which is considered an affiliated employer with Westbank
under Section 4001(b) (1) of ERISA or Section 414 of the Code (an "ERISA
Affiliate") since the effective date of ERISA that has not been satisfied in
full to the extent required by ERISA from time to time; (c) no Westbank Pension
Plan had an "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, as of the last day of the end of the most recent
plan year ending prior to the date hereof; (d) the fair market value of the
assets of each Westbank Defined Benefit Plan exceeds the present value of the
"benefit liabilities" (as defined in Section 4001(a) (16) of ERISA) under such
Westbank Defined Benefit Plan as of the end of the most recent plan year with
respect to the respective Westbank Defined Benefit Plan ending prior to the date
hereof, calculated on the basis of the actuarial assumptions used in the most
recent actuarial valuation for such Westbank Defined Benefit Plan as of the date
hereof; (e) neither Westbank nor any ERISA Affiliate has provided, or is
required to provide, security to any Westbank Defined Benefit Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section 401(a) (29) of
the Code; (f) neither Westbank nor any ERISA Affiliate has contributed to any
"multi-employer plan," as defined in Section 3(37) of ERISA, on or after
September 26, 1980; (g) neither Westbank, nor any ERISA Affiliate, nor any
Westbank Employee Plan, including any Westbank Defined Benefit Plan, nor any
trust created thereunder has engaged in a transaction in connection with which
Westbank, any ERISA Affiliate, and any Westbank Employee Plan, including any
Westbank Defined Benefit Plan, any such trust or any trustee or administrator
thereof, is subject to either a material civil liability or penalty pursuant to
Section 409, 502(i) or 502(1) of ERISA or a material tax imposed pursuant to
Chapter 43 of the Code.
4.14.4 A favorable determination letter has been issued by
the Internal Revenue Service, with respect to each Westbank Employee Plan which
is an "employee pension benefit plan" (as defined in Section 3(2) of ERISA)
which is intended to qualify under Section 401 of the Code (a "Westbank Pension
Plan"), to the effect that such plan is qualified under Section 401 of the Code
and the trust associated with such employee pension plan is tax exempt under
Section 501 of the Code. No such letter has been revoked or, to the best of
Westbank's Knowledge, is threatened to be revoked, and Westbank does not know of
any ground on which such revocation may be based.
26
Except as set forth in Section 4.14.4 of the Westbank DISCLOSURE SCHEDULE,
neither Westbank nor any Westbank Subsidiary has any current liability under any
such plan that was required to be reflected as a liability on the Financial
Statements as of December 31, 2005 under GAAP, which was not reflected on the
consolidated statement of financial condition of Westbank at December 31, 2005
included in the Westbank Financial Statements. All contributions required to be
made under the terms of any such plan have been made on a timely basis in all
material respects.
4.14.5 Except as specifically identified in Section 4.14.5
of the Westbank DISCLOSURE SCHEDULE, neither Westbank nor any Westbank
Subsidiary has any obligations for post-retirement or post-employment benefits
(including but not limited to health, life or disability insurance for retirees)
under any Westbank Employee Plan, except for coverage required by Part 6 of
Title I of ERISA or Section 4980B of the Code, or similar state law, the cost of
which is borne by the insured individual. Full payment has been made (or proper
accruals have been established) of all contributions which are required for
periods prior to the date hereof, and full payment will be so made (or proper
accruals will be so established) of all contributions which are required for
periods after the date hereof and prior to the Effective Time, under the terms
of each Westbank Employee Plan or ERISA except where the failure to make such
payment or accrual would not result in a Material Adverse Effect to Westbank.
4.14.6 The Westbank Employee Plans have been operated in
compliance in all material respects with the applicable provisions of ERISA, the
Code (including without limitation, Section 409A thereof to the extent
applicable), all regulations, rulings and announcements promulgated or issued
thereunder and all other applicable governmental laws and regulations.
4.14.7 There are no pending or, to the Knowledge of
Westbank, threatened claims (other than routine claims for benefits) by, on
behalf of or against any of the Westbank Employee Plans or any trust related
thereto or any fiduciary thereof.
4.14.8 Section 4.14.8 of the Westbank DISCLOSURE SCHEDULE
sets forth (i) the maximum amount that could be paid to each executive officer
and director of Westbank or any Westbank Subsidiary as a result of the
transactions contemplated by this Agreement under all non-tax-qualified Westbank
Employee Plans currently in effect, other than those agreements superceded by
the Termination and Release Agreements being entered into pursuant to Section
7.5.7 hereof; and (ii) the "base amount" (as such term is defined in Section
280G(b)(3) of the Code) for each individual covered by an employment or change
of control agreement or who may otherwise have excess parachute payments under
Section 280G of the Code, calculated as of December 31, 2006 based on
compensation through December 31, 2005 and estimated compensation for 2006 for
each such individual who it is estimated at the time of Closing will be a
"disqualified individual" within the meaning of Final Treasury Regulation
Section 1.280G-1, Q&A 15 to 21.
4.14.9 Except as set forth in Section 4.14.9 of the Westbank
DISCLOSURE SCHEDULE, with respect to any Westbank Employee Plan which is an
employee welfare benefit plan (within the meaning of ERISA Section 3(1) (a
"Westbank Welfare Plan"): (i) each such Westbank Welfare Plan which is intended
to meet the requirements for tax-favored treatment under Subchapter B of Chapter
1 of the Code meets such requirements;
27
(ii) there is no disqualified benefit (as such term is defined in Code Section
4976(b)) which would subject Westbank to a material tax under Code Section
4976(a); (iii) each Westbank Welfare Plan which is a group health plan (as such
term is defined in Code Sections 5000(b)(1)) is in material compliance with the
applicable requirements of Code Section 4980B; and (iv) each such Westbank
Welfare Plan (including any such plan covering former employees of Westbank or
any Westbank Subsidiary) may be amended or terminated by Westbank or NAB or
NewAlliance on or at any time after the Effective Date without incurring
liability to participants in such Plan thereunder except as required to satisfy
the terms of the Plan.
4.14.10 All of the life insurance policies owned by Westbank
or WB on the lives of the directors and employees of Westbank or WB, including
those policies held by rabbi trusts, may be surrendered or otherwise terminated
by NewAlliance following the Effective Time, except as disclosed on Section
4.14.10 of the Westbank DISCLOSURE SCHEDULE.
4.14.11 With respect to those directors with a supplemental
retirement plan agreement who have reached normal retirement age and who
continue to serve as of the date of this Agreement, such directors shall be
deemed to have a "Termination of Service" as defined in their agreement upon
completion of the Merger and shall be entitled to receive the retirement
benefits specified in paragraph III(A) of such agreements.
4.15 CERTAIN CONTRACTS.
-----------------
4.15.1 Except for this Agreement, and those agreements and
other documents which have been filed as exhibits to Westbank's Securities
Documents or set forth in Section 4.15.1 of the Westbank DISCLOSURE SCHEDULE,
neither Westbank nor any Westbank Subsidiary is a party to, bound by or subject
to (i) any agreement, contract, arrangement, commitment or understanding
(whether written or oral) that is a "material contract" within the meaning of
Item 601(b)(10) of the SEC's Regulation S-K; (ii) any collective bargaining
agreement with any labor union relating to employees of Westbank or any Westbank
Subsidiary; (iii) any agreement which by its terms limits the payment of
dividends by Westbank or WB; (iv) any instrument evidencing or related to
material indebtedness for borrowed money whether directly or indirectly, by way
of purchase money obligation, conditional sale, lease, purchase, guaranty or
otherwise, in respect of which Westbank or any Westbank Subsidiary is an obligor
to any Person, which instrument evidences or relates to indebtedness other than
deposits, repurchase agreements, Federal Home Loan Bank of Boston advances,
bankers' acceptances, and "treasury tax and loan" accounts established in the
ordinary course of business and transactions in "federal funds" or which contain
financial covenants or other restrictions (other than those relating to the
payment of principal and interest when due) which would be applicable on or
after the Closing Date to Westbank or any Westbank Subsidiary; (v) any contract
(other than this Agreement) limiting the freedom, in any material respect, of
Westbank or WB to engage in any type of banking or bank-related business which
Westbank or WB is permitted to engage in under applicable law as of the date of
this Agreement or (vi) any agreement, contract, arrangement, commitment or
understanding (whether written or oral) that restricts or limits in any material
way the conduct of business by Westbank or any Westbank Subsidiary (it being
understood that any non-compete or similar provision shall be deemed material).
28
4.15.2 Each real estate lease that may require the consent
of the lessor or its agent resulting from the Merger or any prior merger of WB
by virtue of a legal conclusion, prohibition or restriction relating to
assignment, by operation of law or otherwise, or change in control, is listed in
Westbank DISCLOSURE SCHEDULE 4.15.2 identifying the section of the lease that
contains such prohibition or restriction. Subject to any consents that may be
required as a result of the transactions contemplated by this Agreement, to its
Knowledge, neither Westbank nor any Westbank Subsidiary is in default in any
material respect under any material contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument to which it is a party,
by which its assets, business, or operations may be bound or affected, or under
which it or its assets, business, or operations receive benefits, and there has
not occurred any event that, with the lapse of time or the giving of notice or
both, would constitute such a default.
4.15.3 The agreements, contracts, arrangements and
instruments referred to in Section 4.15.1 and 4.15.2 are in full force and
effect on the date hereof, and neither Westbank nor any Westbank Subsidiary
(nor, to the Knowledge of Westbank, any other party to any such contract,
arrangement or instrument) has materially breached any provision of, or is in
default in any respect under any term of, any such contract, arrangement or
instrument. Except as listed on Section 4.15.3 of the Westbank DISCLOSURE
SCHEDULE, no party to the agreements, contracts, arrangements or instruments
referred to in Sections 4.15.1 and 4.15.2 will have the right to terminate any
or all of the provisions of any such contract, plan, arrangement or instrument
as a result of the execution of, and the transactions contemplated by, this
Agreement. No contract, or similar agreement or arrangement referred to in
Sections 4.15.1 and 4.15.2 to which Westbank or any Westbank Subsidiary is a
party or under which Westbank or any Westbank Subsidiary may be liable contains
provisions which permit an independent contractor to terminate it without cause
and continue to accrue future benefits thereunder.
4.15.4 Except as set forth in Section 4.15.4 of the Westbank
DISCLOSURE SCHEDULE, neither Westbank nor any Westbank Subsidiary has made any
payments, is obligated to make any payments, or is party to any agreement that
could obligate them to make any payments in connection with any officer or
director in the event of a change of control.
4.16 BROKERS AND FINDERS. Except as set forth in Section 4.16 of
-------------------
the Westbank DISCLOSURE SCHEDULE, neither Westbank nor any Westbank Subsidiary
nor any of their respective directors, officers or employees, has employed any
broker or finder or incurred any liability for any broker or finder fees or
commissions in connection with the transactions contemplated hereby.
4.17 INSURANCE. Section 4.17 of the Westbank DISCLOSURE SCHEDULE
---------
sets forth all policies of insurance maintained by Westbank or any Westbank
Subsidiary as of the date hereof and any claims thereunder in excess of $50,000
since December 31, 2002. Except as set forth in Section 4.17 of the Westbank
DISCLOSURE SCHEDULE, since December 31, 2002, neither Westbank nor any Westbank
Subsidiary has received any notice of termination of any such insurance coverage
or increase in the premiums therefor because of an event at Westbank or at a
Westbank Subsidiary, or has any Knowledge of, or received any written notice
that, any such insurance coverage will be terminated or the premiums therefor
increased because of such an event at Westbank or at a Westbank Subsidiary.
29
4.18 PROPERTIES. Section 4.18 of the Westbank DISCLOSURE SCHEDULE
----------
sets forth the street address of all real property in which Westbank or any
Westbank Subsidiary has an ownership or leasehold interest, (specifying, as to
each, whether owned or leased and the date such lease expires), and identifies
all properties on which any Westbank Subsidiary operates a bank branch. All real
property and all personal property integral to the conduct of a banking business
owned by Westbank or any Westbank Subsidiary or presently used by any of them in
its respective business is in good condition (ordinary wear and tear excepted)
and is sufficient to carry on Westbank's and its Subsidiaries' business in the
ordinary course of business consistent with their past practices. Each of
Westbank and each Westbank Subsidiary has good and marketable title free and
clear of all liens, encumbrances, charges, defaults or equities (other than
equities of redemption under applicable foreclosure laws) to all of such
properties and assets, real and personal, reflected on the consolidated
statement of financial condition of Westbank contained in the Westbank Financial
Statements dated December 31, 2005 or acquired, through merger of otherwise,
after such date (other than those disposed of for fair value after such date),
except (i) liens for current taxes not yet due or payable, (ii) pledges to
secure deposits and other liens incurred in the ordinary course of its banking
business, (iii) such imperfections of title, easements and encumbrances, if any,
as are not material in character, amount or extent, and (iv) as reflected on the
consolidated statement of financial condition of Westbank contained in the
Westbank Financial Statements as of December 31, 2005. All real and personal
property leased or licensed by Westbank or any Westbank Subsidiary are held
pursuant to leases or licenses that are valid and enforceable in accordance with
their respective terms and, except as set forth in Section 4.18 of the Westbank
DISCLOSURE SCHEDULE, no such real property lease will terminate or lapse prior
to the Effective Time or as a result of the Merger.
4.19 LABOR. No work stoppage involving Westbank or any Westbank
-----
Subsidiary is pending or, to the Knowledge of Westbank, threatened. Except as
set forth in Section 4.19 of the Westbank DISCLOSURE SCHEDULE, neither Westbank
nor any Westbank Subsidiary is involved in, or to the Knowledge of Westbank,
threatened with or affected by, any labor dispute, arbitration, lawsuit or
administrative proceeding involving its employees. Employees of Westbank and the
Westbank Subsidiaries are not represented by any labor union nor are any
collective bargaining agreements otherwise in effect with respect to such
employees, and to the Knowledge of Westbank, there have been no efforts to
unionize or organize any employees of Westbank or any Westbank Subsidiary.
4.20 CERTAIN TRANSACTIONS. Since December 31, 2005, neither
--------------------
Westbank nor any Westbank Subsidiary has been a party to any off-balance-sheet
transactions involving interest rate and currency swaps, options and futures
contracts, or any other similar derivative transactions, except as set forth in
Section 4.20 of the Westbank DISCLOSURE SCHEDULE.
4.21 FAIRNESS OPINION. Westbank has received an oral opinion from
----------------
Keefe, Bruyette & Woods, Inc. confirmed in writing to the effect that, subject
to the terms, conditions and qualifications set forth therein, as of the date
thereof, the Merger Consideration to be received by the shareholders of Westbank
pursuant to this Agreement is fair to such shareholders from a financial point
of view and Keefe, Bruyette & Woods, Inc. has consented to the inclusion of its
written opinion in the Proxy Statement-Prospectus. Such opinion has not been
amended or rescinded as of the date of this Agreement.
4.22 LOAN PORTFOLIO.
--------------
4.22.1 The allowance for possible losses reflected in
Westbank's audited consolidated statement of financial condition contained in
the Westbank Financial Statements dated December 31, 2005 was, and the allowance
for possible losses shown on the balance sheets in Westbank's Securities
Documents for periods ending after December 31, 2005 were and will be, as of the
dates thereof, in accordance with GAAP and consistent with Westbank's past
practices.
30
4.22.2 Section 4.22.2 of the Westbank DISCLOSURE SCHEDULE
sets forth a listing, as of June 30, 2006, by account, of: (A) all loans, (1)
that are contractually past due ninety (90) days or more in the payment of
principal and/or interest, (2) that are on non-accrual status, (3) that as of
the date of this Agreement are classified as "Impaired" (as contemplated under
FAS 114), "Other Loans Specially Mentioned", "Special Mention", "Substandard",
"Doubtful", "Loss", "Classified", "Criticized", "Watch list", or words of
similar import, together with the principal amount of and accrued and unpaid
interest on each such loan and the identity of the obligor thereunder, (4) where
a reasonable doubt exists as to the timely future collectibility of principal
and/or interest, whether or not interest is still accruing or the loans are less
than ninety (90) days past due, (5) where the interest rate terms have been
reduced and/or the maturity dates have been extended subsequent to the agreement
under which the loan was originally created due to concerns regarding the
borrower's ability to pay in accordance with such initial terms, or (6) where a
specific reserve allocation exists in connection therewith, and (B) all assets
classified by Westbank or any Westbank Subsidiary as real estate acquired
through foreclosure or in lieu of foreclosure, and all other assets currently
held that were acquired through foreclosure or in lieu of foreclosure. Section
4.22.2 of the Westbank DISCLOSURE SCHEDULE may exclude the listing of any
individual loan with an outstanding principal balance of less than $25,000.
4.22.3 All loans receivable (including discounts) and
accrued interest entered on the books of Westbank and the Westbank Subsidiaries
arose out of bona fide arm's-length transactions, were made for good and
valuable consideration in the ordinary course of Westbank's or the appropriate
Westbank Subsidiary's respective business, and the notes or other evidences of
indebtedness with respect to such loans (including discounts) are true and
genuine and are what they purport to be, except as set forth in Section 4.22.3
of the Westbank DISCLOSURE SCHEDULE. Except as set forth in Section 4.22.3 of
the Westbank DISCLOSURE SCHEDULE, the loans, discounts and the accrued interest
reflected on the books of Westbank and the Westbank Subsidiaries are subject to
no defenses, set-offs or counterclaims (including, without limitation, those
afforded by usury or truth-in-lending laws), except as may be provided by
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
by general principles of equity. Except as set forth in Section 4.22.3 of the
Westbank DISCLOSURE SCHEDULE, and other than loans pledged to the FHLB of
Boston, all such loans are owned by Westbank or the appropriate Westbank
Subsidiary free and clear of any liens.
4.22.4 All pledges, mortgages, deeds of trust and other
collateral documents or security instruments relating to the notes or other
forms of indebtedness contemplated in Section 4.22.3 hereof are, in all
respects, valid, true and genuine, and what they purport to be.
4.23 REQUIRED VOTE; INAPPLICABILITY OF ANTI-TAKEOVER STATUTES.
--------------------------------------------------------
4.23.1 The Boards of Directors of Westbank and WB, as
applicable, have approved the acceptance by Westbank and WB of the offer of
NewAlliance to enter into this Agreement and the Bank Merger Agreement and have
approved Westbank and WB entering into this Agreement and WB entering into the
Bank Merger Agreement, and the transactions contemplated hereby and thereby. The
affirmative vote of the holders of two-thirds (2/3) of the shares of Westbank
Common Stock entitled to vote is necessary to approve this Agreement and the
transactions contemplated hereby (including the Bank Merger) on behalf of
Westbank.
31
4.23.2 No "fair price," "moratorium," "control share
acquisition" or other form of anti-takeover statute or regulation or provision
of Westbank's Articles of Organization or By-Laws is applicable to this
Agreement and the transactions contemplated hereby.
4.23.3 Westbank has taken all action necessary or
appropriate so that (a) the entering into of this Agreement and the consummation
of the transactions contemplated hereby do not and will not, or (b) any act by a
third party does not and will not (y) result in the ability of any person to
exercise any Rights (as defined in the Westbank Shareholder Rights Agreement)
under the Westbank Shareholder Rights Agreement or (z) enable or require any
Rights to separate from the shares of Westbank Common Stock to which they are
attached or to be triggered or become exercisable. No "Distribution Date" or
"Stock Acquisition Date" (as such terms are defined in the Westbank Shareholder
Rights Agreement) has occurred or can occur.
4.24 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as set forth in
-------------------------------------
Section 4.24 of the Westbank DISCLOSURE SCHEDULE, no officer or director of
Westbank or a Westbank Subsidiary, or any "associate" (as such term is defined
in Rule 14a-l under the Exchange Act) of any such officer or director, (i) has
any material interest in any contract or property (real or personal), tangible
or intangible, used in or pertaining to the business of Westbank or any of the
Westbank Subsidiaries, or (ii) is indebted to, or has the right under a line of
credit to borrow from, Westbank or any Westbank Subsidiary.
4.25 JOINT VENTURES. Section 4.25 of the Westbank DISCLOSURE
--------------
SCHEDULE sets forth (i) the identities of all Joint Ventures in which Westbank
or any Westbank Subsidiary is participating, (ii) the agreements relating to
such Joint Ventures, (iii) the identities of the other participants in the Joint
Venture, (iv) the percentage of the Joint Venture owned by each participant, (v)
copies of the most recent available financial statements (on an audited basis if
available) of such Joint Ventures, and (vi) the amount of the investment or
contractually binding commitment of Westbank or any Westbank Subsidiary to
invest in such Joint Venture.
4.26 INTELLECTUAL PROPERTY. Except as set forth in Section 4.26 of
---------------------
the Westbank DISCLOSURE SCHEDULE, Westbank and each Westbank Subsidiary own or
possess valid and binding licenses and other rights to use without payment of
any material amount, all material patents, trademarks, trade names, service
marks, copyrights and any applications therefor, schematics, technology,
know-how, trade secrets, inventory, ideas, algorithms, processes, computer
programs and applications (in both source code and object code form) and
tangible and intangible proprietary information or material that are used in
their businesses ("Intellectual Property"), and all such Intellectual Property
is described in Section 4.26 of the Westbank DISCLOSURE SCHEDULE. Neither
Westbank nor any Westbank Subsidiary has any material undisclosed liability with
respect to (i) the Intellectual Property or (ii) licenses, sublicenses and other
agreements as to which Westbank or any Westbank Subsidiary is a party and
pursuant to which Westbank or any Westbank Subsidiary is authorized to use any
third party patents, trademarks or copyrights, including software which are
incorporated in, or form a part of any Westbank or any Westbank Subsidiary
product.
32
4.27 DISCLOSURES. None of the representations and warranties of
-----------
Westbank and WB or any of the written information or documents furnished or to
be furnished by Westbank or WB to NewAlliance in connection with or pursuant to
this Agreement or the consummation of the transactions contemplated hereby
(including the Bank Merger), when considered as a whole, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact required to be stated or necessary to make any such
information or document, in light of the circumstances, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF NEWALLIANCE AND NAB
NewAlliance represents and warrants to Westbank that the statements
contained in this Article V are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article V), except as set forth in the NEWALLIANCE
DISCLOSURE SCHEDULE delivered by NewAlliance to Westbank on the date hereof and
except as to any representation or warranty which specifically relates to an
earlier date. Unless otherwise specified, any reference to NewAlliance in this
Article V shall include NewAlliance and any direct or indirect Subsidiary of
NewAlliance.
5.1 CAPITAL STRUCTURE. The authorized capital stock of NewAlliance
-----------------
consists of 190 million shares of common stock, par value $0.01 per share and 38
million shares of preferred stock, par value $0.01 per share. As of the date of
this Agreement, 109,777,926 shares of NewAlliance Common Stock are issued and
outstanding and no shares of preferred stock are issued or outstanding. All
outstanding shares of NewAlliance Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable, and none of the
outstanding shares of NewAlliance Common Stock has been issued in violation of
the preemptive rights of any person, firm or entity. There are no Rights
authorized, issued or outstanding with respect to or relating to the capital
stock of NewAlliance.
5.2 ORGANIZATION, STANDING AND AUTHORITY OF NEWALLIANCE.
---------------------------------------------------
NewAlliance is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware with full corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as now conducted, and is duly licensed or qualified to do business and
is in good standing or legal existence, as appropriate, in each jurisdiction in
which its ownership or leasing of property or the conduct of its business
requires such licensing or qualification, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on NewAlliance.
NewAlliance is duly registered as a bank holding company under the BHCA. True,
complete and correct copies of the Certificate of Incorporation and Bylaws of
NewAlliance as in effect as of the date hereof are included in its Securities
Documents, more specifically, filed as Exhibits 3.1 and 3.2 respectively to its
Quarterly Report to the SEC on Form 10-Q filed August 13, 2004.
33
5.3 ORGANIZATION, STANDING AND AUTHORITY OF NEWALLIANCE
---------------------------------------------------
SUBSIDIARIES. Each NewAlliance Subsidiary is a savings bank, or corporation or
- ------------
partnership duly organized, validly existing and in good standing or legal
existence, as appropriate, under the laws of the jurisdiction in which it is
organized. Each NewAlliance Subsidiary (i) has full power and authority to own
or lease all of its properties and assets and to carry on its business as now
conducted, and (ii) is duly licensed or qualified to do business and is in good
standing or legal existence, as appropriate, in each jurisdiction in which its
ownership or leasing of property or the conduct of its business requires such
qualification except where the failure to be so licensed or qualified would not
have a Material Adverse Effect on NewAlliance. NewAlliance is authorized to own
each NewAlliance Subsidiary under the BHCA. The deposit accounts of NAB are
insured by the FDIC through the DIF to the maximum extent permitted by the FDIA.
NAB has paid all premiums and assessments required by the FDIC.
5.4 AUTHORIZED AND EFFECTIVE AGREEMENT.
----------------------------------
5.4.1 Each of NewAlliance and NAB has all requisite
corporate power and authority to enter into this Agreement and the Bank Merger
Agreement, as applicable, and (subject to receipt of all necessary governmental
approvals) to perform all of its obligations under this Agreement and the Bank
Merger Agreement, as applicable. The execution and delivery of this Agreement
and the Bank Merger Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of NewAlliance and
NAB. This Agreement has been duly and validly executed and delivered by
NewAlliance and NAB and, assuming due authorization, execution and delivery by
Westbank and WB, constitutes the legal, valid and binding obligation of
NewAlliance and NAB, enforceable against NewAlliance and NAB in accordance with
its terms, subject, as to enforceability, to bankruptcy, insolvency and other
laws of general applicability relating to or affecting creditors' rights and to
general equity principles. The Bank Merger Agreement, upon execution and
delivery by NAB, will have been duly and validly executed and delivered by NAB
and, assuming due authorization and execution by WB, will constitute the legal,
valid and binding obligation of NAB, enforceable against NAB in accordance with
its terms, subject, as to enforceability, to bankruptcy, insolvency, and other
laws of general applicability relating to or affecting creditors' rights and to
general equity principles.
5.4.2 Neither the execution and delivery of this Agreement
by NewAlliance or NAB, the execution and delivery of the Bank Merger Agreement
by NAB, nor consummation of the transactions contemplated hereby or thereby, nor
compliance by NewAlliance and NAB with any of the provisions hereof or thereof
(i) does or will conflict with or result in a breach of any provisions of the
Certificate of Incorporation or Bylaws of NewAlliance or the equivalent
documents of any NewAlliance Subsidiary, (ii) except as set forth in Section
5.4.2(ii) of the NEWALLIANCE DISCLOSURE SCHEDULE, violate, conflict with or
result in a breach of any term, condition or provision of, or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
lien, charge or encumbrance upon any property or asset of NewAlliance or any
NewAlliance Subsidiary pursuant to, any material note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which NewAlliance or any NewAlliance Subsidiary is a party, or by
which any of their respective properties or assets may be bound or affected, or
(iii) subject to receipt of all required governmental approvals, violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
NewAlliance or any NewAlliance Subsidiary.
34
5.4.3 Except as set forth in Section 5.4.3 of the
NEWALLIANCE DISCLOSURE SCHEDULE and except for (i) filings of applications,
notices or other forms with, and consents, approvals or waivers by the Federal
Reserve Board, the Department, the FDIC, the Division, the Board of Bank
Incorporation, the Connecticut Secretary of the State, the Delaware Secretary of
State, and the Secretary of the Commonwealth of Massachusetts, (ii) the filing
and effectiveness of the Merger Registration Statement with the SEC, and (iii)
the approval of this Agreement by the requisite vote of the shareholders of
Westbank, no consents or approvals of or filings or registrations with any
Governmental Entity or with any third party are necessary on the part of
NewAlliance or NAB in connection with the execution and delivery by NewAlliance
and NAB of this Agreement, the execution and delivery by NAB of the Bank Merger
Agreement, the consummation of the Merger by NewAlliance, and the consummation
of the Bank Merger by NAB.
5.4.4 As of the date hereof, NewAlliance has no Knowledge
of any reasons relating to NewAlliance or NAB (including without limitation
Community Reinvestment Act compliance) why all material consents and approvals
shall not be procured from all regulatory agencies having jurisdiction over the
transactions contemplated by this Agreement and the Bank Merger Agreement as
shall be necessary for (i) consummation of the transactions contemplated by this
Agreement and the Bank Merger Agreement, and (ii) the continuation by
NewAlliance and NAB after the Effective Time of the business of NewAlliance and
NAB carried on immediately prior to the Effective Time, free of any conditions
or requirements which, in the reasonable opinion of NewAlliance and NAB, could
have a Material Adverse Effect on the business of NewAlliance or NAB.
5.5 REGULATORY REPORTS.
------------------
5.5.1 NewAlliance has timely filed with the SEC and NASDAQ
or NYSE (as appropriate) all Securities Documents required by the Securities
Laws, and such Securities Documents, as the same may have been amended,
complied, at the time filed with the SEC, in all material respects with the
Securities Laws.
5.5.2 Since December 31, 2002 and, since April 1, 2004,
respectively, NAB and NewAlliance have duly filed with the Bank Regulators, in
correct form, the reports required to be filed under applicable laws and
regulations and such reports were complete and accurate and in compliance with
the requirements of applicable laws and regulations in all material respects.
Except as set forth in Section 5.5.2 of the NEWALLIANCE DISCLOSURE SCHEDULE, in
connection with the most recent federal and state Bank Regulator examinations of
NewAlliance and NAB, neither NewAlliance nor NAB was required to correct or
change any action, procedure or proceeding which NewAlliance or NAB believes has
not been corrected or changed as required as of the date hereof.
5.6 FINANCIAL STATEMENTS.
--------------------
5.6.1 NewAlliance has previously delivered or made
available to Westbank complete and accurate copies of the NewAlliance Financial
Statements. The NewAlliance Financial Statements have been prepared in
accordance with GAAP (including related notes where applicable) and fairly
present in each case in all material respects, the consolidated financial
condition, results of operations, shareholders' equity and cash flows of
NewAlliance and NAB, as applicable, for the respective periods or as of the
respective dates set forth therein, except as indicated in the notes thereto or
in the case of unaudited NewAlliance statements, as permitted by Form 10-Q.
35
5.6.2 Each of the NewAlliance Financial Statements referred
to in Section 5.6.1 have been or will be, as the case may be, prepared in
accordance with GAAP, and/or as applicable, the accounting pronouncements of
PCAOB, during the periods involved (except for the absence of footnotes and
customary year-end adjustments in the case of unaudited interim NewAlliance
Financial Statements). The audits of NewAlliance and NewAlliance Subsidiaries
have been conducted in accordance with generally accepted auditing standards.
The books and records of NewAlliance and the NewAlliance Subsidiaries are being
maintained in compliance with applicable legal and accounting requirements, and
such books and records accurately reflect in all material respects all dealings
and transactions in respect of the business, assets, liabilities and affairs of
NewAlliance and its Subsidiaries. The minute books of NewAlliance and each
NewAlliance Subsidiary contain complete and accurate records of all meetings and
other corporate actions of their respective shareholders and Boards of Directors
(including all committees for which minutes are customarily kept) authorized at
such meetings held or taken since December 31, 2001 through the date of this
Agreement.
5.6.3 Except (i) as set forth in Section 5.6.3 of the
NEWALLIANCE DISCLOSURE SCHEDULE, (ii) as reflected, disclosed or provided for in
the NewAlliance Financial Statements as of December 31, 2005 (including related
notes), (iii) for liabilities incurred since December 31, 2005 in the ordinary
course of business and (iv) for liabilities incurred in connection with this
Agreement and the transactions contemplated hereby, neither NewAlliance nor any
NewAlliance Subsidiary has any liabilities, whether absolute, accrued,
contingent or otherwise, material to the financial condition, results of
operations or business of NewAlliance on a consolidated basis that would be
required in accordance with GAAP to be reflected on an audited consolidated
balance sheet of NewAlliance or the notes thereto.
5.7 MATERIAL ADVERSE CHANGE. Since December 31, 2005 to the date
-----------------------
hereof (i) NewAlliance and each NewAlliance Subsidiary has conducted its
respective business in the ordinary and usual course (excluding the incurrence
of expenses in connection with this Agreement, and excluding the transactions
contemplated hereby) and (ii) no event has occurred or circumstance arisen that,
individually or in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect on NewAlliance.
5.8 COMPLIANCE WITH LAWS.
---------------------
5.8.1 Each of NewAlliance and the NewAlliance Subsidiaries
has all permits, licenses, certificates of authority, orders and approvals of,
and has made all filings, applications and registrations with, federal, state,
local and foreign governmental or regulatory bodies that are required in order
to permit it to carry on its business in all material respects as it is
currently being conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect; and to the
Knowledge of NewAlliance, no suspension or cancellation of any of the same is
threatened.
36
5.8.2 Except as set forth in Section 5.8.2 of the
NEWALLIANCE DISCLOSURE SCHEDULE, neither NewAlliance nor any NewAlliance
Subsidiary is in violation of its respective Certificate of Incorporation,
Charter or other chartering instrument or Bylaws, or has received written notice
of any uncured violation of any applicable federal, state or local law or
ordinance or any order, rule or regulation of any federal, state, local or other
governmental agency or body (including, without limitation, all banking
(including without limitation all regulatory capital requirements), municipal
securities, insurance, safety, health, Environmental Law, zoning,
anti-discrimination, antitrust, and wage and hour laws, ordinances, orders,
rules and regulations), or is in default with respect to any order, writ,
injunction or decree of any court, or is in default under any order, license,
regulation or demand of any governmental agency and, to the Knowledge of
NewAlliance, NewAlliance along with its executive officers and directors is not
in violation of any Securities Laws; and neither NewAlliance nor any NewAlliance
Subsidiary has received any written notice or communication from any federal,
state or local governmental authority asserting that NewAlliance or any
NewAlliance Subsidiary is in violation of any of the foregoing, which violation
has not been corrected on a prospective basis in all respects. Neither
NewAlliance nor any NewAlliance Subsidiary is subject to any regulatory or
supervisory cease and desist order, agreement, written directive, memorandum of
understanding or written commitment (other than those of general applicability
to all savings banks or holding companies), and none of them has received any
written communication requesting that it enter into any of the foregoing. Since
December 31, 2002, no regulatory agency has initiated or continued any
proceeding or, to the Knowledge of NewAlliance, investigation into the business
or operations of NewAlliance, or any NewAlliance Subsidiary. NewAlliance has not
received any objection from any regulatory agency to NewAlliance's response to
any violation, criticism or exception with respect to any report or statement
relating to any examination of NewAlliance or any of the NewAlliance
Subsidiaries.
5.9 BROKERS AND FINDERS. Except as set forth in Section 5.9 of
-------------------
the NEWALLIANCE DISCLOSURE SCHEDULE, neither NewAlliance nor any NewAlliance
Subsidiary nor any of their respective directors, officers or employees, has
employed any broker or finder or incurred any liability for any broker or finder
fees or commissions in connection with the transactions contemplated hereby.
5.10 LABOR. No work stoppage involving NewAlliance or any
-----
NewAlliance Subsidiary is pending or, to the Knowledge of NewAlliance,
threatened. Except as set forth in Section 5.10 of the NEWALLIANCE DISCLOSURE
SCHEDULE, neither NewAlliance nor any NewAlliance Subsidiary is involved in, or
to the Knowledge of NewAlliance, threatened with or affected by, any labor
dispute, arbitration, lawsuit or administrative proceeding involving its
employees. Employees of NewAlliance and the NewAlliance Subsidiaries are not
represented by any labor union nor are any collective bargaining agreements
otherwise in effect with respect to such employees, and, to the Knowledge of
NewAlliance, there have been no efforts to unionize or organize any employees of
NewAlliance or any NewAlliance Subsidiary.
5.11 CERTAIN TRANSACTIONS. Since December 31, 2005, neither
--------------------
NewAlliance nor any NewAlliance Subsidiary has been a party to any
off-balance-sheet transactions involving interest rate and currency swaps,
options and futures contracts, or any other similar derivative transactions,
except as set forth in Section 5.11 of the NEWALLIANCE DISCLOSURE SCHEDULE.
37
5.12 DISCLOSURES. None of the representations and warranties of
-----------
NewAlliance or NAB or any of the written information or documents furnished or
to be furnished by NewAlliance to Westbank in connection with or pursuant to
this Agreement or the consummation of the transactions contemplated hereby
(including the Bank Merger), when considered as a whole, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact required to be stated or necessary to make any such
information or document, in light of the circumstances, not misleading.
5.13 TAX MATTERS.
------------
5.13.1 NewAlliance and each NewAlliance Subsidiary has duly
filed all Tax Returns required by applicable law to be filed by them in respect
of all applicable Taxes required to be paid through the date hereof and will
timely file any such Tax Returns required to be filed prior to the Effective
Time with respect to Taxes required to be paid through the Effective Time.
NewAlliance and each NewAlliance Subsidiary have paid, or where payment is not
required to have been made, have set up an adequate reserve or accrual for the
payment of all Taxes required to be paid in respect to the periods covered by
such Tax Returns and, as of the Effective Time, will have paid, or where payment
is not required to have been made, will have set up an adequate reserve or
accrual for the payment of, all Taxes for any subsequent periods ending on or
prior to the Effective Time, other than Taxes being contested in good faith.
Except as set forth in Section 5.13.1 of the NEWALLIANCE DISCLOSURE SCHEDULE, as
of the date hereof, no audit examination or deficiency or refund litigation with
respect to any Tax Returns filed by NewAlliance or any NewAlliance Subsidiary is
pending or, to NewAlliance's Knowledge, threatened and to NewAlliance's
Knowledge, there is no basis for any Tax authority to assess any additional
Taxes for any period for which Tax Returns have been filed.
5.13.2 NewAlliance and each NewAlliance Subsidiary has
withheld and paid all Taxes required to be paid in connection with amounts paid
to any employee, independent contractor, creditor, shareholder or other third
party.
5.13.3 Except as set forth in Section 5.13.3 of the
NEWALLIANCE DISCLOSURE SCHEDULE, all Tax Returns filed by NewAlliance and its
Subsidiaries are complete and accurate. Neither NewAlliance nor any NewAlliance
Subsidiary is delinquent in the payment of any Tax, assessment, or governmental
charge, or has requested any extension of time within which to file any Tax
Returns in respect of any fiscal year or portion thereof which have not since
been filed. There is no pending Tax audit examination, Tax deficiency assessment
or Tax or governmental charges investigation with respect to NewAlliance or any
NewAlliance Subsidiary, and there are no deficiencies for any Tax, assessment or
governmental charge that, to NewAlliance's Knowledge, have been proposed,
asserted or assessed (tentatively or otherwise) against NewAlliance or any
NewAlliance Subsidiary as a result of any Tax audit examination, Tax deficiency
assessment, or Tax or governmental charges investigation which have not been
settled and paid. There are currently no agreements in effect with respect to
NewAlliance or any NewAlliance Subsidiary to extend the period of limitations
for the assessment or collection of any Tax and no power of attorney has been
granted by NewAlliance and its Subsidiaries with respect to any Tax matter
currently in force.
38
5.13.4 Except as set forth in Section 5.13.4 of the
NEWALLIANCE DISCLOSURE SCHEDULE, neither NewAlliance nor any NewAlliance
Subsidiary (i) is a party to any agreement providing for the allocation or
sharing of taxes (other than a tax allocation agreement between NewAlliance and
NAB) or (ii) is required to include in income any adjustment pursuant to Section
481(a) of the Code by reason of a voluntary change in accounting method
initiated by NewAlliance or any NewAlliance Subsidiary (nor does NewAlliance
have any Knowledge that the Internal Revenue Service has proposed any such
adjustment or change of accounting method).
5.14 LEGAL PROCEEDINGS. Except as disclosed in its Securities
-----------------
Documents, there are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the Knowledge of NewAlliance or any
NewAlliance Subsidiary, threatened against NewAlliance or any NewAlliance
Subsidiary or against any asset, interest, or right of NewAlliance or any
NewAlliance Subsidiary, or against any officer, director or employee of any of
them, other than routine litigation incurred in the ordinary course of business
and immaterial in amount to the financial condition of NewAlliance, and neither
NewAlliance nor any NewAlliance Subsidiary is a party to any unsatisfied order,
judgment or decree.
5.15 NEWALLIANCE COMMON STOCK. The shares of NewAlliance Common
-------------------------
Stock to be issued pursuant to this Agreement, when issued in accordance with
the terms of this Agreement, will be duly authorized, validly issued, fully paid
and non-assessable and subject to no preemptive rights.
5.16 EMPLOYEE BENEFIT PLANS.
-----------------------
5.16.1 NewAlliance has set forth in Section 5.16.1 of the
NEWALLIANCE DISCLOSURE SCHEDULE the primary NewAlliance Employee Plans, and
NewAlliance has previously furnished or made available to Westbank accurate and
complete copies of the same together with (i) the annual reports filed with any
governmental agency for any qualified plans for the last plan year, (ii) the
Summary Annual Report provided to Participants for the last plan year; and (iii)
all rulings and determination letters and any open requests for rulings or
letters that pertain to any qualified plan.
5.16.2 None of NewAlliance, any NewAlliance Subsidiary, any
employee pension benefit plan (as defined in Section 3(2) of ERISA) maintained
by any of them and intended to be qualified under Section 401 of the Code or, to
NewAlliance's Knowledge, any fiduciary of such plan has incurred any liability
to the PBGC (except for premiums payable in the ordinary course) or the Internal
Revenue Service with respect to any employee pension plan of NewAlliance or any
NewAlliance Subsidiary. In the last five (5) years, no reportable event under
Section 4043(b) of ERISA has occurred with respect to any such employee pension
benefit plan, other than the transactions contemplated by this Agreement or
events notice of which has been waived by regulations under Section 4043 of
ERISA.
5.16.3 A favorable determination letter has been issued by
the Internal Revenue Service, with respect to each NewAlliance Employee Plan
which is an "employee pension benefit plan" (as defined in Section 3(2) of
ERISA) which is intended to qualify under Section 401 of the Code (a "
NewAlliance Pension Plan"), to the effect that such plan is qualified under
Section 401 of the Code and the trust associated with such employee pension plan
is tax exempt under Section 501 of the Code. No such letter has been revoked or,
to the best of NewAlliance's Knowledge, is threatened to be revoked, and
NewAlliance does not know of any ground on which such revocation may be based.
Except as set forth in Section 5.16.3 of the NEWALLIANCE DISCLOSURE SCHEDULE,
neither NewAlliance nor any NewAlliance Subsidiary has any current liability
under any such plan that was required to be reflected as a liability on the
Financial Statements as of December 31, 2005 under GAAP, which was not reflected
on the consolidated statement of financial condition of NewAlliance at December
31, 2005 included in the NewAlliance Financial Statements. All contributions
required to be made under the terms of any such plan have been made on a timely
basis in all material respects.
39
5.16.4 The NewAlliance Employee Plans have been operated in
compliance in all material respects with the applicable provisions of ERISA, the
Code, all regulations, rulings and announcements promulgated or issued
thereunder and all other applicable governmental laws and regulations.
5.16.5 There are no pending or, to the Knowledge of
NewAlliance, threatened claims (other than routine claims for benefits) by, on
behalf of or against any of the NewAlliance Employee Plans or any trust related
thereto or any fiduciary thereof.
ARTICLE VI
COVENANTS OF WESTBANK AND WB
6.1 CONDUCT OF BUSINESS
-------------------
6.1.1 Affirmative Covenants. Except with the written
consent of NewAlliance, during the period from the date of this Agreement to the
earlier of the Effective Time or the termination of this Agreement, Westbank
will operate its business, and it will cause each of the Westbank Subsidiaries
to operate its business, only in the usual, regular and ordinary course of
business; use its reasonable best efforts in good faith to preserve intact its
business organization and assets, keep available the present services of the
employees, maintain its rights and franchises, and preserve the goodwill of its
customers and others with whom business relationships exist; and voluntarily
take no action which would or be reasonably likely to (i) materially and
adversely affect the ability of Westbank or WB to obtain any necessary approvals
of Governmental Entities required for the transactions contemplated hereby or
under the Bank Merger Agreement or increase the period of time necessary to
obtain such approvals, or (ii) materially and adversely affect its ability to
perform its covenants and agreements under this Agreement or the Bank Merger
Agreement.
6.1.2 Negative Covenants. Westbank agrees that from the
date of this Agreement to the earlier of the Effective Time or the termination
of this Agreement, except as otherwise specifically permitted or required by
this Agreement, or consented to by NewAlliance in writing, Westbank will not,
and will cause each of the Westbank Subsidiaries not to:
(a) change or waive any provision of its Articles of
Organization, Charter or Bylaws, except as required by law;
(b) change the number of shares of its authorized capital
stock;
40
(c) issue any capital stock or issue or grant any option,
restricted stock award, warrant, call, commitment, subscription, right to
purchase or agreement of any character relating to the authorized or issued
capital stock of Westbank or any of the Westbank Subsidiaries, or any securities
convertible into shares of such stock; except that Westbank may issue shares of
Westbank Common Stock or permit treasury shares to become outstanding to satisfy
currently outstanding Options exercised prior to the Effective Date under and in
accordance with the terms of the Westbank Option Plans, and nothing contained in
this Agreement shall be construed as limiting or restricting the exercise by
their holders of any such currently outstanding Options under and in accordance
with the terms of such Westbank Option Plans prior to the Effective Date;
(d) effect any recapitalization, reclassification, stock
dividend, stock split or like change in capitalization, or redeem, repurchase or
otherwise acquire any shares of its capital stock;
(e) declare or pay any dividends or other distributions
with respect to its capital stock except that (i) Westbank may continue to pay
its regular quarterly cash dividend of $0.14 per share with payment and record
dates consistent with past practice (provided the declaration of the last
quarterly dividend by Westbank prior to the Effective Time and the payment
thereof shall be coordinated with NewAlliance so that holders of Westbank Common
Stock do not receive dividends on both Westbank Common Stock and NewAlliance
Common Stock received in the Merger in respect of such quarter or fail to
receive a dividend on at least one of the Westbank Common Stock or NewAlliance
Common Stock received in the Merger in respect of such quarter), and (ii) any
Westbank Subsidiary may pay dividends to Westbank (as permitted under applicable
law or regulations).
(f) enter into or terminate any contract or agreement
(including without limitation any settlement agreement with respect to
litigation) except in the ordinary course of business;
(g) except in the ordinary course of business consistent
with past practice, including non-callable borrowings from the Federal Home Loan
Bank of Boston ("FHLBB"), incur any liabilities or obligations, whether directly
or by way of guaranty, including any obligation for borrowed money whether or
not evidenced by a note, bond, debenture or similar instrument (other than
borrowings not exceeding the amount reflected on the balance sheet contained in
the Westbank Financial Statements as of December 31, 2005), or acquire any
equity, debt, or except in the ordinary course of business consistent with past
practice, other investment securities. In addition, any FHLBB borrowings or
reverse repurchase agreements with a maturity of more than one year must be
pre-approved by NewAlliance's Chief Investment Officer;
(h) make any capital expenditures in excess of $25,000
individually or $150,000 in the aggregate, except for expenditures reasonable
and necessary to replace existing assets or to maintain assets in good repair;
41
(i) except for commitments issued prior to the date of
this Agreement which have not yet expired and which have been disclosed in
Section 6.1.2(i) of the Westbank DISCLOSURE SCHEDULE, and the renewal of
existing lines of credit to non-criticized borrowers/relationships, make any new
loan or other credit facility commitment (including without limitation, lines of
credit and letters of credit) to any borrower or borrowing relationship in
excess of $1.0 million. In addition, the following require the prior consent of
NewAlliance: a residential loan of $750,000 or greater; a consumer loan of
$100,000 or greater; any new monies extended to currently or previously
criticized borrowers or borrowing relationships (unless the criticism has been
corrected); any loan the approval for which requires an exception to WB's loan
policy as it exists at the date of this Agreement; any subprime loans or
leveraged buy-out loans; any commercial or business loan to or for restaurants,
airplanes, gas stations or marinas; any commercial real estate loan for a
special use property for development or construction of hotels/motels, golf
courses, or assisted living units. Such consent shall not be unreasonably
withheld, conditioned or delayed, and NewAlliance shall be deemed to have
provided such consent unless NewAlliance provides a written refusal to consent
within five Business Days of receipt of any such consent request.
Notwithstanding the $1.0 million limitation above, the limitation on total
credit to borrowing relationships of existing borrowers may be up to $2.5
million in the aggregate if approved by (i) either Westbank's loan committee or
Westbank's Board of Directors and (ii) NewAlliance (through written or oral
consent provided by NewAlliance). During the period from the date of this
Agreement to the Effective Time, within two (2) business days after WB delivers
to the members of any of its credit committees applicable information and
reports for the next upcoming meeting of such committee, Westbank shall provide
to a representative designated by NewAlliance access to the same information and
reports as are provided to WB's credit committee members with respect to new
loans or renewals thereof and extensions of credit proposed to be made by WB;
(j) (i) grant any increase in rates of compensation
to its non-officer employees other than in the ordinary course of business
consistent with past practice provided that such increases shall in any event
not result in an annual average adjustment of more than 4.0%; grant any bonuses
to its non-officer employees other than in the ordinary course of business
consistent with past practice and in consultation with the Chief Operating
Officer or NewAlliance; enter into any employment, severance or similar
agreements or arrangements with any director or employee; except for
non-discretionary payments required by agreements existing as of the date hereof
set forth on Schedule 6.1.2(j)(i) of the Westbank DISCLOSURE SCHEDULE, grant any
increase in rates of compensation to, or, except as described in Section
6.1.2(j)(i) of the Westbank DISCLOSURE SCHEDULE or as contemplated by this
Agreement, pay or agree to pay any bonus or severance to, or provide any other
new employee benefit or incentive to its directors or to its officers (provided
that no bonuses shall be paid to any of the officers of Westbank or WB with an
employment or change of control agreement); adopt or amend or terminate any
employee benefit plan, pension plan or incentive plan except as required by law
or the terms of such plan or as provided in Section 6.1.2 (j)(i) of the Westbank
DISCLOSURE SCHEDULE (provided that any amendment required by law or the terms of
such plan shall be submitted to NewAlliance and its counsel for their review
prior to such adoption), or permit the vesting of any material amount of
benefits under any such plan other than pursuant to the provisions thereof as in
effect on the date of this Agreement; or make any contributions to any Westbank
Employee Plan not in the ordinary course of business consistent with past
practice. Nothing herein shall prevent WB from paying cash awards pursuant to
the "anniversary award program" disclosed in Section 4.14.1 of the Westbank
DISCLOSURE SCHEDULE; or
42
(ii) increase the number of (A) non-officer
personnel employed by Westbank or any Westbank Subsidiary over the staffing
level previously authorized as set forth in Section 6.1.2(j)(ii) of the Westbank
DISCLOSURE SCHEDULE, or (B) officers employed by Westbank or any Westbank
Subsidiary over the number of such officers currently so employed, without the
prior consent of NewAlliance's Chief Operating Officer, which consent will not
be unreasonably withheld, conditioned or delayed.
(k) except as set forth on Section 6.1.2(k) of the
Westbank DISCLOSURE SCHEDULE make an application for the opening or closing of
any, or open or close any, branch or automated banking facility;
(l) 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 foreclosures, settlements in lieu of foreclosure or
troubled loan or debt restructurings in the ordinary course of business
consistent with customary banking practices;
(m) subject to Section 6.10 hereof, merge into,
consolidate with, affiliate with, or be purchased or acquired by, any other
Person, or permit any other Person to be merged, consolidated or affiliated with
it or be purchased or acquired by it, or, except to realize upon collateral in
the ordinary course of its business, acquire a significant portion of the assets
of any other Person, or sell a significant portion of its assets;
(n) make any change in its accounting methods or
practices, except changes as may be required by GAAP, PCAOB accounting
pronouncements or by law or regulatory requirements;
(o) enter into any off-balance sheet transaction
involving interest rate and currency swaps, options and futures contracts, or
any other similar derivative transactions other than to hedge forward loan sale
commitments in the ordinary course of business consistent with past practice;
(p) invest in or commit to invest in, or otherwise
increase, decrease or alter its investment in, any existing or new Joint
Venture;
(q) except as may be required by changes in applicable
law or regulations or in GAAP or PCAOB accounting pronouncements, make any
change in policies in existence as of the date of this Agreement with regard to
the extension of credit, the establishment of reserves with respect to the
possible loss thereon or the charge off of losses incurred thereon, investment,
asset/liability management or other material banking policies without the prior
consent of NewAlliance;
(r) waive, release, grant or transfer any rights of value
or modify or change any existing agreement or indebtedness to which Westbank or
any Westbank Subsidiary is a party, other than in the ordinary course of
business, consistent with past practice;
(s) other than required purchases of FHLB stock, purchase
any equity securities; or purchase any other security for its investment
portfolio which is either below Grade A or inconsistent with Westbank's current
investment policy, or otherwise materially alter the mix, maturity, credit or
interest rate risk profile of its portfolio of investment securities or its
portfolio of mortgage-backed securities (changes in mix, maturity or interest
rate risk profile arising from (a) sale of all or part of the equity securities
portfolio, (b) changes in open-market interest rates, or (c) changes in
prepayment speeds in collateralized mortgage obligations or mortgage-backed
securities are not subject to the limitations of this Section 6.1.2(t)). In
addition, purchases of any debt securities with a final maturity of more than
five (5) years or for which a premium of more than 2% is paid, and any purchase
of a structured note or callable security must be pre-approved by NewAlliance's
Chief Investment Officer;
43
(t) other than in the ordinary course of business and
consistent with past practice in connection with a passive investment
corporation subsidiary, enter into, renew, extend or modify any other
transaction with any Affiliate;
(u) except for the execution of this Agreement, and
actions taken or which will be taken in accordance with the provisions of this
Agreement and performance thereunder, take any action that would give rise to a
right of a severance payment to any individual under any employment or severance
agreement or similar agreement, provided that if Westbank or any Westbank
Subsidiary in good faith terminates any employee believing it is a for cause
termination, and the employee ultimately is determined to be entitled to
severance or other compensation, the termination shall not be deemed to be a
violation of this Agreement;
(v) except for the execution of this Agreement, and
actions taken or which will be taken in accordance with the provisions of this
Agreement, take any action that would give rise to an acceleration of the right
to payment to any individual under any Westbank Employee Plan, provided that if
Westbank or any Westbank Subsidiary in good faith terminates any employee
believing it is a for cause termination, and the employee ultimately is
determined to be entitled to acceleration of any payment, the termination shall
not be deemed to be a violation of this Agreement;
(w) accelerate the vesting of unvested restricted stock
awards granted pursuant to the Westbank Stock Plan to a date earlier than the
date the Westbank shareholders approve the transactions contemplated by this
Agreement;
(x) without the prior consultation and consent, not to be
unreasonably withheld, of NewAlliance's Executive Vice President - Business and
Retail Banking Services, acquire a participation of $1.0 million or more in any
loan that would properly be included in the Westbank Commercial and Industrial
Loan Portfolio;
(y) enter into any new or depart from any existing line
of business without the prior consent of NewAlliance's Chief Operating Officer,
which consent shall not be unreasonably withheld, conditioned or delayed;
(z) materially increase or decrease the rate of interest
paid on time deposits or certificates of deposit, except in response to market
conditions and in a manner and pursuant to policies consistent with past
practices;
(aa) purchase or sell any residential or consumer loan
pool which, individually or when aggregated with other sales or purchases prior
to the Effective Time, would exceed $1.0 million without prior approval of
NewAlliance's Chief Investment Officer;
44
(bb) elect or appoint a new director;
(cc) take any action that would prevent or impede the
Merger or the Bank Merger from qualifying as a tax-free reorganization within
the meaning of Section 368(a) of the Code;
(dd) take any action that is intended or is reasonably
likely to result in (x) any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (y) any of the conditions to the Merger set
forth in Article IX not being satisfied or (z) a material violation of any
provision of this Agreement or the Bank Merger Agreement, except, in each case,
as may be required by applicable law or regulation; or
(ee) agree to do any of the foregoing.
6.2 CURRENT INFORMATION. During the period from the date of this
-------------------
Agreement to the Effective Time, Westbank will cause one or more of its
representatives to confer with representatives of NewAlliance and report on the
general status of its ongoing operations at such times as NewAlliance may
reasonably request, which reports shall include, but not be limited to,
discussion of the possible termination by Westbank or WB of third-party service
provider arrangements effective at the Effective Time or at a date thereafter,
non-renewal of personal property leases and software licenses used by Westbank
or any of its Subsidiaries in connection with its systems operations, retention
of outside consultants and additional employees to assist with the conversion,
and outsourcing, as appropriate, of proprietary or self-provided system
services, it being understood that Westbank shall not be obligated to take any
such action prior to the Effective Time and, unless Westbank otherwise agrees,
no conversion shall take place prior to the Effective Time. Westbank will
promptly notify NewAlliance of any material change from the normal course of the
business of Westbank or any Westbank Subsidiary or in the operation of the
properties of Westbank or any Westbank Subsidiary and, to the extent permitted
by applicable law, 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 Westbank or any Westbank
Subsidiary. Westbank will also provide NewAlliance such information with respect
to such events as NewAlliance may reasonably request from time to time. Within
twenty-five (25) days after the end of each month, Westbank will deliver to
NewAlliance a consolidated balance sheet and a consolidated statement of
operations, without related notes, for such month prepared in accordance with
its current financial reporting practices.
6.3 ACCESS TO PROPERTIES AND RECORDS. In order to facilitate the
--------------------------------
consummation of the Merger and the Bank Merger and the integration of the
business and operations of the parties, subject to Section 12.1 hereof and
subject to applicable laws relating to exchange of information, Westbank will
permit NewAlliance and its officers, employees, counsel, accountants and other
authorized representatives, access, upon reasonable notice, to its personnel and
properties and those of the Westbank Subsidiaries, and shall disclose and make
available to NewAlliance during normal business hours throughout the period
prior to the Effective Time all of the books, papers and records of Westbank or
any Westbank Subsidiary relating to the assets, properties, operations,
obligations and liabilities, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of directors' (other
than minutes that
45
discuss any of the transactions contemplated by this Agreement or other
strategic alternatives) and shareholders' meetings, organizational documents,
Bylaws, material contracts and agreements, filings with any regulatory
authority, litigation files, plans affecting employees, and any other business
activities or prospects in which NewAlliance may have a reasonable interest;
provided, however, that Westbank shall not be required to take any action that
would provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights or business interests or
confidences of any customer or other Person or would result in the waiver by it
of the privilege protecting communications between it and any of its counsel. In
addition, Westbank and the Westbank Subsidiaries shall not be required to
disclose any analysis, minutes, or other materials pertaining to the financial
or other evaluation or discussion of (i) this Agreement or the transactions
contemplated herein, or (ii) any third party proposal to acquire a controlling
interest in Westbank. Westbank shall provide and shall request its auditors to
provide NewAlliance with such historical financial information regarding
Westbank and any Westbank Subsidiary (and related audit reports and consents) as
NewAlliance may reasonably request for securities disclosure purposes.
NewAlliance shall use reasonable efforts to minimize any interference with
Westbank's and any Westbank Subsidiary's regular business operations during any
such access to Westbank's or any Westbank Subsidiary's personnel, property,
books or records. Westbank and its Subsidiaries shall permit NewAlliance, at
NewAlliance's expense, to cause so-called "Phase I Environmental Site
Assessments" and/or "Phase II Environmental Site Assessments" to be performed at
any physical location owned or operated by Westbank or any Westbank Subsidiary
and, to the extent Westbank or the applicable Westbank Subsidiary has the
contractual right to do so, at any Loan Property or Participation Facility.
NewAlliance agrees to indemnify and hold harmless, Westbank, each Westbank
Subsidiary, and any landlord or other Persons with an interest in the real
property, from and against any damages, claims, losses or expenses of any kind,
including reasonable attorneys fees, pertaining to or arising from any entry
onto, or any assessments or other studies undertaken by NewAlliance with respect
to, any such real property under this Section.
6.4 FINANCIAL AND OTHER STATEMENTS.
-------------------------------
6.4.1 Promptly upon receipt thereof, Westbank will furnish
to NewAlliance copies of each annual, interim or special audit of the books of
Westbank and the Westbank Subsidiaries made by its independent accountants
and/or its internal auditors and copies of all internal control reports
submitted to Westbank by such accountants and/or internal auditors in connection
with each annual, interim or special audit of the financial statements of
Westbank and the Westbank Subsidiaries made by such accountants and/or internal
auditors.
6.4.2 As soon as reasonably available, but in no event
later than the date such documents are filed with the SEC, Westbank will deliver
to NewAlliance any and all Securities Documents filed by it with the SEC under
the Securities Laws. As soon as practicable, Westbank will furnish to
NewAlliance copies of all such financial statements and reports as it or any
Westbank Subsidiary shall send to its shareholders, the FDIC, the FRB, the
Division or any other regulatory authority, except as legally prohibited
thereby.
6.4.3 Westbank will advise NewAlliance promptly of the
receipt of any examination report of any Bank Regulator with respect to the
condition or activities of Westbank or any of the Westbank Subsidiaries.
46
6.4.4 Westbank will promptly furnish to NewAlliance such
additional financial data as NewAlliance may reasonably request, including
without limitation, detailed monthly loan reports, deposit reports, asset
liability reports, pricing committee reports, liquidity reports and investment
reports.
6.5 MAINTENANCE OF INSURANCE. Westbank shall continue to maintain,
------------------------
and shall cause its Subsidiaries to continue to maintain, such insurance in such
amounts as are reasonable to cover such risks as are consistent with its past
practices.
6.6 DISCLOSURE SUPPLEMENTS. From time to time prior to the
----------------------
Effective Time, Westbank and WB will promptly supplement or amend the Westbank
DISCLOSURE SCHEDULE delivered in connection herewith with respect to any matter
hereafter arising which, if existing, occurring or known at the date of this
Agreement, would have been required to be set forth or described in such
Westbank DISCLOSURE SCHEDULE or which is necessary to correct any information in
such Westbank DISCLOSURE SCHEDULE which has been rendered materially inaccurate
thereby. No supplement or amendment to such Westbank DISCLOSURE SCHEDULE shall
be deemed to have modified the representation, warranties and covenants for the
purpose of determining satisfaction of the conditions set forth in Article IX.
Notwithstanding anything to the contrary contained herein, no failure to provide
any such supplement or amendment to the Westbank DISCLOSURE SCHEDULE shall
constitute the failure of any condition set forth in Article IX to be satisfied
unless the underlying breach or inaccuracy would individually or in the
aggregate result in the failure of a condition set forth in Article IX to be
satisfied.
6.7 CONSENTS AND APPROVALS OF THIRD PARTIES. Westbank shall use
---------------------------------------
all reasonable best efforts in good faith to obtain as soon as practicable all
consents and approvals of any other persons necessary or desirable for the
consummation of the transactions contemplated by this Agreement and the Bank
Merger Agreement. Without limiting the generality of the foregoing, Westbank
shall utilize the services of a professional proxy-soliciting firm to help
obtain the shareholder vote required to be obtained by it hereunder.
6.8 REASONABLE BEST EFFORTS. Subject to the terms and conditions
-----------------------
herein provided, Westbank shall use its reasonable best efforts in good faith to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Bank Merger Agreement.
6.9 FAILURE TO FULFILL CONDITIONS. In the event that Westbank
-----------------------------
determines that a condition to its obligation to complete the Merger or the Bank
Merger cannot be fulfilled and that it will not waive that condition, it will
promptly so notify NewAlliance.
6.10 ACQUISITION PROPOSALS. (a) Westbank agrees that neither it nor
---------------------
any of Westbank's Subsidiaries shall, and that it shall direct and use its
reasonable best efforts in good faith to cause its and each such Subsidiary's
directors, officers, employees, agents and representatives not to, directly or
indirectly, initiate, solicit, knowingly encourage or otherwise facilitate any
inquiries or the making of any proposal or offer with respect to an Acquisition
Proposal. Westbank further agrees that neither it nor any of its Subsidiaries
shall, and that it shall direct and use its reasonable best efforts in good
faith to cause its and each such Subsidiary's directors, officers,
47
employees, agents and representatives not to, directly or indirectly, engage in
any negotiations concerning, or provide any confidential information or data to,
or have any discussions with, any Person relating to an Acquisition Proposal, or
otherwise knowingly facilitate any effort or attempt to make or implement an
Acquisition Proposal; provided, however, that nothing contained in this
Agreement shall prevent Westbank or its Board of Directors from (A) complying
with its disclosure obligations under federal or state law; (B) providing
information in response to a request therefor by a Person who has made an
unsolicited bona fide written Acquisition Proposal if the Westbank Board of
Directors receives from the Person so requesting such information an executed
confidentiality agreement substantially similar to that entered into with
NewAlliance; (C) engaging in any negotiations or discussions with any Person who
has made an unsolicited bona fide written Acquisition Proposal or (D)
recommending such an Acquisition Proposal to the shareholders of Westbank, if
and only to the extent that, in each such case referred to in clause (B), (C) or
(D) above, (i) the Westbank Board of Directors determines in good faith (after
consultation with outside legal counsel) that such action would be required in
order for its directors to comply with their respective fiduciary duties under
applicable law, (ii) the Westbank Board of Directors determines in good faith
(after consultation with its financial advisor) that such Acquisition Proposal,
if accepted, is reasonably likely to be consummated, taking into account all
legal, financial and regulatory aspects of the proposal and the Person making
the proposal, and would, if consummated, result in a transaction more favorable
to Westbank's shareholders from a financial point of view than the Merger, and
(iii) the shareholders of Westbank have not yet approved this Agreement at the
Westbank Shareholders Meeting. An Acquisition Proposal which is received and
considered by Westbank in compliance with this Section 6.10 and which meets the
requirements set forth in clause (D) of the preceding sentence is herein
referred to as a "Superior Proposal." Westbank agrees that it will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposals. Westbank agrees that it will notify NewAlliance orally
within one (1) Business Day, with written notice to follow within three (3)
Business Days thereafter, if any such inquiries, proposals or offers are
received by, any such information is requested from, or any such discussions or
negotiations are sought to be initiated or continued with Westbank or any of its
representatives after the date hereof, and the identity of the person making
such inquiry, proposal or offer and the substance thereof and will keep
NewAlliance informed of any material developments with respect thereto
immediately upon the occurrence thereof.
(b) In the event that the Board of Directors of Westbank
determines in good faith, after consultation with its financial advisor and upon
advice from outside counsel, that it desires to accept a Superior Proposal, it
shall notify NewAlliance in writing of its intent to terminate this Agreement in
order to enter into an acquisition agreement or similar agreement (each an
"Acquisition Agreement") with respect to, or recommend acceptance of, the
Superior Proposal. Such notice shall specify all of the terms and conditions of
such Superior Proposal and identify the Person making such Superior Proposal.
NewAlliance shall have five Business Days to evaluate and respond to Westbank's
notice. If NewAlliance delivers to Westbank in writing prior to the expiration
of the five Business Day period provided above (x) an amendment to Sections
3.1.2, 3.1.3 and 3.1.4 of this Agreement increasing the Merger Consideration to
an amount, and (y) adjusting other material terms and conditions such that they
are at least equal to that of such Superior Proposal (the "NewAlliance
Amendment"), as determined by Westbank's Board of Directors in the good faith
exercise of its fiduciary duties after consultation with its financial advisors
and counsel, then Westbank shall accept the NewAlliance Amendment and reject the
Superior Proposal. Westbank shall have five Business Days to evaluate the
NewAlliance Amendment.
48
(c) In the event that the Board of Directors of Westbank
determines under Section 6.10(b) that the NewAlliance Amendment is not at least
equal to the Superior Proposal, Westbank can terminate this Agreement in order
to execute an Acquisition Agreement with respect to, or to allow its Board to
adopt a resolution recommending acceptance to Westbank's shareholders of, the
Superior Proposal as provided in Section 11.1.9.
6.11 BOARD OF DIRECTORS AND COMMITTEE MEETINGS. Westbank shall
-----------------------------------------
provide to NewAlliance (a) notice of any and all meetings of its Board of
Directors, Executive Committee, and Loan Committee, which notice shall be no
less timely than the notice required to be provided to Westbank's or WB's
directors, and (b) copies of all written materials (i) accompanying any such
notices, (ii) presented to the participants of any and all such meetings, and
(iii) copies of drafts of meeting minutes and credit memoranda produced with
respect to such meeting at such time as customarily provided to Westbank's or
WB's directors, excluding, however, any materials pertaining to NewAlliance, the
transactions contemplated by this Agreement, or any third party proposal to
acquire a controlling interest in Westbank or WB.
6.12 RESERVES AND MERGER-RELATED COSTS. Not earlier than sixty (60)
---------------------------------
days before the anticipated Effective Time, to the extent consistent with GAAP,
the rules and regulations of the SEC and applicable banking laws and
regulations, Westbank shall establish such additional accruals and reserves as
may be necessary to conform the accounting reserve practices and methods
(including credit loss practices and methods) of Westbank and WB to those of
NewAlliance (as such practices and methods are to be applied to Westbank and WB
from and after the Closing Date) and NewAlliance's plans with respect to the
conduct of the business of Westbank and WB following the Merger and otherwise to
reflect Merger-related expenses and costs incurred by Westbank, provided,
however, that Westbank shall not be required to take such action unless
NewAlliance agrees in writing that (i) all conditions to Closing set forth in
Sections 9.1 and 9.3 have been satisfied or waived (except for the expiration of
any applicable waiting periods relating to any governmental approvals) and (ii)
all opinions, certificates, letters and other documents to be received by
NewAlliance, Westbank or WB on the Closing Date have been delivered into escrow
fully signed, and subject only to the expiration of any governmental waiting
period. Prior to the delivery by NewAlliance of the writing referred to in the
preceding sentence, Westbank shall provide NewAlliance a written statement,
certified without personal liability by the chief executive officer of Westbank
and dated that date of such writing, that the representation made in Section
4.22.1 hereof with respect to Westbank's allowance for possible loan losses is
true as of such date in all material respects or, alternatively, setting forth
in detail the circumstances that prevent such representation from being true as
of such date; and no accrual or reserve made by Westbank or any Westbank
Subsidiary pursuant to this subsection, or any litigation or regulatory
proceeding arising out of any such accrual or reserve, shall constitute a breach
of this Agreement within the meaning of Section 11.1.2 hereof. No action shall
be required to be taken by Westbank pursuant to this Section 6.12 if, in the
opinion of Westbank's independent auditors, such action would contravene GAAP.
The recording of any such adjustments shall not be deemed to imply any
misstatement of previously furnished financial statements or information and
shall not be construed as concurrence of Westbank or its management with any
such adjustments.
49
6.13 TRANSACTION EXPENSES OF WESTBANK.
---------------------------------
6.13.1 For planning purposes, Westbank shall, within ten
(10) days from the date hereof, provide NewAlliance with Westbank's estimated
budget of transaction-related expenses reasonably anticipated to be payable by
Westbank in connection with this transaction, including the fees and expenses of
counsel, accountants, investment bankers and other professionals. Westbank shall
promptly notify NewAlliance if or when it determines that it expects to exceed
its budget.
6.14 CERTAIN POLICIES OF WESTBANK. Upon the request of NewAlliance
----------------------------
and NAB, Westbank and WB shall, consistent with GAAP and regulatory accounting
principles, use their reasonable best efforts to record certain accounting
adjustments to the policies of Westbank and WB so as to reflect the policies of
NewAlliance and NAB and to implement internal control procedures which are
consistent with NewAlliance's and NAB's current internal control procedures to
allow NewAlliance to fulfill its reporting requirement under Section 404 of the
Sarbanes-Oxley Act of 2002; provided, however, that Westbank and WB shall not be
obligated to record any such accounting adjustments or implement any internal
control procedures pursuant to this Section 6.14 unless and until Westbank and
WB shall be satisfied that the conditions to the obligation of the parties to
consummate the Merger will be satisfied or waived on or before the Effective
Time and in no event until the day prior to the Effective Date. Westbank's and
WB's representations, warranties and covenants contained in this Agreement shall
not be deemed to be untrue or breached in any respect for any purpose as a
consequence of any modifications or changes undertaken solely on account of this
Section 6.14.
6.15 AMENDMENTS TO PLANS.
--------------------
6.15.1 With respect to each Westbank Employee Plan subject
to Section 409A of the Code, Westbank agrees to amend each such plan or cause
each such plan to be amended to the extent necessary to comply with Section 409A
of the Code (or to cause such plan, in whole or in part, to avoid the
application of Section 409A of the Code by preserving the terms of such plan,
and the law in effect, for benefits earned and vested as of December 31, 2004)
prior to the earlier of the Effective Time or the deadline imposed by the IRS.
Such amendments shall be provided to NewAlliance and its counsel at least ten
days prior to their proposed adoption by Westbank or WB and shall be subject to
the prior approval of NewAlliance, which shall not be unreasonably withheld.
6.15.2 Prior to December 31, 2006, Westbank shall amend its
Money Purchase Pension plan and its 401(k) Retirement Plan (to the extent
practicable under applicable law) in order to exclude from the compensation
covered by such plans the following items: (a) any compensation recognized with
respect to stock options or restricted stock awards subsequent to June 30, 2006,
(b) any severance payments, including any severance to be prepaid in 2006, and
(c) the payment of benefits pursuant to any Westbank Employee Plan, including
the supplemental retirement plan agreements. Such amendments shall be provided
to NewAlliance and its counsel at least ten days prior to their proposed
adoption by Westbank or WB and shall be subject to the prior approval of
NewAlliance, which shall not be unreasonably withheld.
50
6.16 ACCELERATION OF RESTRICTED STOCK AWARDS. Westbank shall take,
---------------------------------------
or shall cause the committee administering the Westbank Stock Plan to take, all
action necessary to cause each unvested restricted share of Westbank Common
Stock to become vested and free of restrictions as of the date specified in
Section 3.1.8 hereof.
6.17 WB SEVERANCE PAYMENTS. WB shall pay those of its employees who
---------------------
are not Continuing Employees, as defined in Section 7.5.2 hereof, whose
employment is terminated as of the Effective Time other than for cause,
disability or retirement ("Terminated Employees") in accordance with a severance
plan to be adopted by WB with terms no more generous than the Severance Plan, as
defined in Section 7.5.4 below.
ARTICLE VII
COVENANTS OF NEWALLIANCE AND NAB
7.1 DISCLOSURE SUPPLEMENTS. From time to time prior to the
----------------------
Effective Time, NewAlliance will promptly supplement or amend the NEWALLIANCE
DISCLOSURE SCHEDULE delivered in connection herewith with respect to any
material matter hereafter arising which, if existing, occurring or known at the
date of this Agreement, would have been required to be set forth or described in
such NEWALLIANCE DISCLOSURE SCHEDULE or which is necessary to correct any
information in such NEWALLIANCE DISCLOSURE SCHEDULE which has been rendered
materially inaccurate thereby. No supplement or amendment to such NEWALLIANCE
DISCLOSURE SCHEDULE shall have any effect for the purpose of determining
satisfaction of the conditions set forth in Article IX.
7.2 CONSENTS AND APPROVALS OF THIRD PARTIES. NewAlliance shall use
---------------------------------------
all reasonable best efforts in good faith to obtain as soon as practicable all
consents and approvals of any other Persons necessary or desirable for the
consummation of the transactions contemplated by this Agreement and the Bank
Merger Agreement.
7.3 REASONABLE BEST EFFORTS. Subject to the terms and conditions
-----------------------
herein provided, NewAlliance shall use all reasonable best efforts in good faith
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Bank Merger Agreement.
7.4 FAILURE TO FULFILL CONDITIONS. In the event that NewAlliance
-----------------------------
determines that a condition to its obligation to complete the Merger or the Bank
Merger Agreement cannot be fulfilled and that it will not waive that condition,
it will promptly so notify Westbank.
7.5 EMPLOYEES AND EMPLOYEE BENEFITS.
--------------------------------
7.5.1 NAB anticipates employing branch office customer
service employees of WB and such other employees of WB as NAB shall reasonably
require for the conduct of NAB's business following the Effective Time. In
addition, NAL and WB may wish to provide retention bonuses to employees of WB
who remain employed at WB through the Effective Time, or at NAB for an interim
period following the Effective Time as disclosed in Section 7.5.1 of the
NewAlliance DISCLOSURE SCHEDULE, and pursuant to a retention agreement
substantially similar to agreements used by NewAlliance in previous
acquisitions.
51
7.5.2 Except as set forth below, each employee of WB who
remains employed by NAB following the Effective Time (each, a "Continuing
Employee") shall be entitled to participate in (i) such of the employee benefit
plans, deferred compensation arrangements, bonus or incentive plans and/or other
compensation and benefit plans of WB that NAB may continue for the benefit of
Continuing Employees following the Effective Time and (ii) whatever employee
benefit plans and other compensation and benefit plans that NAB may maintain for
the benefit of its similarly situated employees, if such Continuing Employee is
not otherwise then participating in a similar plan of WB then provided by NAB,
in each case other than as set forth in the Termination, Release and
Noncompetition Agreements or the Termination and Release Agreements referred to
in Section 7.5.7 hereof. The parties hereto acknowledge that Continuing
Employees shall not be entitled to receive any specific level of grants under
any stock option plan or restricted stock plan of NewAlliance. Any grants that
may be made to the Continuing Employees under any of such plans will be subject
to the sole discretion of the Board of Directors of NewAlliance or the committee
administering such plans. Continuing Employees shall be eligible to participate
in all NewAlliance employee benefit plans in accordance with plan documents,
including, but not limited to, NewAlliance's 401(k) plan, employee stock
ownership plan and defined benefit plan. Continuing Employees shall not receive
credit for service with Westbank and the Westbank Subsidiaries under any
existing NewAlliance employee plan or any NewAlliance benefit plan in which such
employees would be eligible to enroll for any purposes under any NewAlliance
benefit plan, except as set forth below. With respect to the NewAlliance defined
benefit pension plan, each Continuing Employee shall be credited with service as
a WB employee for purposes of determining eligibility to participate and vesting
under such plan (but not for purposes of benefit accrual); with respect to the
NewAlliance employee stock ownership plan, each Continuing Employee shall be
credited with service as a WB employee for purposes of determining eligibility
to participate under such plan and for purposes of vesting under Section
7.4(b)(1) of the employee stock ownership plan only with respect to employer
matching contributions related to the NewAlliance 401(k) plan (but not in any
event for purposes of benefit accrual or for vesting of any other amounts under
the employee stock ownership plan, including but not limited to employer
contributions made pursuant to Section 4.1(b) of the employee stock ownership
plan); and with respect to the NewAlliance 401(k) plan, each Continuing Employee
shall be credited with service as a WB employee for purposes of determining
eligibility and vesting. NewAlliance and NAB shall credit the accrued but unused
vacation and sick time of the Continuing Employees at the Effective Time under
the applicable policies of Westbank, as set forth on Section 7.5.2 of the
Westbank DISCLOSURE SCHEDULE. Nothing herein shall limit the ability of
NewAlliance to amend or terminate any of the Westbank Employee Plans in
accordance with their terms at any time after the Effective Time. At the
Effective Time, NewAlliance shall become the plan sponsor of each Westbank
Employee Plan. Westbank agrees to take or cause to be taken such actions as
NewAlliance may reasonably request to give effect to such assumption.
NewAlliance shall have the right and power at any time following the Effective
Time to amend or terminate or cease benefit accruals under any Westbank Employee
Plan or cause it to be merged with or its assets and liabilities to be
transferred to a similar plan maintained by NewAlliance.
52
7.5.3 If Continuing Employees become eligible to
participate in a medical, dental, health or disability plan which is a
NewAlliance Employee Plan, NewAlliance shall cause each such plan to (i) waive
any preexisting condition limitations to the extent such conditions are covered
under the applicable medical, health, dental or disability plans that are
NewAlliance Employee Plans and are covered under the applicable medical, health,
dental or disability plans that are Westbank Employee Plans, (ii) credit under
such plans any deductible, co-payment and out-of-pocket expenses incurred by the
employees and their covered dependents during the portion of the plan year prior
to such participation and (iii) waive any waiting period limitation or evidence
of insurability requirement which would otherwise be applicable to such employee
on or after the Effective Time, unless such employee had not yet satisfied any
similar limitation or requirement under an analogous Westbank Employee Plan
prior to the Effective Time.
7.5.4 NAB and NewAlliance shall pay and provide severance
benefits to Continuing Employees as provided under the NAB and NewAlliance
severance plan (a copy of which has been provided to Westbank and is referred to
as the "Severance Plan") treating service with Westbank, WB and any Westbank
Subsidiary as service with NAB and NewAlliance for all purposes (providing
benefits as if the Severance Plan had been adopted by Westbank, WB, and all
Westbank Subsidiaries prior to the Effective Time) in accordance with its terms
as in effect on the date of this Agreement for a period of twelve months
following the Effective Time.
7.5.5 For a period of six months following the Effective
Time, NewAlliance shall make available (through written or intra-net notice) to
Continuing Employees of Westbank, WB or a Westbank Subsidiary notification
regarding opportunities for positions with NewAlliance or NAB, and shall respond
to inquiries concerning open positions at NewAlliance from any former employees
of Westbank, WB or a Westbank subsidiary, whose employment was terminated at or
following the Effective Time other than for cause, disability or retirement
("Terminated Employees") and shall consider any application submitted by such
persons, provided, however, that any decision to offer employment to any such
person shall be made in the sole discretion of NewAlliance.
7.5.6 Section 7.5.6 of the Westbank DISCLOSURE SCHEDULE
contains all employment and change of control, severance, deferred compensation,
retirement, salary continuation and similar agreements, arrangements, policies
or programs with any employee or director of Westbank or any Westbank Subsidiary
and all Westbank Employee Plans ("Benefit Agreements"). At and following the
Effective Time, NewAlliance shall honor, and the Surviving Corporation shall
continue to be obligated to perform, in accordance with their terms, all benefit
obligations of Westbank existing as of the Effective Time under the Benefit
Agreements other than those employment agreements and change in control
agreements covered by the Termination, Release and Noncompetition Agreements or
the Termination and Release Agreements referenced in Section 7.5.7 hereof.
NewAlliance acknowledges that the consummation of the Merger will constitute a
"change-in-control" of Westbank for purposes of any of the Benefit Agreements of
Westbank (except where otherwise set forth in Section 7.5.6 of the Westbank
DISCLOSURE SCHEDULE). Any employee or director of Westbank or any of its
Subsidiaries who is a party to an agreement which has been set forth in Section
7.5.6 of the Westbank DISCLOSURE SCHEDULE excluding the employment agreements
and change in control agreements covered by the Termination, Release and
Noncompetition Agreements or the Termination and Release Agreements referenced
in Section 7.5.7 hereof (with the agreements not excluded referred to herein as
the "Executive Agreements") who becomes entitled to benefits thereunder shall be
entitled to receive the cash benefits payable under such agreement at the time
and in the amounts provided for by the agreement; provided, however, that the
employee or
53
director executes and delivers to NewAlliance an instrument in form and
substance satisfactory to NewAlliance acknowledging that the employee or
director has received the payment in full satisfaction of his or her rights
under such agreement. To the extent that an employee of Westbank or any of its
Subsidiaries is entitled to the continued receipt of health insurance, life
insurance, disability insurance, or other similar fringe benefits pursuant to an
Executive Agreement, and such employee becomes an officer, employee or
consultant of NewAlliance or any of its Subsidiaries following the Effective
Time and as a result becomes entitled to receive the same fringe benefits in his
or her capacity as an officer, employee or consultant of NewAlliance or any of
its Subsidiaries, then the fringe benefits provided to such person shall be
deemed to be provided in connection with such person's service as an officer,
employee or consultant of NewAlliance or any of its Subsidiaries for so long as
such person serves in such capacity and shall be in lieu of, and not in addition
to (and for the sole purpose to avoid duplication of benefits), the same fringe
benefits that would have otherwise been provided pursuant to the Executive
Agreement.
7.5.7 Concurrently with the execution of this Agreement by
the parties hereto, (i) each of Donald R. Chase, Gary L. Briggs and John M.
Lilly shall enter into a Termination, Release and Noncompetition Agreement with
Westbank, WB, and NewAlliance substantially in the form of Exhibit C hereto, and
(ii) each of Kathleen A. Jalbert and Trenton E. Taylor shall enter into a
Termination and Release Agreement with Westbank, WB and NewAlliance
substantially in the form of Exhibit D hereto.
The dollar amounts to be paid to each of the officers named in this
Section 7.5.7 are set forth on Section 7.5.7 of the NEWALLIANCE DISCLOSURE
SCHEDULE. In consideration of the amounts to be paid to the officers named in
this Section 7.5.7 pursuant to their respective Termination, Release and
Noncompetition Agreements or Termination and Release Agreements, Westbank and WB
agree that they will make no severance or other change in control payments or
benefits to such officers pursuant to the existing employment or change of
control agreements with such officers.
7.5.8 With respect to each director or executive officer
who has a supplemental retirement plan ("SERP") agreement with Westbank or WB
and who has not yet reached his normal retirement age under such agreement,
Westbank or WB shall pay a lump sum cash amount to such participant immediately
prior to the Effective Time in an amount equal to such participant's accrued
liability retirement account under such agreement (which accrued amount for each
participant as of December 31, 2006 is set forth in Section 4.14.8 of the
Westbank DISCLOSURE SCHEDULE), with the SERP agreement to be terminated as of
the Effective Date. In addition, Westbank and WB shall notify the trustee and
the benefits determiner under each of the rabbi trusts for such SERP agreements
of the payments to be made pursuant to this section.
54
7.6 DIRECTORS AND OFFICERS INDEMNIFICATION AND INSURANCE.
-----------------------------------------------------
7.6.1 NewAlliance shall maintain in effect for six (6)
years following the Effective Time the current directors' and officers'
liability insurance policies maintained by Westbank and the Westbank
Subsidiaries (provided, that NewAlliance may substitute therefor policies of at
least the same coverage containing terms and conditions which are not materially
less favorable) with respect to matters occurring prior to the Effective Time;
provided, however, that in no event shall NewAlliance be required to expend in
the aggregate pursuant to this Section 7.6.1 more than 200% of the annual cost
currently expended by Westbank with respect to such insurance (the "Maximum
Premium Amount"). In connection with the foregoing, Westbank agrees to provide
such insurer or substitute insurer with such representations as such insurer may
request with respect to the reporting of any prior claims. Notwithstanding the
above, Westbank may, in consultation with NewAlliance, purchase "tail coverage"
for a period of six (6) years following the Effective Time for its officers and
directors provided the cost for such coverage in the aggregate does not exceed
the Maximum Premium Amount. If such coverage is purchased, NewAlliance shall not
be required to provide the insurance set forth in this Section 7.6.1.
7.6.2 NewAlliance shall, and/or shall cause the appropriate
NewAlliance Subsidiary to, indemnify, defend and hold harmless each person who
is now, or who has been at any time before the date hereof or who becomes before
the Effective Time, an officer or director of Westbank or WB (the "Indemnified
Parties") against all losses, claims, damages, costs, expenses (including
reasonable attorney's fees), liabilities or judgments or amounts that are paid
in settlement (which settlement shall require the prior written consent of
NewAlliance, which consent shall not be unreasonably withheld) of or in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, or administrative (each a "Claim"), in which an Indemnified
Party is, or is threatened to be made, a party or witness in whole or in part or
arising in whole or in part out of the fact that such person is or was a
director, officer or employee of Westbank or a Westbank Subsidiary if such Claim
pertains to any matter of fact arising, existing or occurring before the
Effective Time (including, without limitation, the Merger and the other
transactions contemplated hereby), regardless of whether such Claim is asserted
or claimed before, or after, the Effective Time (the "Indemnified Liabilities"),
to the fullest extent permitted under applicable state or federal law and under
Westbank's Articles of Organization and Bylaws. NewAlliance shall pay expenses,
including reasonable attorney's fees, in advance of the final disposition of any
such action or proceeding to each Indemnified Party to the full extent permitted
by applicable state or federal law upon receipt of an undertaking to repay such
advance payments if he or she shall be adjudicated or determined not to be
entitled to indemnification in the manner set forth below. Any Indemnified Party
wishing to claim indemnification under this Section 7.6.2 upon learning of any
Claim, shall notify NewAlliance (but the failure so to notify NewAlliance shall
not relieve it from any liability which it may have under this Section 7.6.2,
except to the extent such failure prejudices NewAlliance) and shall deliver to
NewAlliance the undertaking referred to in the previous sentence. In the event
of any such Claim (whether arising before or after the Effective Time) (1)
NewAlliance shall have the right to assume the defense thereof (in which event
the Indemnified Parties will cooperate in the defense of any such matter) and
upon such assumption NewAlliance 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
55
NewAlliance elects not to assume such defense, or counsel for the Indemnified
Parties reasonably advises the Indemnified Parties that there are or may be
(whether or not any have yet actually arisen) issues which raise conflicts of
interest between NewAlliance and the Indemnified Parties, the Indemnified
Parties may retain counsel reasonably satisfactory to them, and NewAlliance
shall pay the reasonable fees and expenses of such counsel for the Indemnified
Parties, (2) NewAlliance shall be obligated pursuant to this paragraph to pay
for only one (1) firm of counsel for all Indemnified Parties whose reasonable
fees and expenses shall be paid promptly as statements are received unless there
is a conflict of interest that necessitates more than one (1) law firm, (3)
NewAlliance shall not be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld), and (4) no
Indemnified Party shall be entitled to indemnification hereunder with respect to
a matter as to which (x) he shall have been adjudicated in any proceeding not to
have acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of Westbank or any Westbank Subsidiary, or (y) in
the event that a proceeding is compromised or settled so as to impose any
liability or obligation upon an Indemnified Party, if there is a determination
that with respect to said matter said Indemnified Party did not act in good
faith and in a manner he reasonably believed to be in, or not opposed to, the
best interests of Westbank or any Westbank Subsidiary. The determination shall
be made by a majority vote of a quorum consisting of the Directors of
NewAlliance who are not involved in such proceeding.
7.7 CONDUCT OF BUSINESS. Except with the written consent of
-------------------
Westbank, during the period from the date of this Agreement to the earlier of
the Effective Time or the termination of this Agreement, NewAlliance will
operate its business, and it will cause each of the NewAlliance Subsidiaries to
operate its business, only in the usual, regular and ordinary course of
business; use its reasonable best efforts in good faith to preserve intact its
business organization and assets, keep available the present services of the
employees, maintain its rights and franchises, and preserve the goodwill of its
customers and others with whom business relationships exist; and voluntarily
take no action which would or be reasonably likely to (i) adversely affect the
ability of NewAlliance or NAB to obtain any necessary approvals of Governmental
Entities required for the transactions contemplated hereby or under the Bank
Merger Agreement or increase the period of time necessary to obtain such
approvals, or (ii) adversely affect its ability to perform its covenants and
agreements under this Agreement or the Bank Merger Agreement. Subject to the
forgoing qualifications (i) and (ii), nothing herein shall be interpreted as
precluding NewAlliance or NAB from entering into agreements with respect to or
consummating mergers with or acquisitions of other companies at any time.
7.8 FINANCIAL AND OTHER STATEMENTS.
-------------------------------
7.8.1 Promptly upon receipt thereof, NewAlliance will
furnish to Westbank copies of each annual, interim or special audit of the books
of NewAlliance and the NewAlliance Subsidiaries made by its independent
accountants and/or its internal auditors and copies of all internal control
reports submitted to NewAlliance by such accountants and/or internal auditors in
connection with each annual, interim or special audit of the financial
statements of NewAlliance and the NewAlliance Subsidiaries made by such
accountants and/or internal auditors.
7.8.2 As soon as reasonably available, but in no event
later than the date such documents are filed with the SEC, NewAlliance will
deliver to Westbank any and all Securities Documents filed by it with the SEC
under the Securities Laws. As soon as practicable, NewAlliance will furnish to
Westbank copies of all such financial statements and reports as it or any
NewAlliance Subsidiary shall send to its shareholders, the FDIC, the FRB, the
Department or any other regulatory authority, except as legally prohibited
thereby.
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7.8.3 NewAlliance will advise Westbank promptly of the
receipt of any examination report of any Bank Regulator with respect to the
condition or activities of NewAlliance or any of the NewAlliance Subsidiaries.
7.8.4 NewAlliance will promptly furnish to Westbank such
additional financial data as Westbank may reasonably request, including without
limitation, detailed monthly loan reports.
7.9 CURRENT INFORMATION. During the period from the date of this
-------------------
Agreement to the earlier of the Effective Time or the termination of this
Agreement, NewAlliance will cause one or more of its representatives to confer
with representatives of Westbank and report on the general status of its ongoing
operations at such times as Westbank may reasonably request. NewAlliance will
promptly notify Westbank of any material change from the normal course of
business of NewAlliance or NAB or in the operation of the properties of
NewAlliance or NAB and, to the extent permitted by applicable law, of any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the institution or the threat
of material litigation involving NewAlliance or NAB.
7.10 NEGATIVE COVENANTS. NewAlliance agrees that from the date of
------------------
this Agreement to the earlier of the Effective Time or the termination of this
Agreement, except as otherwise specifically permitted or required by this
Agreement, or consented to by Westbank in writing which consent shall not
unreasonably be withheld, conditioned or delayed, NewAlliance will not, and will
cause each of the NewAlliance Subsidiaries not to;
(a) make any change in its accounting methods or
practices, except changes as may be required by GAAP, PCAOB accounting
pronouncements or by law or regulatory requirements;
(b) take any action that would result in the
representations and warranties of NewAlliance and any NewAlliance Subsidiary
contained in this Agreement not being true and correct in all material respects
on the date of this Agreement or at the Closing Date;
(c) take any action that is intended or is reasonably
likely to result in (x) any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect at the Effective
Time, (y) any of the conditions to the Merger set forth in Article IX not being
satisfied or (z) a material violation of any provision of this Agreement or the
Bank Merger Agreement, except, in each case, as may be required by applicable
law or regulation; or
(d) take any action that would prevent or impede the
Merger or the Bank Merger from qualifying as a tax-free reorganization within
the meaning of Section 368(a) of the Code; or
(e) agree to do any of the foregoing.
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7.11 ACCESS TO PROPERTIES AND RECORDS. In order to facilitate the
--------------------------------
consummation of the Merger and the Bank Merger and the integration of the
business and operations of the parties, subject to Section 12.1 hereof and
subject to applicable laws relating to exchange of information, NewAlliance
shall permit Westbank and its officers, employees, counsel, accountants and
other authorized representatives, access, upon reasonable notice, to its
personnel and properties and those of the NewAlliance Subsidiaries, and shall
disclose and make available to Westbank during normal business hours throughout
the period prior to the Effective Time all of the books, papers and records of
NewAlliance or any NewAlliance Subsidiary relating to the assets, properties,
operations, obligations and liabilities, including, but not limited to, all
books of account (including the general ledger), tax records, minute books of
directors' (other than minutes that discuss any of the transactions contemplated
by this Agreement or other strategic alternatives) and shareholders' meetings,
organizational documents, Bylaws, material contracts and agreements, filings
with any regulatory authority, litigation files, plans affecting employees, and
any other business activities or prospects in which Westbank may have a
reasonable interest; provided, however, that NewAlliance shall not be required
to take any action that would provide access to or to disclose information where
such access or disclosure would violate or prejudice the rights or business
interests or confidences of any customer or other person or would result in the
waiver by it of the privilege protecting communications between it and any of
its counsel. In addition, NewAlliance and the NewAlliance subsidiaries shall not
be required to disclose any analysis, minutes, or other materials pertaining to
the financial or other evaluation or discussion of (i) this Agreement, or the
transactions contemplated hereunder, or (ii) any third party proposal to acquire
a controlling interest in NewAlliance. NewAlliance shall provide and shall
request its auditors to provide Westbank with such historical financial
information regarding NewAlliance and any NewAlliance Subsidiary (and related
audit reports and consents) as Westbank may reasonably request for securities
disclosure purposes. Westbank shall use reasonable efforts to minimize any
interference with NewAlliance's and any NewAlliance Subsidiary's regular
business operations during any such access to NewAlliance's or any NewAlliance
Subsidiary's personnel, property, books or records.
7.12 STOCK LISTING. NewAlliance agrees to list on the NYSE (or such
-------------
other national securities exchange on which the shares of the NewAlliance Common
Stock shall be listed as of the Closing Date), subject to official notice of
issuance, the shares of NewAlliance Common Stock to be issued in the Merger.
7.13 STOCK AND CASH RESERVE. NewAlliance agrees at all times from
----------------------
the date of this Agreement until the Merger Consideration has been paid in full
to reserve a sufficient number of shares of NewAlliance Common Stock and to
maintain sufficient liquid accounts or borrowing capacity to fulfill its
obligations under this Agreement.
ARTICLE VIII
REGULATORY AND OTHER MATTERS
8.1 WESTBANK SPECIAL MEETING.
------------------------
Westbank will, in accordance with applicable law and Westbank's
Articles of Organization and Bylaws, (i) as promptly as reasonably practicable
take all steps necessary to duly call, give notice of, convene and hold a
meeting of its shareholders (the "Westbank Shareholders Meeting") for the
purpose of approving the transactions contemplated by this Agreement, and for
such other purposes as may be, in Westbank's and NewAlliance's reasonable
judgment, necessary or desirable, (ii) subject to the fiduciary responsibility
of the Board of Directors of Westbank as advised by counsel, recommend to its
shareholders the approval of the aforementioned matters to be submitted by it to
its shareholders and oppose any third party proposal or other action that is
inconsistent with this Agreement or the consummation of the transactions
contemplated herein (including the Bank Merger), and (iii) cooperate and consult
with NewAlliance with respect to each of the foregoing matters. Except with the
prior approval of NewAlliance, no other matters shall be submitted for approval
of the Westbank shareholders at the Westbank Shareholders Meeting.
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8.2 PROXY STATEMENT - PROSPECTUS.
----------------------------
8.2.1 For the purposes of (x) registering NewAlliance
Common Stock to be offered to holders of Westbank Common Stock in connection
with the Merger with the SEC under the Securities Act and applicable state
securities laws and (y) holding the Westbank Shareholders Meeting, NewAlliance,
at its expense, shall draft and prepare, and Westbank shall cooperate in the
preparation of, an S-4 registration statement for the registration of the shares
to be issued by NewAlliance in the Merger (the "Merger Registration Statement"),
including a proxy statement and prospectus satisfying all applicable
requirements of applicable state securities and banking laws, and of the
Securities Act and the Exchange Act, and the rules and regulations thereunder
(such proxy statement/prospectus in the form mailed by Westbank to the Westbank
shareholders, together with any and all amendments or supplements thereto, being
herein referred to as the "Proxy Statement-Prospectus"). NewAlliance shall
provide Westbank and its counsel with appropriate opportunity to review and
comment on the Merger Registration Statement and Proxy Statement-Prospectus
prior to the time they are initially filed with the SEC or any amendments are
filed with the SEC. NewAlliance shall file the Merger Registration Statement
with the SEC. Each of NewAlliance and Westbank shall use its best efforts to
have the Merger Registration Statement declared effective under the Securities
Act as promptly as practicable after such filing, and Westbank shall thereafter
promptly mail the Proxy Statement-Prospectus to its shareholders. NewAlliance
shall also use its best 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 Westbank shall furnish to NewAlliance all
information concerning Westbank and the holders of Westbank Common Stock as may
be reasonably requested in connection with such action.
8.2.2 Westbank shall provide NewAlliance with any
information concerning Westbank and its Subsidiaries that NewAlliance may
reasonably request in connection with the drafting and preparation of the Merger
Registration Statement and Proxy Statement-Prospectus, and each party shall
notify the other promptly of the receipt of any comments of the SEC with respect
to the Merger Registration Statement or Proxy Statement-Prospectus and of any
requests by the SEC for any amendment or supplement thereto or for additional
information and shall provide to Westbank promptly copies of all correspondence
between it or any of its representatives and the SEC. NewAlliance shall provide
Westbank and its counsel with appropriate opportunity to review and comment on
all amendments and supplements to the Merger Registration Statement and Proxy
Statement-Prospectus and all responses to requests for additional information
and replies to comments prior to their being filed with, or sent to, the SEC.
Each of NewAlliance and Westbank agrees to use all reasonable efforts, after
consultation with the other party hereto, to respond promptly to all such
comments of and requests by the SEC and to cause the Proxy Statement-Prospectus
and all required amendments and supplements thereto to be mailed to the holders
of Westbank Common Stock entitled to vote at the Westbank Shareholders Meeting
referred to in Section 8.1 hereof at the earliest practicable time.
59
8.2.3 Westbank and NewAlliance shall promptly notify the
other party if at any time it becomes aware that the Proxy Statement-Prospectus
or the Merger Registration Statement contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances under
which they were made, not misleading. In such event, Westbank shall cooperate
with NewAlliance in the preparation of a supplement or amendment to such Proxy
Statement-Prospectus which corrects such misstatement or omission, and
NewAlliance shall file an amended Merger Registration Statement with the SEC,
and Westbank shall mail an amended Proxy Statement-Prospectus to Westbank's
shareholders. Westbank, on the one hand, and NewAlliance on the other shall each
provide to the other a "comfort" letter from its independent registered public
accountant, dated as of the date of the Proxy Statement-Prospectus and updated
as of the Effective Date of the Merger, with respect to certain financial
information regarding Westbank and NewAlliance in the Proxy
Statement-Prospectus, respectively, each in form and substance which is
customary in transactions such as the Merger, unless waived by the Parties.
8.3 REGULATORY APPROVALS. Each of Westbank, WB and NewAlliance
--------------------
will cooperate with the other and use all reasonable efforts to promptly prepare
all necessary documentation, to effect all necessary filings and to obtain all
necessary permits, consents, approvals and authorizations of all third parties
and governmental bodies necessary to consummate the transactions contemplated by
this Agreement, including without limitation the Merger and the Bank Merger.
Westbank and NewAlliance will furnish each other and each other's counsel with
all information concerning themselves, their subsidiaries, directors, officers
and shareholders and such other matters as may be necessary or advisable in
connection with the Proxy Statement-Prospectus and any application, petition or
any other statement or application made by or on behalf of NewAlliance, NAB,
Westbank or WB to any governmental body in connection with the Merger, the Bank
Merger, and the other transactions contemplated by this Agreement. Each party
hereto shall have the right to review and approve in advance all
characterizations of the information relating to such party and any of its
Subsidiaries that appear in any filing made in connection with the transactions
contemplated by this Agreement with any governmental body. In addition,
NewAlliance, NAB, Westbank and WB shall each furnish to the other for review a
copy of each such filing made in connection with the transactions contemplated
by this Agreement with any governmental body prior to its filing.
8.4 AFFILIATES. Westbank shall use all reasonable efforts to cause
----------
each director, executive officer and other Person who is an "affiliate" (for
purposes of Rule 145 under the Securities Act) of Westbank to deliver to
NewAlliance, as soon as practicable after the date of this Agreement and in no
event later than thirty (30) days after the date this Agreement, a written
agreement, in the form of Exhibit E hereto, providing that such Person will not
sell, pledge, transfer or otherwise dispose of any shares of NewAlliance Common
Stock to be received by such "affiliate," as a result of the Merger except in
compliance with the applicable provisions of the Securities Act and the rules
and regulations thereunder.
60
8.5 COMPLIANCE WITH ANTI-TRUST LAWS. Each of NewAlliance and
-------------------------------
Westbank shall use reasonable best efforts in good faith to resolve objections,
if any, which may be asserted with respect to the Merger under anti-trust laws.
In the event a suit is threatened or instituted challenging the Merger as
violative of anti-trust laws, each of NewAlliance and Westbank shall use
reasonable best efforts in good faith to avoid the filing of, or resist or
resolve such suit. NewAlliance and Westbank shall use reasonable best efforts in
good faith to take such action as may be required: (a) by the FRB, the
Department, the Division, the Board of Bank Incorporation and the Antitrust
Division of the DOJ or the United States Federal Trade Commission in order to
resolve such objections as any of them may have to the Merger under antitrust
laws, or (b) by any federal or state court of the United States, in any suit
brought by a private party or Governmental Entity challenging the Merger as
violative of antitrust laws, in order to avoid the entry of, or to effect the
dissolution of, any injunction, temporary restraining order, or other order
which has the effect of preventing the consummation of the Merger. Reasonable
best efforts in good faith shall not include, among other things and only to the
extent NewAlliance so desires, the willingness of NewAlliance to accept an order
agreeing to the divestiture, or the holding separate, of any assets of
NewAlliance or Westbank.
8.6 EXECUTION OF BANK MERGER AGREEMENT. Contemporaneously with the
----------------------------------
execution of this Agreement, WB and NAB each shall execute and deliver the Bank
Merger Agreement, substantially in the form attached hereto as Exhibit A.
ARTICLE IX
CLOSING CONDITIONS
9.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS UNDER THIS AGREEMENT.
-----------------------------------------------------------
The respective obligations of each party under this Agreement to proceed to
Closing shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions:
9.1.1 Shareholder Approval. This Agreement shall have been
approved by the requisite vote of the shareholders of Westbank.
9.1.2 Injunctions. None of the parties hereto shall be
subject to any order, decree or injunction of a court or agency of competent
jurisdiction which enjoins or prohibits the consummation of the transactions
contemplated by this Agreement.
9.1.3 Regulatory Approvals. All necessary approvals,
authorizations and consents of all Governmental Entities required to consummate
the transactions contemplated by this Agreement, including the Merger and the
Bank Merger, shall have been obtained and shall remain in full force and effect
and all waiting periods relating to such approvals, authorizations or consents
shall have expired; and no such approval, authorization or consent shall include
any condition or requirement, excluding standard conditions that are normally
imposed by the regulatory authorities in bank merger transactions that would, in
the good faith reasonable judgment of the Board of Directors of NewAlliance,
materially and adversely affect the business, operations, financial condition,
property or assets of the combined enterprise of Westbank, WB and NewAlliance or
otherwise materially impair the value of Westbank or WB to NewAlliance.
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9.1.4 Effectiveness of Merger Registration Statement. The
Merger Registration Statement shall have become effective under the Securities
Act and no stop order suspending the effectiveness of the Merger Registration
Statement shall have been issued, and no proceedings for that purpose shall have
been initiated or threatened by the SEC and, if the offer and sale of
NewAlliance Common Stock in the Merger is subject to the blue sky laws of any
state, shall not be subject to a stop order of any state securities
commissioner.
9.1.5 Tax Opinions. On the basis of facts, representations
and assumptions which shall be consistent with the state of facts existing
immediately prior to the Closing Date: (a) NewAlliance and NAB shall have
received an opinion of NewAlliance and NAB's counsel, or such other qualified
professional firm on which the parties shall agree, and (b) Westbank and WB
shall have received an opinion of Westbank and WB's counsel, or such other
qualified professional firm on which the parties shall agree, in each case
reasonably acceptable in form and substance to NewAlliance, Westbank and WB
dated as of the Closing Date, substantially to the effect that, for Federal
income tax purposes:
(i) The Merger, when consummated in accordance with the
terms hereof, either will constitute a reorganization within the meaning of
Section 368(a) of the Code or will be treated as part of a reorganization within
the meaning of Section 368(a) of the Code;
(ii) Neither the Merger nor the Bank Merger will adversely
affect the Merger qualifying as a Reorganization within the meaning of Section
368(a) of the Code;
(iii) No gain or loss will be recognized by NewAlliance,
NAB, Westbank or WB by reason of the Merger;
(iv) The exchange of Westbank Common Stock to the extent
exchanged for NewAlliance Common Stock will not give rise to recognition of gain
or loss for Federal income tax purposes to the shareholders of Westbank;
(v) Subject to any adjustments to basis as a result of
any cash received in exchange for Westbank Common Stock, the basis of the
NewAlliance Common Stock to be received (including any fractional shares deemed
received for tax purposes) by a Westbank shareholder will be the same as the
basis, as so adjusted, of the Westbank Common Stock surrendered pursuant to the
Merger in exchange therefor; and
(vi) The holding period of the shares of NewAlliance
Common Stock to be received by a shareholder of Westbank will include the period
during which the shareholder held the shares of Westbank Common Stock
surrendered in exchange therefor, provided the Westbank Common Stock surrendered
is held as a capital asset at the Effective Time.
Each of NewAlliance, Westbank, NAB and WB shall provide a letter
setting forth the facts, assumptions and representations on which such counsel
may rely in rendering its opinion.
9.2 Conditions to the Obligations of NewAlliance under this
-------------------------------------------------------
Agreement. The obligations of NewAlliance under this Agreement shall be further
- ---------
subject to the satisfaction of the conditions set forth in Sections 9.2.1
through 9.2.5 at or prior to the Closing:
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9.2.1 Representations and Warranties. Except as otherwise
contemplated by this Agreement or consented to in writing by NewAlliance, the
representations and warranties of Westbank and WB set forth in this Agreement
shall be true and correct in all material respects as of the date of this
Agreement and as of the Effective Time as though made on and as of the Effective
Time; and Westbank shall have delivered to NewAlliance a certificate of Westbank
to such effect signed by the Chief Executive Officer and the Chief Financial
Officer of Westbank as of the Effective Time.
9.2.2 Agreements and Covenants. As of the Closing Date,
Westbank and each Westbank Subsidiary shall have performed in all material
respects all obligations and complied in all material respects with all
agreements or covenants to be performed or complied with by each of them at or
prior to the Effective Date under this Agreement, and NewAlliance shall have
received a certificate signed on behalf of Westbank by the Chief Executive
Officer and Chief Financial Officer of Westbank to such effect dated as of the
Effective Time.
9.2.3 Permits, Authorizations, Etc. Westbank and the
Westbank Subsidiaries shall have obtained any and all permits, authorizations,
consents, waivers, clearances or approvals required for the lawful consummation
of the Merger by Westbank and the Bank Merger by WB, the failure to obtain which
would have a Material Adverse Effect on Westbank and its Subsidiaries, taken as
a whole.
9.2.4 No Material Adverse Effect. Since December 31, 2005,
no event has occurred or circumstance arisen that, individually or in the
aggregate, has had or is reasonably likely to have a Material Adverse Effect on
Westbank or WB, or both.
9.3 Conditions to the Obligations of Westbank under this
----------------------------------------------------
Agreement.
---------
The obligations of Westbank under this Agreement shall be further subject to the
satisfaction of the conditions set forth in Sections 9.3.1 through 9.3.5 at or
prior to the Closing:
9.3.1 Representations and Warranties. Except as otherwise
contemplated by this Agreement or consented to in writing by Westbank, the
representations and warranties of NewAlliance and NAB set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Effective Time as though made on and as of the
Effective Time (or on the date when made in the case of any representation and
warranty which specifically relates to an earlier date); and NewAlliance shall
have delivered to Westbank a certificate of NewAlliance to such effect signed by
the Chief Executive Officer and the Chief Financial Officer of NewAlliance as of
the Effective Time.
9.3.2 Agreements and Covenants. As of the Closing Date,
NewAlliance and each NewAlliance Subsidiary shall have performed in all material
respects all obligations and complied in all material respects with all
agreements or covenants to be performed or complied with by each of them at or
prior to the Effective Date under this Agreement, and Westbank shall have
received a certificate signed on behalf of NewAlliance by the Chief Executive
Officer and Chief Financial Officer of NewAlliance to such effect dated as of
the Effective Time.
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9.3.3 Permits, Authorizations, Etc. NewAlliance and the
NewAlliance Subsidiaries shall have obtained any and all permits,
authorizations, consents, waivers, clearances or approvals required for the
lawful consummation of the Merger by NewAlliance and the Bank Merger by NAB, the
failure to obtain which would have a Material Adverse Effect on NewAlliance and
its Subsidiaries, taken as a whole.
9.3.4 Payment of Merger Consideration. NewAlliance shall
have delivered the Exchange Fund to the Exchange Agent on or before the Closing
Date and the Exchange Agent shall provide Westbank with a certificate evidencing
such delivery.
9.3.5 No Material Adverse Effect. Since December 31, 2005,
no event has occurred or circumstance arisen that, individually or in the
aggregate, has had or is reasonably likely to have a Material Adverse Effect on
NewAlliance or NAB, or both.
ARTICLE X
THE CLOSING
10.1 TIME AND PLACE. Subject to the provisions of
--------------
Articles IX and XI hereof, the Closing of the transactions contemplated hereby
shall take place at the offices of Tyler Cooper & Alcorn, LLP, 205 Church
Street, New Haven, Connecticut at 10:00 a.m. on January 2, 2007, or such other
date as the parties may mutually agree, but in no event prior to January 1, 2007
and in no event prior to the date on which the last condition precedent pursuant
to this Agreement has been fulfilled or waived, including the expiration of any
applicable waiting period.
10.2 DELIVERIES AT THE CLOSING. At the Closing there shall be
-------------------------
delivered (i) to NewAlliance and Westbank the certificates and other documents
and instruments required to be delivered at the Closing under Article IX hereof
and (ii) to the Exchange Agent on behalf of Westbank the Merger Consideration
required to be delivered at the Closing under Section 9.3.4 hereof.
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ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1 TERMINATION. This Agreement may be terminated at any time
-----------
prior to the Closing Date, whether before or after approval of the Merger by the
shareholders of WestBank:
11.1.1 By the mutual written agreement of NewAlliance and
Westbank;
11.1.2 By either NewAlliance or Westbank, provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein, if there shall have been
a material breach of any of the representations or warranties set forth in this
Agreement on the part of the other party, which breach (i) by its nature cannot
be cured, or (ii) shall not have been cured within thirty (30) days after
written notice by the non-breaching party to the breaching party, provided that,
in the event the breach cannot reasonably be cured within the specified thirty
(30) day period, the time to cure shall be extended to such time as reasonably
may be necessary to effect the cure, not to exceed an additional thirty (30)
days (sixty (60) days in the aggregate), conditioned upon the breaching party
commencing to cure the breach within fifteen (15) days after notice of the
breach, providing written notice to the non-breaching party within such fifteen
(15) day period of the breaching party's inability to complete the cure within
the specified thirty (30) day period and thereafter diligently and continuously
prosecuting the cure to completion. For purposes of this Section 11.1.2, a
material breach shall be deemed to be a breach which has, either individually or
in the aggregate, a Material Adverse Effect on (x) the party making such
representations or warranties or (y) the consummation of the Merger, the Bank
Merger, and the other transactions contemplated hereby, provided, that if the
applicable representation or warranty by its terms already is limited to a
Material Adverse Effect, this provision shall not be deemed to further limit or
qualify the representation or warranty;
11.1.3 By either NewAlliance or Westbank, provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein, if there shall have been
a material failure to perform or comply with any of the covenants or agreements
set forth in this Agreement on the part of the other party, including also any
failure to satisfy a condition to Closing, which failure (i) by its nature
cannot be cured, or (ii) shall not have been cured within thirty (30) days after
written notice by the non-breaching party to the breaching party, provided that,
in the event the breach cannot reasonably be cured within the specified thirty
(30) day period, the time to cure shall be extended to such time as reasonably
may be necessary to effect the cure, not to exceed an additional thirty (30)
days (sixty (60) days in the aggregate), conditioned upon the breaching party
commencing to cure the breach within fifteen (15) days after notice of the
breach, providing written notice to the non-breaching party within such fifteen
(15) day period of the breaching party's inability to complete the cure within
the specified thirty (30) day period and thereafter diligently and continuously
prosecuting the cure to completion. For purposes of this Section 11.1.3, a
material failure to perform or comply shall be deemed to be a failure which has,
either individually or in the aggregate, a Material Adverse Effect on (x) the
party so failing or (y) the consummation of the Merger, the Bank Merger, and the
other transactions contemplated hereby, provided, that if the applicable
performance obligation by its terms already is limited to a Material Adverse
Effect, this provision shall not be deemed to further limit or qualify the
performance obligation;
65
11.1.4 By (a) Westbank, if the Merger Registration Statement
shall not have been declared effective, within the meaning of the Securities
Laws, by the SEC by December 31, 2006, or (b) either NewAlliance or Westbank, if
the Closing shall not have occurred by the Termination Date, or such later date
as shall have been agreed to in writing by NewAlliance and Westbank; provided,
that no party may terminate this Agreement pursuant to this Section 11.1.4 if
the failure to achieve effectiveness of the Merger Registration Statement or of
the Closing to have occurred on or before said date was due to such party's
breach of any of its obligations under this Agreement;
11.1.5 By either NewAlliance or Westbank if the shareholders
of Westbank shall have voted at the Westbank shareholders meeting on this
Agreement and such vote shall not have been sufficient to approve the Agreement;
11.1.6 By either NewAlliance or Westbank if (i) final action
has been taken by a Governmental Entity whose approval is required in connection
with this Agreement or the Bank Merger Agreement and the transactions
contemplated hereby or thereby, which final action (x) has become non-appealable
and (y) does not approve this Agreement or the Bank Merger Agreement or the
transactions contemplated hereby or thereby, (ii) any regulatory authority whose
approval or non-objection is required in connection with this Agreement or the
Bank Merger Agreement and the transactions contemplated hereby or thereby, has
stated in writing that it will not issue the required approval or non-objection,
or (iii) any court of competent jurisdiction or other governmental authority
shall have issued an order, decree, ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger or the Bank Merger
and such order, decree, ruling or other action shall have become final and
non-appealable, any of the foregoing being termed an "Adverse Action", provided
that each party shall use their respective reasonable best efforts to obtain all
necessary approvals from any applicable Governmental Entity and to timely and
fully address any objections raised or questions posed by such Governmental
Entity;
11.1.7 By NewAlliance if at any time prior to the Westbank
Shareholder meeting, (a) Westbank shall have materially breached Section 6.10 of
this Agreement, (b) the Westbank Board of Directors shall have failed for any
reason to make its recommendation referred to in Section 8.1, withdrawn such
recommendation or modified or changed such recommendation in a manner adverse in
any respect to the interests of NewAlliance or (c) Westbank shall have
materially breached its obligations under Section 8.1 by failing to call, give
notice of, convene and hold the Westbank Shareholders Meeting in accordance with
Section 8.1.
11.1.8 By NewAlliance if a tender offer or exchange offer
for 25% or more of the outstanding shares of Westbank Common Stock is commenced
(other than by NewAlliance), and the Westbank Board of Directors recommends that
the shareholders of Westbank tender their shares in such tender or exchange
offer or otherwise fails to recommend that such shareholders reject such tender
offer or exchange offer within the ten-Business Day period specified in Rule
14e-2(a) under the Exchange Act.
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11.1.9 At any time prior to the Westbank Shareholders
Meeting, by Westbank in order to concurrently enter into an acquisition
agreement or similar agreement (each, an "Acquisition Agreement") with respect
to a Superior Proposal which has been received and considered by Westbank and
the Westbank Board of Directors in compliance with Section 6.10 hereof,
provided, however, that this Agreement may be terminated by Westbank pursuant to
this Section 11.1.9 only after the fifth (5th) Business Day following
NewAlliance's receipt of written notice from Westbank advising NewAlliance that
Westbank is prepared to enter into an Acquisition Agreement with respect to a
Superior Proposal, and only if, during such five (5)-Business Day period,
NewAlliance does not, in its sole discretion, make an offer to Westbank that
Westbank's Board of Directors determines in good faith, after consultation with
its financial and legal advisors, is at least as favorable as the Superior
Proposal.
11.2 EFFECT OF TERMINATION.
---------------------
11.2.1 In the event of termination of this Agreement
pursuant to any provision of Section 11.1, this Agreement shall forthwith become
void and have no further force, except that the provisions of Sections 11.1,
11.3, 12.1, 12.2, 12.6, 12.9, 12.10, this Section 11.2, and any other Section
which, by its terms, relates to post-termination rights or obligations, shall
survive such termination of this Agreement and remain in full force and effect.
11.2.2 In the event of termination of this Agreement
pursuant to Section 11.1, except as provided in Section 11.2.3, whether or not
the Merger is consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated by this Agreement shall be paid
by the party incurring such expenses. In the event of a termination of this
Agreement because of a willful breach of any representation, warranty, covenant
or agreement contained in this Agreement, the breaching party shall remain
liable for any and all damages, costs and expenses, including all reasonable
attorneys' fees, sustained or incurred by the non-breaching party as a result
thereof or in connection therewith or with respect to the enforcement of its
rights hereunder.
11.2.3 In recognition of the efforts, expenses and other
opportunities foregone by NewAlliance while structuring and pursuing the Merger,
the parties hereto agree that Westbank shall pay to NewAlliance a termination
fee of $4,500,000 (the "Westbank Termination Fee") in the manner and subject to
the conditions set forth below if:
(i) this Agreement is terminated by NewAlliance
pursuant to Sections 11.1.7 or 11.1.8;
(ii) this Agreement is terminated by Westbank
pursuant to Section 11.1.9; or
(iii) this Agreement is terminated by (A)
NewAlliance pursuant to Section 11.1.2 or 11.1.3 or (B) by either NewAlliance or
Westbank pursuant to Section 11.1.5, and in the case of any termination pursuant
to Section 11.1.2, 11.1.3 or 11.1.5 an Acquisition Proposal shall have been
publicly announced or otherwise communicated or made known to the senior
management of Westbank or the Westbank Board (or any Person shall have publicly
announced, communicated or made known an intention, whether or not conditional,
to make an Acquisition Proposal) at any time after the date of this Agreement
and prior to the date of termination of this Agreement in the case of clause
(A), or the date of the vote of the shareholders of Westbank in the case of
clause (B), and in any such event, Westbank or WB enters into any agreement with
respect to, or consummates, an Acquisition Transaction within twelve (12) months
after such termination of this Agreement.
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In the event the Westbank Termination Fee shall become payable pursuant
to Section 11.2.3 (i) or (ii), Westbank shall pay to NewAlliance the Westbank
Termination Fee on or before the third Business Day following the date of
termination of this Agreement. In the event the Westbank Termination Fee shall
become payable pursuant to Section 11.2.3 (iii), Westbank shall pay to
NewAlliance the Westbank Termination Fee on the date of execution of such
agreement or consummation of the Acquisition Transaction. Any amount that
becomes payable pursuant to this Section 11.2.3 shall be paid by wire transfer
of immediately available funds to an account designated by NewAlliance.
11.2.4 If payment of the Westbank Termination Fee is timely
made, then NewAlliance will not have any other rights or claims against
Westbank, any Westbank Subsidiaries, or their respective officers and directors,
under this Agreement, it being agreed that the acceptance of the Westbank
Termination Fee under Section 11.2.3 will constitute the sole and exclusive
remedy of NewAlliance against Westbank, any Westbank Subsidiaries, or their
respective officers and directors. If Westbank fails to pay the amounts due
under Section 11.2.3 above within the time period specified therein, Westbank
shall pay the costs and expenses (including reasonable legal fees and expenses)
incurred by NewAlliance in connection with any action in which it prevails,
including the filing of any lawsuit taken to collect payment of such amount,
together with interest on the amount of any such unpaid amounts at the prime
lending rate prevailing during such period as published in The Wall Street
Journal, calculated on a daily basis from the date such amounts were required to
be paid until the date of actual payment.
11.3 AMENDMENT, EXTENSION AND WAIVER. Subject to applicable law, at
-------------------------------
any time prior to the Effective Time (whether before or after approval thereof
by the shareholders of Westbank), the parties hereto by action of their
respective Boards of Directors, may (a) amend this Agreement, (b) extend the
time for the performance of any of the obligations or other acts of any other
party hereto, (c) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, or (d) waive
compliance with any of the agreements or conditions contained herein; provided,
however, that after any approval of this Agreement and the transactions
contemplated hereby by the shareholders of Westbank, there may not be, without
further approval of such shareholders, any amendment of this Agreement which
reduces the amount, value or changes the form of consideration to be delivered
to Westbank's shareholders or Option holders pursuant to this Agreement. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto. Any agreement on the part of a party hereto to
any extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party, but such waiver or failure to insist on
strict compliance with such obligation, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
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ARTICLE XII
MISCELLANEOUS
12.1 CONFIDENTIALITY. Except as specifically set forth herein,
---------------
NewAlliance and Westbank mutually agree to be bound by the terms of the
confidentiality agreement dated as of June 7, 2006 (the "Confidentiality
Agreement") previously executed by the parties hereto, which Confidentiality
Agreement is hereby incorporated herein by reference. The parties hereto agree
that such Confidentiality Agreement shall continue in accordance with its
respective terms, notwithstanding the termination of this Agreement.
12.2 PUBLIC ANNOUNCEMENTS. Westbank and NewAlliance shall cooperate
--------------------
with each other in the development and distribution of all news releases and
other public information disclosures with respect to this Agreement, except as
may be otherwise required by law, and neither Westbank nor NewAlliance shall
issue any joint news releases with respect to this Agreement unless such news
releases have been mutually agreed upon in writing by the parties hereto, except
as required by law.
12.3 SURVIVAL. All representations, warranties and covenants in
--------
this Agreement or in any instrument delivered pursuant hereto or thereto shall
expire on and be terminated and extinguished at the Effective Date, other than
those covenants set forth in Sections 2.5, 2.6, 7.6, and 7.7, which shall
survive or be performed after the Effective Date.
12.4 NOTICES. All notices or other communications hereunder shall
-------
be in writing and shall be deemed given if delivered by receipted hand delivery
or mailed by prepaid registered or certified mail (return receipt requested) or
by cable, telegram, telex or fax addressed as follows:
If to Westbank or WB, to:
Westbank
225 Park Avenue
West Springfield, MA 01090-0149
Attention: Donald R. Chase
Fax: (413) 747-1468
With required copies to:
Thacher Proffitt & Wood LLP
1700 Pennsylvania Avenue, N.W.
Suite 800
Washington, D.C. 20006
Attention: Richard A. Schaberg, Esq.
Fax: (202) 626-1930
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If to NewAlliance or NAB, to:
NewAlliance Bank
195 Church Street
New Haven, CT 06510
Attention: Merrill B. Blanksteen, Executive Vice President and
CFO
Fax: 203-789-2650
With required copies to:
Tyler Cooper & Alcorn, LLP
185 Asylum Street - 35th Floor
Hartford, Connecticut 06103-3488
Attention: William W. Bouton III, Esq.
Fax: (860) 278-3802
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
so mailed.
12.5 PARTIES IN INTEREST. This Agreement shall be binding upon and
-------------------
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other party, and that (except as
otherwise expressly provided in this Agreement) nothing in this Agreement is
intended to confer upon any other Person any rights or remedies under or by
reason of this Agreement other than the severance benefits described in Section
7.5.4 and the insurance provided under Section 7.6.
12.6 COMPLETE AGREEMENT. This Agreement, including the Exhibits and
------------------
Disclosure Schedules hereto and the documents and other writings referred to
herein or therein or delivered pursuant hereto or thereto, together with the
Confidentiality Agreement referred to in Section 12.1, contains the entire
agreement and understanding of the parties with respect to its subject matter.
There are no restrictions, agreements, promises, warranties, covenants or
undertakings between the parties other than those expressly set forth herein or
therein. This Agreement supersedes all prior agreements and understandings
(other than the Confidentiality Agreement referred to in Section 12.1 hereof)
between the parties, both written and oral, with respect to its subject matter.
12.7 COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
12.8 SEVERABILITY. In the event that any one or more provisions of
------------
this Agreement shall for any reason be held invalid, illegal or unenforceable in
any respect, by any court of competent jurisdiction, such invalidity, illegality
or unenforceability shall not affect any other provisions of this Agreement and
the parties shall use their reasonable efforts to substitute a valid, legal and
enforceable provision which, insofar as practical, implements the purposes and
intents of this Agreement.
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12.9 GOVERNING LAW. This Agreement shall be governed by the laws of
-------------
the State of Connecticut, without giving effect to conflicts of laws principles
that would require the application of any other law.
12.10 INTERPRETATION. When a reference is made in this Agreement to
--------------
Sections or Exhibits, such reference shall be to a Section of or Exhibit to this
Agreement unless otherwise indicated. The recitals hereto constitute an integral
part of this Agreement. References to Sections include subsections, which are
part of the related Section (e.g., a section numbered "Section 5.5.1" would be
part of "Section 5.5" and references to "Section 5.5" would also refer to
material contained in the subsection described as "Section 5.5.1"). The table of
contents, index 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". The phrases "the date of this Agreement", "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to the date set forth in the Recitals to this Agreement.
12.11 SPECIFIC PERFORMANCE. The parties hereto agree that
--------------------
irreparable damage would occur in the event that the provisions contained in
this Agreement were not performed in accordance with its specific terms or was
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.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, NewAlliance, NAB, Westbank and WB have caused this
Agreement to be executed under seal by their duly authorized officers as of the
date first set forth above.
NEWALLIANCE BANCSHARES, INC.
By: /s/ Merrill B. Blanksteen
-------------------------------------
Name: Merrill B. Blanksteen
Title: Executive Vice President and
Chief Financial Officer
NEWALLIANCE BANK
By: /s/ Merrill B. Blanksteen
-------------------------------------
Name: Merrill B. Blanksteen
Title: Executive Vice President and
Chief Financial Officer
WESTBANK CORPORATION
By: /s/Donald R. Chase
-------------------------------------
Name: Donald R. Chase
Title: President and Chief Executive Officer
WESTBANK
By: /s/ Donald R. Chase
-------------------------------------
Name: Donald R. Chase
Title: President and Chief Executive Officer
72