SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-1
C U R R E N T R E P O R T
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
October 26, 1997
Date of Report (Date Of Earliest Event Reported)
EAGLE FINANCIAL CORP.
(Exact Name Of Registrant As Specified In Its Charter)
Delaware
(State Or Other Jurisdiction Of Incorporation)
0-15311 06-1194047
(Commission File Number) (IRS Employer Identification No.)
222 Main Street, P.O. Box 1157
Bristol, Connecticut 06010
(Address Of Principal Executive Offices) (Zip Code)
(860) 314-6400
(Registrant's Telephone Number, including Area Code)
NOT APPLICABLE
(Former Name Or Former Address, If Changed Since Last Report)
ITEM 5. OTHER EVENTS.
On October 26, 1997, Eagle Financial Corp., a
Delaware corporation ("Eagle"), entered into an Agreement
and Plan of Merger (the "Merger Agreement") with Webster
Financial Corporation, a Delaware corporation
("Webster"), pursuant to which Eagle will be merged with
and into Webster (the "Merger"). The Merger is intended
to constitute a tax-free reorganization and to be
accounted for as a pooling-of-interests. The Merger
Agreement is filed herewith as Exhibit 2.1 and is
incorporated by reference herein.
In accordance with the terms of the Merger
Agreement, each share of Eagle common stock, par value
$.01 per share ("Eagle Common Stock"), outstanding
immediately prior to the effective time of the Merger,
together with the rights attached thereto (the "Rights")
issued pursuant to the Rights Agreement, dated as of
October 22, 1996 (the "Rights Agreement") between Eagle
and The First National Bank of Boston, as rights agent,
will (subject to certain exceptions) be converted into
the right to receive .84 shares (the "Exchange Ratio") of
Webster common stock, par value $.01 per share, together
with the number of Webster rights associated therewith
(with cash being paid in lieu of fractional share
interests). The Exchange Ratio is subject to adjustment
in certain circumstances.
Consummation of the Merger is subject to
various conditions, including the approval of the
stockholders of Webster and Eagle and the receipt of all
requisite regulatory approvals.
In connection with the Merger Agreement,
Webster and Eagle entered into a Stock Option Agreement
dated October 26, 1997 (the "Option Agreement"), pursuant
to which Eagle granted Webster an option to purchase,
under certain circumstances, up to 1,256,991 shares of
Eagle Common Stock at a price, subject to certain
adjustments, of $41.25 per share (the "Option"). The
Option will become exercisable only upon the occurrence
of certain events, none of which has occurred as of the
date hereof. The Option was granted by Eagle as a
condition to Webster's entering into the Merger
Agreement. The Option Agreement is filed herewith as
Exhibit 99.3 and is incorporated by reference herein.
The joint press release issued by Eagle and
Webster with respect to the Merger is filed herewith as
Exhibit 99.1.
In connection with the execution of the Merger
Agreement and the Option Agreement, Eagle amended the
Rights Agreement to provide that the Rights will not
become distributable or exercisable as a result of the
execution of the Merger Agreement and the Option
Agreement or the consummation of the transactions
contemplated thereby.
Amendment No. 1 to the Rights Agreement is
filed herewith as Exhibit 99.2 and is incorporated by
reference herein.
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
(c) Exhibits
2.1 Agreement and Plan of Merger by and
between Webster Financial Corporation
and Eagle Financial Corp., dated as
of October 26, 1997.
99.1 Press Release issued by Webster
Financial Corporation and Eagle
Financial Corp. on October 27, 1997.
99.2 Amendment No. 1, dated as of October
27, 1997, to the Rights Agreement,
dated as of October 22, 1996, between
Eagle Financial Corp. and The First
National Bank of Boston, as rights
agent.
99.3 Stock Option Agreement, dated October
26, 1997, between Eagle Financial
Corp. and Webster Financial
Corporation.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunder duly authorized.
Dated: November 24, 1997
Eagle Financial Corp.
By: /s/ Robert J. Britton
Name: Robert J. Britton
Title: President and Chief
Executive Officer
EXHIBIT INDEX
Exhibit
Number Description
2.1 Agreement and Plan of Merger by and
between Webster Financial Corporation
and Eagle Financial Corp., dated as of
October 26, 1997.
99.1 Press Release issued by Webster
Financial Corporation and Eagle
Financial Corp. on October 27, 1997.
99.2 Amendment No. 1, dated as of October 27,
1997, to the Rights Agreement, dated as
of October 22, 1996, between Eagle
Financial Corp. and The First National
Bank of Boston, as rights agent.
99.3 Stock Option Agreement, dated October
26, 1997, between Eagle Financial Corp.
and Webster Financial Corporation.
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
WEBSTER FINANCIAL CORPORATION
AND
EAGLE FINANCIAL CORP.
DATED AS OF
OCTOBER 26, 1997
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER.................................. 2
1.1 The Merger.................................. 2
1.2 Effective Time.............................. 2
1.3 Effects of the Merger....................... 2
1.4 Conversion of Eagle Common Stock............ 2
1.5 Webster Common Stock........................ 4
1.6 Options..................................... 4
1.7 Certificate of Incorporation................ 5
1.8 By-Laws..................................... 5
1.9 Directors and Officers...................... 5
1.10 Tax Consequences............................ 6
1.11 Accounting Treatment........................ 6
ARTICLE II EXCHANGE OF SHARES.......................... 6
2.1 Webster to Make Shares Available............ 6
2.2 Exchange of Shares.......................... 6
ARTICLE II-A DISCLOSURE SCHEDULE; STANDARDS FOR
REPRESENTATIONS AND WARRANTIES............ 8
2A.1 Disclosure Schedule......................... 8
2A.2 Standards................................... 9
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF EAGLE.................................. 9
3.1 Corporate Organization...................... 9
3.2 Capitalization.............................. 10
3.3 Authority; No Violation..................... 12
3.4 Consents and Approvals...................... 13
3.5 Loan Portfolio; Reports..................... 14
3.6 Financial Statements; Exchange Act
Filings; Books and Records................ 15
3.7 Broker's Fees............................... 16
3.8 Absence of Certain Changes or Events........ 16
3.9 Legal Proceedings........................... 17
3.10 Taxes and Tax Returns....................... 17
3.11 Employee Plans.............................. 18
3.12 Certain Contracts........................... 21
3.13 Agreements with Regulatory Agencies......... 22
3.14 State Takeover Laws;
Certificate of Incorporation............... 22
3.15 Environmental Matters....................... 23
3.16 Reserves for Losses......................... 24
3.17 Properties and Assets....................... 24
3.18 Insurance................................... 25
3.19 Compliance with Applicable Laws............. 26
3.20 Loans....................................... 26
3.21 Ownership of Webster Common Stock........... 27
3.22 Eagle DRIP.................................. 28
3.23 Fairness Opinion............................ 28
3.24 Tax and Accounting Treatment of Merger...... 28
3.25 Rights Agreement............................ 28
3.26 Eagle Information........................... 28
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF WEBSTER................................ 29
4.1 Corporate Organization...................... 29
4.2 Capitalization.............................. 29
4.3 Authority; No Violation..................... 30
4.4 Regulatory Approvals........................ 32
4.5 Financial Statements; Exchange Act
Filings; Books and Records................ 33
4.6 Absence of Certain Changes or Events........ 34
4.7 Compliance with Applicable Law.............. 34
4.8 Ownership of Eagle Common Stock;
Affiliates and Associates.................. 35
4.9 Employee Benefit Plans...................... 35
4.10 Agreements with Regulatory Agencies......... 35
4.11 Tax and Accounting Treatment of Merger...... 35
4.12 Legal Proceedings........................... 36
4.13 Reserves for Losses......................... 36
4.14 Broker's Fees............................... 36
4.15 Fairness Opinion............................ 37
4.16 Taxes....................................... 37
4.17 Webster Information......................... 37
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS.... 38
5.1 Covenants of Eagle.......................... 38
5.2 Covenants of Webster........................ 43
5.3 Merger Covenants............................ 43
5.4 Employment and Other Agreements............. 44
ARTICLE VI ADDITIONAL AGREEMENTS....................... 44
6.1 Regulatory Matters.......................... 44
6.2 Access to Information....................... 46
6.3 Stockholder Meetings........................ 47
6.4 Legal Conditions to Merger.................. 47
6.5 Stock Exchange Listing...................... 48
6.6 Employees................................... 48
6.7 Indemnification............................. 49
6.8 Subsequent Interim and Annual Financial
Statements................................. 51
6.9 Additional Agreements....................... 51
6.10 Advice of Changes........................... 51
6.11 Current Information......................... 52
6.12 Execution and Authorization of
Bank Merger Agreement...................... 52
6.13 Change in Structure......................... 52
6.14 Transaction Expenses of Eagle............... 52
6.15 Affiliate Agreements........................ 53
ARTICLE VII CONDITIONS PRECEDENT....................... 53
7.1 Conditions to Each Party's Obligation
To Effect the Merger....................... 53
7.2 Conditions to Obligations of Webster........ 55
7.3 Conditions to Obligations of Eagle.......... 56
ARTICLE VIII TERMINATION AND AMENDMENT................. 57
8.1 Termination................................. 57
8.2 Effect of Termination....................... 61
8.3 Amendment................................... 61
8.4 Extension; Waiver........................... 62
ARTICLE IX GENERAL PROVISIONS.......................... 62
9.1 Closing..................................... 62
9.2 Nonsurvival of Representations,
Warranties and Agreements.................. 62
9.3 Expenses.................................... 62
9.4 Notices..................................... 63
9.5 Interpretation.............................. 64
9.6 Counterparts................................ 64
9.7 Entire Agreement............................ 64
9.8 Governing Law............................... 64
9.9 Enforcement of Agreement.................... 65
9.10 Severability................................ 65
9.11 Publicity................................... 65
9.12 Assignment; Limitation of Benefits.......... 65
9.13 Additional Definitions...................... 66
EXHIBITS
A Form of Articles of Combination and
Bank Merger Agreement
B Form of Option Agreement
C Form of Certificate of Merger
D Form of Agreement of Eagle Affiliates
E Form of Agreement of Webster Affiliates
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of Octo-
ber 26, 1997 (this "Agreement"), is entered into by and between
Webster Financial Corporation, a Delaware corporation ("Web-
ster") and Eagle Financial Corp., a Delaware corporation
("Eagle").
WHEREAS, the Boards of Directors of Webster and Eagle
have determined that it is in the best interests of their re-
spective companies and stockholders to consummate the business
combination transaction provided for herein in which Eagle
will, subject to the terms and conditions set forth herein,
merge with and into Webster, with Webster being the surviving
corporation in such merger (the "Merger");
WHEREAS, prior to the consummation of the Merger,
Webster and Eagle will respectively cause Webster Bank, a fed-
eral savings bank and wholly-owned subsidiary of Webster, and
Eagle Bank ("Eagle Bank"), a federally chartered savings bank
and wholly-owned subsidiary of Eagle, to enter into a merger
agreement, in the form attached hereto as Exhibit A (the "Bank
Merger Agreement"), providing for the merger (the "Bank
Merger") of Eagle Bank with and into Webster Bank, with Webster
Bank being the "Surviving Bank" of the Bank Merger, and it is
intended that the Bank Merger be consummated immediately after
consummation of the Merger;
WHEREAS, as an inducement to Webster to enter into
this Agreement, Eagle will enter into an option agreement, in
the form attached hereto as Exhibit B (the "Option Agreement"),
with Webster immediately following the execution of this Agree-
ment pursuant to which Eagle will grant Webster an option to
purchase, under certain circumstances, an aggregate number of
newly issued shares of common stock equal to 19.9% of the out-
standing shares of common stock, par value $.01 per share, of
Eagle ("Eagle Common Stock") and otherwise upon the terms and
conditions therein contained; and
WHEREAS, the Merger is intended to be treated as a
"reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and as a "pooling of
interests" under generally accepted accounting principles; and
WHEREAS, the parties desire to make certain represen-
tations, warranties and agreements in connection with the Merg-
er and also to prescribe certain conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual cov-
enants, representations, warranties and agreements contained
herein, and intending to be legally bound hereby, the parties
agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER.
Subject to the terms and conditions of this Agree-
ment, in accordance with the Delaware General Corporation Law
(the "DGCL") at the Effective Time (as defined in Section 1.2
hereof), Eagle shall merge with and into Webster, with Webster
being the surviving corporation (hereinafter sometimes called
the "Surviving Corporation") in the Merger. Upon consummation
of the Merger, the corporate existence of Eagle shall cease and
the Surviving Corporation shall continue to exist as a Delaware
corporation.
1.2 EFFECTIVE TIME.
The Merger shall become effective on the Closing Date
(as defined in Section 9.1 hereof), as set forth in the cer-
tificate of merger (the "Certificate of Merger") in the form
attached as Exhibit C hereto which shall be filed with the Sec-
retary of State of the State of Delaware on the Closing Date.
The term "Effective Time" shall be the date and time when the
Merger becomes effective on the Closing Date, as set forth in
the Certificate of Merger.
1.3 EFFECTS OF THE MERGER.
At and after the Effective Time, the Merger shall
have the effects set forth in Sections 259 and 261 of the DGCL.
1.4 CONVERSION OF EAGLE COMMON STOCK.
(a) At the Effective Time, subject to Sections
1.4(b), 1.4(c), 1.4(d) and 8.1(h) hereof, each share of Eagle
Common Stock issued and outstanding prior to the Effective
Time, together with the rights (the "Eagle Rights") attached
thereto issued pursuant to the Rights Agreement, dated as of
October 22, 1996 (the "Eagle Rights Agreement"), between Eagle
and The First National Bank of Boston, as Rights Agent, shall,
by virtue of this Agreement and without any action on the part
of the holder thereof, be converted into and exchangeable for
0.84 shares (the "Exchange Ratio") of the common stock, par
value $.01 per share, of Webster (the "Webster Common Stock"),
together with the number of rights ("Webster Rights") issued
pursuant to the Rights Agreement, dated as of February 5, 1996
(the "Webster Rights Agreement"), between Webster and Chemical
Mellon Shareholder Services, L.L.C., as Rights Agent, associ-
ated therewith. Notwithstanding any other provision of this
Agreement other than Sections 1.4(b) and 8.1(h), no more than
5,893,366 shares of Webster Common Stock (the "Maximum Share
Amount") shall be issued or become issuable in connection with
the Merger and the other transactions contemplated by this
Agreement (including shares issued or issuable in respect of
shares of any capital stock of Eagle, including Eagle Common
Stock, or any right to acquire any such capital stock).
(b) All of the shares of Eagle Common Stock
converted into Webster Common Stock pursuant to this Article I
shall no longer be outstanding and shall automatically be can-
celed and shall cease to exist, and each certificate (each a
"Certificate") previously representing any such shares of Eagle
Common Stock shall thereafter represent the right to receive
(i) the number of whole shares of Webster Common Stock and (ii)
cash in lieu of fractional shares into which the shares of
Eagle Common Stock represented by such Certificate have been
converted pursuant to this Section 1.4(b) and Section 2.2(e)
hereof. Certificates previously representing shares of Eagle
Common Stock shall be exchanged for certificates representing
whole shares of Webster Common Stock and cash in lieu of frac-
tional shares issued in consideration therefor upon the sur-
render of such Certificates in accordance with Section 2.2
hereof, without any interest thereon. If after the date hereof
and prior to the Effective Time Webster should split or combine
its common stock, or pay a dividend or other distribution in
such common stock, then the Exchange Ratio and the Maximum
Share Amount shall be appropriately adjusted to reflect such
split, combination, dividend or distribution.
(c) At the Effective Time, all shares of Eagle
Common Stock that are owned by Eagle as treasury stock and all
shares of Eagle Common Stock that are owned directly or indi-
rectly by Webster or Eagle or any of their respective Subsid-
iaries (other than shares of Eagle Common Stock held directly
or indirectly in trust accounts, managed accounts and the like
or otherwise held in a fiduciary capacity that are beneficially
owned by third parties (any such shares, and shares of Webster
Common Stock which are similarly held, whether held directly or
indirectly by Webster or Eagle, as the case may be, being re-
ferred to herein as "Trust Account Shares") and other than any
shares of Eagle Common Stock held by Webster or Eagle or any of
their respective Subsidiaries in respect of a debt previously
contracted (any such shares of Eagle Common Stock, and shares
of Webster Common Stock which are similarly held, whether held
directly or indirectly by Webster or Eagle, being referred to
herein as "DPC Shares")) shall be canceled and shall cease to
exist and no stock of Webster or other consideration shall be
delivered in exchange therefor. All shares of Webster Common
Stock that are owned by Eagle or any of its Subsidiaries (other
than Trust Account Shares and DPC Shares) shall become treasury
stock of Webster.
(d) Certificates for fractions of shares of
Webster Common Stock will not be issued. In lieu of a fraction
of a share of Webster Common Stock, each holder of Eagle Common
Stock otherwise entitled to a fraction of a share of Webster
Common Stock shall be entitled to receive an amount of cash
equal to (i) the fraction of a share of the Webster Common
Stock to which such holder would otherwise be entitled, multi-
plied by (ii) the market value of the Webster Common Stock,
which shall be deemed to be the average of the daily closing
prices per share for Webster Common Stock for the twenty con-
secutive trading days on which shares of Webster Common Stock
are actually traded (as reported on the Nasdaq Stock Market
National Market) ending on the third trading day preceding the
Closing Date. Following consummation of the Merger, no holder
of Eagle Common Stock shall be entitled to dividends or any
other rights in respect of any such fraction.
1.5 WEBSTER COMMON STOCK.
Each share of Webster Common Stock issued and out-
standing immediately prior to the Effective Time shall be un-
changed and shall remain issued and outstanding as common stock
of the Surviving Corporation.
1.6 OPTIONS.
At the Effective Time, each option granted by Eagle
to purchase shares of Eagle Common Stock which is outstanding
and unexercised immediately prior thereto shall be converted
automatically into an option to purchase shares of Webster Com-
mon Stock in an amount and at an exercise price determined as
provided below (and otherwise subject to the terms of the Eagle
Financial Corp. Stock Option Plan (the "Eagle Stock Plan"), the
BFS Bancorp, Inc. Stock Option Plan (the "BFS Plan") or the
Eagle Financial Corp. 1988 Stock Option Plan (the "1988 Plan")
(the Eagle Stock Plan, the BFS Plan and the 1988 Plan collec-
tively the "Eagle Stock Plans"), in each case, under which such
option was granted):
(1) The number of shares of Webster Common
Stock to be subject to the option immediately after the Effec-
tive Time shall be equal to the product of the number of shares
of Eagle Common Stock subject to the option immediately before
the Effective Time, multiplied by the Exchange Ratio, provided
that any fractional shares of Webster Common Stock resulting
from such multiplication shall be rounded down to the nearest
share; and
(2) The exercise price per share of Web-
ster Common Stock under the option immediately after the Effec-
tive Time shall be equal to the exercise price per share of
Eagle Common Stock under the option immediately before the Ef-
fective Time divided by the Exchange Ratio, provided that such
exercise price shall be rounded to the nearest cent.
The adjustment provided herein shall be and is intended to be
effected in a manner which is consistent with Section 424(a) of
the Internal Revenue Code of 1986, as amended (the "Code").
The duration and other terms of the option immediately after
the Effective Time shall be the same as the corresponding terms
in effect immediately before the Effective Time, except that
all references to Eagle or Eagle Bank in the Eagle Stock Plans
(and the corresponding references in the option agreement docu-
menting such option) shall be deemed to be references to Web-
ster.
1.7 CERTIFICATE OF INCORPORATION.
At the Effective Time, the Certificate of Incorpora-
tion of Webster, as in effect at the Effective Time, shall be
the Certificate of Incorporation of the Surviving Corporation.
1.8 BY-LAWS.
At the Effective Time, the By-Laws of Webster, as in
effect immediately prior to the Effective Time, shall be the
By-Laws of the Surviving Corporation.
1.9 DIRECTORS AND OFFICERS.
At the Effective Time, the directors and officers of
Webster immediately prior to the Effective Time shall continue
to be directors and officers of the Surviving Corporation.
Three directors of Eagle, to be selected by the Board of Direc-
tors of Webster in consultation with Eagle, shall be invited to
serve as additional members (the "New Members") of the Board of
Directors of Webster. The New Members will receive directors
fees on the same basis as other non-employee directors of Web-
ster. In addition, the other non-employee directors of Eagle
serving immediately prior to the Effective Time will be invited
to serve on an advisory board to Webster after the Bank Merger
for a period not less than 24 months following the Effective
Time. Such advisory directors will each be paid a retainer of
$3,250 per quarter and a meeting fee of $1,750 per meeting for
such service, such advisory board to meet not less frequently
than 4 times per year.
1.10 TAX CONSEQUENCES.
It is intended that the Merger, either alone or in
conjunction with the Bank Merger, shall constitute a reorgani-
zation within the meaning of Section 368(a) of the Code, and
that this Agreement shall constitute a "plan of reorganization"
for the purposes of the Code.
1.11 ACCOUNTING TREATMENT.
It is intended that the Merger shall be accounted for
as a "pooling of interests" under generally accepted accounting
principles ("GAAP").
ARTICLE II
EXCHANGE OF SHARES
2.1 WEBSTER TO MAKE SHARES AVAILABLE.
At or prior to the Effective Time, Webster shall de-
posit, or shall cause to be deposited, with Webster's transfer
agent, American Stock Transfer & Trust Company, or such other
bank, trust company or transfer agent as Webster may select
(the "Exchange Agent"), for the benefit of the holders of Cer-
tificates, for exchange in accordance with this Article II,
certificates representing the shares of Webster Common Stock
and the cash in lieu of fractional shares (such cash and cer-
tificates for shares of Webster Common Stock, being hereinafter
referred to as the "Exchange Fund") to be issued pursuant to
Section 1.4 and paid pursuant to Section 2.2(a) hereof in ex-
change for outstanding shares of Eagle Common Stock.
2.2 EXCHANGE OF SHARES.
(a) As soon as practicable after the Effective
Time, the Exchange Agent shall mail to each holder of record of
a Certificate or Certificates a form letter of transmittal
(which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent) and in-
structions for use in effecting the surrender of the Certifi-
cates in exchange for certificates representing the shares of
Webster Common Stock and the cash in lieu of fractional shares
into which the shares of Eagle Common Stock represented by such
Certificate or Certificates shall have been converted pursuant
to this Agreement. Eagle shall have the right to review both
the letter of transmittal and the instructions prior to such
documents being finalized. Upon surrender of a Certificate for
exchange and cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor
(x) a certificate representing that number of whole shares of
Webster Common Stock to which such holder of Eagle Common Stock
shall have become entitled pursuant to the provisions of Ar-
ticle I hereof and (y) a check representing the amount of cash
in lieu of fractional shares, if any, which such holder has the
right to receive in respect of the Certificate surrendered pur-
suant to the provisions of this Article II, and the Certificate
so surrendered shall forthwith be canceled. No interest will
be paid or accrued on the cash in lieu of fractional shares and
unpaid dividends and distributions, if any, payable to holders
of Certificates.
(b) No dividends or other distributions de-
clared after the Effective Time with respect to Webster Common
Stock and payable to the holders of record thereof shall be
paid to the holder of any unsurrendered Certificate until the
holder thereof shall surrender such Certificate in accordance
with this Article II. After the surrender of a Certificate in
accordance with this Article II, the record holder thereof
shall be entitled to receive any such dividends or other dis-
tributions, without any interest thereon, which theretofore
had become payable with respect to shares of Webster Common
Stock represented by such Certificate. No holder of an unsur-
rendered Certificate shall be entitled, until the surrender of
such Certificate, to vote the shares of Webster Common Stock
into which his Eagle Common Stock shall have been converted.
2.3 If any certificate representing shares of
Webster Common Stock is to be issued in a name other than that
in which the Certificate surrendered in exchange therefor is
registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed
(or accompanied by an appropriate instrument of transfer) and
otherwise in proper form for transfer, and that the person re-
questing such exchange shall pay to the Exchange Agent in ad-
vance any transfer or other taxes required by reason of the
issuance of a certificate representing shares of Webster Common
Stock in any name other than that of the registered holder of
the Certificate surrendered, or shall establish to the satis-
faction of the Exchange Agent that such tax has been paid or is
not payable.
(a) After the close of business on the day im-
mediately prior to the Effective Time, there shall be no trans-
fers on the stock transfer books of Eagle of the shares of
Eagle Common Stock which were issued and outstanding immediate-
ly prior to the Effective Time. If, after the Effective Time,
Certificates representing such shares are presented for trans-
fer to the Exchange Agent, they shall be canceled and ex-
changed for certificates representing shares of Webster Common
Stock as provided in this Article II.
(b) Any portion of the Exchange Fund that re-
mains unclaimed by the stockholders of Eagle for six months
after the Effective Time shall be returned to Webster. Any
stockholders of Eagle who have not theretofore complied with
this Article II shall thereafter look only to Webster for pay-
ment of their shares of Webster Common Stock, cash in lieu of
fractional shares and unpaid dividends and distributions on
Webster Common Stock deliverable in respect of each share of
Eagle Common Stock such stockholder holds as determined pursu-
ant to this Agreement, in each case, without any interest
thereon. Notwithstanding the foregoing, none of Webster,
Eagle, the Exchange Agent or any other person shall be liable
to any former holder of shares of Eagle Common Stock for any
amount properly delivered to a public official pursuant to ap-
plicable abandoned property, escheat or similar laws.
(c) In the event any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming such Certificate to be
lost, stolen or destroyed and, if required by Webster, the
posting by such person of a bond in such amount as Webster may
reasonably direct as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange
Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Webster Common Stock and cash in lieu
of fractional shares deliverable in respect thereof pursuant to
this Agreement.
ARTICLE II-A
DISCLOSURE SCHEDULE; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
2A.1 Disclosure Schedule. Prior to the execu-
tion and delivery hereof, Eagle has delivered to Webster a
schedule (the "Eagle Disclosure Schedule") setting forth, among
other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure re-
quirements contained in a provision hereof or as an exception
to one or more of such party's representations or warranties
contained in Article III or to one or more of its covenants
contained in Article V; provided, however, that (a) subject to
Section 3.18, no such item is required to be set forth by ei-
ther party hereto in a Disclosure Schedule as an exception to a
representation or warranty if its absence would not result in
the related representation or warranty being deemed untrue or
incorrect under the standard established by Section 2A.2, and
(b) the mere inclusion of an item in a Disclosure Schedule as
an exception to a representation or warranty shall not be
deemed an admission by a party that such item represents a ma-
terial exception or fact, event or circumstance or that such
item has had or would have a Material Adverse Effect (as de-
fined in Section 9.13) with respect to such party.
2A.2 Standards. No representation or warranty of
Eagle contained in Article III or of Webster contained in Ar-
ticle IV shall be deemed untrue or incorrect for any purpose
under this Agreement, and no party hereto shall be deemed to
have breached a representation or warranty for any purpose un-
der this Agreement, as a consequence of the existence or ab-
sence of any fact, circumstance or event unless such fact, cir-
cumstance or event, individually or when taken together with
all other facts, circumstances or events inconsistent with any
representations or warranties contained in Article III, in the
case of Eagle, or Article IV, in the case of Webster, has had
or would be reasonably certain to have a Material Adverse Ef-
fect with respect to Eagle or Webster, respectively.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EAGLE
Eagle hereby makes the following representations and
warranties to Webster as set forth in this Article III, each of
which is being relied upon by Webster as a material inducement
to it to enter into and perform this Agreement.
3.1 CORPORATE ORGANIZATION.
(a) Eagle is a corporation duly organized, val-
idly existing and in good standing under the laws of the State
of Delaware. Eagle has the corporate power and authority to
own or lease all of its properties and assets and to carry on
its business as it is now being conducted, and is duly licensed
or qualified to do business in each jurisdiction in which the
nature of any material business conducted by it or the charac-
ter or location of any material properties or assets owned or
leased by it makes such licensing or qualification necessary.
Eagle is duly registered as a savings and loan holding company
with the Office of Thrift Supervision (the "OTS") under the
Home Owners' Loan Act of 1933 (the "HOLA"). The Restated Cer-
tificate of Incorporation and By-Laws of Eagle, copies of which
have previously been delivered to Webster, are true, correct
and complete copies of such documents as in effect as of the
date of this Agreement.
(b) Eagle Bank is a federally chartered savings
bank duly organized, validly existing and in good standing un-
der the laws of the United States. The deposit accounts of
Eagle Bank are insured by the Federal Deposit Insurance Cor-
poration (the "FDIC") through the Savings Association Insurance
Fund (the "SAIF") to the fullest extent permitted by law, and
all premiums and assessments required in connection therewith
have been paid by Eagle Bank. Eagle Bank is the only subsid-
iary of Eagle that is a "Significant Subsidiary" as such term
is defined in Regulation S-X promulgated by the Securities and
Exchange Commission (the "SEC"). Eagle Bank has the corporate
or other power and authority to own or lease all of its proper-
ties and assets and to carry on its business as it is now being
conducted and is duly licensed or qualified to do business in
each jurisdiction in which the nature of any material business
conducted by it or the character or the location of any mate-
rial properties or assets owned or leased by it makes such li-
censing or qualification necessary. The Certificate of Incor-
poration and By-Laws of Eagle Bank, copies of which have previ-
ously been delivered to Webster, are true, correct and complete
copies of such documents as in effect as of the date of this
Agreement.
3.2 CAPITALIZATION.
(a) The authorized capital stock of Eagle con-
sists of 8,000,000 shares of Eagle Common Stock and 2,000,000
shares of serial preferred stock, par value $.01 per share (the
"Eagle Preferred Stock"). As of the date hereof, there are (x)
6,316,537 shares of Eagle Common Stock issued and outstanding
and an additional 47,373 shares of Eagle Common Stock held in
Eagle's treasury, (y) no shares of Eagle Common Stock reserved
for issuance upon exercise of outstanding stock options or oth-
erwise, except for (i) 580,491 shares of Eagle Common Stock re-
served for issuance pursuant to the Eagle Stock Plans (of which
options for 518,688 shares are currently outstanding), (ii)
180,687 shares of Eagle Common Stock reserved for issuance pur-
suant to the Eagle DRIP (as defined herein) and (iii) 1,256,991
shares of Eagle Common Stock reserved for issuance upon exer-
cise of the option to be issued to Webster pursuant to the Op-
tion Agreement, and (z) no shares of Eagle Preferred Stock is-
sued or outstanding, held in Eagle's treasury or reserved for
issuance upon exercise of outstanding stock options or oth-
erwise, except for 8,000 shares of Series A Participating Pre-
ferred Stock, par value $.01 per share, of Eagle reserved for
issuance upon exercise of the Eagle Rights. All of the issued
and outstanding shares of Eagle Common Stock have been duly
authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability at-
taching to the ownership thereof. Except for the Option Agree-
ment and the Eagle Stock Plans, Eagle does not have and is not
bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of Eagle Common Stock or
Eagle Preferred Stock or any other equity security of Eagle or
any securities representing the right to purchase or otherwise
receive any shares of Eagle Common Stock or any other equity
security of Eagle. The names of the optionees, the date of
each option to purchase Eagle Common Stock granted, the number
of shares subject to each such option and the price at which
each such option may be exercised under the Eagle Stock Plans
are set forth in Section 3.2(a) of the Eagle Disclosure Sched-
ule, and no such option expires more than 10 years from the
date of the grant thereof. Since September 30, 1997 Eagle has
not issued any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital
stock, other than pursuant to the exercise of director or em-
ployee stock options granted prior to September 30, 1997, under
the Eagle Stock Plans and pursuant to the Eagle Financial Corp.
Dividend Reinvestment Plan and Stock Purchase Plan (the "Eagle
DRIP").
(b) Section 3.2(b) of the Eagle Disclosure
Schedule sets forth a true, correct and complete list of all
Subsidiaries of Eagle as of the date of this Agreement. Eagle
owns, directly or indirectly, all of the issued and outstanding
shares of capital stock of each of its Subsidiaries, free and
clear of all liens, charges, encumbrances and security inter-
ests whatsoever, and all of such shares are duly authorized and
validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the
ownership thereof. No Eagle Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, commit-
ments or agreements of any character calling for the purchase
or issuance of any shares of capital stock or any other equity
security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Subsidiary.
3.3 AUTHORITY; NO VIOLATION.
(a) Eagle has full corporate power and author-
ity to execute and deliver this Agreement and the Option Agree-
ment and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the
Option Agreement and the consummation of the transactions con-
templated hereby and thereby have been duly and validly ap-
proved by the Board of Directors of Eagle. The Board of Direc-
tors of Eagle has directed that this Agreement and the transac-
tions contemplated hereby be submitted to Eagle's stockholders
for approval at a special meeting of such stockholders and,
except for the adoption of this Agreement by the requisite vote
of Eagle's stockholders and the requisite approval, if any, of
Eagle stockholders in connection with the Option Agreement pur-
suant to the Eagle Restated Certificate of Incorporation, no
other corporate proceedings on the part of Eagle (except for
matters related to setting the date, time, place and record
date for the special meeting) are necessary to approve this
Agreement or the Option Agreement or to consummate the transac-
tions contemplated hereby or thereby. This Agreement has been,
and the Option Agreement will be, duly and validly executed and
delivered by Eagle and (assuming due authorization, execution
and delivery by Webster of this Agreement and of the Option
Agreement) this Agreement constitutes, and the Option Agreement
will constitute, a valid and binding obligation of Eagle, en-
forceable against Eagle in accordance with its terms, except as
enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by
bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally.
(b) Eagle Bank has full corporate or other
power and authority to execute and deliver the Bank Merger
Agreement and to consummate the transactions contemplated
thereby. The execution and delivery of the Bank Merger Agree-
ment and the consummation of the transactions contemplated
thereby will be duly and validly approved by the Board of Di-
rectors of Eagle Bank, and by Eagle as the sole stockholder of
Eagle Bank prior to the Effective Time. All corporate pro-
ceedings on the part of Eagle Bank necessary to consummate the
transactions contemplated thereby will have been taken prior to
the Effective Time. The Bank Merger Agreement, upon execution
and delivery by Eagle Bank, will be duly and validly executed
and delivered by Eagle Bank and will (assuming due authori-
zation, execution and delivery by Webster Bank) constitute a
valid and binding obligation of Eagle Bank, enforceable against
Eagle Bank in accordance with its terms, except as enforcement
may be limited by general principles of equity whether applied
in a court of law or a court of equity and by bankruptcy, in-
solvency and similar laws affecting creditors' rights and rem-
edies generally.
(c) Neither the execution and delivery of this
Agreement and the Option Agreement by Eagle or the Bank Merger
Agreement by Eagle Bank, nor the consummation by Eagle or Eagle
Bank, as the case may be, of the transactions contemplated
hereby or thereby, nor compliance by Eagle or Eagle Bank with
any of the terms or provisions hereof or thereof, will (i) vio-
late any provision of the Restated Certificate of Incorporation
or By-Laws of Eagle or the Certificate of Incorporation or By-
Laws of Eagle Bank, or (ii) assuming that the consents and ap-
provals referred to in Section 3.4 hereof are duly obtained,
(x) violate any Laws (as defined in Section 9.13) applicable to
Eagle or Eagle Bank, or any of their respective properties or
assets, or (y) violate, conflict with, result in a breach of
any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termina-
tion of or a right of termination or cancellation under, accel-
erate the performance required by, or result in the creation of
any lien, pledge, security interest, charge or other encum-
brance upon any of the respective properties or assets of Eagle
or Eagle Bank under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which
Eagle or Eagle Bank is a party, or by which they or any of
their respective properties or assets may be bound or affected.
3.4 CONSENTS AND APPROVALS.
(a) Except for (i) the filing of applications
and notices, as applicable, as to the Merger and the Bank
Merger with the OTS under the HOLA and the Bank Merger Act and
approval of such applications and notices, (ii) the filing with
the SEC of a registration statement on Form S-4 to register the
shares of Webster Common Stock to be issued in connection with
the Merger (including the shares of Webster Common Stock that
may be issued upon the exercise of the options referred to in
Section 1.6 hereof), which will include the joint proxy
statement/prospectus (the "Joint Proxy Statement/Prospectus")
to be used in soliciting the requisite approvals of Webster
stockholders and Eagle stockholders at special meetings of such
stockholders (the "Eagle Meeting" and the "Webster Meeting,"
respectively) to be held in connection with this Agreement and
the transactions contemplated hereby, (iii) the approval of
this Agreement by the requisite vote of the stockholders of
Eagle and the requisite approval, if any, of Eagle stockholders
in connection with the Option Agreement pursuant to the Eagle
Restated Certificate of Incorporation, (iv) the approval of
this Agreement by the requisite vote of the stockholders of
Webster, (v) the filing of the Certificate of Merger with the
Secretary of State of Delaware pursuant to the DGCL and (vi)
the filings required in connection with the Bank Merger Agree-
ment and the Bank Merger, no consents or approvals of or fil-
ings or registrations with any court, administrative agency or
commission or other governmental authority or instrumentality
(each a "Governmental Entity"), or with any third party are
necessary in connection with (1) the execution and delivery by
Eagle of this Agreement and the Option Agreement, (2) the con-
summation by Eagle of the Merger and the other transactions
contemplated hereby, (3) the execution and delivery by Eagle
Bank of the Bank Merger Agreement, (4) the consummation by
Eagle of transactions contemplated by the Option Agreement; and
(5) the performance by Eagle Bank of the Bank Merger Agreement
and the transactions contemplated thereby, except, in each
case, for such consents, approvals or filings, the failure of
which to obtain will not have a material adverse effect on the
ability of Webster to consummate the transactions contemplated
hereby.
(b) Eagle hereby represents to Webster that, as
of the date of this Agreement, it has no knowledge of any rea-
son why approval or effectiveness of any of the applications,
notices or filings referred to in Section 3.4(a) cannot be ob-
tained or granted on a timely basis.
3.5 LOAN PORTFOLIO; REPORTS.
(a) Except as disclosed on Schedule 3.5(a),
neither Eagle nor Eagle Bank is a party to any written or oral
loan agreement, note or borrowing arrangement (including, with-
out limitation, leases, credit enhancements, commitments,
guarantees and interest-bearing assets) (collectively,
"Loans"), with any director, officer or five percent or greater
stockholder of Eagle or any of its Subsidiaries, or any Affili-
ated Person (as defined in Section 9.13) of the foregoing.
Within 10 business days after the date hereof, Eagle shall pro-
vide to Webster a list of each employee of Eagle or its Subsid-
iaries with which Eagle or Eagle Bank is a party to any Loan.
(b) Eagle and Eagle Bank have timely filed all
reports, registrations and statements, together with any amend-
ments required to be made with respect thereto, that they were
required to file since December 31, 1995 with (i) the OTS, (ii)
the FDIC, (iii) the SEC and (iv) any self-regulatory organiza-
tion ("SRO") (collectively "Regulatory Agencies"). As of its
respective date, each such report, registration, statement and
amendment complied in all material respects with all rules and
regulations promulgated by the applicable Regulatory Agency and
did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or nec-
essary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, exce-
pt that information as of a later date shall be deemed to modi-
fy information as of an earlier date. Except for normal exami-
nations conducted by a Regulatory Agency in the regular course
of the business of Eagle and its Subsidiaries, no Governmental
Entity is conducting, or has conducted, any proceeding or in-
vestigation into the business or operations of Eagle or Eagle
Bank since December 31, 1995.
3.6 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS;
BOOKS AND RECORDS.
Eagle has previously delivered to Webster true, cor-
rect and complete copies of (i) the audited consolidated bal-
ance sheets of Eagle and its Subsidiaries as of September 30
for the fiscal years 1995 and 1996 and the related audited con-
solidated statements of income, shareholders' equity and cash
flows for the fiscal years 1994 through 1996, inclusive, as
reported in Eagle's Annual Report on Form 10-K for the fiscal
year ended September 30, 1996 filed with the SEC under the Se-
curities Exchange Act of 1934, as amended (the "Exchange Act"),
in each case accompanied by the audit report of KPMG Peat Mar-
wick LLP, independent public accountants with respect to Eagle,
(ii) in draft form, the consolidated balance sheet of Eagle and
its Subsidiaries as of September 30, 1997 and the related con-
solidated statements of income, shareholders' equity and cash
flows for the fiscal year ended September 30, 1997 in the form
Eagle expects to file under the Exchange Act in connection with
its Form 10-K for the fiscal year ended September 30, 1997 and
(iii) the unaudited consolidated balance sheets of Eagle and
its Subsidiaries as of June 30, 1997 and 1996 and the related
unaudited consolidated statements of income, shareholders' eq-
uity and cash flows for the interim periods ended June 30, 1997
and 1996, as reported on Eagle's Quarterly Report on Form 10-Q
for the period ended June 30, 1997 filed with the SEC under the
Exchange Act. The financial statements referred to in this
Section 3.6 (including the related notes, where applicable)
fairly present, and the financial statements referred to in
Section 6.8 hereof will fairly present (subject, in the case of
the unaudited and draft statements, to recurring audit adjust-
ments normal in nature and amount), the results of the consoli-
dated operations and consolidated financial condition of Eagle
and its Subsidiaries for the respective fiscal periods or as of
the respective dates therein set forth; each of such statements
(including the related notes, where applicable) comply, and the
financial statements referred to in Section 6.8 hereof will
comply, with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto
and each of such statements (including the related notes, where
applicable) has been, and the financial statements referred to
in Section 6.8 hereof will be prepared in accordance with GAAP
consistently applied during the periods involved, except in
each case as indicated in such statements or in the notes
thereto or, in the case of unaudited statements, as permitted
by Form 10-Q or, in the case of draft statements, subject to
revisions that in the aggregate will not be material. Eagle's
Annual Report on Form 10-K for the fiscal year ended September
30, 1996 and all reports subsequently filed under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act (the "Eagle Ex-
change Act Reports") comply in all material respects with the
appropriate requirements for such reports under the Exchange
Act, and Eagle has previously delivered or made available to
Webster true, correct and complete copies of such reports. The
books and records of Eagle and Eagle Bank have been, and are
being, maintained in all material respects in accordance with
GAAP and any other applicable legal and accounting require-
ments.
3.7 BROKER'S FEES.
Neither Eagle nor any Eagle Subsidiary nor any of
their respective officers or directors has employed any broker
or finder or incurred any liability for any broker's fees, com-
missions or finder's fees in connection with any of the trans-
actions contemplated by this Agreement, the Bank Merger Agree-
ment or the Option Agreement, except that Eagle has engaged,
and will pay a fee or commission to Sandler O'Neill & Partners,
L.P. ("Sandler O'Neill") in accordance with the terms of a let-
ter agreement between Sandler O'Neill and Eagle, dated October
20, 1997, a true, complete and correct copy of which has been
previously delivered by Eagle to Webster.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in any Eagle Exchange
Act Report filed with the SEC prior to the date of this Agree-
ment, since September 30, 1996 (i) neither Eagle nor any of its
Subsidiaries has incurred any material liability, except as
contemplated by this Agreement or in the ordinary course of
their business, (ii) neither Eagle nor any of its Subsidiaries
has discharged or satisfied any material lien or paid any mate-
rial obligation or liability (absolute or contingent), other
than in the ordinary course of business; (iii) neither Eagle
nor any of its Subsidiaries has sold, assigned, transferred,
leased, exchanged or otherwise disposed of any of its material
properties or assets other than in the ordinary course of busi-
ness; (iv) neither Eagle nor any of its Subsidiaries has suf-
fered any material damage, destruction, or loss, whether as a
result of fire, explosion, earthquake, accident, casualty, la-
bor trouble, requisition or taking of property by any Regula-
tory Authority, flood, windstorm, embargo, riot, act of God or
other casualty or event, whether or not covered by insurance;
(v) neither Eagle nor any of its Subsidiaries has cancelled or
compromised any debt, except for debts charged off or compro-
mised in accordance with the past practice of Eagle or such
Subsidiary, as the case may be, and (vi) no event has occurred
which has had or is reasonably certain to have, individually or
in the aggregate, a Material Adverse Effect on Eagle.
(b) Since September 30, 1996, Eagle and its
Subsidiaries have carried on their respective businesses in the
ordinary and usual course consistent with their past practices.
3.9 LEGAL PROCEEDINGS.
(a) Neither Eagle nor any of its Subsidiaries
is a party to any, and there are no pending or threatened, le-
gal, administrative, arbitration or other proceedings, claims,
actions or governmental or regulatory investigations of any
nature against Eagle or any of its Subsidiaries in which there
is a reasonable probability of any material recovery against or
other material adverse effect upon Eagle or any of its Subsid-
iaries or which challenge the validity or propriety of the
transactions contemplated by this Agreement, the Bank Merger
Agreement or the Option Agreement as to which there is a rea-
sonable probability of success.
(b) There is no injunction, order, judgment or
decree imposed upon Eagle, any of its Subsidiaries or the as-
sets of Eagle or any of its Subsidiaries.
3.10 TAXES AND TAX RETURNS.
(a) Each of Eagle and its Subsidiaries has duly
filed all material Federal, state, local and foreign Tax Re-
turns required to be filed by it on or prior to the date hereof
(all such returns being accurate and complete in all material
respects) and has duly paid or made provisions for the payment
of all material Taxes which have been incurred or are due or
claimed to be due from it by Federal, state, local and foreign
taxing authorities on or prior to the date hereof. All li-
ability with respect to the income tax returns of Eagle and its
Subsidiaries has been satisfied for all years to and including
1996. The Internal Revenue Service ("IRS") has not notified
Eagle of, or otherwise asserted, that there are any material
deficiencies with respect to the income tax returns of Eagle.
There are no material disputes pending, or claims asserted for,
Taxes or assessments upon Eagle or any of its Subsidiaries, nor
has Eagle or any of its Subsidiaries been requested to give any
waivers extending the statutory period of limitation applicable
to any Federal, state or local income tax return for any period.
For the purposes of this Agreement, "Taxes"
shall mean all taxes, charges, fees, levies, penalties or other
assessments imposed by any United States federal, state, local
or foreign taxing authority, including, but not limited to in-
come, excise, property, sales, transfer, franchise, payroll,
withholding, social security or other taxes, including any in-
terest, penalties or additions attributable thereto.
For purposes of this Agreement, "Tax Return"
shall mean any return, report, information return or other
document (including any related or supporting information) with
respect to Taxes.
(b) Eagle Funding Corp. (i) will be, for the
taxable year ended December 31, 1997 and at the Effective Time,
a "real estate investment trust" as defined in Section 856(a)
of the Code, (ii) will meet, for the taxable year ended Decem-
ber 31, 1997 and at the Effective Time, the requirements of
Section 857(a) of the Code, (iii) will not be, for the taxable
year ended December 31, 1997 or at the Effective Time, de-
scribed in Section 856(c)(7) of the Code, (iv) has not had, and
at the Effective Time will not have had, any "net income de-
rived from prohibited transactions" within the meaning of Sec-
tion 857(b)(6) of the Code, (v) has not, and at the Effective
Time will not have, issued any stock or securities as part of a
multiple party financing transaction described in Internal Rev-
enue Service Notice 97-21, 1997-11 I.R.B. 2, and (vi) will be,
for the taxable year ended December 31, 1997 and at the Effec-
tive Time, a "Qualified Real Estate Investment Trust" of which
Eagle Bank will be for the taxable year ended December 31, 1997
and at the Effective Time, a "Qualified Dividend Recipient" (as
those terms are defined in Connecticut Public Act 97-119, 1997
Ct. ALS 119, 1997 Ct. P.A. 119, 1997 Ct. SB 1205). As of De-
cember 31, 1997, persons (not including Eagle Bank or any per-
son that is a "related person," employee or director of Eagle
Bank) will have outstanding cash capital contributions to Eagle
Funding Corp. that, in the aggregate, exceed 5 percent of the
fair market value of the aggregate "real estate assets," valued
as of December 31, 1997, then held by Eagle Funding Corp. (as
such terms are used in Connecticut Public Act 97-119, 1997 Ct.
ALS 119, 1997 Ct. P.A. 119, 1997 Ct. SB 1205).
3.11 EMPLOYEE PLANS.
(a) Section 3.11(a) of the Eagle Disclosure
Schedule sets forth a true and complete list of each employee
benefit plan (within the meaning of Section 3(3) of the Em-
ployee Retirement Income Security Act of 1974, as amended
("ERISA")), arrangement or agreement that is maintained or
contributed to as of the date of this Agreement, or that has
within the last six years been maintained or contributed to, by
Eagle or any of its Subsidiaries or any other entity which to-
gether with Eagle would be deemed a "single employer" within
the meaning of Section 4001 of ERISA or Code Sections 414(b),
(c), (m) or (o) (an "ERISA Affiliate") or under which Eagle or
any Subsidiary or ERISA Affiliate has any liability (collec-
tively, the "Plans").
(b) Eagle has heretofore made available to Web-
ster true, correct and complete copies of each of the Plans and
all related documents, including but not limited to (i) the
actuarial report for such Plan (if applicable) for the last
year, (ii) the most recent determination letter from the Inter-
nal Revenue Service (if applicable) for such Plan, (iii) the
current summary plan description and any summaries of material
modification, (iv) all annual reports (Form 5500 series) for
each Plan filed for the preceding plan year, (v) all agreements
with fiduciaries and service providers relating to the Plan,
and (vi) all substantive correspondence relating to any such
Plan addressed to or received from the Internal Revenue Ser-
vice, the Department of Labor, the Pension Benefit Guaranty
Corporation or any other governmental agency.
(c) Except as set forth at Section 3.11(c) of
the Eagle Disclosure Schedule, (i) each of the Plans has been
operated and administered in all material respects in compli-
ance with applicable Laws, including but not limited to ERISA
and the Code, (ii) each of the Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code is so quali-
fied, (iii) with respect to each Plan which is subject to Title
IV of ERISA, the present value of accrued benefits under such
Plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such
Plan's actuary with respect to such Plan, did not, as of its
latest valuation date, exceed the then current value of the
assets of such Plan allocable to such accrued benefits, and
there has not been a material adverse change in the financial
condition of such Plans, (iv) no Plan provides benefits, in-
cluding, without limitation, death or medical benefits (whether
or not insured), with respect to current or former employees of
Eagle or any Eagle Subsidiary beyond their retirement or other
termination of service, other than (w) coverage mandated by ap-
plicable Law, (x) death benefits or retirement benefits under a
Plan that is an "employee pension plan," as that term is de-
fined in Section 3(2) of ERISA, (y) deferred compensation ben-
efits under a Plan that are accrued as liabilities on the books
of Eagle or any Eagle Subsidiary, or (z) benefits the full cost
of which is borne by the current or former employee (or his
beneficiary), (v) Eagle and its Subsidiaries have reserved the
right to amend, terminate and modify any Plan providing post-
retirement death or medical benefits, (vi) no material li-
ability under Title IV of ERISA has been incurred by Eagle, any
Eagle Subsidiary or any ERISA Affiliate that has not been sat-
isfied in full, and no condition exists that presents a mate-
rial risk to Eagle or any Eagle Subsidiary incurring a material
liability thereunder, (vii) none of Eagle, its Subsidiaries or
any ERISA Affiliate has incurred, and Eagle does not expect
that any such entity will incur, any withdrawal liability with
respect to a "multiemployer pension plan" (as such term is de-
fined in Section 3(37) of ERISA) under Title IV of ERISA, or
any material liability in connection with the termination or
reorganization of a multiemployer pension plan, (viii) all con-
tributions or other amounts payable by Eagle or any Eagle Sub-
sidiary as of the Effective Time with respect to each Plan and
all other liabilities of each such entity with respect to each
Plan in respect of current or prior plan years have been paid
or accrued in accordance with generally accepted accounting
practices and Section 412 of the Code, (ix) neither Eagle nor
any Eagle Subsidiary has engaged in a transaction in connection
with which Eagle or any Eagle Subsidiary is subject to either a
material civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or a material tax imposed pursuant to Section
4975 or 4976 of the Code, (x) to the knowledge of Eagle, there
are no pending, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any of
the Plans or any trusts related thereto, (xi) no Plan, program,
agreement or other arrangement, either individually or collec-
tively, provides for any payment by Eagle or any Eagle Subsid-
iary that would not be deductible under Code Sections
162(a)(1), 162(m) or 404 or that would constitute a "parachute
payment" within the meaning of Code Section 280G, nor is there
outstanding under any such Plan, program, agreement or arrange-
ment, any limited stock appreciation right or any similar right
or instrument that could reasonably be expected to prevent the
Merger from being accounted for as a pooling-of-interests,
(xii) no "accumulated funding deficiency," as defined in Sec-
tion 302(a)(2) of ERISA or Section 412 of the Code, whether or
not waived, and no "unfunded current liability," as determined
under Section 412(l) of the Code, exists with respect to any
Plan, and (xiii) no Plan has experienced a "reportable event"
(as such term is defined in Section 4043(c) of ERISA) that is
not subject to an administrative or statutory waiver from the
reporting requirement.
3.12 CERTAIN CONTRACTS.
(a) Except as set forth at Section 3.12 of the
Eagle Disclosure Schedule, neither Eagle nor any of its Subsid-
iaries is a party to or bound by any contract, arrangement or
commitment (i) with respect to the employment of any directors,
officers, employees or consultants, (ii) which, upon the con-
summation of the transactions contemplated by this Agreement or
the Bank Merger Agreement will (either alone or upon the occur-
rence of any additional acts or events) result in any payment
(whether of severance pay or otherwise) becoming due from Web-
ster, Eagle, Eagle Bank, Webster Bank or any of their respec-
tive Subsidiaries to any director, officer or employee thereof,
(iii) which materially restricts the conduct of any line of
business by Eagle or Eagle Bank or of any current or future
affiliates thereof, (iv) with or to a labor union or guild (in-
cluding any collective bargaining agreement), (v) (including
any stock option plan, stock appreciation rights plan, re-
stricted stock plan or stock purchase plan) any of the benefits
of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the Bank Merger
Agreement, or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated
by this Agreement or the Bank Merger Agreement, (vi) that is
material and is not made in the ordinary course of business or
pursuant to which Eagle or any of its Subsidiaries is or may
become obligated to invest in or contribute capital to any
Eagle Subsidiaries, (vii) not fully disclosed in the financial
statements contemplated by Section 3.6 that relates to borrow-
ings of money (or guarantees thereof by Eagle, or any Eagle
Subsidiary), other than in the ordinary course of business, or
(viii) is a lease or similar arrangement with annual rental
payments of $100,000 or more. Eagle has previously delivered
or made available to Webster true, correct and complete copies
of all employment, consulting and deferred compensation agree-
ments to which Eagle or any of its Subsidiaries is a party.
Section 3.12(a) of the Eagle Disclosure Schedule sets forth a
list of all material contracts (as defined in Item 601(b)(10)
of Regulation S-K) of Eagle. Each contract, arrangement or
commitment of the type described in this Section 3.12(a),
whether or not set forth in Section 3.12(a) of the Eagle Dis-
closure Schedule, is referred to herein as a "Eagle Contract,"
and neither Eagle nor any of its Subsidiaries has received no-
tice of, nor do any executive officers of such entities know
of, any violation or imminent violation of any Eagle Contract
by any other party thereto.
(b) (i) Each Eagle Contract is valid and bind-
ing and in full force and effect, (ii) Eagle and each of its
Subsidiaries has in all material respects performed all obliga-
tions required to be performed by it to date under each Eagle
Contract, and (iii) no event or condition exists which consti-
tutes or, after notice or lapse of time or both, would consti-
tute, a material default on the part of Eagle or any of its
Subsidiaries under any such Eagle Contract.
3.13 AGREEMENTS WITH REGULATORY AGENCIES.
Neither Eagle nor Eagle Bank is subject to any cease-
and-desist or other order issued by, or is a party to any writ-
ten agreement, consent agreement or memorandum of understanding
with, or is a party to any commitment letter or similar under-
taking to, or is subject to any order or directive by, or has
been a recipient of any extraordinary supervisory letter from,
or has adopted any board resolutions at the request of (each,
whether or not set forth on Section 3.13 of the Eagle Disclo-
sure Schedule, a "Regulatory Agreement"), any Governmental En-
tity that restricts the conduct of its business or that in any
manner relates to its capital adequacy, its credit policies,
its management or its business, nor has Eagle or Eagle Bank
been advised by any Governmental Entity that it is considering
issuing or requesting any Regulatory Agreement.
3.14 STATE TAKEOVER LAWS; CERTIFICATE OF
INCORPORATION.
The Board of Directors of Eagle has approved the of-
fer of Webster to enter into this Agreement, the Bank Merger
Agreement and the Option Agreement, and has approved Eagle's
entering into this Agreement, the Bank Merger Agreement and the
Option Agreement, and the transactions contemplated thereby,
such that under the DGCL (including, without limitation, Sec-
tion 203 thereof) and Eagle's Restated Certificate of Incorpo-
ration (including, without limitation, Articles 10, 12, and 13
thereof) the only vote of Eagle stockholders necessary to con-
summate the transactions contemplated hereby (including the
Bank Merger and, subject to any additional vote of Eagle stock-
holders required pursuant to Article 13 of the Eagle Restated
Certificate of Incorporation, the transactions contemplated by
the Option Agreement) is the approval of the holders of at
least a majority of the outstanding Eagle Common Stock entitled
to vote thereon at the Eagle Meeting or any adjournment or
postponement thereof.
3.15 ENVIRONMENTAL MATTERS.
(a) Each of Eagle and the Eagle Subsidiaries is
in compliance in all material respects with all applicable fed-
eral and state laws and regulations relating to pollution or
protection of the environment (including without limitation,
laws and regulations relating to emissions, discharges, re-
leases and threatened releases of Hazardous Material (as here-
inafter defined)), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials;
(b) There is no suit, claim, action, proceed-
ing, investigation or notice pending or to the knowledge of
Eagle's and Eagle Bank's executive officers threatened (or to
the knowledge of Eagle's and Eagle Bank's executive officers
past or present actions or events that could reasonably be ex-
pected to form the basis of any such suit, claim, action, pro-
ceeding, investigation or notice), in which Eagle or any Eagle
Subsidiary has been or, with respect to threatened suits,
claims, actions, proceedings, investigations or notices may be,
named as a defendant (x) for alleged material noncompliance
(including by any predecessor), with any environmental law,
rule or regulation or (y) relating to any material release or
threatened release into the environment of any Hazardous Mate-
rial, whether or not occurring at or on a site owned, leased or
operated (directly or indirectly in a fiduciary capacity) by
Eagle or any Eagle Subsidiary;
(c) To the knowledge of Eagle's and Eagle
Bank's executive officers, there has not been any release of
Hazardous Materials in, on, under or affecting any such prop-
erty;
(d) To the knowledge of Eagle's and Eagle
Bank's executive officers, neither Eagle nor any Eagle Subsid-
iary has made or participated in any loan to any person who is
subject to any suit, claim, action, proceeding, investigation
or notice, pending or threatened, with respect to (i) any al-
leged material noncompliance as to any property securing such
loan with any environmental law, rule or regulation, or (ii)
the release or the threatened release into the environment of
any Hazardous Material at any property securing such loan.
(e) For purposes of this section 3.15, the term
"Hazardous Material" means any hazardous waste, petroleum prod-
uct, polychlorinated biphenyl, chemical, pollutant, contami-
nant, pesticide, radioactive substance, lead paint or other
toxic material, or other material or substance (in each such
case, other than small quantities of such substances in retail
containers) regulated under any applicable environmental or
public health statute, law, ordinance, rule or regulation.
3.16 RESERVES FOR LOSSES.
All reserves or other allowances for possible losses
reflected in Eagle's most recent financial statements referred
to in Section 3.6 complied with all Laws and are adequate under
GAAP. Neither Eagle nor Eagle Bank has been notified by the
OTS, the FDIC, any other regulatory authority or by Eagle's
independent auditor, in writing or otherwise, that such re-
serves are inadequate or that the practices and policies of
Eagle or Eagle Bank in establishing such reserves and in ac-
counting for delinquent and classified assets generally fail to
comply with applicable accounting or regulatory requirements,
or that the OTS, the FDIC, any other regulatory authority or
Eagle's independent auditor believes such reserves to be inad-
equate or inconsistent with the historical loss experience of
Eagle or Eagle Bank. Eagle has previously furnished or made
available to Webster a complete list of all extensions of cred-
it and other real estate owned ("OREO") that have been classi-
fied by any bank examiner (regulatory or internal) as other
loans specially mentioned, special mention, substandard, doubt-
ful, loss, classified or criticized, credit risk assets, con-
cerned loans or words of similar import. All OREO held by Eag-
le or Eagle Bank is being carried net of reserves at the lower
of cost or net realizable value.
3.17 PROPERTIES AND ASSETS.
Section 3.17 of the Eagle Disclosure Schedule lists
as of the date of this Agreement (i) all real property owned by
Eagle and each Eagle Subsidiary; (ii) each real property lease,
sublease or installment purchase arrangement to which Eagle or
any Eagle Subsidiary is a party; (iii) a description of each
contract for the purchase, sale, or development of real estate
to which Eagle or any Eagle Subsidiary is a party; and (iv) all
items of Eagle's or any Eagle Subsidiary's tangible personal
property and equipment with a book value of $50,000 or more or
having any annual lease payment of $25,000 or more. Except for
(a) items reflected in Eagle's consolidated financial stat-
ements as of June 30, 1997 referred to in Section 3.6 hereof,
(b) exceptions to title that do not interfere materially with
Eagle's or any Eagle Subsidiary's use and enjoyment of owned or
leased real property (other than OREO), (c) liens for current
real estate taxes not yet delinquent, or being contested in
good faith, properly reserved against, (d) properties and as-
sets sold or transferred in the ordinary course of business
consistent with past practices since June 30, 1997, and (e)
items listed in Section 3.17 of the Eagle Disclosure Schedule,
Eagle and each Eagle Subsidiary have good and, as to owned real
property, marketable and insurable title to all their proper-
ties and assets, reflected in the consolidated financial state-
ments of Eagle as of June 30, 1997, free and clear of all
liens, claims, charges and other encumbrances. Eagle and each
Eagle Subsidiary, as lessees, have the right under valid and
subsisting leases to occupy, use and possess all property leas-
ed by them. All properties and assets used by Eagle and each
Eagle Subsidiary are in good operating condition and repair
(subject to ordinary wear and tear) suitable for the purposes
for which they are currently utilized and comply in all mate-
rial respects with all Laws relating thereto now in effect.
Eagle and each Eagle Subsidiary enjoy peaceful and undisturbed
possession under all leases for the use of all property under
which they are the lessees, and all leases to which Eagle or
any Eagle Subsidiary is a party are valid and binding obliga-
tions in accordance with the terms thereof. Neither Eagle nor
any Eagle Subsidiary is in material default with respect to any
such lease, and there has occurred no default by Eagle or Eagle
Bank or event which with the lapse of time or the giving of
notice, or both, would constitute a material default under any
such lease. There are no Laws, conditions of record, or other
impediments which interfere with the intended use by Eagle or
any Eagle Subsidiary of any of the property owned, leased, or
occupied by them.
3.18 INSURANCE.
Notwithstanding anything to the contrary in Article
II-A, Section 3.18 of the Eagle Disclosure Schedule contains a
true, correct and complete list of all insurance policies and
bonds maintained by Eagle and any Eagle Subsidiary, including
the name of the insurer, the policy number, the type of policy
and any applicable deductibles. The existing insurance carried
by Eagle and Eagle Subsidiaries is and will continue to be, in
respect of the nature of the risks insured against and the
amount of coverage provided, substantially similar in kind and
amount to that customarily carried by parties similarly situ-
ated who own properties and engage in businesses substantially
similar to that of Eagle and the Eagle Subsidiaries, and is
sufficient for compliance by Eagle and the Eagle Subsidiaries
with all requirements of Law and agreements to which Eagle or
any of the Eagle Subsidiaries is subject or is party. True,
correct and complete copies of all such policies and bonds re-
flected at Section 3.18 of the Eagle Disclosure Schedule, as in
effect on the date hereof, have been delivered or made avail-
able to Webster.
3.19 COMPLIANCE WITH APPLICABLE LAWS.
Each of Eagle and any Eagle Subsidiary has complied
in all material respects with all Laws applicable to it or to
the operation of its business. Neither Eagle nor any Eagle
Subsidiary has received any notice of any material alleged or
threatened claim, violation, or liability under any such Laws
that has not heretofore been cured and for which there is no
remaining liability.
3.20 LOANS.
As of the date hereof:
(a) All loans owned by Eagle or any Eagle Sub-
sidiary, or in which Eagle or any Eagle Subsidiary has an in-
terest, comply in all material respects with all Laws, includ-
ing, but not limited to, applicable usury statutes, underwrit-
ing and recordkeeping requirements and the Truth in Lending
Act, the Equal Credit Opportunity Act and the Real Estate Pro-
cedures Act, and other applicable consumer protection statutes
and the regulations thereunder.
(b) All loans owned by Eagle or any Eagle Sub-
sidiary, or in which Eagle or any Eagle Subsidiary has an in-
terest, have been made or acquired by Eagle in all material
respects in accordance with board of director-approved loan
policies. Each of Eagle and each Eagle Subsidiary holds mort-
gages contained in its loan portfolio for its own benefit to
the extent of its interest shown therein; such mortgages evi-
dence liens having the priority indicated by their terms, sub-
ject, as of the date of recordation or filing of applicable
security instruments, only to such exceptions as are discussed
in attorneys' opinions regarding title or in title insurance
policies in the mortgage files relating to the loans secured by
real property or are not material as to the collectability of
such loans; and all loans owned by Eagle and each Eagle Sub-
sidiary are with full recourse to the borrowers, and each of
Eagle and any Eagle Subsidiary has taken no action which would
result in a waiver or negation of any rights or remedies avail-
able against the borrower or guarantor, if any, on any loan,
other than in the ordinary course of business. All applicable
remedies against all borrowers and guarantors are enforceable
except as may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting creditors' rights and except as
may be limited by the exercise of judicial discretion in apply-
ing principles of equity. Except as set forth at Section
3.20(b) of the Eagle Disclosure Schedule, all loans purchased
or originated by Eagle or any Eagle Subsidiary and subsequently
sold by Eagle or any Eagle Subsidiary have been sold without
recourse to Eagle or any Eagle Subsidiary and without any lia-
bility under any yield maintenance or similar obligation.
True, correct and complete copies of loan delinquency reports
as of September 30, 1997 prepared by Eagle and each Eagle Sub-
sidiary, which reports include all loans delinquent or other-
wise in default, have been furnished or made available to Web-
ster. True, correct and complete copies of the currently ef-
fective lending policies and practices of Eagle and each Eagle
Subsidiary also have been furnished or made available to Web-
ster.
(c) Except as set forth in Section 3.20(c) of
the Eagle Disclosure Schedule, each outstanding loan participa-
tion sold by Eagle or any Eagle Subsidiary was sold with the
risk of non-payment of all or any portion of that underlying
loan to be shared by each participant (including Eagle or any
Eagle Subsidiary) proportionately to the share of such loan
represented by such participation without any recourse of such
other lender or participant to Eagle or any Eagle Subsidiary
for payment or repurchase of the amount of such loan repre-
sented by the participation or liability under any yield main-
tenance or similar obligation. Eagle and any Eagle Subsidiary
have properly fulfilled in all material respects its contrac-
tual responsibilities and duties in any loan in which it acts
as the lead lender or servicer and has complied in all material
respects with its duties as required under applicable regula-
tory requirements.
(d) Eagle and each Eagle Subsidiary have prop-
erly perfected or caused to be properly perfected all security
interests, liens, or other interests in any collateral securing
any loans made by it.
3.21 OWNERSHIP OF WEBSTER COMMON STOCK.
Except as set forth at Section 3.21 of the Eagle Dis-
closure Schedule, neither Eagle nor any of its directors, of-
ficers, 10% or greater stockholders or affiliates (i) benefi-
cially own, directly or indirectly, or (ii) is a party to any
agreement, arrangement or understanding for the purpose of ac-
quiring, holding, voting or disposing of, in each case, any
shares of outstanding capital stock of Webster (other than
those agreements, arrangements or understandings specifically
contemplated hereby).
3.22 EAGLE DRIP.
Eagle has suspended the Eagle DRIP such that from the
date hereof, no issuances or purchases of Eagle Common Stock
under the Eagle DRIP shall be permitted, nor shall any other
obligations thereunder accrue.
3.23 FAIRNESS OPINION.
Eagle has received an opinion from Sandler O'Neill to
the effect that, in its opinion, the Exchange Ratio pursuant to
this Agreement is fair to the holders of Eagle Common Stock
from a financial point of view.
3.24 TAX AND ACCOUNTING TREATMENT OF MERGER.
As of the date of this Agreement, Eagle is not aware
of any fact or state of affairs that could cause the Merger not
to be treated as a "reorganization" under Section 368(a) of the
Code or to qualify for "pooling-of-interests" accounting treat-
ment.
3.25 RIGHTS AGREEMENT.
Subject to the execution of an amendment to the Eagle
Rights Agreement which has been approved by Eagle's Board of
Directors and shall be executed promptly after the date of this
Agreement, Eagle has taken or will take all action (including,
if required, redeeming all of the outstanding Eagle Rights is-
sued pursuant to the Eagle Rights Agreement or amending or ter-
minating the Eagle Rights Agreement) so that the entering into
of this Agreement and the Option Agreement and the consummation
of the transactions contemplated hereby and thereby do not and
will not result in the grant of any rights to any person under
the Eagle Rights Agreement or enable or require the Eagle
Rights to be exercised, distributed or triggered.
3.26 EAGLE INFORMATION.
The information relating to Eagle and its Subsidiar-
ies to be provided by Eagle to be contained in the Joint Proxy
Statement/Prospectus and the Registration Statement will not
contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein,
in light of the circumstances in which they are made, not mis-
leading. The Joint Proxy Statement/Prospectus (except for such
portions thereof that relate only to Webster or any of its Sub-
sidiaries) will comply in all material respects with the provi-
sions of the Exchange Act and the rules and regulations there-
under.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF WEBSTER
Webster, on behalf of itself and Webster Bank, hereby
makes the following representations and warranties to Eagle as
set forth in this Article IV, each of which is being relied
upon by Eagle as a material inducement to enter into and per-
form this Agreement.
4.1 CORPORATE ORGANIZATION.
(a) Webster is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware. Webster has the corporate power and author-
ity to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in
which the nature of the business conducted by it or the charac-
ter or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary. Webster is
duly registered as a savings and loan holding company with the
OTS under HOLA. The Restated Certificate of Incorporation and
By-Laws of Webster, copies of which have previously been made
available to Eagle, are true, correct and complete copies of
such documents as in effect as of the date of this Agreement.
(b) Webster Bank is a federal savings bank
chartered by the OTS under the laws of the United States with
its main office in the State of Connecticut. Webster Bank has
the corporate power and authority to own or lease all of its
properties and assets and to carry on business as is now being
conducted, and is duly licensed or qualified to do business in
each jurisdiction in which the nature of the business conducted
by it or the character or location of the properties and assets
owned or leased by it makes such licensing or qualification
necessary. The Charter and By-Laws of Webster Bank, copies of
which have previously been made available to Eagle, are true,
correct and complete copies of such documents as in effect as
of the date of this Agreement.
4.2 CAPITALIZATION.
(a) The authorized capital stock of Webster as
of the date hereof consists of 30,000,000 shares of Webster
Common Stock, of which 13,554,224 shares were outstanding (net
of 83,639 treasury shares) at September 30, 1997 and 3,000,000
shares of serial preferred stock, par value $.01 per share
("Webster Preferred Stock"), 14,000 of which are designated as
Series C Preferred Stock, none of which were outstanding at
September 30, 1997. At such date, there were options outstand-
ing to purchase 754,744 shares of Webster Common Stock. All of
the issued and outstanding shares of Webster Common Stock have
been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. As of the date
of this Agreement, except as set forth above, Webster does not
have and is not bound by any outstanding subscriptions, op-
tions, warrants, calls, commitments or agreements of any char-
acter calling for the purchase or issuance of any shares of
Webster Common Stock or Webster Preferred Stock or any other
equity securities of Webster or any securities representing the
right to purchase or otherwise receive any shares of Webster
Common Stock or Webster Preferred Stock, other than (i) a war-
rant to purchase 300,000 shares of Webster Common Stock issued
to Fleet Financial Group and a contingent payment arrangement
with Fleet Financial Group as described in the Form 8-K filed
by Webster with the Securities and Exchange Commission for such
event, (ii) pursuant to that certain Rights Agreement between
Webster and American Stock Transfer & Trust Co and (iii) pursu-
ant to that certain Escrow Agreement between Webster, American
Stock Transfer & Trust Co., as Escrow Agent, and certain former
shareholders of Sachem Trust National Association. The shares
of Webster Common Stock to be issued pursuant to the Merger are
duly authorized and, at the Effective Time, all such shares
will be validly issued, fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the
ownership thereof.
(b) The authorized capital stock of Webster
Bank consists of 2,000 shares of common stock, par value $.01
per share, 1,000 of which are issued and outstanding, and 1,000
shares of preferred stock, par value $.01 per share, none of
which is issued or outstanding. The outstanding shares of com-
mon stock of Webster Bank are owned by Webster free and clear
of all liens, charges, encumbrances and security interests
whatsoever, and all of such shares are duly authorized and val-
idly issued and fully paid, nonassessable and free of preemp-
tive rights, with no personal liability attaching to ownership
thereof.
4.3 AUTHORITY; NO VIOLATION.
(a) Webster has full corporate power and au-
thority to execute and deliver this Agreement and the Option
Agreement and to consummate the transactions contemplated here-
by and thereby. The execution and delivery of this Agreement
and the Option Agreement and the consummation of the transac-
tions contemplated hereby and thereby have been duly and val-
idly approved by the Board of Directors of Webster. Except for
the adoption and approval of this Agreement by the requisite
vote of the Webster stockholders, no other corporate proceed-
ings on the part of Webster are necessary to consummate the
transactions contemplated hereby. This Agreement has been, and
the Option Agreement will be, duly and validly executed and
delivered by Webster and (assuming due authorization, execution
and delivery by Eagle) this Agreement constitutes a valid and
binding obligation of Webster, enforceable against Webster in
accordance with its terms, except as enforcement may be limited
by general principles of equity whether applied in a court of
law or a court of equity and by bankruptcy, insolvency and sim-
ilar law affecting creditors' rights and remedies generally.
(b) Webster Bank has full corporate power and
authority to execute and deliver the Bank Merger Agreement and
to consummate the transactions contemplated thereby. The ex-
ecution and delivery of the Bank Merger Agreement and the con-
summation of the transactions contemplated thereby will be duly
and validly approved by the Board of Directors of Webster Bank,
and by Webster as the sole stockholder of Webster Bank prior to
the Effective Time. All corporate proceedings on the part of
Webster Bank necessary to consummate the transactions contem-
plated thereby will have been taken prior to the Effective
Time. The Bank Merger Agreement, upon execution and delivery
by Webster Bank, will be duly and validly executed and deliv-
ered by Webster Bank and will (assuming due authorization, ex-
ecution and delivery by Eagle Bank) constitute a valid and
binding obligation of Webster Bank, enforceable against Webster
Bank in accordance with its terms, except as enforcement may be
limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency
and similar laws affecting creditors' rights and remedies gen-
erally.
(c) Neither the execution and delivery of this
Agreement or the Option Agreement by Webster or the Bank Merger
Agreement by Webster Bank, nor the consummation by Webster or
Webster Bank, as the case may be, of the transactions contem-
plated hereby or thereby, nor compliance by Webster or Webster
Bank, as the case may be, with any of the terms or provisions
hereof or thereof, will (i) violate any provision of the Re-
stated Certificate of Incorporation or Bylaws of Webster or the
Charter or By-Laws of Webster Bank, as the case may be, or (ii)
assuming that the consents and approvals referred to in Section
4.4 are duly obtained, (x) violate any Laws applicable to Web-
ster or Webster Bank or any of their respective properties or
assets, or (y) violate, conflict with, result in a breach of
any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termina-
tion of or a right of termination or cancellation under, ac-
celerate the performance required by, or result in the creation
of any lien, pledge, security interest, charge or other encum-
brance upon any of the respective properties or assets of Web-
ster or Webster Bank under any of the terms, conditions or pro-
visions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to
which Webster or Webster Bank is a party, or by which they or
any of their respective properties or assets may be bound or
affected.
4.4 REGULATORY APPROVALS.
(a) Except for (i) the filing of applications
and notices, as applicable, as to the Merger and the Bank Merg-
er with the OTS under HOLA and the Bank Merger Act and approval
of such applications and notices, (ii) the filing with the SEC
of a registration statement on Form S-4 to register the shares
of Webster Common Stock to be issued in connection with the
Merger (including the shares of Webster Common Stock that may
be issued upon the exercise of the options referred to in Sec-
tion 1.6 hereof), which will include the Joint Proxy Statement/
Prospectus, (iii) the approval of this Agreement by the requi-
site vote of the stockholders of Eagle and the requisite ap-
proval, if any, of Eagle stockholders in connection with the
Option Agreement pursuant to the Eagle Restated Certificate of
Incorporation, (iv) the approval of this Agreement by the req-
uisite vote of the stockholders of Webster, (v) the filing of
the Certificate of Merger with the Secretary of State of Dela-
ware pursuant to the DGCL, (vi) the filings in connection with
the Bank Merger Agreement and the transactions contemplated
thereby and (vii) such filings and approvals as are required to
be made or obtained under the securities or "Blue Sky" laws of
various states or with Nasdaq (or such other exchange as may be
applicable) in connection with the issuance of the shares of
Webster Common Stock pursuant to this Agreement, no consents or
approvals of or filings or registrations with any Governmental
Entity are necessary in connection with (1) the execution and
delivery by Webster of this Agreement and the Option Agreement,
(2) the performance by Webster of this Agreement and the trans-
actions contemplated hereby, (3) the execution and delivery by
Webster Bank of the Bank Merger Agreement, and (4) the con-
summation by Webster Bank of the transactions contemplated by
the Bank Merger Agreement except for such consents, approvals
or filings the failure of which to obtain will not have a mate-
rial adverse effect on the ability of Eagle to consummate the
transactions contemplated thereby.
(b) Webster hereby represents to Eagle that, as
of the date of this Agreement, it has no knowledge of any rea-
son why approval or effectiveness of any of the applications,
notices or filings referred to in Section 4.4(a) cannot be ob-
tained or granted on a timely basis.
(c) Webster and Webster Bank have timely filed
all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they
were required to file since December 31, 1993, with any Regula-
tory Agencies. As of its respective date, each such report,
registration, statement and amendment complied in all material
respects with all rules and regulations promulgated by the ap-
plicable Regulatory Agency and did not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading. Except for normal examinations
conducted by a Regulatory Agency in the regular course of the
business of Webster and its Subsidiaries, no Governmental En-
tity is conducting, or has conducted, any proceeding or inves-
tigation into the business or operations of Webster since De-
cember 31, 1993.
4.5 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS;
BOOKS AND RECORDS.
Webster has previously delivered to Eagle true, cor-
rect and complete copies of (i) the audited consolidated state-
ments of condition of Webster and its Subsidiaries as of Decem-
ber 31 for the fiscal years 1995 and 1996 and the related au-
dited consolidated statements of income, changes in sharehold-
ers' equity and cash flows for the fiscal years 1994 through
1996, inclusive, as reported in Webster's Annual Report on Form
10-K for the fiscal year ended December 31, 1996 filed with the
SEC under the Exchange Act, in each case accompanied by the
audit report of KPMG Peat Marwick LLP, independent public ac-
countants with respect to Webster; and (ii) the unaudited con-
solidated statements of condition of Webster and its Subsidiar-
ies as of June 30, 1997 and 1996 and the related unaudited con-
solidated statements of income, changes in shareholders' equity
and cash flows for the interim periods ended June 30, 1997 and
1996, as reported on Webster's Quarterly Report on Form 10-Q
for the period ended June 30, 1997 filed with the SEC under the
Exchange Act. The financial statements referred to in this
Section 4.5 (including the related notes, where applicable)
fairly present, and the financial statements referred to in
Section 6.8 hereof will fairly present (subject, in the case of
the unaudited statements, to recurring audit adjustments normal
in nature and amount), the results of the consolidated opera-
tions and consolidated financial condition of Webster and its
Subsidiaries for the respective fiscal periods or as of the
respective dates therein set forth; each of such statements
(including the related notes, where applicable) comply, and the
financial statements referred to in Section 6.8 hereof will
comply, with applicable accounting requirements and with the
published rules and regulations of the SEC with respect there-
to; and each of such statements (including the related notes,
where applicable) has been, and the financial statements re-
ferred to in Section 6.8 hereof will be, prepared in accordance
with GAAP consistently applied during the periods involved,
except as indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q. Webster's
Annual Report on Form 10-K for the fiscal year ended December
31, 1996 and all subsequently filed reports under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act comply in all
material respects with the appropriate requirements for such
reports under the Exchange Act, and Webster has previously de-
livered or made available to Eagle true, correct and complete
copies of such reports. The books and records of Webster and
Webster Bank have been, and are being, maintained in all mate-
rial respects in accordance with GAAP and any other applicable
legal and accounting requirements and reflect only actual
transactions.
4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in Webster's Annual Report
on Form 10-K for the fiscal year ended December 31, 1996 and
all reports subsequently filed by Webster under Sections 13(a),
13(e), 14 or 15(d) of the Exchange Act, true, correct and com-
plete copies of which have previously been delivered or made
available to Eagle, since December 31, 1996, no event has oc-
curred which has had, individually or in the aggregate, a Mate-
rial Adverse Effect on Webster.
(b) Since September 30, 1996, Webster and its Sub-
sidiaries have carried on their respective businesses in the
ordinary and usual course consistent with their past practices.
4.7 COMPLIANCE WITH APPLICABLE LAW.
Webster and each Webster Subsidiary has complied in
all material respects with all Laws applicable to it or to the
operation of its business. Neither Webster nor any Webster
Subsidiary has received any notice of any alleged or threatened
claim, violation of or liability or potential responsibility
under any such Laws that has not heretofore been cured and for
which there is no remaining liability.
4.8 OWNERSHIP OF EAGLE COMMON STOCK;
AFFILIATES AND ASSOCIATES.
(a) Except for this Agreement, neither Webster
nor any of its affiliates or associates (as such terms are de-
fined under the Exchange Act), (i) beneficially own, directly
or indirectly, or (ii) is a party to any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting
or disposing of, in each case, more than five percent of the
outstanding capital stock of Eagle, excluding the shares of
Eagle Common Stock issuable pursuant to the Option Agreement to
be executed subsequent to the execution of the Agreement.
4.9 EMPLOYEE BENEFIT PLANS.
Webster has heretofore made available for inspection,
or delivered (if requested) to Eagle true, correct and complete
copies of each employee benefit plan arrangement or agreement
that is maintained as of the date of this Agreement (the "Web-
ster Plans") by Webster or any of its Subsidiaries. No "ac-
cumulated funding deficiency" as defined in Section 302(a)(2)
of ERISA or Section 412 of the Code, whether or not waived, and
no "unfunded current liability" as determined under Section
412(l) of the Code exists with respect to any Webster Plan.
The Webster Plans are in compliance in all material respects
with the applicable requirements of ERISA and the Code.
4.10 AGREEMENTS WITH REGULATORY AGENCIES.
Neither Webster nor any of its affiliates is subject
to any cease-and-desist or other order issued by, or is a party
to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any order or directive
by, or has been a recipient of any extraordinary supervisory
letter from, or has adopted any board resolutions at the re-
quest of (each, whether or not set forth on Section 4.10 of the
Webster Disclosure Schedule, a "Regulatory Agreement"), any
Governmental Entity that restricts the conduct of its business
or that in any manner relates to its capital adequacy, its
credit policies, its management or its business, nor has Web-
ster or Webster Bank been advised by any Governmental Entity
that it is considering issuing or requesting any Regulatory
Agreement.
4.11 TAX AND ACCOUNTING TREATMENT OF MERGER.
As of the date of this Agreement, Webster is not
aware of any fact or state of affairs that could cause the
Merger not to be treated as a "reorganization" under Section
368(a) of the Code or to qualify for "pooling-of-interests"
accounting treatment.
4.12 LEGAL PROCEEDINGS.
(a) Neither Webster nor any of its Subsidiaries is a
party to any, and there are no pending or threatened, legal,
administrative, arbitration or other proceedings, claims, ac-
tions or governmental or regulatory investigations of any na-
ture against Webster or any of its Subsidiaries in which there
is a reasonable probability of any material recovery against or
other material adverse effect upon Webster or any of its Sub-
sidiaries or which challenge the validity or propriety of the
transactions contemplated by this Agreement, the Bank Merger
Agreement or the Option Agreement as to which there is a rea-
sonable probability of success.
(b) There is no injunction, order, judgment or de-
cree imposed upon Webster, any of its Subsidiaries or the as-
sets of Webster or any of its Subsidiaries.
4.13 RESERVES FOR LOSSES.
All reserves or other allowances for possible losses
reflected in Webster's most recent financial statements re-
ferred to in Section 4.5 complied with all Laws and are ad-
equate under GAAP. Neither Webster nor Webster Bank has been
notified by the OTS, the FDIC, any other regulator authority or
by Webster's independent auditor, in writing or otherwise, that
the reserves or other allowances for possible loan losses re-
flected in Webster's most recent financial statements referred
to in Section 4.5 are inadequate or that the practices and
policies of Webster or Webster Bank in establishing such re-
serves and in accounting for delinquent and classified assets
generally fail to comply with applicable accounting or regula-
tory requirements or that the OTS, the FDIC, any other regula-
tory authority or Webster's independent auditor believes such
reserves to be inadequate or inconsistent with the historical
loss experience of Webster or Webster Bank. Webster has previ-
ously furnished Eagle with a complete list of all OREO that
have been classified by any bank examiner (regulatory or inter-
nal) as other loans specially mentioned, special mention, sub-
standard, doubtful, loss, classified or criticized, credit risk
assets, concerned loans or words of similar import. All OREO
held by Webster or Webster Bank is being carried net of re-
serves at the lower of cost or net realizable value.
4.14 BROKER'S FEES.
Neither Webster nor any Webster Subsidiary nor
any of their respective officers or directors has employed any
broker or finder or incurred any liability for any broker's
fees, commissions or finder's fees in connection with any of
the transactions contemplated by this Agreement, the Bank
Merger Agreement or the Option Agreement, except that Webster
has engaged, and will pay a fee or commission to Merrill,
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") in
accordance with the terms of a letter agreement between Merrill
Lynch and Webster, dated October 21, 1997, a true, complete and
correct copy of which has been previously delivered or made
available by Webster to Eagle.
4.15 FAIRNESS OPINION.
Webster has received an opinion from Merrill Lynch to
the effect that, in its opinion, the Exchange pursuant to this
Agreement is fair to Webster from a financial point of view.
4.16 TAXES.
Each of Webster and its Subsidiaries has duly filed
all material Federal, state, local and foreign Tax Returns re-
quired to be filed by it on or prior to the date hereof (all
such returns being accurate and complete in all material re-
spects) and has duly paid or made provisions for the payment of
all material Taxes which have been incurred or are due or
claimed to be due from it by Federal, state, local and foreign
taxing authorities on or prior to the date hereof. All liabil-
ity with respect to the income tax returns of Webster and its
Subsidiaries has been satisfied for all years to and including
1996. The Internal Revenue Service ("IRS") has not notified
Webster of, or otherwise asserted, that there are any material
deficiencies with respect to the income tax returns of Webster.
There are no material disputes pending, or claims asserted for,
Taxes or assessments upon Webster or any of its Subsidiaries,
nor has Webster or any of its Subsidiaries been requested to
give any waivers extending the statutory period of limitation
applicable to any Federal, state or local income tax return for
any period.
4.17 WEBSTER INFORMATION.
The information relating to Webster and its Subsid-
iaries to be provided by Webster to be contained in the Joint
Proxy Statement/Prospectus and the Registration Statement will
not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein,
in light of the circumstances in which they are made, not mis-
leading. The Joint Proxy Statement/Prospectus (except for such
portions thereof that relate only to Eagle or any of its Sub-
sidiaries) will comply in all material respects with the provi-
sions of the Exchange Act and the rules and regulations there-
under. The Registration Statement will comply in all material
respects with the provisions of the Securities Act and the
rules and regulations thereunder.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 COVENANTS OF EAGLE.
During the period from the date of this Agreement and
continuing until the Effective Time, except as expressly con-
templated or permitted by this Agreement, the Bank Merger
Agreement or the Option Agreement, or with the prior written
consent of Webster, Eagle and each Eagle Subsidiary shall carry
on their respective businesses in the ordinary course consis-
tent with past practices and consistent with prudent banking
practices. Eagle will use its reasonable best efforts to (x)
preserve its business organization and that of each Eagle Sub-
sidiary intact, (y) keep available to itself and Webster the
present services of the employees of Eagle and each Eagle Sub-
sidiary and (z) preserve for itself and Webster the goodwill of
the customers of Eagle and each Eagle Subsidiary and others
with whom business relationships exist. Without limiting the
generality of the foregoing, and except as set forth in the
Eagle Disclosure Schedule or as otherwise contemplated by this
Agreement or consented to by Webster in writing, Eagle shall
not, and shall not permit any Eagle Subsidiary to:
(a) declare or pay any dividends on, or make
other distributions in respect of, any of its capital stock
(except for the payment of regular quarterly cash dividends by
Eagle of $0.25 per share on the Eagle Common Stock with decla-
ration, record and payment dates corresponding to the quarterly
dividends paid by Eagle during its fiscal year ended September
30, 1996 and except that any Eagle Subsidiary may declare and
pay dividends and distributions to Eagle). Until the Effective
Time, Eagle and Webster shall coordinate with the other decla-
ration of any dividends or other distributions with respect to
the Eagle Common Stock and the Webster Common Stock and the
record dates and payment dates relating thereto, it being the
intention of the parties that holders of shares of Eagle Common
Stock or Webster Common Stock shall not receive more than one
dividend, or fail to receive one dividend, for any single cal-
endar quarter on their shares of Eagle Common Stock (including
any shares of Webster Common Stock received in exchange there-
for in the Merger) or Webster Stock, as the case may be.
(b) (i) split, combine or reclassify any shares
of its capital stock or issue, authorize or propose the issu-
ance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock except upon the
exercise or fulfillment of rights or options issued and out-
standing as of the date hereof pursuant to the Eagle Stock
Plans in accordance with their present terms, and except pursu-
ant to the Option Agreement, or (ii) repurchase, redeem or oth-
erwise acquire (except for the acquisition of Trust Account
Shares and DPC Shares, as such terms are defined in Section
1.4(c) hereof) any shares of the capital stock of Eagle or any
Eagle Subsidiary, or any securities convertible into or exer-
cisable for any shares of the capital stock of Eagle or any
Eagle Subsidiary;
(c) issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its
capital stock or any securities convertible into or exercisable
for, or any rights, warrants or options to acquire, any such
shares, or enter into any agreement with respect to any of the
foregoing, other than (i) the issuance of Eagle Common Stock
pursuant to stock options or similar rights to acquire Eagle
Common Stock granted pursuant to the Eagle Stock Plans and out-
standing prior to the date of this Agreement, in each case in
accordance with their present terms and (ii) pursuant to the
Option Agreement;
(d) amend its Restated Certificate of Incorpo-
ration, By-Laws or other similar governing documents;
(e) authorize or permit any of its officers,
directors, employees or agents to, directly or indirectly, so-
licit, initiate or encourage any inquiries relating to, or the
making of any proposal from, hold discussions or negotiations
with or provide any information to, any person, entity or group
(other than Webster) concerning any Acquisition Transaction (as
defined below); provided, however, that Eagle may, and may au-
thorize and permit its officers, directors, employees or agents
to, provide or cause to be provided information and may par-
ticipate in such discussions or negotiations if the Board of
Directors of Eagle, after having consulted with and considered
the advice of outside counsel, has determined that the failure
to provide such information or participate in such negotiations
or discussions could cause the members of such Board of Direc-
tors to breach their fiduciary duties under applicable laws.
Eagle shall promptly communicate to Webster the material terms
of any proposal, whether written or oral, which it may receive
in respect of any such Acquisition Transaction and whether it
is having discussions or negotiations with a third party about
an Acquisition Transaction or providing information in connec-
tion with, or which may lead to, an Acquisition Transaction
with a third party. Eagle will promptly cease and cause to be
terminated any existing activities, discussions or negotiations
previously conducted with any parties other than Webster with
respect to any of the foregoing. As used in this Agreement,
"Acquisition Transaction" shall mean any offer, proposal or
expression of interest relating to (i) any tender or exchange
offer involving Eagle or any Eagle Subsidiary, (ii) merger,
consolidation or other business combination involving Eagle or
any Eagle Subsidiary, or (iii) the acquisition in any manner of
a substantial equity interest in, or a substantial portion of
the assets, out of the ordinary course of business, of, Eagle
or Eagle Bank other than the transactions contemplated or per-
mitted by this Agreement, the Bank Merger Agreement and the
Option Agreement;
(f) make capital expenditures aggregating in
excess of $100,000, other than related to the matters and in no
more than the amounts set forth on Section 5.1(f) of the Eagle
Disclosure Schedule;
(g) enter into any new line of business;
(h) acquire or agree to acquire, by merging or
consolidating with, or by purchasing an equity interest in or
the assets of, or by any other manner, any business or any cor-
poration, partnership, association or other business organiza-
tion or division thereof or otherwise acquire any assets, other
than in connection with foreclosures, settlements in lieu of
foreclosure or troubled loan or debt restructurings, or in the
ordinary course of business consistent with prudent banking
practices;
(i) take any action that is intended or may
reasonably be expected to result in any of its representations
and warranties set forth in this Agreement being or becoming
untrue or in any of the conditions to the Merger set forth in
Article VII not being satisfied, or in a violation of any pro-
vision of this Agreement or the Bank Merger Agreement, except,
in every case, as may be required by applicable Law;
(j) change its methods of accounting in effect
at September 30, 1996 except as required by changes in GAAP or
regulatory accounting principles as concurred to by Eagle's
independent auditors;
(k) (i) except as required by applicable law or
to maintain qualification pursuant to the Code, adopt, amend,
renew (other than through operation of evergreen provisions or
renewals of the agreements set forth in Section 5.1(k) of the
Eagle Disclosure Schedule consistent with past practice) or
terminate any Plan or any agreement, arrangement, plan or poli-
cy between Eagle or any Eagle Subsidiary and one or more of its
current or former directors, officers or employees, (ii) other
than normal annual increases in pay, consistent with past prac-
tice, for employees not subject to an employment, change of
control or severance agreement, increase in any manner the com-
pensation of any employee or director or pay any benefit not
required by any Plan or agreement as in effect as of the date
hereof (including, without limitation, the granting of stock
options, stock appreciation rights, restricted stock, re-
stricted stock units or performance units or shares), (iii)
enter into, modify or renew (other than through operation of
evergreen provisions or renewals of the agreements set forth in
Section 5.1(k) of the Eagle Disclosure Schedule consistent with
past practice) any contract, agreement, commitment or arrange-
ment providing for the payment to any director, officer or em-
ployee of compensation or benefits, other than normal annual
increases in pay, consistent with past practice, for employees
not subject to an employment, change of control or severance
agreement, and except for the retention and incentive bonus ar-
rangements described on Section 5.1(k) of the Eagle Disclosure
Schedule, (iv) hire any new employee at an annual compensation
in excess of $30,000, (v) pay expenses of any employees or di-
rectors for attending conventions or similar meetings which
conventions or meetings are held after the date hereof, except
as set forth on Section 5.1(k) of the Eagle Disclosure Sched-
ule, (vi) promote to a rank of vice president or more senior
any employee, or (vii) pay any retention or other bonuses to
any employees except for the retention and incentive bonus ar-
rangements described on Section 5.1(k) of the Eagle Disclosure
Schedule;
(l) incur any indebtedness for borrowed money,
assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other individual,
corporation or other entity other than in the ordinary course
of business consistent with past practice;
(m) except as set forth in Section 5.1(m) of
the Eagle Disclosure Schedule, sell, purchase, enter into a
lease, relocate, open or close any banking or other office, or
file an application pertaining to such action with any Govern-
mental Entity;
(n) make any equity investment or commitment to
make such an investment in real estate or in any real estate
development project, other than in connection with foreclosure,
settlements in lieu of foreclosure, or troubled loan or debt
restructuring, in the ordinary course of business consistent
with past banking practices;
(o) make any new loans to, modify the terms of
any existing loan to, or engage in any other transactions
(other than routine banking transactions) with, any Affiliated
Person of Eagle or any Eagle Subsidiary;
(p) make any investment, or incur deposit li-
abilities, other than in the ordinary course of business con-
sistent with past practices, or make any equity investments;
(q) except as set forth in Section 5.1(q) of
the Eagle Disclosure Schedule, purchase any loans or sell, pur-
chase or lease any real property, except for the sale of real
estate that is the subject of a casualty loss or condemnation
or the sale of OREO on a basis consistent with past practices;
(r) originate (i) any loans except in ac-
cordance with existing Eagle Bank lending policies, (ii) unse-
cured consumer loans in excess of $10,000, (iii) commercial
real estate first mortgage or other commercial loans in excess
of $250,000 as to any loan or $500,000 in the aggregate as to
related loans, or loans to related persons, or (iv) land acqui-
sition loans to borrowers who intend to construct a residence
on such land in excess of the lesser of 75% of the appraised
value of such land or $100,000, except in each case for (A)
loans for which written commitments have been issued by Eagle
Bank as of the date hereof, as disclosed in Section 5.1(r) of
the Eagle Disclosure Schedule, (B) renewals of loans existing
as of the date of this Agreement or loans permitted pursuant to
this Section 5.1(r) and (C) increases in the principal amount
of loans existing as of the date of this Agreement, subject to
a limit of 30% of the principal amount of such loans as of the
date of this Agreement or $500,000, whichever is less.
(s) make any investments in any equity or
derivative securities or engage in any forward commitment, fu-
tures transaction, financial options transaction, hedging or
arbitrage transaction or covered asset trading activities or
make any investments in any investment security with a maturity
of greater than one year;
(t) sell or purchase any mortgage loan servic-
ing rights; or
(u) agree or commit to do any of the actions
set forth in clauses (a) - (t) of this Section 5.1.
The consent of Webster to any action by Eagle or any Eagle Sub-
sidiary that is not permitted by any of the preceding para-
graphs shall be evidenced only by a writing signed by the Pres-
ident or any Executive Vice President of Webster or, in the
case of 5.1(r), the Chief Credit Policy Officer of Webster.
5.2 COVENANTS OF WEBSTER.
During the period from the date of this Agreement and
continuing until the Effective Time, except as expressly con-
templated or permitted by this Agreement or with Eagle's prior
written consent, Webster shall not, and shall not permit Web-
ster Bank to:
(a) take any action that will result in any of
Webster's representations and warranties set forth in this
Agreement being or becoming untrue or any of the conditions to
the Merger set forth in Article VII not being satisfied or in a
violation of any provision of this Agreement or the Bank Merger
Agreement, except, in every case, as may be required by appli-
cable Law; or
(b) take any other action that would materially
adversely affect or materially delay the ability of Webster to
obtain the Requisite Regulatory Approvals or otherwise materi-
ally adversely affect Webster's and Webster Bank's ability to
consummate the transactions contemplated by this Agreement.
5.3 MERGER COVENANTS.
Notwithstanding that Eagle believes that it has es-
tablished all reserves and taken all provisions for possible
loan losses required by GAAP and applicable laws, rules and
regulations, Eagle recognizes that Webster may have adopted
different loan, accrual and reserve policies (including loan
classifications and levels of reserves for possible loan loss-
es). In that regard, and in general, from and after the date
of this Agreement to the Effective Time, Eagle and Webster
shall consult and cooperate with each other in order to formu-
late the plan of integration for the Merger, including, among
other things, with respect to conforming immediately prior to
the Effective Time, based upon such consultation, Eagle's loan,
accrual and reserve policies to those policies of Webster to
the extent consistent with GAAP; provided, that any change in
Eagle's policies in connection with such matters need not be
effected until Webster irrevocably agrees in writing that (i)
all conditions to Webster's obligation to consummate the Merger
have been satisfied, (ii) that Webster will waive any and all
rights that it may have to terminate this Agreement and (iii)
Webster will complete the Merger.
5.4 EMPLOYMENT AND OTHER AGREEMENTS.
Following the Merger, Webster agrees that it shall
honor the existing written deferred compensation, employment,
change of control and severance contracts with directors and
employees of Eagle and Eagle Bank that are listed at Section
5.4 of the Eagle Disclosure Schedule; provided, however, that
in making the foregoing agreement, Webster will honor such con-
tracts only to the extent that, as represented at Section 3.11
hereof, none of such deferred compensation, employment, change
of control and severance contracts, nor any other Eagle Plan,
program, agreement or other arrangement under which any such
director or employee is a beneficiary, either individually or
collectively, provides for any payment by Eagle or any Eagle
Subsidiary that would not be deductible under Code Sections
162(a)(1) or 404 or that would constitute a "parachute payment"
within the meaning of Code Section 280G. In addition, follow-
ing the Merger, Webster agrees that it shall continue to pro-
vide the benefits set forth in Section 5.4-A of the Eagle Dis-
closure Schedule as provided therein.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS.
(a) Upon the execution and delivery of this
Agreement, Webster and Eagle (as to information to be included
therein pertaining to Eagle) shall promptly cause to be pre-
pared and filed with the SEC a registration statement of
Webster on Form S-4, including the Joint Proxy Statement/
Prospectus (the "Registration Statement") for the purpose of
registering the Webster Common Stock to be issued in the
Merger, and for soliciting the adoption and approval of this
Agreement and the Merger by the stockholders of Eagle and Web-
ster. Webster and Eagle shall use their reasonable best ef-
forts to have the Registration Statement declared effective by
the SEC as soon as possible after the filing thereof. The par-
ties shall cooperate in responding to and considering any ques-
tions or comments from the SEC staff regarding the information
contained in the Registration Statement. If at any time after
the Registration Statement is filed with the SEC, and prior to
the Closing Date, any event relating to Eagle is discovered by
Eagle which should be set forth in an amendment of, or a sup-
plement to, the Registration Statement, including the Joint
Proxy Statement/Prospectus, Eagle shall promptly inform Web-
ster, and shall furnish Webster with all necessary information
relating to such event, whereupon Webster shall promptly cause
an appropriate amendment to the Registration Statement to be
filed with the SEC. Upon the effectiveness of such amendment,
each of Eagle and Webster (if prior to the meeting of its re-
spective stockholders pursuant to Section 6.3 hereof) will take
all necessary action as promptly as practicable to permit an
appropriate amendment or supplement to be transmitted to its
stockholders entitled to vote at such meeting. Webster shall
also use reasonable efforts to obtain all necessary state secu-
rities law or "Blue Sky" permits and approvals required to car-
ry out the transactions contemplated by this Agreement and the
Bank Merger Agreement and Eagle shall furnish all information
concerning Eagle and the holders of Eagle Common Stock as may
be reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate with
each other and use their best efforts to promptly prepare and
file all necessary documentation, to effect all applications,
notices, petitions and filings, and to obtain as promptly as
practicable all permits, consents, approvals and authorizations
of all third parties and Governmental Entities which are neces-
sary or advisable to consummate the transactions contemplated
by this Agreement (including without limitation the Merger and
the Bank Merger). Eagle and Webster shall have the right to
review in advance, and to the extent practicable each will con-
sult the other on, in each case subject to applicable laws re-
lating to the exchange of information, all the information re-
lating to Eagle or Webster, as the case may be, which appears
in any filing made with, or written materials submitted to, any
third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement; provided, however,
that nothing contained herein shall be deemed to provide either
party with a right to review any information provided to any
Governmental Entity on a confidential basis in connection with
the transactions contemplated hereby. In exercising the fore-
going right, each of the parties hereto shall act reasonably
and as promptly as practicable. The parties hereto agree that
they will consult with each other with respect to the obtaining
of all permits, consents, approvals and authorizations of all
third parties and Governmental Entities necessary or advisable
to consummate the transactions contemplated by this Agreement
and each party will keep the other apprised of the status of
matters relating to consummation of the transactions contem-
plated herein.
(c) Eagle shall, upon request, furnish Webster
with all information concerning Eagle and its directors, offic-
ers and stockholders and such other matters as may be reason-
ably necessary or advisable in connection with the Registration
Statement or any other statement, filing, notice or application
made by or on behalf of Webster to any Governmental Entity in
connection with the Merger or the other transactions contem-
plated by this Agreement.
(d) Webster and Eagle shall promptly advise
each other upon receiving any communication from any Governmen-
tal Entity whose consent or approval is required for consumma-
tion of the transactions contemplated by this Agreement which
causes such party to believe that there is a reasonable likeli-
hood that any Requisite Regulatory Approval (as defined in Sec-
tion 7.1(c) hereof) will not be obtained or that the receipt of
any such approval will be materially delayed.
6.2 ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to ap-
plicable Laws relating to the exchange of information, Eagle
shall accord to the officers, employees, accountants, counsel
and other representatives of Webster, access, during normal
business hours during the period prior to the Effective Time,
to all its and Eagle Bank's properties, books, contracts, com-
mitments and records and, during such period, Eagle shall make
available to Webster (i) a copy of each report, schedule, reg-
istration statement and other document filed or received by it
(including Eagle Bank) during such period pursuant to the re-
quirements of federal securities laws or federal or state bank-
ing laws and (ii) all other information concerning its (includ-
ing Eagle Bank) business, properties and personnel as Webster
may reasonably request. Webster shall receive notice of all
meetings of the Eagle and Eagle Bank's Board of Directors and
any committees thereof, and of any management committees (in
all cases, at least as timely as all Eagle and Eagle Bank, as
the case may be, representatives to such meetings are required
to be provided notice). One representative of Webster, who
shall be a senior officer of Webster, shall be permitted to
attend all meetings of the Board of Directors (except for the
portion of such meetings which relate to the Merger or such
other matters deemed confidential ("Confidential Matters") of
Eagle or Eagle Bank, as the case may be) and such meetings of
committees of the Board of Directors and management of Eagle
and Eagle Bank which Webster desires. Webster will hold all
such information in confidence to the extent required by, and
in accordance with, the provisions of the confidentiality
agreement which Webster entered into with Eagle dated October
15, 1997 (the "Confidentiality Agreement").
(b) Upon reasonable notice and subject to ap-
plicable Laws relating to the exchange of information, Webster
shall afford to the officers, employees, accountants, counsel
and other representatives of Eagle, access, during normal busi-
ness hours during the period prior to the Effective Time, to
such information regarding Webster as shall be reasonably nec-
essary for Eagle to fulfill its obligations pursuant to this
Agreement or which may be reasonably necessary for Eagle to
confirm that the representations and warranties of Webster con-
tained herein are true and correct and that the covenants of
Webster contained herein have been performed in all material
respects. Eagle will hold all such information in confidence
to the extent required by, and in accordance with, the provi-
sions of the Confidentiality Agreement.
(c) No investigation by either of the parties
or their respective representatives shall affect the represen-
tations and warranties of the other set forth herein.
(d) Eagle shall provide Webster with true, cor-
rect and complete copies of all financial and other information
provided to directors of Eagle and Eagle Bank in connection
with meetings of their Boards of Directors or committees
thereof.
6.3 STOCKHOLDER MEETINGS.
Each of Webster and Eagle shall take all steps neces-
sary to duly call, give notice of, convene and hold a meeting
of its stockholders within 40 days after the Registration
Statement becomes effective for the purpose of voting upon the
approval of this Agreement and the Merger. Management and the
Board of Directors of each of Webster and Eagle shall recommend
to Webster's and Eagle's stockholders, as the case may be, ap-
proval of this Agreement, including the Merger, and the trans-
actions contemplated hereby, together with any matters incident
thereto; and in each case shall oppose any third party proposal
or other action that is inconsistent with this Agreement or the
consummation of the transactions contemplated hereby (subject
in each case to compliance with its fiduciary duties as advised
by counsel). Eagle and Webster shall coordinate and cooperate
with respect to the foregoing matters.
6.4 LEGAL CONDITIONS TO MERGER.
Each of Webster and Eagle shall use their reasonable
best efforts (a) to take, or cause to be taken, all actions
reasonably necessary, proper or advisable to comply promptly
with all legal requirements which may be imposed on such party
with respect to the Merger and, subject to the conditions set
forth in Article VII hereof, to consummate the transactions
contemplated by this Agreement and (b) to obtain (and to coop-
erate with the other party to obtain) any consent, authoriza-
tion, order or approval of, or any exemption by, any Governmen-
tal Entity and any other third party which is required to be
obtained by Eagle or Webster in connection with the Merger and
the other transactions contemplated by this Agreement.
6.5 STOCK EXCHANGE LISTING.
Webster shall cause the shares of Webster Common
Stock to be issued in the Merger and pursuant to options re-
ferred to herein to be approved for quotation on the Nasdaq
Stock Market National Market (or such other exchange on which
the Webster Common Stock has become listed, or approved for
listing) prior to or at the Effective Time.
6.6 EMPLOYEES.
(a) To the extent permissible under the ap-
plicable provisions of the Code and ERISA, for purposes of
crediting periods of service for eligibility to participate and
vesting, but not for benefit accrual purposes, under employee
pension benefit plans (within the meaning of ERISA Section
3(2)) maintained by Webster or Webster Bank, as applicable,
individuals who are employees of Eagle or Eagle Bank at the
Effective Time will be credited with periods of service with
Eagle or Eagle Bank before the Effective Time (including ser-
vice with any predecessor employer for which service credit was
given under similar employee benefit plans of Eagle or Eagle
Bank) as if such service had been with Webster or Webster Bank,
as applicable. Similar credit shall also be given by Webster
or Webster Bank in calculating other retirement plan, vacation
and similar benefits for such employees of Eagle or Eagle Bank
after the Merger. Webster will or will cause Webster Bank to
(i) give credit to employees of Eagle and Eagle Bank, with re-
spect to the satisfaction of the limitations as to pre-existing
condition exclusions and waiting periods for participation and
coverage which are applicable under the welfare benefit plans
of Webster or Webster Bank, equal to the credit that any such
employee had received as of the Effective Time towards the sat-
isfaction of any such limitations and waiting periods under the
comparable welfare benefit plans of Eagle and Eagle Bank and
(ii) provide each employee of Eagle and Eagle Bank with credit
for any co-payment and deductibles paid prior to the Effective
Time in satisfying any deductible or out-of-pocket require-
ments.
(b) Webster shall, and shall cause Webster Bank
to pay severance to employees of Eagle and Eagle Bank (i) for a
period of one year following the Effective Time, in accordance
with the terms of the severance policy set forth in Section
6.6(b) of the Eagle Disclosure Schedule and (ii) thereafter in
accordance with the terms of the severance plan maintained by
Webster or Webster Bank, as the case may be (as in effect from
time to time).
(c) Webster will cause Webster Bank to offer a
position of at-will employment to each of Eagle Bank's non-
management branch office personnel in good standing as of the
Effective Time. Webster will use its reasonable best efforts
in connection with reviewing applicants for employment posi-
tions to give Eagle and Eagle Bank employees who are not of-
fered positions at the Effective Time the same consideration as
is afforded Webster or Webster Bank employees for such posi-
tions in accordance with existing formal or informal policies.
Webster will provide outplacement assistance to each Eagle and
Eagle Bank employee who is not offered a position at the Effec-
tive Time.
6.7 INDEMNIFICATION.
(a) In the event of any threatened or actual
claim, action, suit, proceeding or investigation, whether civ-
il, criminal or administrative, in which any person who is now,
or has been at any time prior to the date of this Agreement, or
who becomes prior to the Effective Time, a director or officer
or employee of Eagle or any of its Subsidiaries (the "Indemni-
fied Parties") is, or is threatened to be, made a party based
in whole or in part on, or arising in whole or in part out of,
or pertaining to (i) the fact that he is or was a director,
officer or employee of Eagle or any of its Subsidiaries or any
of their respective predecessors or (ii) this Agreement or the
Option Agreement or any of the transactions contemplated hereby
or thereby, whether in any case asserted or arising before or
after the Effective Time, the parties hereto agree to cooperate
and use their best efforts to defend against and respond there-
to. It is understood and agreed that, after the Effective
Time, Webster shall indemnify and hold harmless, as and to the
fullest extent permitted by applicable law, each such Indemni-
fied Party against any losses, claims, damages, liabilities,
costs, expenses (including reasonable attorney's fees and ex-
penses in advance of the final disposition of any claim, suit,
proceeding or investigation to each Indemnified Party to the
fullest extent permitted by law upon receipt of any undertaking
required by applicable law), judgments, fines and amounts paid
in settlement in connection with any such threatened or actual
claim, action, suit, proceeding or investigation, and in the
event of any such threatened or actual claim, action, suit,
proceeding or investigation (whether asserted or arising before
or after the Effective Time), the Indemnified Parties may re-
tain counsel reasonably satisfactory to Webster; provided, how-
ever, that (1) Webster shall have the right to assume the de-
fense thereof and upon such assumption Webster shall not be
liable to any Indemnified Party for any legal expenses of other
counsel or any other expenses subsequently incurred by any In-
demnified Party in connection with the defense thereof, except
that if Webster elects not to assume such defense or counsel
for the Indemnified Parties reasonably advises the Indemnified
Parties that there are issues which raise conflicts of interest
between Webster and the Indemnified Parties, the Indemnified
Parties may retain counsel reasonably satisfactory to Webster,
and Webster shall pay the reasonable fees and expenses of such
counsel for the Indemnified Parties, (2) Webster shall be obli-
gated pursuant to this paragraph to pay for only one firm of
counsel for each Indemnified Party, and (3) Webster shall not
be liable for any settlement effected without its prior written
consent (which consent shall not be unreasonably withheld or
delayed). Any Indemnified Party wishing to claim indemnifica-
tion under this Section 6.7, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify Webster
thereof; provided, however, that the failure to so notify shall
not affect the obligations of Webster under this Section 6.7
except to the extent such failure to notify materially preju-
dices Webster. Webster's obligations under this Section 6.7
continue in full force and effect for a period of six years
from the Effective Time; provided, however, that all rights to
indemnification in respect of any claim asserted or made within
such period shall continue until the final disposition of such
claim.
(b) Webster shall use commercially reasonable
efforts to cause the persons serving as officers and directors
of Eagle immediately prior to the Effective Time to be covered
by a directors' and officers' liability insurance policy ("Tail
Insurance") of substantially the same coverage and amounts con-
taining terms and conditions which are generally not less ad-
vantageous than Eagle's current policy with respect to acts or
omissions occurring prior to the Effective Time which were com-
mitted by such officers and directors in their capacity as such
for a period not less than one year.
(c) In the event Webster or any of its succes-
sors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger, or (ii) transfers or
conveys all or substantially all of its properties and assets
to any person, then, and in each such case, to the extent nec-
essary, proper provision shall be made so that the successors
and assigns of Webster assume the obligations set forth in this
section.
(d) The provisions of this Section 6.7 are in-
tended to be for the benefit of, and shall be enforceable by,
each Indemnified Party and his or her heirs and representa-
tives.
6.8 SUBSEQUENT INTERIM AND ANNUAL FINANCIAL
STATEMENTS.
As soon as reasonably available, but in no event more
than 45 days after the end of each fiscal quarter (other than
the fourth fiscal quarter), Webster will deliver to Eagle and
Eagle will deliver to Webster their respective Quarterly Re-
ports on Form 10-Q, as filed with the SEC under the Exchange
Act. Each party shall deliver to the other any Current Reports
on Form 8-K promptly after filing such reports with the SEC.
6.9 ADDITIONAL AGREEMENTS.
In case at any time after the Effective Time any fur-
ther action is necessary or desirable to carry out the purposes
of this Agreement, or to vest the Surviving Corporation or the
Surviving Bank with full title to all properties, assets, righ-
ts, approvals, immunities and franchises of any of the parties
to the Merger, or the constituent banks to the Bank Merger, as
the case may be, the proper officers and directors of each
party to this Agreement and Webster's and Eagle's Subsidiaries
shall take all such necessary action as may be reasonably re-
quested by Webster.
6.10 ADVICE OF CHANGES.
Webster and Eagle shall promptly advise the other
party of any change or event that, individually or in the ag-
gregate, has had or would be reasonably certain to have a Mate-
rial Adverse Effect on it or to cause or constitute a material
breach of any of its representations, warranties or covenants
contained herein. From time to time prior to the Effective
Time, each party will promptly supplement or amend its disclo-
sure schedule delivered in connection with the execution of
this Agreement to reflect any matter which, if existing, occur-
ring or known at the date of this Agreement, would have been
required to be set forth or described in such disclosure sched-
ule or which is necessary to correct any information in such
disclosure schedule which has been rendered inaccurate thereby.
No supplement or amendment to such disclosure schedule shall
have any effect for the purpose of determining satisfaction of
the conditions set forth in Sections 7.2(a) or 7.3(a) hereof,
as the case may be, or the compliance by Eagle or Webster, as
the case may be, with the respective covenants set forth in
Sections 5.1 and 5.2 hereof.
6.11 CURRENT INFORMATION.
During the period from the date of this Agreement to
the Effective Time, Eagle will cause one or more of its desig-
nated representatives to confer on a regular and frequent ba-
sis (not less than monthly) with representatives of Webster
and to report the general status of the ongoing operations of
Eagle. Eagle will promptly notify Webster of any material
change in the normal course of business or in the operation of
the properties of Eagle and of any governmental complaints,
investigations or hearings (or communications indicating that
the same may be contemplated), or the institution or the threat
of litigation involving Eagle, and will keep Webster fully in-
formed of such events.
6.12 EXECUTION AND AUTHORIZATION OF BANK MERGER
AGREEMENT.
Prior to the Effective Time, (a) Webster and Eagle
shall each approve the Bank Merger Agreement as the sole stock-
holder of Webster Bank and Eagle Bank, respectively, and (b)
Eagle Bank shall execute and deliver the Bank Merger Agreement.
6.13 CHANGE IN STRUCTURE.
Webster may elect to modify the structure of the
transactions contemplated by this Agreement as noted herein so
long as (i) there are no adverse tax consequences to the Eagle
stockholders as a result of such modification, (ii) the consid-
eration to be paid to the Eagle stockholders under this Agree-
ment is not thereby changed or reduced in amount, and (iii)
such modification will not delay or jeopardize receipt of any
required regulatory approvals. In the event that the structure
of the Merger is modified pursuant to this Section 6.13, the
parties agree to modify this Agreement and the various exhibits
hereto to reflect such revised structure. In such event, Web-
ster shall prepare appropriate amendments to this Agreement and
the exhibits hereto for execution by the parties hereto. Eagle
agrees to cooperate fully with Webster to effect such amend-
ments.
6.14 TRANSACTION EXPENSES OF EAGLE.
As promptly as practicable after the execution of
this Agreement, Eagle will provide to Webster an estimate of
the expenses Eagle expects to incur in connection with the
Merger, and shall keep Webster reasonably informed of material
changes in such estimate.
6.15 AFFILIATE AGREEMENTS.
(a) Not later than the 15th day prior to the mailing
of the Joint Proxy Statement/Prospectus, (i) Webster shall de-
liver to Eagle a schedule of each person that, to the best of
its knowledge, is or is reasonably likely to be, as of the date
of the Webster stockholder meeting called pursuant to Section
6.3, deemed to be an "affiliate" of it (each, a "Webster Affil-
iate") as that term is used in SEC Accounting Series Releases
130 and 135; and (ii) Eagle shall deliver to Webster a schedule
of each person that, to the best of its knowledge, is or is
reasonably likely to be, as of the date of the Eagle stock-
holder meeting called pursuant to Section 6.3, deemed to be an
"affiliate of it (each, an "Eagle Affiliate") as that term is
used in Rule 145 under the Securities Act or SEC Accounting
Series Releases 130 and 135.
(b) Each of Eagle and Webster shall use its respec-
tive reasonable best efforts to cause each person who may be
deemed to be an Eagle Affiliate or a Webster Affiliate, as the
case may be, to execute and deliver to Eagle and Webster on or
before the date of mailing of the Joint Proxy Statement/
Prospectus an agreement in the form attached hereto as Exhibit
D or Exhibit E, respectively.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION
TO EFFECT THE MERGER.
The respective obligation of each party to effect the
Merger shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) STOCKHOLDER APPROVALS.
This Agreement and the Merger shall have been
approved and adopted by the requisite votes of the Eagle stock-
holders and the Webster stockholders.
(b) STOCK EXCHANGE LISTING.
The shares of Webster Common Stock which shall
be issued in the Merger (including the Webster Common Stock
that may be issued upon exercise of the options referred to in
Section 1.6 hereof) upon consummation of the Merger shall have
been authorized for quotation on the Nasdaq Stock Market Na-
tional Market (or such other exchange on which the Webster Com-
mon Stock may become listed).
(c) OTHER APPROVALS.
All regulatory approvals required to consummate
the transactions contemplated hereby shall have been obtained
and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired (all such
approvals and the expiration of all such waiting periods being
referred to herein as the "Requisite Regulatory Approvals").
(d) REGISTRATION STATEMENT.
The Registration Statement shall have become
effective under the Securities Act, and no stop order suspend-
ing the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
initiated or threatened by the SEC.
(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY.
No order, injunction or decree issued by any
court or agency of competent jurisdiction or other legal re-
straint or prohibition (an "Injunction") preventing the consum-
mation of the Merger or any of the other transactions contem-
plated by this Agreement or the Certificate of Merger shall be
in effect. No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or en-
forced by any Governmental Entity which prohibits, restricts or
makes illegal consummation of the Merger. No proceeding initi-
ated by any Governmental Entity seeking an Injunction shall be
pending.
(f) FEDERAL TAX OPINION.
Webster shall have received an opinion from
Wachtell, Lipton, Rosen & Katz, counsel to Webster, and Eagle
shall have received an opinion from Skadden, Arps, Slate,
Meagher & Flom LLP, counsel to Eagle, in form and substance
reasonably satisfactory to Webster or Eagle, respectively, dat-
ed the date of the Effective Time, in each case, substantially
to the effect that on the basis of facts, representations, and
assumptions set forth in such opinion which are consistent with
the state of facts existing at the Effective Time, the Merger
will be treated for federal income tax purposes as a reorgani-
zation within the meaning of Section 368(a) of the Code and
each of Webster and Eagle will be a party to the reorganization
with the meaning of Section 368(b) of the Code and that, ac-
cordingly, for federal income tax purposes, (i) no gain or loss
will be recognized by Webster or Eagle as a result of the
Merger, (ii) no gain or loss will be recognized by the stock-
holders of Eagle who exchange all of the Eagle Common Stock
solely for Webster Common Stock pursuant to the Merger (except
with respect to cash received in lieu of a fractional share
interest in Webster Common Stock), and (iii) the aggregate tax
basis of the Webster Common Stock received by stockholders who
exchange all of their Eagle Common Stock solely for Webster
Common Stock pursuant to the Merger will be the same as the
aggregate tax basis of the Eagle Common Stock surrendered in
exchange therefor (reduced by any amount allocable to a frac-
tional share interest for which cash is received). In render-
ing such opinion, such counsel shall require and, to the extent
such counsel deems necessary or appropriate, may rely upon rep-
resentations and covenants, including those contained in cer-
tificates of officers of Eagle, Webster, their respective af-
filiates and others.
7.2 CONDITIONS TO OBLIGATIONS OF WEBSTER.
The obligation of Webster to effect the Merger is
also subject to the satisfaction or waiver by Webster at or
prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Eagle set
forth in this Agreement shall be true and correct as of the
date of this Agreement and (except to the extent such represen-
tations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date; pro-
vided, however, that for purposes of this paragraph, such rep-
resentations and warranties shall be deemed to be true and cor-
rect, unless the failure or failures of such representations
and warranties to be so true and correct, individually or in
the aggregate, would have a Material Adverse Effect on Eagle.
Such determination of aggregate Material Adverse Effect shall
be made as if there were no materiality qualifications in such
representations and warranties. Webster shall have received a
certificate signed on behalf of Eagle by each of the President
and Chief Executive Officer and the Chief Financial Officer of
Eagle to the foregoing effect.
(b) PERFORMANCE OF COVENANTS AND
AGREEMENTS OF EAGLE
Eagle shall have performed in all material re-
spects all covenants and agreements required to be performed by
it under this Agreement at or prior to the Closing Date. Web-
ster shall have received a certificate signed on behalf of
Eagle by each of the President and Chief Executive Officer and
the Chief Financial Officer of Eagle to such effect.
(c) POOLING OF INTERESTS.
Webster shall have received as of the Effective
Time, a written opinion of KPMG Peat Marwick LLP to the effect
that the Merger will be accounted for as a pooling-of-
interests.
7.3 CONDITIONS TO OBLIGATIONS OF EAGLE.
The obligation of Eagle to effect the Merger is also
subject to the satisfaction or waiver by Eagle at or prior to
the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Webster
set forth in this Agreement shall be true and correct as of the
date of this Agreement and (except to the extent such represen-
tations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date; pro-
vided, however, that for purposes of this paragraph, such rep-
resentations and warranties shall be deemed to be true and cor-
rect, unless the failure or failures of such representations
and warranties to be so true and correct, individually or in
the aggregate, would have a Material Adverse Effect on Webster.
Such determination of aggregate Material Adverse Effect shall
be made as if there were no materiality qualifications in such
representations and warranties. Eagle shall have received a
certificate signed on behalf of Webster by each of the Presi-
dent and Chief Executive Officer and the Chief Financial Of-
ficer of Webster to the foregoing effect.
(b) PERFORMANCE OF COVENANTS AND
AGREEMENTS OF WEBSTER.
Webster shall have performed in all material
respects all covenants and agreements required to be performed
by it under this Agreement at or prior to the Closing Date.
Eagle shall have received a certificate signed on behalf of
Webster by each of the President and Chief Executive Officer
and the Chief Financial Officer of Webster to such effect.
(c) POOLING OF INTERESTS.
Webster shall have received as of the Effective
Time, a written opinion of KPMG Peat Marwick LLP to the effect
that the Merger will be accounted for as a pooling-of-
interests.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION.
This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of this
Agreement by the stockholders of Eagle or Webster:
(a) by mutual consent of Webster and Eagle in a
written instrument, if the Board of Directors of each so deter-
mines by a vote of a majority of the members of its entire
Board;
(b) by either Webster or Eagle upon written
notice to the other party (i) 30 days after the date on which
any request or application for a Requisite Regulatory Approval
shall have been denied or withdrawn at the request or recom-
mendation of the Governmental Entity which must grant such Req-
uisite Regulatory Approval, unless within the 30-day period
following such denial or withdrawal the parties agree to file,
and have filed with the applicable Governmental Entity, a peti-
tion for rehearing or an amended application, provided, how-
ever, that no party shall have the right to terminate this
Agreement, if such denial or request or recommendation for
withdrawal shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants
and agreements of such party set forth herein;
(c) by either Webster or Eagle if the Merger
shall not have been consummated on or before September 30,
1998, unless the failure of the Closing to occur by such date
shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe the covenants and agree-
ments of such party set forth herein;
(d) by either Webster or Eagle (provided that
the terminating party is not in breach of its obligations under
Section 6.3 hereof) if the approval of the stockholders of
Eagle or Webster required for the consummation of the Merger
shall not have been obtained by reason of the failure to obtain
the required vote at the respective duly held meetings of
stockholders or at any adjournment or postponement thereof;
(e) by either Webster or Eagle (provided that
the terminating party is not then in breach of any representa-
tion, warranty, covenant or other agreement contained herein
that, individually or in the aggregate, would give the other
party the right to terminate this Agreement) if there shall
have been a breach of any of the representations or warranties
set forth in this Agreement on the part of the other party, if
such breach, individually or in the aggregate, has had or would
be reasonably certain to have a Material Adverse Effect on the
breaching party, and such breach shall not have been cured
within 30 days following receipt by the breaching party of
written notice of such breach from the other party hereto or
such breach, by its nature, cannot be cured prior to the Clos-
ing;
(f) by either Webster or Eagle (provided that
the terminating party is not then in breach of any representa-
tion, warranty, covenant or other agreement contained herein
that, individually or in the aggregate, would give the other
party the right to terminate this Agreement) if there shall
have been a material breach of any of the covenants or agree-
ments set forth in this Agreement on the part of the other par-
ty, and such breach shall not have been cured within 30 days
following receipt by the breaching party of written notice of
such breach from the other party hereto or such breach, by its
nature, cannot be cured prior to the Closing;
(g) by either the Board of Directors of Webster
or the Board of Directors of Eagle, if the Board of Directors
of the other party shall have withdrawn, modified or changed in
a manner adverse to the terminating party its approval or rec-
ommendation of this Agreement and the transactions contemplated
thereby; and
(h) by the Board of Directors of Eagle, upon
written notice to Webster at any time during the ten-day period
commencing two days after the Determination Date (as defined
below), if both of the following conditions are satisfied:
(i) the Average Closing Price shall be less than the
product of 0.80 and the Starting Price; and
(ii) (A) the quotient obtained by dividing the Aver-
age Closing Price by the Starting Price (such
number being referred to herein as the "Webster
Ratio") shall be less than (B) the quotient ob-
tained by dividing the Average Index Price by
the Index Price on the Starting Date and sub-
tracting 0.15 from the quotient in this clause
(ii)(B) (such number being referred to herein as
the "Index Ratio");
subject, however, to the following provisions. If Eagle elects
to exercise its termination right pursuant to the immediately
preceding sentence, it shall give prompt written notice to Web-
ster; provided, however, that such notice of election to termi-
nation may be withdrawn at any time within the aforementioned
ten-day period. During the five-day period commencing with its
receipt of such notice, Webster shall have the option to elect
to increase the Exchange Ratio to equal the lesser of (i) the
quotient obtained by dividing (A) the product of 0.80, the
Starting Price and the Exchange Ratio (as then in effect) by
(B) the Average Closing Price, and (ii) the quotient obtained
by dividing (A) the product of the Index Ratio and the Exchange
Ratio (as then in effect) by (B) the Webster Ratio. If Webster
makes such an election within such five-day period, it shall
give prompt written notice to Eagle of such election and of the
revised Exchange Ratio, whereupon no termination shall have
occurred pursuant to this Section 8.1(h) and this Agreement
shall remain in effect in accordance with its terms (except as
the Exchange Ratio shall have been so modified), and any refer-
ences in this Agreement to "Exchange Ratio" shall thereafter be
deemed to refer to the Exchange Ratio as adjusted pursuant to
this Section 8.1(h) (and corresponding a corresponding modifi-
cation shall be made to the Maximum Share Amount).
For purposes of this Section 8.1(h), the following
terms shall have the meanings indicated:
"Average Closing Price" means the average of the
daily last sale prices of Webster Common Stock as reported on
Nasdaq (as reported in The Wall Street Journal or, if not re-
ported therein, in another mutually agreed upon authoritative
source) for the ten consecutive full trading days in which such
shares are traded on Nasdaq ending at the close of trading on
the Determination Date.
"Average Index Price" means the average of the Index
Prices for the ten consecutive full trading days ending at the
close of trading on the Determination Date.
"Determination Date" means the date on which the ap-
proval of the OTS required for consummation of the Merger shall
be received.
"Index Group" means the 16 savings and loan holding
companies listed below, the common stocks of all of which shall
be publicly traded and as to which there shall not have been,
since the Starting Date and before the Determination Date, an
announcement of a proposal for such company to be acquired or
for such company to acquire another company or companies in
transactions with a value exceeding 25% of the acquiror's mar-
ket capitalization as of the Starting Date. In the event that
the common stock of any such company ceases to be publicly
traded or any such announcement is made with respect to any
such company, such company shall be removed from the Index
Group, and the weights (which have been determined based on the
number of outstanding shares of common stock) redistributed
proportionately for purposes of determining the Index Price.
The 16 savings and loan holding companies and the weights at-
tributed to them are as follows:
Holding Company Weighting (%)
Washington Federal..................12.39
Bank United Corp.....................8.25
Peoples Heritage Financial Group.....7.17
Astoria Financial Corp...............5.48
Commercial Federal Corp..............5.63
Roslyn Bancorp Inc..................11.39
St. Paul Bancorp Inc.................8.91
Downey Financial Corp................6.98
TR Financial Corp....................4.57
Queens County Bancorp Inc............3.94
Westcorp.............................6.84
ALBANK Financial Corp................3.36
MAF Bancorp Inc......................4.02
CFX Corp.............................6.26
CitFed Bancorp Inc...................2.25
JSB Financial Inc....................2.57
"Index Price" on a given date means the weighted av-
erage (weighted in accordance with the factors listed above) of
the closing prices on such date of the companies comprising the
Index Group.
"Starting Date" means the last full day on which Nas-
daq was open for trading prior to the execution of this Agree-
ment.
"Starting Price" shall mean the last sale price per
share of Webster Common Stock on the Starting Date, as reported
on Nasdaq (as reported in The Wall Street Journal or, if not
reported therein, in another mutually agreed upon authoritative
source).
If Webster or any company belonging to the Index
Group declares or effects a stock dividend, reclassification,
recapitalization, slit-up, combination, exchange of shares or
similar transaction between the Starting Date and the Determi-
nation Date, the prices for the common stock of such company
shall be appropriately adjusted for the purposes of applying
this Section 8.1(h).
8.2 EFFECT OF TERMINATION.
In the event of termination of this Agreement by ei-
ther Webster or Eagle as provided in Section 8.1 hereof, this
Agreement shall forthwith become void and have no effect except
(i) the last sentences of Sections 6.2(a) and 6.2(b) and Sec-
tions 8.2, 9.2 and 9.3 hereof shall survive any termination of
this Agreement, and (ii) notwithstanding anything to the con-
trary contained in this Agreement, no party shall be relieved
or released from any liabilities or damages arising out of its
willful or intentional breach of any provision of this Agree-
ment.
8.3 AMENDMENT.
Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken
or authorized by their respective Board of Directors, at any
time before or after approval of the matters presented in con-
nection with the Merger by the stockholders of Eagle; provided,
however, that after any approval of the transactions contem-
plated by this Agreement by Eagle's stockholders, there may not
be, without further approval of such stockholders, any amend-
ment of this Agreement which reduces the amount or changes the
form of the consideration to be delivered to Eagle stockholders
hereunder other than as contemplated by this Agreement. This
Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
8.4 EXTENSION; WAIVER.
At any time prior to the Effective Time, the parties
hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, (a)
extend the time for the performance of any of the obligations
or other acts of the other parties hereto, (b) waive any inac-
curacies in the representations and warranties contained herein
or in any document delivered pursuant hereto, and (c) waive
compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance
with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subse-
quent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 CLOSING.
Subject to the terms and conditions of this Agree-
ment, the closing of the Merger (the "Closing") will take place
at 10:00 a.m. at the main offices of Webster on (i) the fif-
teenth day after the last Requisite Regulatory Approval is re-
ceived and all applicable waiting periods have expired, or (ii)
such other date, place and time as the parties may agree (the
"Closing Date").
9.2 NONSURVIVAL OF REPRESENTATIONS,
WARRANTIES AND AGREEMENTS.
None of the representations, warranties, covenants
and agreements in this Agreement or in any instrument delivered
pursuant to this Agreement (other than pursuant to the Option
Agreement, which shall terminate in accordance with its terms)
shall survive the Effective Time, except for those covenants
and agreements contained herein and therein which by their
terms apply in whole or in part after the Effective Time.
9.3 EXPENSES.
All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expense, except that all
filing and other fees paid to the SEC in connection with this
Agreement and printing fees in connection with the Joint Proxy
Statement/Prospectus shall be borne equally by Webster and
Eagle. Notwithstanding the foregoing and without limitation of
any party's rights under clause (ii) of Section 8.2, in the
event that this Agreement is terminated by either Webster or
Eagle by reason of a material breach pursuant to Sections
8.1(e) or (f) hereof, the other party shall pay all documented,
reasonable costs and expenses up to $1,500,000 incurred by the
terminating party in connection with this Agreement and the
transactions contemplated hereby.
9.4 NOTICES.
All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered person-
ally, mailed by registered or certified mail (return receipt
requested) or delivered by an express courier (with confirma-
tion) to the parties at the following addresses (or at such
other address for a party as shall be specified by like no-
tice):
(a) if to Webster, to:
Webster Financial Corporation
Webster Plaza
145 Bank Street
Waterbury, Connecticut 06702
Attn.: James C. Smith
Chairman and Chief
Executive Officer
WITH A COPY TO:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attn.: Craig M. Wasserman, Esq.
and
(b) if to Eagle, to:
Eagle Financial Corp.
222 Main Street
Bristol, CT 06010
Attn.: Robert J. Britton
President and Chief
Executive Officer
WITH A COPY TO:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue, 5th Floor
New York, New York 10022
Attn.: William S. Rubenstein, Esq.
9.5 INTERPRETATION.
When a reference is made in this Agreement to Sec-
tions, Exhibits or Schedules, such reference shall be to a Sec-
tion of or an Exhibit or Schedule to this Agreement unless oth-
erwise indicated. The table of contents and headings contained
in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agree-
ment. Whenever the words "include", "includes" or "including"
are used in this Agreement, they shall be deemed to be followed
by the words "without limitation". No provision of this Agree-
ment shall be construed to require Webster, Eagle or any of
their respective Subsidiaries or affiliates to take any action
that would violate any applicable law, rule or regulation.
9.6 COUNTERPARTS.
This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by
each of the parties and delivered to the other parties, it
being understood that all parties need not sign the same coun-
terpart.
9.7 ENTIRE AGREEMENT.
This Agreement (including the disclosure schedules,
documents and the instruments referred to herein) constitutes
the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof, other than the Confi-
dentiality Agreement, the Bank Merger Agreement, the Certifi-
cate of Merger and the Option Agreement.
9.8 GOVERNING LAW.
This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without re-
gard to any applicable conflicts of law rules.
9.9 ENFORCEMENT OF AGREEMENT.
The parties hereto agree that irreparable damage
would occur in the event that the provisions of this Agreement
were not performed in accordance with its specific terms or
were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically
the terms and provisions thereof in any court of the United
States or any state having jurisdiction, this being in addition
to any other remedy to which they are entitled at law or in
equity.
9.10 SEVERABILITY.
Any term or provision of this Agreement which is in-
valid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affect-
ing the validity or enforceability of any of the terms or pro-
visions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable,
the provision shall be interpreted to be only so broad as is
enforceable.
9.11 PUBLICITY.
Except as otherwise required by law or the rules of
the Nasdaq Stock Market National Market (or such other exchange
on which the Webster Common Stock may become listed), so long
as this Agreement is in effect, neither Webster nor Eagle
shall, or shall permit any of Webster's or Eagle's Subsidiaries
to, issue or cause the publication of any press release or
other public announcement with respect to, or otherwise make
any public statement concerning, the transactions contemplated
by this Agreement, the Bank Merger Agreement or the Option
Agreement without the consent of the other party, which consent
shall not be unreasonably withheld.
9.12 ASSIGNMENT; LIMITATION OF BENEFITS.
Neither this Agreement nor any of the rights, inter-
ests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) with-
out the prior written consent of the other parties. Subject to
the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and
their respective successors and assigns. Except as otherwise
specifically provided in Section 6.7 hereof, this Agreement
(including the documents and instruments referred to herein) is
not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder, and the covenants,
undertakings and agreements set out herein shall be solely for
the benefit of, and shall be enforceable only by, the parties
hereto and their permitted assigns.
9.13 ADDITIONAL DEFINITIONS.
In addition to any other definitions contained in
this Agreement, the following words, terms and phrases shall
have the following meanings when used in this Agreement.
"Affiliated Person": any director, officer or 5%
or greater stockholder, spouse or other person living in the
same household of such director, officer or stockholder, or any
company, partnership or trust in which any of the foregoing
persons is an officer, 10% or greater stockholder, general
partner or 10% or greater trust beneficiary.
"Laws": any and all statutes, laws, ordinances,
rules, regulations, orders, permits, judgments, injunctions,
decrees, case law and other rules of law enacted, promulgated
or issued by any Governmental Entity.
"Material Adverse Effect": with respect to Webster
or Eagle, as the case may be, means a condition, event, change
or occurrence that has had or is reasonably certain to have a
material adverse effect upon (A) the financial condition, re-
sults of operations or business of such party and its Subsid-
iaries, taken as a whole, or (B) the ability of Webster or
Eagle to timely perform its obligations under, and to consum-
mate the transactions contemplated by, this Agreement and the
Option Agreement; provided, however, that in determining
whether a Material Adverse Effect has occurred there shall be
excluded any effect on the referenced party the cause of which
is (i) any change in banking or similar laws, rules or regula-
tions of general applicability or interpretations thereto by
courts or governmental authorities, (ii) any change in gener-
ally accepted accounting principles or regulatory accounting
requirements applicable to banks, thrifts or their holding com-
panies generally, (iii) any action or omission of Eagle or Web-
ster or any Subsidiary of either of them taken with the prior
written consent of Webster or Eagle, as applicable, in contem-
plation of the Merger, (iv) any expenses reasonably incurred by
such party in connection with this Agreement or the transac-
tions contemplated hereby and (v) any changes in general eco-
nomic conditions affecting banks, thrifts or their holding com-
panies generally.
"Subsidiary": with respect to any party means any
corporation, partnership or other organization, whether incor-
porated or unincorporated, which is consolidated with such par-
ty for financial reporting purposes.
IN WITNESS WHEREOF, Webster and Eagle have caused
this Agreement to be executed and delivered by their respective
officers thereunto duly authorized as of the date first above
written.
WEBSTER FINANCIAL CORPORATION
By: /s/ James C. Smith
Name: James C. Smith
Title: Chairman and Chief
Executive Officer
EAGLE FINANCIAL CORP.
By: /s/ Robert J. Britton
Name: Robert J. Britton
Title: President and Chief
Executive Officer
[Merger Agreement]
EXHIBIT 99.1
WEBSTER FINANCIAL CORP. TO JOIN FORCES WITH EAGLE FINANCIAL CORP.
IN MERGER
Monday, October 27, 1997 08:36 AM
> WATERBURY, Conn. -- Webster Financial Corporation (Nasdaq:
WBST) today announced a definitive agreement to acquire Eagle
Financial Corp. (Nasdaq: EGFC) on a stock-for-stock basis in a
tax-free exchange fixed at 0.84 shares of Webster common stock
for each share of Eagle common stock. Eagle, the fourth largest
Connecticut-based bank with total assets of $2.1 billion,
operates 30 branches in Hartford and Litchfield counties. With
the addition of Eagle, Webster will have $8.9 billion in assets
and more than 110 branches.
The definitive agreement, which has been approved by both
companies' boards of directors, is subject to the approval of
Webster's and Eagle's shareholders and the appropriate regulatory
agencies. Webster expects the transaction to close in the first
quarter of 1998.
"We are extremely pleased to be joining forces with one of
Connecticut's leading banks," said James C. Smith, Webster's
chairman and chief executive officer. "This is a natural
alliance between two like-minded, customer- and community-
oriented banks. Both banks' employees are dedicated to providing
excellent customer service, and both companies have strong
commitments to the communities they serve. This merger will
allow our combined organization to offer more convenient and
accessible banking services to our customers."
Under terms of the agreement, Eagle shareholders will receive a
fixed exchange of 0.84 shares of Webster common stock for each
share of Eagle common stock. To illustrate the value of this
transaction at a given point in time, using Webster's closing
stock price on Friday, Oct. 24, of $66.00 per share, the
transaction would have a value of $55.44 per share to Eagle
shareholders and an approximate transaction value of $362
million.
The acquisition, which is expected to have a positive impact on
Webster's earnings per share beginning in the first year, will be
accounted for as a pooling of interests. The purchase price is
approximately 2.50 times Eagle's book value and 18.97 times
Eagle's estimated 1998 earnings and 16.43 times Eagle's estimated
1998 cash earnings per share. Webster currently anticipates
recognizing acquisition related charges of approximately $18.9
million before taxes.
Robert J. Britton, Eagle's president and chief executive officer,
said, "Webster and Eagle fit well together because of our common
understanding of our customers and our markets. Eagle has sought
to be a good corporate citizen in the communities where our
customers live. We are pleased that Webster has demonstrated the
same commitment. The merger increases our capacity to provide
financial services, including expanded business banking, as well
as new services such as trust and investment management and PC
banking, to our growing numbers of customers."
The merger will increase Webster's assets to $8.9 billion and its
deposits to $5.6 billion, representing 10.8 percent of total
deposits in Connecticut. "Webster will strengthen its position
as number two in deposit market share in Hartford and New Haven
counties, and will immediately gain the top deposit market share
in Litchfield County," said John V. Brennan, Webster's executive
vice president and chief financial officer. Webster will have
more than 110 branches and more than 130 ATMs.
"Webster guarantees positions in our combined branch network to
all Eagle non-management branch employees. When two similar
companies combine to form a stronger bank, there will inevitably
be duplication of duties, resulting in some job eliminations,"
Brennan said. "While we have not yet finalized the number of
overlapping positions, we will do all we can to keep the number
of position eliminations to a minimum, as in past mergers.
Employees whose positions are eliminated at Eagle will be given
preference for open positions at Webster. Our history
demonstrates a pattern of successfully placing most employees
affected by our mergers."
Regarding potential branch consolidation, Brennan said that some
branches, because of geographic proximity, will be consolidated.
"We have not determined the number and locations. Usually where
branches are on opposite corners of the street or within a mile
of each other, we can consolidate the offices without disruption
to customers," Brennan said. "It is important to note that both
Eagle and Webster customers will have more branches and more ATMs
following this merger."
Webster Financial Corporation, headquartered in Waterbury, Conn.,
is the holding company for Webster Bank, which was founded in
1935 and is a leading financial institution in Connecticut.
Webster Bank, its primary subsidiary, delivers consumer,
commercial, mortgage, and trust and investment management
services to individuals, families and businesses in Connecticut.
Webster operates through a network of 84 banking offices, three
commercial banking centers, six trust offices and more than 100
ATMS, in addition to telephone banking, video banking and PC
banking.
Webster Bank, with $6.8 billion in assets, is the second-largest
bank based in Connecticut and has the second largest deposit
market share in Hartford and New Haven counties. Webster is also
the second-largest mortgage lender in Connecticut and a leading
commercial lender with an extensive line of business services,
including international and cash management. Webster Trust, the
bank's new trust and investment management subsidiary, is the
second-largest bank trust company based in Connecticut.
Eagle Bank offers a full array of innovative products and
services for the retail and commercial market, including 24-hour
telephone banking, loans by phone, cash management services,
debit cards, alternative investment products and a full line of
deposit and loan products. Eagle operates 26 traditional branch
offices and four supermarket branch offices in Hartford and
Litchfield counties.
Webster Bank / Eagle Bank - Facts
Strategic Benefits
-- In-market acquisition with positive impact on earnings per
share beginning in year one
-- Strengthens franchise in Hartford and Litchfield counties
-- Increases branches to more than 110, ATMs to 130, creating
greater convenience for combined customer base
-- Provides cross-sell opportunities for Webster's commercial
trust, and investment management services
Transaction Summary
Terms
-- Fixed Exchange Ratio: 0.84 shares of Webster for each share
of Eagle
-- Payment: Tax-free exchange of stock
-- Implied Price Per Share: $55.44 (based on Webster's closing
price of $66 on 10/24)
-- Estimated Transaction Value: Aprox. $362 million
-- Price to Eagle Book Value: 2.50 times
-- Price to Eagle 1998 Estimated Fully Diluted Earnings: 18.97
times
-- Price to Eagle 1998 Estimated Cash Earnings: 16.43 times
-- Eagle can terminate the agreement should Webster's stock price
decline by more than 20 percent and more than 15 percent relative
to a peer index
Financial Summary
Webster Bank Eagle bank Combined
Total Assets: $6.8 billion $2.1 billion $8.9 billion
Loans, Net: $3.7 billion $1.1 billion $4.9 billion
Deposits: $4.3 billion $1.4 billion $5.6 billion
Eagle Branch Listing
Avon Big Y Supermarket, West Main St.
Berlin (Kensington) one Webster Square
346 Main St.
51 Chamberland Highway
Bloomfield Stop & Shop, 20-22 Mountain Road
782 Park Ave,
Bristol 222 Main St.
Bristol Commons, 9 Farmington Ave.
Bristol Farms, 1235 Farmington Ave.
Pine Plaza, 785 Pine St.
Canton Canton Village, Route 44
East Hartford Big Y Supermarket, 295 Ellington Road
Glastonbury Stop & Shop, Naubuc Ave.
Hartford 108 Farmington Ave.
324 Franklin Ave.
50 State House Square
Litchfield West Street
Manchester 1147 Tolland Turnpike
New Britain One Liberty Square
747 Farmington Ave.
Newington 1120 Main St.
Plainville 63 East Main St.
Rocky Hill 53 New Britain Ave.
Simsbury Farmington Valley Mall
Terryville 115 Main St.
Torrington 50 Litchfield St.
1180 East Main St.
West Hartford 75 Park Road
Bishops Corner, 774 North Main St.
Winsted Shops at Ledgebrook Plaza, Route 44
TOTAL: 30
/CONTACT: Christopher Capot, media, 203-578-2461, or John V.
Brennan, investors,
203-578-2335, both of Webster; or Robert J. Britton, media, 860-
314-6411, or Mark J. Blum, investors, 860-314-6410, both of
Eagle/
Quote for referenced ticker symbols: EGFC, WBST
1997, PR Newswire
EXHIBIT 99.2
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
AMENDMENT NO. 1, dated as of October 26, 1997 (this
"Amendment"), to the Rights Agreement, dated as of October 22, 1996
(the "Rights Agreement"), between Eagle Financial Corp., a Delaware
corporation (the "Company"), and The First National Bank of Boston, as
rights agent (the "Rights Agent").
WITNESSETH
WHEREAS, the Company and the Rights Agent have previously
entered into the Rights Agreement; and
WHEREAS, no Distribution Date (as defined in Section 3(a) of
the Rights Agreement) has occurred as of the date of this Amendment;
and
WHEREAS, Section 27 of the Rights Agreement provides that
the Company may from time to time supplement or amend the Rights
Agreement in accordance with the terms of Section 27; and
WHEREAS, the Company and Webster Financial Corporation, a
Delaware corporation ("Webster"), have entered into an Agreement and
Plan of Merger, dated as of October 26, 1997 (the "Merger Agreement"),
pursuant to which the Company will merge with and into Webster with
Webster as the surviving corporation in the merger; and
WHEREAS, in connection with the Merger Agreement, the
Company and Webster have entered into a Stock Option Agreement, dated
as of October 26, 1997, pursuant to which the Company has granted to
Webster an option to purchase certain shares of the Company's Common
Stock under certain circumstances and upon certain terms and
conditions; and
WHEREAS, the Board of Directors has determined that the
transactions contemplated by the Merger Agreement are in the best
interests of the Company and its stockholders; and
WHEREAS, the Board of Directors has determined that it is in
the best interest of the Company and its stockholders to amend the
Rights Agreement to exempt the Merger Agreement, the Option Agreement
and the transactions contemplated thereby (including, without
limitation, the option granted pursuant to the Option Agreement) from
the application of the Rights Agreement; and
WHEREAS, the Board of Directors of the Company has approved
and adopted this Amendment and directed that the proper officers take
all appropriate steps to execute and put into effect this Amendment.
NOW, THEREFORE, the Company hereby amends the Rights
Agreement as follows:
1. Section 1(a) of the Rights Agreement is hereby amended
by inserting the following proviso at the end thereof;
"; provided, however, that, until the termination
of the Merger Agreement and the Stock Option
Agreement (each as defined below) in accordance
with their respective terms, neither Webster
Financial Corporation, a Delaware corporation
("Webster"), nor any Affiliate or Associate of
Webster (collectively with Webster, the "Webster
Parties") shall be deemed to be an Acquiring
Person by virtue of the fact that Webster is the
Beneficial Owner solely of shares of Common Stock
(i) of which any Webster Party is or becomes the
Beneficial Owner by reason of the approval,
execution or delivery of the Agreement and Plan of
Merger, dated as of October 26, 1997, by and
between the Company and Webster, as may be amended
from time to time (the "Merger Agreement"), or the
Stock Option Agreement, dated as of October 26,
1997, between the Company, as issuer, and Webster,
as grantee, as may be amended from time to time
(the "Stock Option Agreement"), or by reason of
the consummation of any transaction contemplated
in the Merger Agreement, the Stock Option
Agreement or both, (ii) of which any Webster Party
is the Beneficial Owner on the date hereof, (iii)
of which any Webster Party becomes the Beneficial
Owner after the date hereof, provided, however,
that the aggregate number of shares of Common
Stock which may be Beneficially Owned by the
Webster Parties pursuant to this clause (iii)
shall not exceed 1% of the shares of Common Stock
outstanding, (iv) acquired in satisfaction of
debts contracted prior to the date hereof by any
Webster Party in good faith in the ordinary course
of such Webster Party's banking business, (v) held
by any Webster Party in a bona fide fiduciary or
depository capacity, or (vi) owned in the ordinary
course of business by either (A) an investment
company registered under the Investment Company
Act of 1940, as amended, or (B) an investment
account, in either case for which any Webster
Party acts as investment advisor."
2. Section 11(a)(ii)(A) of the Rights Agreement is hereby
modified and amended to read in its entirety as follows:
"any Person shall at any time after the Rights Dividend
Declaration Date become an Acquiring Person, unless the
event causing such Person to become an Acquiring Person is a
transaction set forth in Section 13(a) hereof; or"
3. Section 13 of the Rights Agreement is hereby amended to
add the following subsection (e) at the end thereof:
"Notwithstanding any other provision of this Agreement, at
the Effective Time (as defined in the Merger Agreement), the
Common Stock will be converted into the consideration
provided for in the Merger Agreement, and all Rights
attached thereto shall simultaneously be extinguished with
no additional consideration being paid on account thereof."
4. Section 15 of the Rights Agreement is hereby modified
and amended to add the following sentence at the end thereof:
"Nothing in this Agreement shall be construed to give any
holder of Rights or any other Person any legal or equitable
rights, remedies or claims under this Agreement in
connection with any transactions contemplated by the Merger
Agreement or the Stock Option Agreement."
5. This Amendment shall be deemed to be in force and
effective immediately prior to the execution and delivery of the
Merger Agreement. Except as amended hereby, the Rights Agreement
shall remain in full force and effect and shall be otherwise
unaffected hereby.
6. Capitalized terms used in this Amendment and not
defined herein shall have the meanings assigned thereto in the Rights
Agreement.
7. This Amendment may be executed in any number of
counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
8. In all respects not inconsistent with the terms and
provisions of this Amendment, the Rights Agreement is hereby ratified,
adopted, approved and confirmed. In executing and delivering this
Amendment, the Rights Agent shall be entitled to all the privileges
and immunities afforded to the Rights Agent under the terms and
conditions of the Rights Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to be duly executed and their respective corporate
seals to be hereunto affixed and attested, all as of the day and year
first above written.
ATTEST: EAGLE FINANCIAL CORP.
By: /s/ Kenneth Burns By: /s/ Robert J. Britton
Name: Kenneth Burns Name: Robert J. Britton
Title: Vice President Title: President and CEO
ATTEST: THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Peg Prentis By: /s/ Carol Mulvey-Eori
Name: Peg Prentis Name: Carol Mulvey-Eori
Title: Director, Client Services Title: Director, Client Services
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated October 26, 1997, be-
tween Eagle Financial Corp., a Delaware corporation ("Issuer"),
and Webster Financial Corporation, a Delaware corporation
("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an
Agreement and Plan of Merger of even date herewith (the "Merger
Agreement"), which agreement has been executed by the parties
hereto immediately prior to this Stock Option Agreement (the
"Agreement"); and
WHEREAS, as a condition to Grantee's entering into
the Merger Agreement and in consideration therefor, Issuer has
agreed to grant Grantee the Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and
the mutual covenants and agreements set forth herein and in the
Merger Agreement, the parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an uncondi-
tional, irrevocable option (the "Option") to purchase, subject
to the terms hereof, up to 1,256,991 fully paid and nonassess-
able shares of Issuer's Common Stock, par value $0.01 per share
("Common Stock"), at a price of $41.25 per share (the "Option
Price"); provided, however, that in no event shall the number
of shares of Common Stock for which this Option is exercisable
exceed 19.9% of the Issuer's issued and outstanding shares of
Common Stock without giving effect to any shares subject to or
issued pursuant to the Option. The number of shares of Common
Stock that may be received upon the exercise of the Option and
the Option Price are subject to adjustment as herein set forth.
(b) Notwithstanding anything in this Agreement or
the Merger Agreement to the contrary, (i) Grantee acknowledges
that, as of the date of this Agreement, Issuer does not have a
sufficient number of authorized but unreserved shares of Common
Stock available to fulfill its obligations under this Agreement
with respect to the issuance of the full number of shares cov-
ered by the Option, (ii) Issuer shall use its best efforts to
take any corporate action necessary to cure such insufficiency
(including, without limitation, using its best efforts to ob-
tain any required vote of Issuer's stockholders) at such time
as is appropriate to preserve Issuer's rights hereunder (but in
any event as promptly as practicable after the occurrence of an
Initial Triggering Event); and (iii) Grantee agrees that there
shall not be any breach or default under, or any liability of
Issuer in respect of, any representation, warranty, covenant or
agreement of Issuer in this Agreement or the Merger Agreement
based solely on the inability of Issuer to issue such full num-
ber of shares, or the fact of such inability, provided that
Issuer has complied with its obligations set forth in clause
(ii) of this Section 1(b).
(c) In the event that any additional shares of Com-
mon Stock are either (i) issued or otherwise become outstanding
after the date of this Agreement (other than pursuant to this
Agreement) or (ii) redeemed, repurchased, retired or otherwise
cease to be outstanding after the date of the Agreement, the
number of shares of Common Stock subject to the Option shall be
increased or decreased, as appropriate, so that, after such
issuance, such number equals 19.9% of the number of shares of
Common Stock then issued and outstanding without giving effect
to any shares subject or issued pursuant to the Option. Noth-
ing contained in this Section 1(b) or elsewhere in this Agree-
ment shall be deemed to authorize Issuer or Grantee to breach
any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may ex-
ercise the Option, in whole or part, and from time to time, if,
but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter de-
fined) shall have occurred prior to the occurrence of an Exer-
cise Termination Event (as hereinafter defined), provided that
the Holder shall have sent the written notice of such exercise
(as provided in subsection (e) of this Section 2) within 90
days following such Subsequent Triggering Event. Each of the
following shall be an "Exercise Termination Event": (i) the
Effective Time (as defined in the Merger Agreement) of the Mer-
ger; (ii) termination of the Merger Agreement in accordance
with the provisions thereof if such termination occurs prior to
the occurrence of an Initial Triggering Event except a termina-
tion by Grantee pursuant to Section 8.1(e) or Section 8.1(f) of
the Merger Agreement (in each case, unless the breach by Issuer
giving rise to such right of termination is non-volitional); or
(iii) the passage of 12 months after termination of the Merger
Agreement if such termination follows the occurrence of an Ini-
tial Triggering Event or is a termination by Grantee pursuant
to Section 8.1(e) or Section 8.1(f) of the Merger Agreement (in
each case, unless the breach by Issuer giving rise to such
right of termination is non-volitional). The term "Holder"
shall mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean
any of the following events or transactions occurring after the
date hereof:
1. Issuer or any of its Subsidiaries (each
an "Issuer Subsidiary"), without having received Grant-
ee's prior written consent, shall have entered into an
agreement to engage in an Acquisition Transaction (as
hereinafter defined) with any person (the term "person"
for purposes of this Agreement having the meaning as-
signed thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934
Act"), and the rules and regulations thereunder) other
than Grantee or any of its Subsidiaries (each a "Grantee
Subsidiary") or the Board of Directors of Issuer shall
have recommended that the stockholders of Issuer approve
or accept any Acquisition Transaction. For purposes of
this Agreement, "Acquisition Transaction" shall mean (w)
a merger or consolidation, or any similar transaction,
involving Issuer or any Significant Subsidiary (as de-
fined in Rule 1-02 of Regulation S-X promulgated by the
Securities and Exchange Commission (the "SEC")) of Is-
suer, (x) a purchase, lease or other acquisition or as-
sumption of all or a substantial portion of the assets
or deposits of Issuer or any Significant Subsidiary of
Issuer, (y) a purchase or other acquisition (including
by way of merger, consolidation, share exchange or oth-
erwise) of securities representing 10% or more of the
voting power of Issuer, or (z) any substantially similar
transaction; provided, however, that in no event shall
any (i) merger, consolidation, purchase or similar
transaction involving only the Issuer and one or more of
its Subsidiaries or involving only any two or more of
such Subsidiaries or (ii) merger or consolidation as to
which the common stockholders of the Issuer immediately
prior thereto own in the aggregate at least 60% of the
common stock of the surviving corporation or its pub-
licly held parent corporation immediately following con-
summation thereof be deemed to be an Acquisition Trans-
action, provided that any such transaction is not en-
tered into in violation of the terms of the Merger
Agreement;
2. Issuer or any Issuer Subsidiary, without
having received Grantee's prior written consent, shall
have authorized, recommended, proposed or publicly an-
nounced its intention to authorize, recommend or pro-
pose, to engage in an Acquisition Transaction with any
person other than Grantee or a Grantee Subsidiary, or
the Board of Directors of Issuer shall have publicly
withdrawn or modified, or publicly announced its inten-
tion to withdraw or modify, in any manner adverse to
Grantee, its recommendation that the stockholders of
Issuer approve the transactions contemplated by the Mer-
ger Agreement in anticipation of engaging in an Acquisi-
tion Transaction;
3. Any person other than Grantee, any
Grantee Subsidiary or any Issuer Subsidiary acting in a
fiduciary capacity in the ordinary course of its busi-
ness shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 10% or more of
the outstanding shares of Common Stock (the term "bene-
ficial ownership" for purposes of this Agreement having
the meaning assigned thereto in Section 13(d) of the
1934 Act, and the rules and regulations thereunder);
4. Any person other than Grantee or any
Grantee Subsidiary shall have made a bona fide proposal
to Issuer or its stockholders by public announcement or
written communication that is or becomes the subject of
public disclosure to engage in an Acquisition Transac-
tion;
5. After an overture is made by a third
party to Issuer or its stockholders to engage in an Ac-
quisition Transaction, Issuer shall have breached any
covenant or obligation contained in the Merger Agreement
and such breach (x) would entitle Grantee to terminate
the Merger Agreement and (y) shall not have been cured
prior to the Notice Date (as defined below); or
6. Any person other than Grantee or any
Grantee Subsidiary, other than in connection with a
transaction to which Grantee has given its prior written
consent, shall have filed an application or notice with
the Office of Thrift Supervision (the "OTS"), or other
federal or state bank or thrift regulatory authority,
which application or notice has been accepted for pro-
cessing, for approval to engage in an Acquisition Trans-
action.
(c) The term "Subsequent Triggering Event" shall
mean either of the following events or transactions occurring
after the date hereof:
1. The acquisition by any person of benefi-
cial ownership of 25% or more of the then outstanding
Common Stock; or
2. The occurrence of the Initial Triggering
Event described in paragraph (i) of subsection (b) of
this Section 2, except that the percentage referred to
in clause (y) shall be 25%.
(d) Issuer shall notify Grantee promptly in writ-
ing of the occurrence of any Initial Triggering Event or Sub-
sequent Triggering Event of which it has notice (together, a
"Triggering Event"), it being understood that the giving of
such notice by Issuer shall not be a condition to the right
of the Holder to exercise the Option.
(e) In the event the Holder is entitled to and
wishes to exercise the Option, it shall send to Issuer a
written notice (the date of which being herein referred to as
the "Notice Date") specifying (i) the total number of shares
it will purchase pursuant to such exercise and (ii) a place
and date not earlier than three business days nor later than
60 business days from the Notice Date for the closing of such
purchase (the "Closing Date"); provided that if prior notifi-
cation to or approval of the OTS or of any other regulatory
agency or of Issuer's stockholders is required in connection
with such purchase, the Holder shall promptly file the re-
quired notice or application for approval and shall expedi-
tiously process the same or use best efforts to promptly ob-
tain such stockholder approval, as the case may be, and the
period of time that otherwise would run pursuant to this sen-
tence shall run instead from the date on which any required
notification periods have expired or been terminated or such
approvals have been obtained and any requisite waiting period
or periods shall have passed. Any exercise of the Option
shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e)
of this Section 2, the Holder shall pay to Issuer the aggre-
gate purchase price for the shares of Common Stock purchased
pursuant to the exercise of the Option in immediately avail-
able funds by wire transfer to a bank account designated by
Issuer, provided that failure or refusal of Issuer to desig-
nate such a bank account shall not preclude the Holder from
exercising the Option.
(g) At such closing, simultaneously with the de-
livery of immediately available funds as provided in sub-
section (f) of this Section 2, Issuer shall deliver to the
Holder a certificate or certificates representing the number
of shares of Common Stock purchased by the Holder and, if the
Option should be exercised in part only, a new Option evi-
dencing the rights of the Holder thereof to purchase the bal-
ance of the shares purchasable hereunder, and the Holder
shall deliver to Issuer a copy of this Agreement and a letter
agreeing that the Holder will not offer to sell or otherwise
dispose of such shares in violation of applicable law or the
provisions of this Agreement.
(h) Certificates for Common Stock delivered at a
closing hereunder may be endorsed with a restrictive legend
that shall read substantially as follows:
The transfer of the shares represented by this cer-
tificate is subject to certain provisions of an
agreement between the registered holder hereof and
Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such
agreement is on file at the principal office of
Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written
request therefor.
It is understood and agreed that: (i) the reference to the
resale restrictions of the Securities Act of 1933, as amended
(the "1933 Act"), in the above legend shall be removed by
delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a let-
ter from the staff of the SEC, or an opinion of counsel, in
form and substance reasonably satisfactory to Issuer, to the
effect that such legend is not required for purposes of the
1933 Act; (ii) the reference to the provisions of this Agree-
ment in the above legend shall be removed by delivery of sub-
stitute certificate(s) without such reference if the shares
have been sold or transferred in compliance with the provi-
sions of this Agreement and under circumstances that do not
require the retention of such reference; and (iii) the legend
shall be removed in its entirety if both conditions in the
preceding clauses (i) and (ii) are satisfied. In addition,
such certificates shall bear any other legend as may be re-
quired by law.
(i) Upon the giving by the Holder to Issuer of the
written notice of exercise of the Option provided for under
subsection (e) of this Section 2 and the tender of the appli-
cable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwith-
standing that the stock transfer books of Issuer shall then
be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the
Holder. Issuer shall pay all expenses, and any and all
United States federal, state and local taxes and other
charges that may be payable in connection with the prepara-
tion, issue and delivery of stock certificates under this
Section 2 in the name of the Holder or its assignee, trans-
feree or designee.
3. Issuer agrees: (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized
but unissued or treasury shares of Common Stock so that the
Option may be exercised without additional authorization of
Common Stock after giving effect to all other options, war-
rants, convertible securities and other rights to purchase
Common Stock; (ii) that it will not, by charter amendment or
through reorganization, consolidation, merger, dissolution or
sale of assets, or by any other voluntary act, avoid or seek
to avoid the observance or performance of any of the cove-
nants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all action as may
from time to time be required (including (x) complying with
all premerger notification, reporting and waiting period re-
quirements specified in 15 U.S.C. 18a and regulations pro-
mulgated thereunder and (y) in the event, under the Home Own-
ers' Loan Act of 1933, as amended, (the "HOLA") or any other
federal or state banking or thrift law or regulations there-
under, prior approval of or notice to the OTS or to any other
federal or any state regulatory authority is necessary before
the Option may be exercised, cooperating fully with the
Holder in preparing such applications or notices and pro-
viding such information to the OTS or other federal or any
such state regulatory authority as they may require) in order
to permit the Holder to exercise the Option and Issuer duly
and effectively to issue shares of Common Stock pursuant
hereto; and (iv) promptly to take all action provided herein
to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of the
Holder, upon presentation and surrender of this Agreement at
the principal office of Issuer, for other Agreements provid-
ing for Options of different denominations entitling the
holder thereof to purchase, on the same terms and subject to
the same conditions as are set forth herein, in the aggregate
the same number of shares of Common Stock purchasable here-
under. The terms "Agreement" and "Option" as used herein
include any Stock Option Agreements and related Options for
which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutila-
tion of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if muti-
lated, Issuer will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement executed and
delivered shall constitute an additional contractual obliga-
tion on the part of Issuer, whether or not the Agreement so
lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. In addition to the adjustment in the number of
shares of Common Stock that are purchasable upon exercise of
the Option pursuant to Section 1 of this Agreement, the num-
ber of shares of Common Stock purchasable upon the exercise
of the Option and the Option Price shall be subject to ad-
justment from time to time as provided in this Section 5. In
the event of any change in, or distributions in respect of,
the Common Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations, subdivisions, con-
versions, exchanges of shares, distributions on or in respect
of the Common Stock that would be prohibited under the terms
of the Merger Agreement, or the like, the type and number of
shares of Common Stock purchasable upon exercise hereof and
the Option Price shall be appropriately adjusted in such man-
ner as shall fully preserve the economic benefits provided
hereunder and proper provision shall be made in any agreement
governing any such transaction for such proper adjustment and
the full satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering
Event that occurs prior to an Exercise Termination Event,
Issuer shall, at the request of Grantee delivered within 90
days of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option
(or part thereof) or any of the shares of Common Stock issued
pursuant hereto), promptly prepare, file and keep current a
shelf registration statement under the 1933 Act covering this
Option and any shares issued and issuable pursuant to this
Option and shall use its reasonable best efforts to cause
such registration statement to become effective and remain
current in order to permit the sale or other disposition of
this Option and any shares of Common Stock issued upon total
or partial exercise of this Option ("Option Shares") in ac-
cordance with any plan of disposition requested by Grantee.
Issuer will use its reasonable best efforts to cause such
registration statement first to become effective and then to
remain effective for such period not in excess of 180 days
from the day such registration statement first becomes effec-
tive or such shorter time as may be reasonably necessary to
effect such sales or other dispositions. Grantee shall have
the right to demand two such registrations. The foregoing
notwithstanding, if, at the time of any request by Grantee
for registration of the Option or Option Shares as provided
above, Issuer is in registration with respect to an under-
written public offering of shares of Common Stock, and if in
the good faith judgment of the managing underwriter or manag-
ing underwriters, or, if none, the sole underwriter or under-
writers, of such offering the inclusion of the Holder's Op-
tion or Option Shares would interfere with the successful
marketing of the shares of Common Stock offered by Issuer,
the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced;
provided, however, that after any such required reduction the
number of Option Shares to be included in such offering for
the account of the Holder shall constitute at least 25% of
the total number of shares to be sold by the Holder and Is-
suer in the aggregate; and provided further, however, that if
such reduction occurs, then the Issuer shall file a regis-
tration statement for the balance as promptly as practicable
and no reduction shall thereafter occur. Each such Holder
shall provide all information reasonably requested by Issuer
for inclusion in any registration statement to be filed here-
under. If requested by any such Holder in connection with
such registration, Issuer shall become a party to any under-
writing agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of repre-
sentations, warranties, indemnities and other agreements cus-
tomarily included in secondary offering underwriting agree-
ments for the Issuer. Upon receiving any request under this
Section 6 from any Holder, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to
registration rights under this Section 6, in each case by
promptly mailing the same, postage prepaid, to the address of
record of the persons entitled to receive such copies. Not-
withstanding anything to the contrary contained herein, in no
event shall Issuer be obligated to effect more than two reg-
istrations pursuant to this Section 6 by reason of the fact
that there shall be more than one Grantee as a result of any
assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a
Repurchase Event (as defined below), (i) following a request
of the Holder, delivered prior to an Exercise Termination
Event, Issuer (or any successor thereto) shall repurchase the
Option from the Holder at a price (the "Option Repurchase
Price") equal to the amount by which (A) the Market/Offer
Price (as defined below) exceeds (B) the Option Price, multi-
plied by the number of shares for which this Option may then
be exercised (without reference to any limitation set forth
in Section 1(b) hereof) and (ii) at the request of the owner
of Option Shares from time to time (the "Owner"), delivered
within 90 days of such occurrence (or such later period as
provided in Section 10), Issuer shall repurchase such number
of the Option Shares from the Owner as the Owner shall desig-
nate at a price (the "Option Share Repurchase Price") equal
to the Market/Offer Price multiplied by the number of Option
Shares so designated. The term "Market/Offer Price" shall
mean the highest of (i) the price per share of Common Stock
at which a tender offer or exchange offer therefor has been
made, (ii) the price per share of Common Stock to be paid by
any third party pursuant to an agreement with Issuer, (iii)
the highest closing price for shares of Common Stock within
the six-month period immediately preceding the date the
Holder gives notice of the required repurchase of this Option
or the Owner gives notice of the required repurchase of Op-
tion Shares, as the case may be, or (iv) in the event of a
sale of all or a substantial portion of Issuer's assets, the
sum of the price paid in such sale for such assets and the
current market value of the remaining assets of Issuer as
determined by a nationally recognized investment banking firm
selected by the Holder or the Owner, as the case may be, and
reasonably acceptable to the Issuer, divided by the number of
shares of Common Stock of Issuer outstanding at the time of
such sale. In determining the Market/Offer Price, the value
of consideration other than cash shall be determined by a
nationally recognized investment banking firm selected by the
Holder or Owner, as the case may be, and reasonably accept-
able to the Issuer.
(b) The Holder and the Owner, as the case may be,
may exercise its right to require Issuer to repurchase the
Option and any Option Shares pursuant to this Section 7 by
surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option
Shares, as applicable, accompanied by a written notice or
notices stating that the Holder or the Owner, as the case may
be, elects to require Issuer to repurchase this Option and/or
the Option Shares in accordance with the provisions of this
Section 7. Within the latter to occur of (x) five business
days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or
notices relating thereto and (y) the time that is immediately
prior to the occurrence of a Repurchase Event, Issuer shall
deliver or cause to be delivered to the Holder the Option
Repurchase Price and/or to the Owner the Option Share Repur-
chase Price therefor or the portion thereof, if any, that
Issuer is not then prohibited under applicable law and regu-
lation from so delivering (or with respect to which Issuer is
not required to give notice to, or to obtain the prior ap-
proval of, any regulatory authority in order to cause its
federally-chartered savings bank subsidiary to pay dividends
sufficient to allow it to so deliver) or with respect to
which Issuer does not require the approval (or has obtained
such approval) of its stockholders pursuant to Article Thir-
teen of Issuer's Restated Certificate of Incorporation.
(c) To the extent that Issuer is prohibited under
applicable law or regulation from repurchasing (or would be
required to give prior notice to, or to obtain the prior ap-
proval of, any regulatory authority in order to cause its
federally-chartered savings bank subsidiary to pay dividends
sufficient to allow Issuer to repurchase), or requires any
approval of its stockholders to repurchase, the Option and/or
the Option Shares in full, Issuer shall immediately so notify
the Holder and/or the Owner and thereafter deliver or cause
to be delivered, from time to time, to the Holder and/or the
Owner, as appropriate, the portion of the Option Repurchase
Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering (or with re-
spect to which Issuer has received any required funds from
its federally-chartered savings bank subsidiary), within five
business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time
after delivery of a notice of repurchase pursuant to para-
graph (b) of this Section 7 is prohibited under applicable
law or regulation from delivering (or would be required to
give prior notice to, or to obtain the prior approval of, any
regulatory authority in order to cause its federally-
chartered savings bank subsidiary to pay dividends sufficient
to allow Issuer to repurchase), or requires any approval of
its stockholders to deliver, to the Holder and/or the Owner,
as appropriate, the Option Repurchase Price and the Option
Share Repurchase Price, respectively, in full (and Issuer
hereby undertakes to use its best efforts to obtain such ap-
proval of its stockholders and all required regulatory and
legal approvals and to file any required notices, in each
case as promptly as practicable in order to accomplish such
repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares either in whole
or to the extent of the prohibition, whereupon, in the latter
case, Issuer shall promptly (i) deliver to the Holder and/or
the Owner, as appropriate, that portion of the Option Repur-
chase Price or the Option Share Repurchase Price that Issuer
is not prohibited from delivering (or with respect to which
Issuer has received any required funds from its federally-
chartered savings bank subsidiary); and (ii) deliver, as ap-
propriate, either (A) to the Holder, a new Stock Option
Agreement evidencing the right of the Holder to purchase that
number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered
Stock Option Agreement was exercisable at the time of deliv-
ery of the notice of repurchase by a fraction, the numerator
of which is the Option Repurchase Price less the portion
thereof theretofore delivered to the Holder and the denomina-
tor of which is the Option Repurchase Price, or (B) to the
Owner, a certificate for the Option Shares it is then so pro-
hibited from repurchasing.
(d) For purposes of this Section 7, a Repurchase
Event shall be deemed to have occurred (i) upon the consumma-
tion of any merger, consolidation or similar transaction in-
volving Issuer or any purchase, lease or other acquisition of
all or a substantial portion of the assets of Issuer, other
than any such transaction which would not constitute an Ac-
quisition Transaction pursuant to the provisos to Section
2(b)(i) hereof or (ii) upon the acquisition by any person of
beneficial ownership of 50% or more of the then outstanding
shares of Common Stock, provided that no such event shall
constitute a Repurchase Event unless a Subsequent Triggering
Event shall have occurred prior to an Exercise Termination
Event. The parties hereto agree that Issuer's obligations to
repurchase the Option or Option Shares under this Section 7
shall not terminate upon the occurrence of an Exercise Termi-
nation Event unless no Subsequent Triggering Event shall have
occurred prior to the occurrence of an Exercise Termination
Event.
8. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i)
to consolidate with or merge into any person, other than
Grantee or one of its Subsidiaries, and shall not be the con-
tinuing or surviving corporation of such consolidation or
merger, (ii) to permit any person, other than Grantee or one
of its Subsidiaries, to merge into Issuer and Issuer shall be
the continuing or surviving corporation, but, in connection
with such merger, the then outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securi-
ties of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such
merger represent less than 50% of the outstanding voting
shares and voting share equivalents of the merged company, or
(iii) to sell or otherwise transfer all or substantially all
of its assets to any person, other than Grantee or one of its
Subsidiaries, then, and in each such case, the agreement gov-
erning such transaction shall make proper provision so that
the Option shall, upon the consummation of any such transac-
tion and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the
Acquiring Corporation (as hereinafter defined) or (y) any
person that controls the Acquiring Corporation.
(b) The following terms have the meanings indi-
cated:
a. "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation
or merger with Issuer (if other than Issuer), (ii) Is-
suer in a merger in which Issuer is the continuing or
surviving person, and (iii) the transferee of all or
substantially all of Issuer's assets.
b. "Substitute Common Stock" shall mean the
common stock issued by the issuer of the Substitute Op-
tion upon exercise of the Substitute Option.
(3) "Assigned Value" shall mean the Market/
Offer Price, as defined in Section 7.
(4) "Average Price" shall mean the average
closing price of a share of the Substitute Common Stock
for the one year immediately preceding the consolida-
tion, merger or sale in question, but in no event higher
than the closing price of the shares of Substitute Com-
mon Stock on the day preceding such consolidation,
merger or sale; provided that if Issuer is the issuer of
the Substitute Option, the Average Price shall be com-
puted with respect to a share of common stock issued by
the person merging into Issuer or by any company which
controls or is controlled by such person, as the Holder
may elect.
(c) The Substitute Option shall have the same
terms as the Option, provided, that if the terms of the Sub-
stitute Option cannot, for legal reasons, be the same as the
Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the
Substitute Option shall also enter into an agreement with the
then Holder or Holders of the Substitute Option in substan-
tially the same form as this Agreement, which shall be appli-
cable to the Substitute Option.
(d) The Substitute Option shall be exercisable for
such number of shares of Substitute Common Stock as is equal
to the Assigned Value multiplied by the number of shares of
Common Stock for which the Option is then exercisable (with-
out reference to any limitation set forth in Section 1(b)
hereof), divided by the Average Price. The exercise price of
the Substitute Option per share of Substitute Common Stock
shall then be equal to the Option Price multiplied by a frac-
tion, the numerator of which shall be the number of shares of
Common Stock for which the Option is then exercisable (with-
out reference to any limitation set forth in Section 1(b)
hereof) and the denominator of which shall be the number of
shares of Substitute Common Stock for which the Substitute
Option is exercisable.
(e) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for
more than 19.9% of the shares of Substitute Common Stock out-
standing prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for
more than 19.9% of the shares of Substitute Common Stock out-
standing prior to exercise but for this clause (e), the is-
suer of the Substitute Option (the "Substitute Option Is-
suer") shall make a cash payment to Holder equal to the ex-
cess of (i) the value of the Substitute Option without giving
effect to the limitation in this clause (e) over (ii) the
value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value
shall be determined by a nationally recognized investment
banking firm selected by the Holder or the Owner, as the case
may be, and reasonably acceptable to the Acquiring Corpora-
tion.
(f) Issuer shall not enter into any transaction
described in subsection (a) of this Section 8 unless the Ac-
quiring Corporation and any person that controls the Acquir-
ing Corporation assume in writing all the obligations of Is-
suer hereunder.
9. (a) At the request of the holder of the Sub-
stitute Option (the "Substitute Option Holder"), the Substi-
tute Option Issuer shall repurchase the Substitute Option
from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to (x) the amount by which
(i) the Highest Closing Price (as hereinafter defined) ex-
ceeds (ii) the exercise price of the Substitute Option, mul-
tiplied by the number of shares of Substitute Common Stock
for which the Substitute Option may then be exercised plus
(y) Grantee's reasonable out-of-pocket expenses (to the ex-
tent not previously reimbursed), and at the request of the
owner (the "Substitute Share Owner") of shares of Substitute
Common Stock (the "Substitute Shares"), the Substitute Option
Issuer shall repurchase the Substitute Shares at a price (the
"Substitute Share Repurchase Price") equal to (x) the Highest
Closing Price multiplied by the number of Substitute Shares
so designated plus (y) Grantee's reasonable out-of-pocket
expenses (to the extent not previously reimbursed). The term
"Highest Closing Price" shall mean the highest closing price
for shares of Substitute Common Stock within the six-month
period immediately preceding the date the Substitute Option
Holder gives notice of the required repurchase of the Substi-
tute Option or the Substitute Share Owner gives notice of the
required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substi-
tute Share Owner, as the case may be, may exercise its re-
spective right to require the Substitute Option Issuer to
repurchase the Substitute Option and the Substitute Shares
pursuant to this Section 9 by surrendering for such purpose
to the Substitute Option Issuer, at its principal office, the
agreement for such Substitute Option (or, in the absence of
such an agreement, a copy of this Agreement) and certificates
for Substitute Shares accompanied by a written notice or no-
tices stating that the Substitute Option Holder or the Sub-
stitute Share Owner, as the case may be, elects to require
the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the
provisions of this Section 9. As promptly as practicable,
and in any event within five business days after the sur-
render of the Substitute Option and/or certificates repre-
senting Substitute Shares and the receipt of such notice or
notices relating thereto, the Substitute Option Issuer shall
deliver or cause to be delivered to the Substitute Option
Holder the Substitute Option Repurchase Price and/or to the
Substitute Share Owner the Substitute Share Repurchase Price
therefor or, in either case, the portion thereof which the
Substitute Option Issuer is not then prohibited under appli-
cable law and regulation, or under any express provision of
its certificate of incorporation or similar charter document
requiring prior stockholder approval, from so delivering.
(c) To the extent that the Substitute Option Is-
suer is prohibited under applicable law or regulation from
repurchasing, or requires any approval of its stockholders to
repurchase, the Substitute Option and/or the Substitute
Shares in part or in full, the Substitute Option Issuer fol-
lowing a request for repurchase pursuant to this Section 9
shall immediately so notify the Substitute Option Holder and/
or the Substitute Share Owner and thereafter deliver or cause
to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the
portion of the Substitute Share Repurchase Price, respec-
tively, which it is no longer prohibited from delivering,
within five business days after the date on which the Substi-
tute Option Issuer is no longer so prohibited; provided, how-
ever, that if the Substitute Option Issuer is at any time
after delivery of a notice of repurchase pursuant to subsec-
tion (b) of this Section 9 prohibited under applicable law or
regulation from delivering, or requires the any approval of
its stockholders to deliver, to the Substitute Option Holder
and/or the Substitute Share Owner, as appropriate, the Sub-
stitute Option Repurchase Price and the Substitute Share Re-
purchase Price, respectively, in full (and the Substitute
Option Issuer shall use its best efforts to obtain any such
required stockholder approval and all required regulatory and
legal approvals, in each case as promptly as practicable, in
order to accomplish such repurchase), the Substitute Option
Holder or Substitute Share Owner may revoke its notice of
repurchase of the Substitute Option or the Substitute Shares
either in whole or to the extent of the prohibition, where-
upon, in the latter case, the Substitute Option Issuer shall
promptly (i) deliver to the Substitute Option Holder or Sub-
stitute Share Owner, as appropriate, that portion of the Sub-
stitute Option Repurchase Price or the Substitute Share Re-
purchase Price that the Substitute Option Issuer is not pro-
hibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Substitute Option Holder, a new Substitute
Option evidencing the right of the Substitute Option Holder
to purchase that number of shares of the Substitute Common
Stock obtained by multiplying the number of shares of the
Substitute Common Stock for which the surrendered Substitute
Option was exercisable at the time of delivery of the notice
of repurchase by a fraction, the numerator of which is the
Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the
denominator of which is the Substitute Option Repurchase
Price, or (B) to the Substitute Share Owner, a certificate
for the Substitute Common Shares it is then so prohibited
from repurchasing.
10. The 90-day period for exercise of certain
rights under Sections 2, 6, 7 and 14 shall be extended: (i)
to the extent necessary to obtain all regulatory approvals
for the exercise of such rights, for the expiration of all
statutory waiting periods, and to the extent required to ob-
tain any required stockholder approval or until such stock-
holder approval is no longer required; and (ii) to the extent
necessary to avoid liability under Section 16(b) of the 1934
Act by reason of such exercise.
11. Issuer hereby represents and warrants to
Grantee as follows:
(a) Issuer has full corporate power and authority
to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by
the Board of Directors of Issuer and no other corporate pro-
ceedings on the part of Issuer (other than the shareholder
approval referred to in Sections 2(e), 7(b) and 9(c) hereof)
are necessary to authorize this Agreement or to consummate
the transactions so contemplated. This Agreement has been
duly and validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate ac-
tion to authorize and reserve and to permit it to issue, and
at all times from the date hereof through the termination of
this Agreement in accordance with its terms will have re-
served for issuance upon the exercise of the Option, that
number of shares of Common Stock equal to the maximum number
of shares of Common Stock at any time and from time to time
issuable hereunder, and all such shares, upon issuance pursu-
ant hereto, will be duly authorized, validly issued, fully
paid, nonassessable, and will be delivered free and clear of
all claims, liens, encumbrance and security interests and not
subject to any preemptive rights.
12. Grantee hereby represents and warrants to Is-
suer that:
(a) Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any
approvals or consents referred to herein, to consummate the
transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all neces-
sary corporate action on the part of Grantee. This Agreement
has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of
Common Stock or other securities acquired by Grantee upon
exercise of the Option will not be, acquired with a view to
the public distribution thereof and will not be transferred
or otherwise disposed of except in a transaction registered
or exempt from registration under the Securities Act.
13. Neither of the parties hereto may assign any
of its rights or obligations under this Option Agreement or
the Option created hereunder to any other person, without the
express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred
prior to an Exercise Termination Event, Grantee, subject to
the express provisions hereof and applicable restrictions
under law, may assign in whole or in part its rights and ob-
ligations hereunder within 90 days following such Subsequent
Triggering Event (or such later period as provided in Section
10).
14. Each of Grantee and Issuer will use its best
efforts to make all filings with, and to obtain consents of,
all third parties and governmental authorities necessary to
the consummation of the transactions contemplated by this
Agreement, including without limitation making application to
have approved for quotation the shares of Common Stock issu-
able hereunder on the NASDAQ Stock Market National Market
upon official notice of issuance and applying to the OTS un-
der the HOLA for approval to acquire the shares issuable
hereunder, but Grantee shall not be obligated to apply to
state banking authorities for approval to acquire the shares
of Common Stock issuable hereunder until such time, if ever,
as it deems appropriate to do so.
15. The parties hereto acknowledge that damages
would be an inadequate remedy for a breach of this Agreement
by either party hereto and that the obligations of the par-
ties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
16. If any term, provision, covenant or restric-
tion contained in this Agreement is held by a court or a fed-
eral or state regulatory agency of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the
terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and
shall in no way be affected, impaired or invalidated. If for
any reason such court or regulatory agency determines that
the Holder is not permitted to acquire, or Issuer is not per-
mitted to repurchase pursuant to Section 7, the full number
of shares of Common Stock provided in Section 1(a) hereof (as
adjusted pursuant to Section 1(b) or 5 hereof), it is the
express intention of Issuer to allow the Holder to acquire or
to require Issuer to repurchase such lesser number of shares
as may be permissible, without any amendment or modification
hereof.
17. All notices, requests, claims, demands and
other communications hereunder shall be deemed to have been
duly given when delivered in person, by cable, telegram,
telecopy or telex, or by registered or certified mail (post-
age prepaid, return receipt requested) at the respective ad-
dresses of the parties set forth in the Merger Agreement.
18. This Agreement shall be governed by and con-
strued in accordance with the laws of the State of Delaware,
without regard to any conflicts of laws rules.
19. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an origi-
nal, but all of which shall constitute one and the same
agreement.
20. Except as otherwise expressly provided herein,
each of the parties hereto shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with
the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bank-
ers, accountants and counsel.
21. Except as otherwise expressly provided herein
or in the Merger Agreement, this Agreement contains the en-
tire agreement between the parties with respect to the trans-
actions contemplated hereunder and supersedes all prior ar-
rangements or understandings with respect thereof, written or
oral. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the parties hereto and
their respective successors and permitted assigns. Nothing
in this Agreement, expressed or implied, is intended to con-
fer upon any party, other than the parties hereto, and their
respective successors and permitted assigns, any rights, rem-
edies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and
not defined herein shall have the meanings assigned thereto
in the Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused
this Agreement to be executed on its behalf by its officers
thereunto duly authorized, all as of the date first above
written.
EAGLE FINANCIAL CORP.
By: /s/ Robert J. Britton
Name: Robert J. Britton
Title: President and Chief
Executive Officer
WEBSTER FINANCIAL CORPORATION
By: /s/ James C. Smith
Name: James C. Smith
Title: Chairman and Chief
Executive Officer
[Stock Option Agreement]
