<PAGE>
FORM 8-K/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): June 20, 1995
WEBSTER FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-15213 06-1187536
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
First Federal Plaza, Waterbury, Connecticut 06720
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(Address of principal executive offices)
Registrant's telephone number, including area code: (203) 753-2921
--------------
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5 Other Events
Webster Financial Corporation ("Webster") and Shelton Bancorp, Inc.
("Shelton Bancorp") jointly announced on June 20, 1995 that they had signed a
definitive agreement and plan of merger, dated June 20, 1995 (the "Merger
Agreement"), pursuant to which Webster agreed to acquire Shelton Bancorp on a
stock for stock basis through a merger with a Webster wholly-owned subsidiary
formed for such purpose (the "Merger"). The Merger Agreement was amended as of
July 26, 1995. The amendments to the Merger Agreement pertain primarily to the
manner in which Shelton Savings Bank will be merged into a wholly-owned savings
bank subsidiary of Webster after the Merger and do not affect the consideration
to be received by the shareholders of Shelton Bancorp in the Merger. This Form
8-K/A is being filed by Webster to append the amended Merger Agreement as
Exhibit 2.
Under the terms of the Merger Agreement, shareholders of Shelton
Bancorp will receive .92 of a share of Webster common stock for each share of
Shelton Bancorp common stock (the "Exchange Rate"). The Exchange Rate is not
subject to market price adjustment. The Merger is intended to be a tax-free
exchange. The Merger represents an aggregate transaction value of $29.4 million,
or $21.85 per share, based on 1,343,341 outstanding shares of Shelton Bancorp
and the $23.75 closing price on June 16, 1995 of Webster common stock. The
Merger is expected to close in the fourth quarter of 1995 and to be accounted
for as a pooling of interests. Webster expects to recognize a restructuring
charge of approximately $3 million.
Shelton Bancorp, a Delaware corporation located in Shelton,
Connecticut, is the holding company of Shelton Savings Bank. Shelton Savings
Bank, a Connecticut chartered savings bank, operates six full service banking
offices in eastern Fairfield and southwestern New Haven counties. Deposits at
Shelton Savings Bank are insured by the Federal Deposit Insurance Corporation
through the Bank Insurance Fund. The Merger Agreement also provides for Shelton
Savings Bank to be merged into a wholly-owned savings bank subsidiary of
Webster, and for the banking offices of Shelton Savings Bank then to be operated
as banking offices of that subsidiary.
At March 31, 1995, Shelton reported total assets of $295 million,
deposit liabilities of $271 million, and shareholders' equity of $19.5 million.
Shelton's net income for its fiscal year ended June 30, 1994 was reported at
$2.3 million, or $1.71 per fully diluted share. For the nine months ended March
31, 1995, Shelton reported net income of $1.7 million or $1.25 per fully diluted
share. At March 31, 1995, Shelton's nonaccrual assets amounted to 0.9% of its
total assets and its allowance for loan losses represented 79% of its nonaccrual
loans.
The Merger is subject to various federal and state regulatory approvals
(including approvals by the Office of Thrift Supervision and the Connecticut
Commissioner of Banking) and other customary closing conditions. The Merger
Agreement has been unanimously approved by the Boards of Directors of both
Webster and Shelton Bancorp. In connection with their approval of the Merger
Agreement, the Board of Directors of Shelton Bancorp was advised by Alex. Brown
& Sons, Incorporated. Approval of Webster's shareholders is required for the
issuance of the additional shares of Webster common stock in the Merger by a
majority vote of the shares of Webster common stock to be cast at a special
meeting. Approval of the Merger by a two-thirds vote of Shelton Bancorp's
outstanding shares will be required. Each of the directors and executive
officers of Shelton Bancorp has signed a Stockholder Agreement (Exhibit C to the
Merger Agreement) pursuant to which they agree to vote their shares (which in
the aggregate represent 16% of the outstanding Shelton Bancorp common stock) in
favor of the Merger.
At June 20, 1995, there were options outstanding to purchase 110,591
shares of Shelton Bancorp common stock held by its directors, officers and other
employees. Upon consummation of the Merger, these options (to the extent not
previously exercised) will become options to purchase Webster common stock,
subject to adjustment as to price and number of shares to reflect the Exchange
Rate.
Webster and Shelton Bancorp also have entered into an option agreement,
dated June 20, 1995 (the "Option Agreement", which is Exhibit B to the Merger
Agreement), in which Shelton Bancorp has granted Webster the option to purchase
267,324 newly issued shares of Shelton Bancorp common stock (which is equal to
19.9% of the outstanding Shelton Bancorp common stock) at a price of $17.00 per
share, subject to certain adjustments (the "Option"), in the event of (i) the
acquisition by any person (other than Webster or its subsidiaries) of beneficial
ownership of 25% or more of the then outstanding Shelton Bancorp common stock,
or (ii) Shelton Bancorp entering into a letter of intent or definitive agreement
to engage in an acquisition transaction with any person (other than Webster or
its subsidiaries) or the Board of Directors of Shelton Bancorp recommending for
approval or acceptance by Shelton Bancorp's shareholders of an acquisition
transaction with any person (other than Webster or its subsidiaries).
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Item 7. Financial Statements and Exhibits.
c. Exhibits
2. Agreement and Plan of Merger, among Webster Financial
Corporation, Webster Acquisition Corp. and Shelton
Bancorp, Inc., dated June 20, 1995 as amended, including
Exhibits A through G thereto.
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SIGNATURES
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 hereunto duly authorized.
WEBSTER FINANCIAL CORPORATION
(Registrant)
/s/ John V. Brennan
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John V. Brennan
Executive Vice President,
Chief Financial Officer and Treasurer
Date: July 27, 1995
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Exhibit 2
Agreement and Plan of Merger, among Webster Financial Corporation,
Webster Acquisition Corp. and Shelton Bancorp, Inc., dated June 20,
1995 as amended, including Exhibits A through G thereto.
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AGREEMENT AND PLAN OF MERGER,
AS AMENDED,
AMONG
WEBSTER FINANCIAL CORPORATION,
WEBSTER ACQUISITION CORP.,
AND SHELTON BANCORP, INC.
June 20, 1995
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TABLE OF CONTENTS
Page
ARTICLE I THE MERGER
1.1 The Merger .................................................... 1
1.2 Effective Time ................................................ 2
1.3 Effects of the Merger ......................................... 2
1.4 Conversion of Shelton Common Stock ............................ 2
1.5 Conversion of Merger Sub Common Stock ......................... 3
1.6 Options ....................................................... 3
1.7 Certificate of Incorporation .................................. 3
1.8 By-Laws ....................................................... 3
1.9 Directors and Officers ........................................ 4
1.10 Tax Consequences ............................................. 4
ARTICLE II EXCHANGE OF SHARES ........................................ 4
2.1 Webster to Make Shares Available .............................. 4
2.2 Exchange of Shares ............................................ 4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
SHELTON ............................................................. 6
3.1 Corporate Organization ........................................ 6
3.2 Capitalization ................................................ 6
3.3 Authority; No Violation ....................................... 7
3.4 Consents and Approvals ........................................ 8
3.5 Loan Portfolio; Reports ....................................... 9
3.6 Financial Statements; Exchange Act Filings;
Books and Records ............................................. 9
3.7 Broker's Fees ................................................. 10
3.8 Absence of Certain Changes or Events .......................... 10
3.9 Legal Proceedings ............................................. 10
3.10 Taxes and Tax Returns ........................................ 11
3.11 Employee Plans ............................................... 11
3.12 Certain Contracts ............................................ 12
3.13 Agreements with Regulatory Agencies .......................... 13
3.14 State Takeover Laws .......................................... 13
3.15 Environmental Matters ........................................ 13
3.16 Reserves for Losses .......................................... 14
3.17 Properties and Assets ........................................ 14
3.18 Insurance .................................................... 15
3.19 Liquidation Account .......................................... 15
3.20 Compliance with Applicable Laws .............................. 16
3.21 Loans ........................................................ 16
3.22 Affiliates; Certain Executive Officers ....................... 17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
WEBSTER ............................................................ 17
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4.1 Corporate Organization ........................................ 17
4.2 Capitalization ................................................ 18
4.3 Authority; No Violation ....................................... 18
4.4 Regulatory Approvals .......................................... 20
4.5 Financial Statements; Exchange Act Filings;
Books and Records ............................................. 20
4.6 Absence of Certain Changes or Events .......................... 21
4.7 Compliance with Applicable Law ................................ 21
4.8 Ownership of Shelton Common Stock; Affiliates
and Associates ................................................ 21
4.9 Employee Benefit Plans ........................................ 22
4.10 Agreements with Regulatory Agencies .......................... 22
4.11 Reserves for Losses .......................................... 22
4.12 Legal Proceedings ............................................ 22
ARTICLE V COVENANTS RELATING TO CONDUCT OF
BUSINESS ........................................................... 22
5.1 Covenants of Shelton .......................................... 22
5.2 Covenants of Webster .......................................... 26
ARTICLE VI ADDITIONAL AGREEMENTS ..................................... 26
6.1 Regulatory Matters ............................................ 26
6.2 Access to Information ......................................... 27
6.3 Shareholder Meetings .......................................... 28
6.4 Legal Conditions to Merger .................................... 28
6.5 Publication of Combined Financial Results ..................... 29
6.6 Stock Exchange Listing ........................................ 29
6.7 Employee Plans ................................................ 29
6.8 Indemnification; Directors' and Officers'
Insurance ....................................................... 30
6.9 Subsequent Interim and Annual Financial
Statements .................................................... 31
6.10 Additional Agreements ........................................ 31
6.11 Advice of Changes ............................................ 31
6.12 Current Information .......................................... 31
6.13 Execution and Authorization of Bank Merger
Agreement .................................................... 32
6.14 Merger Sub ................................................... 32
6.15 Change in Structure .......................................... 32
ARTICLE VII CONDITIONS PRECEDENT ..................................... 33
7.1 Conditions to Each Party's Obligation To
Effect the Merger ............................................. 33
(a) Shareholder Approvals ..................................... 33
(b) Stock Exchange Listing .................................... 33
(c) Other Approvals ........................................... 33
(d) Registration Statement .................................... 33
(e) No Injunctions or Restraints; Illegality .................. 33
(f) Federal Tax Opinion ....................................... 33
7.2 Conditions to Obligations of Webster and
Merger Sub .................................................... 34
(a) Representations and Warranties ............................. 34
(b) Performance of Covenants and Agreements of
Shelton .................................................... 34
(c) Consents Under Agreements .................................. 34
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(d) No Pending Governmental Actions ............................ 34
(e) Legal Opinion .............................................. 34
(f) Accountant's Comfort Letter ................................ 35
(g) Pooling of Interests ....................................... 35
7.3 Conditions to Obligations of Shelton .......................... 35
(a) Representations and Warranties ............................. 35
(b) Performance of Obligations of Webster ...................... 35
(c) Consents Under Agreements .................................. 35
(d) No Pending Governmental Actions ............................ 36
(e) Legal Opinion .............................................. 36
(f) Fairness Opinion ........................................... 36
ARTICLE VIII TERMINATION AND AMENDMENT ............................... 36
8.1 Termination ................................................... 36
8.2 Effect of Termination ......................................... 37
8.3 Amendment ..................................................... 37
8.4 Extension; Waiver ............................................. 38
ARTICLE IX GENERAL PROVISIONS ........................................ 38
9.1 Closing ....................................................... 38
9.2 Nonsurvival of Representations, Warranties
and Agreements ................................................ 38
9.3 Expenses; Breakup Fee ......................................... 38
9.4 Notices ....................................................... 39
9.5 Interpretation ................................................ 39
9.6 Counterparts .................................................. 40
9.7 Entire Agreement .............................................. 40
9.8 Governing Law ................................................. 40
9.9 Enforcement of Agreement ...................................... 40
9.10 Severability ................................................. 40
9.11 Publicity .................................................... 40
9.12 Assignment; Limitation of Benefits ........................... 41
9.13 Additional Definitions ....................................... 41
EXHIBITS:
A - Articles of Merger - Bank Merger Agreement
B - Option Agreement
C - Stockholder Agreement
D - Employment and Consulting Agreement - Schaible
E - Consulting Agreement - Nimons
F - Consulting Agreement - Rodriguez
G - Executive Officers Agreement
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 20, 1995, as amended, by
and among Webster Financial Corporation, a Delaware corporation ("Webster"),
Webster Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of
Webster ("Merger Sub"), and Shelton Bancorp, Inc., a Delaware corporation
("Shelton"). (Shelton and Merger Sub are herein sometimes collectively referred
to herein as the "Constituent Corporations".)
WHEREAS, the Boards of Directors of Webster and Shelton have determined
that it is in the best interests of their respective companies and their
shareholders to consummate the business combination transaction provided for
herein in which Merger Sub will, subject to the terms and conditions set forth
herein, merge (the "Merger") with and into Shelton, with Shelton being the
Surviving Corporation (as defined) and becoming a wholly-owned subsidiary of
Webster; and
WHEREAS, prior to the consummation of the Merger, Webster intends to
cause (i) its wholly-owned savings bank subsidiary, Bristol Savings Bank
("Bristol"), to convert from a state to a federal charter and concurrently to be
renamed "Webster Bank", and (ii) its wholly-owned savings bank subsidiary, First
Federal Bank, a federal savings bank, to be merged with and into Webster Bank,
as the surviving federally chartered savings bank (sometimes referred to herein
as the "Surviving Bank"); and
WHEREAS, prior to the consummation of the Merger, Webster and Shelton
will respectively cause Webster Bank and Shelton Savings Bank, a Connecticut
chartered state savings bank and wholly-owned subsidiary of Shelton ("Shelton
Bank"), 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
Shelton Bank with and into Webster Bank, and it is intended that the Bank Merger
be consummated immediately after consummation of the Merger and the Subsidiary
Merger (as defined in Section 1.1 hereof); and
WHEREAS, as an inducement to Webster to enter into this Agreement,
Shelton will enter into an option agreement, in the form attached hereto as
Exhibit B (the "Option Agreement"), with Webster immediately following the
execution of this Agreement pursuant to which Shelton will grant Webster options
to purchase, under certain circumstances, an aggregate of 267,324 newly issued
shares of common stock, par value $1.00 per share, of Shelton upon the terms and
conditions therein contained; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger.
Subject to the terms and conditions of this Agreement, in
accordance with the Delaware General Corporation Law (the "DGCL"), at the
Effective Time (as defined in Section 1.2 hereof), Merger Sub shall merge into
Shelton, with Shelton being the surviving corporation (hereinafter sometimes
called the "Surviving Corporation") in the Merger and becoming a wholly-owned
subsidiary of Webster. Upon consummation of the Merger, the separate corporate
existence of
<PAGE>
Merger Sub shall terminate. Immediately after the consummation of the Merger,
the Surviving Corporation, as a wholly-owned subsidiary of Webster, shall be
merged into Webster, which will be the surviving corporation in such merger (the
"Subsidiary Merger"). Upon consummation of the Subsidiary Merger, the separate
corporate existence of Shelton shall terminate.
1.2 Effective Time.
The Merger shall become effective on the Closing Date, as set
forth in the certificate of merger (the "Certificate of Merger") which shall be
filed with the Secretary of State of Delaware (the "Secretary of State") on the
Closing Date (as defined in Section 9.1 hereof). 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 Section 259 and 261 of the DGCL.
1.4 Conversion of Shelton Common Stock.
(a) At the Effective Time, subject to Section 2.2(e) hereof,
each share of the common stock, par value $1.00 per share, of Shelton (the
"Shelton Common Stock") issued and outstanding prior to the Effective Time
(other than shares of Shelton Common Stock held (x) in Shelton's treasury or (y)
directly or indirectly by any Subsidiary (as defined in Section 9.13) of Webster
or Shelton (except for Trust Account Shares and DPC shares, as such terms are
defined in Section 1.4(b) hereof)) shall, by virtue of this Agreement and
without any action on the part of the holder thereof, be converted into and
exchangeable for 0.92 shares (the "Exchange Ratio") of the common stock, par
value $.01 per share, of Webster ("Webster Common Stock"). All of the shares of
Shelton Common Stock converted into Webster Common Stock pursuant to this
Article I shall no longer be outstanding and shall automatically be canceled and
shall cease to exist, and each certificate (each a "Certificate") previously
representing any such shares of Shelton 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 Shelton Common
Stock represented by such Certificate have been converted pursuant to this
Section 1.4(a) and Section 2.2(e) hereof. Certificates previously representing
shares of Shelton Common Stock shall be exchanged for certificates representing
whole shares of Webster Common Stock and cash in lieu of fractional shares
issued in consideration therefor upon the surrender of such Certificates in
accordance with Section 2.2 hereof, without any interest thereon. If prior to
the Effective Time Webster should split or combine its common stock, or pay a
dividend or other distribution in such common stock, then the Exchange Ratio
shall be appropriately adjusted to reflect such split, combination, dividend or
distribution.
(b) At the Effective Time, all shares of Shelton Common Stock
that are owned by Shelton as treasury stock and all shares of Shelton Common
Stock that are owned directly or indirectly by Webster or Shelton or any of
their respective Subsidiaries (other than shares of Shelton 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 Shelton, as the case may
be, being referred to herein as "Trust Account Shares") and other than any
shares of Shelton Common Stock held by Webster or Shelton or any of their
respective Subsidiaries in respect of a debt previously contracted (any such
shares of Shelton Common Stock, and shares of Webster Common Stock which are
similarly held, whether held directly or indirectly by Webster or Shelton, being
referred to herein as "DPC Shares")) shall be
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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 Shelton or any of its Subsidiaries (other than Trust Account Shares
and DPC Shares) shall become treasury stock of Webster.
1.5 Conversion of Merger Sub Common Stock.
Each of the shares of the common stock, par value $.01 per
share, of Merger Sub issued and outstanding immediately prior to the Effective
Time shall become shares of the Surviving Corporation after the Merger and shall
thereafter constitute all of the issued and outstanding shares of the Surviving
Corporation.
1.6 Options.
At the Effective Time, each option granted by Shelton to
purchase shares of Shelton Common Stock which is outstanding and unexercised
immediately prior thereto shall be converted automatically into an option to
purchase shares of Webster Common Stock in an amount and at an exercise price
determined as provided below (and otherwise subject to the terms of the Shelton
Stock Option Plan (the "Shelton Stock Plan");
(1) The number of shares of Webster Common Stock to be subject
to the new option shall be equal to the product of the number
of shares of Shelton Common Stock subject to the original
option, 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;
(2) The exercise price per share of Webster Common Stock under
the new option shall be equal to the exercise price per share
of Shelton Common Stock under the original option divided by
the Exchange Ratio, provided that such exercise price shall be
rounded up to the nearest cent; and
(3) The non-qualifying options held by non-employee directors
of Shelton shall be modified by Webster to provide for
exercise within three months after termination of service as
an advisory director of the Surviving Bank.
The adjustment provided herein with respect to any options which are "incentive
stock options" (as defined in Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code")) shall be and is intended to be effected in a manner
which is consistent with Section 424(a) of the Code. The duration and other
terms of the new option shall be the same as the original option, except that
all references to Shelton shall be deemed to be references to Webster and except
as provided in (3) above.
1.7 Certificate of Incorporation.
At the Effective Time, the Certificate of Incorporation of
Merger Sub, as in effect at the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation.
1.8 By-Laws.
At the Effective Time, the By-Laws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation.
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1.9 Directors and Officers.
At the Effective Time, the directors and officers of Merger
Sub immediately prior to the Effective Time shall be the directors and officers
of the Surviving Corporation. One director of Shelton, to be jointly selected by
the Board of Directors of Webster and the Board of Directors of Shelton, shall
be invited to serve as an additional member of the Board of Directors of the
Surviving Bank. The Surviving Bank's Board of Directors will be expanded after
the Bank Merger to add such additional director, who will serve until the 1999
annual meeting of the Surviving Bank (with an initial term ending at the 1996
annual meeting and subject to reelection thereat for a full three-year term,
which Webster intends to cause). In addition, the directors of Shelton serving
immediately prior to the Effective Time will be invited to serve on an advisory
board to the Surviving Bank after the Bank Merger for a period of 40 months
(with an initial term ending at the 1996 annual meeting and subject to
reelection annually thereafter, which Webster intends to cause). Such advisory
directors (other than J. Allen Kosowsky who shall serve without a retainer or
attendance fees and any advisory director also serving as a member of the Board
of Directors of the Surviving Bank or as an officer or consultant to the
Surviving Bank) will each be paid for such service up to $50,000, based on a
monthly retainer of $650 per month and monthly meeting attendance fees of $600
per meeting attended. At the Effective Time, Webster will enter into an
employment and consulting agreement with Kenneth E. Schaible and consulting
agreements with Messrs. William C. Nimons and Ralph J. Rodriguez, in the forms
set forth in Exhibits D, E and F, respectively. Such advisory board will also
include Messrs. Nimons and Rodriguez while they serve as consultants to the
Surviving Bank. Webster agrees to include the advisory directors in its
nonqualified deferred compensation plan.
1.10 Tax Consequences.
It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Code, and that this
Agreement shall constitute a "plan of reorganization" for the purposes of
Section 368 of the Code.
ARTICLE II
EXCHANGE OF SHARES
2.1 Webster to Make Shares Available.
At or prior to the Effective Time, Webster shall deposit, or
shall cause to be deposited, with Webster's transfer agent, Chemical Bank, or
such other bank or trust company as Webster may select (the "Exchange Agent"),
for the benefit of the holders of Certificates, for exchange in accordance with
this Article II, certificates representing the shares of Webster Common Stock
and the cash in lieu of fractional shares (such cash and certificates for shares
of Webster Common Stock, being hereinafter referred to as the "Exchange Fund")
to be issued pursuant to Section 1.4 and paid pursuant to Section 2.2(a) in
exchange for outstanding shares of Shelton Common Stock.
2.2 Exchange of Shares.
(a) As soon as practicable after the Effective Time, and in no
event later than three business days thereafter, the Exchange Agent shall mail
to each holder of record of a Certificate or Certificates a form letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing the
shares of Webster Common Stock and the cash in lieu of fractional shares into
which the shares of Shelton Common Stock represented by such Certificate or
Certificates shall have been converted pursuant to this Agreement. Shelton shall
have the right to review both the letter of transmittal and the instructions.
Upon surrender of a Certificate for exchange and cancellation to the Exchange
Agent, together with such letter of transmittal, duly
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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 Shelton Common Stock shall have
become entitled pursuant to the provisions of Article I hereof and (y) a check
representing the amount of cash in lieu of fractional shares, if any, which such
holder has the right to receive in respect of the Certificate surrendered
pursuant to the provisions of this Article II, and the Certificate so
surrendered shall forthwith be canceled. No interest will be paid or accrued on
the cash in lieu of fractional shares and unpaid dividends and distributions, if
any, payable to holders of Certificates.
(b) No dividends or other distributions declared after the
Effective Time with respect to Webster Common Stock and payable to the holders
of record thereof shall be paid to the holder of any unsurrendered Certificate
until the holder thereof shall surrender such Certificate in accordance with
this Article II. After the surrender of a Certificate in accordance with this
Article II, the record holder thereof shall be entitled to receive any such
dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to shares of Webster Common Stock
represented by such Certificate. No holder of an unsurrendered Certificate shall
be entitled, until the surrender of such Certificate, to vote the shares of
Webster Common Stock into which his Shelton Common Stock shall have been
converted.
(c) If any certificate representing shares of Webster Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the Certificate so surrendered shall be properly endorsed
(or accompanied by an appropriate instrument of transfer) and otherwise in
proper form for transfer, and that the person requesting such exchange shall pay
to the Exchange Agent in advance any transfer or other taxes required by reason
of the issuance of a certificate representing shares of Webster Common Stock in
any name other than that of the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on
the stock transfer books of Shelton of the shares of Shelton Common Stock which
were issued and outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates representing such shares are presented for
transfer to the Exchange Agent, they shall be canceled and exchanged for
certificates representing shares of Webster Common Stock as provided in this
Article II.
(e) Notwithstanding anything to the contrary contained herein,
no certificates or scrip representing fractional shares of Webster Common Stock
shall be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Webster Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a shareholder of
Webster. In lieu of the issuance of any such fractional share, Webster shall pay
to each former shareholder of Shelton who otherwise would be entitled to receive
a fractional share of Webster Common Stock an amount in cash determined by
multiplying (i) the average, without respect to the number of shares traded, of
the high and low sales prices of the Webster Common Stock as reported on the
Nasdaq National Market (or any other securities exchange on which the Webster
Common Stock is then traded) for the five trading days immediately preceding the
first trading day before the Closing Date by (ii) the fraction of a share of
Webster Common Stock to which such holder would otherwise be entitled to receive
pursuant to Section 1.4 hereof.
(f) Any portion of the Exchange Fund that remains unclaimed by
the shareholders of Shelton for twelve months after the Effective Time shall be
paid to Webster. Any shareholders of Shelton who have not theretofore complied
with this Article II shall thereafter look only to Webster for payment of their
shares of Webster Common Stock, cash in lieu of fractional shares and unpaid
dividends and distributions on the Webster Common Stock deliverable in respect
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of each share of Shelton Common Stock such shareholder holds as determined
pursuant to this Agreement, in each case, without any interest thereon.
Notwithstanding the foregoing, none of Webster, Shelton, the Exchange Agent or
any other person shall be liable to any former holder of shares of Shelton
Common Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(g) 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
direct as indemnity against claim that may be made against it with respect to
such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the shares of Webster Common Stock and cash in
lieu of fractional shares deliverable in respect thereof pursuant to this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SHELTON
Shelton hereby represents and warrants to Webster and Merger Sub as
follows:
3.1 Corporate Organization.
(a) Shelton is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Shelton has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business in each jurisdiction in which the nature of any
material business conducted by it or the character or location of any material
properties or assets owned or leased by it makes such licensing or qualification
necessary. Shelton is duly registered as a savings and loan holding company with
the Office of Thrift Supervision ("OTS") under the Home Owners' Loan Act of
1933, as amended ("HOLA"). The Certificate of Incorporation and By-Laws of
Shelton, 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) Shelton Bank is a state chartered savings bank duly
organized, validly existing and in good standing under the laws of the State of
Connecticut. The deposit accounts of Shelton Bank are insured by the Federal
Deposit Insurance Corporation (the "FDIC") through the Bank Insurance Fund (the
"BIF") to the fullest extent permitted by law, and all premiums and assessments
required in connection therewith have been paid by Shelton Bank. Shelton Bank is
the only subsidiary of Shelton that is a "Significant Subsidiary" as such term
is defined in Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC"). Shelton Bank has the corporate power and authority to
own or lease all of its properties and assets and to carry on its business as it
is now being conducted and is duly licensed or qualified to do business in each
jurisdiction in which the nature of any material business conducted by it or the
character or the location of any material properties or assets owned or leased
by it makes such licensing or qualification necessary. The Certificate of
Incorporation and By-Laws of Shelton Bank, copies of which have previously been
delivered to Webster, are true, correct and complete copies of such documents as
in effect as of the date of this Agreement.
3.2 Capitalization.
(a) The authorized capital stock of Shelton consists of
5,000,000 shares of Shelton Common Stock and 1,000,000 shares of serial
preferred stock, par value $1.00 per share (the "Shelton Preferred Stock"). As
of the date hereof, there are (x) 1,343,341 shares of Shelton Common Stock
issued and outstanding and 103,458 shares of Shelton Common Stock held in
Shelton's
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treasury, (y) no shares of Shelton Common Stock reserved for issuance upon
exercise of outstanding stock options or otherwise, except for (i) 135,086
shares of Shelton Common Stock reserved for issuance pursuant to the Shelton
Stock Plans (of which options for 110,591 shares are currently outstanding) and
(ii) 267,324 shares of Shelton Common Stock reserved for issuance upon exercise
of the options to be issued to Webster pursuant to the Option Agreement, and (z)
no shares of Shelton Preferred Stock issued or outstanding, held in Shelton's
treasury or reserved for issuance upon exercise of outstanding stock options or
otherwise. All of the issued and outstanding shares of Shelton Common Stock have
been duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the ownership
thereof. Except as referred to above or reflected in Section 3.2(a) of the
disclosure schedule which is being delivered to Webster concurrently herewith
(the "Shelton Disclosure Schedule"), and except for the Option Agreement,
Shelton 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 Shelton Common Stock or Shelton
Preferred Stock or any other equity security of Shelton or any securities
representing the right to purchase or otherwise receive any shares of Shelton
Common Stock or any other equity security of Shelton. The names of the
optionees, the date of each option to purchase Shelton Common Stock granted, the
number of shares subject to each such option, the expiration date of each such
option, and the price at which each such option may be exercised under the
Shelton Stock Plan are set forth in Section 3.2(a) of the Shelton Disclosure
Schedule. Since June 30, 1994, Shelton has not issued any shares of its capital
stock or any securities convertible into or exercisable for any shares of its
capital stock, other than pursuant to the exercise of director or employee stock
options granted prior to such date under the Shelton Stock Plan.
(b) Section 3.2(b) of the Shelton Disclosure Schedule sets
forth a true, correct and complete list of all Subsidiaries of Shelton as of the
date of this Agreement. Except as set forth on Section 3.2(b) of the Shelton
Disclosure Schedule, Shelton owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of its Subsidiaries, free and clear
of all liens, charges, encumbrances and security interests whatsoever, and all
of such shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No Shelton Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of capital
stock or any other equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Subsidiary.
3.3 Authority; No Violation.
(a) Shelton has full corporate power and authority to execute
and deliver this Agreement and the Option Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly approved by the Board
of Directors of Shelton. The Board of Directors of Shelton has directed that
this Agreement and the transactions contemplated hereby be submitted to
Shelton's shareholders for approval at a special meeting of such shareholders
and, except for the adoption of this Agreement by the requisite vote of
Shelton's shareholders, no other corporate proceedings on the part of Shelton
are necessary to approve this Agreement or the Option Agreement or to consummate
the transactions contemplated hereby or thereby. This Agreement has been, and
the Option Agreement will be, duly and validly executed and delivered by Shelton
and (assuming due authorization, execution and delivery by Webster and Merger
Sub of this Agreement and by Webster of the Option Agreement) will constitute
valid and binding obligations of Shelton, enforceable against Shelton in
accordance with their terms, except as enforcement may be limited by general
principles of equity
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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) Shelton Bank has full corporate power and authority to
execute and deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby have been duly and
validly approved by the Board of Directors of Shelton Bank and by Shelton as the
sole shareholder of Shelton Bank. No other corporate proceedings on the part of
Shelton Bank will be necessary to consummate the transactions contemplated
thereby. The Bank Merger Agreement, upon execution and delivery by Shelton Bank,
will be duly and validly executed and delivered by Shelton Bank and will
(assuming due authorization, execution and delivery by the Surviving Bank)
constitute a valid and binding obligation of Shelton Bank, enforceable against
Shelton Bank in accordance with its terms, except as enforcement may be limited
by general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally.
(c) Except as set forth in Section 3.3(c) of the Shelton
Disclosure Schedule, neither the execution and delivery of this Agreement and
the Option Agreement by Shelton or the Bank Merger Agreement by Shelton Bank,
nor the consummation by Shelton or Shelton Bank, as the case may be, of the
transactions contemplated hereby or thereby, nor compliance by Shelton or
Shelton Bank with any of the terms or provisions hereof or thereof, will (i)
violate any provision of the Certificate of Incorporation or By-Laws of Shelton
or the Certificate of Incorporation or By-Laws of Shelton Bank, or (ii) assuming
that the consents and approvals referred to in Section 3.4 hereof are duly
obtained, (x) violate any Laws (as defined in Section 9.13) applicable to
Shelton or Shelton Bank, or any of their respective properties or assets, or (y)
violate, conflict with, result in a breach of any provision of or the loss of
any benefit under, constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, result in the termination
of or a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the respective properties or assets of
Shelton or Shelton 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 Shelton or Shelton 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 HOLA and the
Bank Merger Act and approval of such applications and notices, (ii) the filing
of any required applications or notices with the FDIC and OTS as to the
subsidiary activities of Shelton Bank which become service corporation or
operating subsidiaries of the Surviving Bank and approval of such applications
and notices, (iii) the filing of applications and notices with the Banking
Commissioner of the State of Connecticut (the "Connecticut Commissioner") and
approval of such applications and notices as to the Merger and the Bank Merger
(the "State Banking Approvals"), (iv) the filing with the Connecticut
Commissioner of an acquisition statement pursuant to Section 36a-184 of the
Banking Law of the State of Connecticut prior to the acquisition of more than
10% of the Shelton Common Stock pursuant to the Option Agreement, if not exempt,
(v) the filing with the SEC of a registration statement on Form S-4 to register
the shares of Webster Common Stock to be issued in connection with the Merger
(including the shares of Webster Common Stock that may be issued upon the
exercise of the options referred to in Section 1.6 hereof), which will include
the joint proxy statement/prospectus to be used in soliciting the approval of
Shelton's shareholders at a special meeting to be held in connection with this
Agreement and the transactions contemplated hereby (the "Proxy
Statement/Prospectus"), (vi) the approval of this Agreement by the requisite
vote of the shareholders of Shelton, (vii) the approval for
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the issuance of the Webster Common Stock hereunder by a majority of shares of
Webster Common Stock voted at a meeting of Webster shareholders at which a
quorum is present, (viii) the filing of the Certificate of Merger with the
Secretary of State pursuant to the DGCL, (ix) the filings required by the Bank
Merger Agreement, (x) the filings required by Webster for the conversion of
Bristol to federal savings bank charter and concurrent renaming of Bristol as
Webster Bank, and for the merger of First Federal into Webster Bank, prior to
the Merger and Bank Merger, (xi) the filings required for the Subsidiary Merger,
and (xii) such filings, authorizations or approvals as may be set forth in
Section 3.4 of the Shelton Disclosure Schedule, no consents or approvals of or
filings or registrations with any court, administrative agency or commission or
other governmental authority or instrumentality (each a "Governmental Entity")
or with any third party are necessary in connection with (1) the execution and
delivery by Shelton of this Agreement and the Option Agreement, (2) the
consummation by Shelton of the Merger and the other transactions contemplated
hereby, (3) the execution and delivery by Shelton Bank of the Bank Merger
Agreement, (4) the consummation by Shelton Bank of the Bank Merger and the
transactions contemplated thereby, and (5) the consummation by Shelton of the
Option Agreement.
(b) Shelton hereby represents to Webster that it has no
Knowledge of any reason why approval or effectiveness of any of the
applications, notices or filings referred to in Section 3.4(a) cannot be
obtained or granted on a timely basis.
3.5 Loan Portfolio; Reports.
(a) Except as set forth in Section 3.5(a) of the Shelton
Disclosure Schedule, as of June 30, 1994 and thereafter through and including
the date of this Agreement, neither Shelton nor Shelton Bank is a party to any
written or oral loan agreement, note or borrowing arrangement (including,
without limitation, leases, credit enhancements, commitments, guarantees and
interest-bearing assets) (collectively, "Loans"), with any director, officer or
five percent or greater shareholder of Shelton or any of its Subsidiaries, or to
the Knowledge of Shelton, any Affiliated Person (as defined in Section 9.13) of
the foregoing.
(b) Shelton and Shelton 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 June 30, 1992 with
(i) the OTS, (ii) the FDIC, (iii) the Connecticut Commissioner and any other
state banking commissions or any other state regulatory authority (each a "State
Regulator"), (iv) the SEC and (v) any other self-regulatory organization ("SRO")
(collectively "Regulatory Agencies"). Except for normal examinations conducted
by a Regulatory Agency in the regular course of the business of Shelton and its
Subsidiaries, to the Knowledge of Shelton, no Governmental Entity is conducting,
or has conducted, any proceeding or investigation into the business or
operations of Shelton or Shelton Bank since June 30, 1992.
3.6 Financial Statements; Exchange Act Filings; Books and
Records.
Shelton has previously delivered to Webster true, correct and
complete copies of (a) the consolidated balance sheets of Shelton and its
Subsidiaries as of June 30, for the fiscal years 1993 and 1994, and the related
consolidated statements of income, changes in shareholders' equity and cash
flows for the fiscal years 1992 through 1994, inclusive, as reported in
Shelton's Annual Report on Form 10-K for the fiscal year ended June 30, 1994
filed with the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), in each case accompanied by the audit report of Coopers &
Lybrand, independent public accountants with respect to Shelton, and (b) the
unaudited consolidated balance sheet of Shelton and its Subsidiaries as of March
31, 1995 and the related comparative unaudited consolidated statements of
income, cash flows and changes in shareholders' equity for the nine month
periods ended March 31, 1995 and 1994 as reported in Shelton's Quarterly Report
on Form 10-Q filed with the SEC under the Exchange Act. The financial
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statements referred to in this Section 3.6 (including the related notes, where
applicable) fairly present, and the financial statements referred to in Section
6.9 hereof will fairly present (subject, in the case of the unaudited
statements, to recurring audit adjustments normal in nature and amount), the
results of the consolidated operations and consolidated financial condition of
Shelton and its Subsidiaries for the respective fiscal periods or as of the
respective dates therein set forth; each of such statements (including the
related notes, where applicable) comply, and the financial statements referred
to in Section 6.9 hereof will comply, with applicable accounting requirements
and with the published rules and regulations of the SEC with respect thereto and
each of such statements (including the related notes, where applicable) has
been, and the financial statements referred to in Section 6.9 hereof will be,
prepared in accordance with generally accepted accounting principles ("GAAP")
consistently applied during the periods involved, except in each case as
indicated in such statements or in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q. Shelton's Annual Report on Form
10-K for the fiscal year ended June 30, 1992 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 Shelton has previously delivered to Webster true, correct and
complete copies of such reports. The books and records of Shelton and Shelton
Bank have been, and are being, maintained in all material respects in accordance
with GAAP and any other applicable legal and accounting requirements and reflect
only actual transactions.
3.7 Broker's Fees.
Neither Shelton nor any Shelton 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 Shelton has engaged, and will pay
a fee or commission to Alex Brown & Co. in accordance with the terms of a letter
agreement, as amended, between Alex Brown & Co. and Shelton, a true, complete
and correct copy of which has been previously delivered by Shelton to Webster.
3.8 Absence of Certain Changes or Events.
(a) Except as may be set forth in Section 3.8(a) of the
Shelton Disclosure Schedule or as disclosed in Shelton's Annual Report on Form
10-K for June 30, 1994 or in any Current or Quarterly Report of Shelton on Form
8-K or Form 10-Q filed prior to the date of this Agreement, since June 30, 1994,
(i) neither Shelton nor any of its Subsidiaries has incurred any material
liability, except in the ordinary course of their business consistent with their
past practices, and (ii) no event has occurred which has had, or is likely to
have, individually or in the aggregate, a Material Adverse Effect (as defined
Section 9.13) on Shelton.
(b) Except as set forth in Section 3.8(b) of the Shelton
Disclosure Schedule, since June 30, 1994, Shelton and its Subsidiaries have
carried on their respective businesses in the ordinary and usual course
consistent with their past practices.
3.9 Legal Proceedings.
(a) Except as set forth in Section 3.9 of the Shelton
Disclosure Schedule, neither Shelton nor any of its Subsidiaries is a party to
any, and there are no pending or, to Shelton's Knowledge, threatened, legal,
administrative, arbitration or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against Shelton or any
of its Subsidiaries in which there is a reasonable probability of any material
recovery against Shelton or any of its Subsidiaries or which challenge the
validity or propriety of the transactions contemplated by this
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Agreement, the Bank Merger Agreement or the Option Agreement as to which there
is a reasonable probability of success.
(b) Except as otherwise disclosed in Section 3.9(b) of the
Shelton Disclosure Schedule, there is no injunction, order, judgment, decree, or
regulatory restriction imposed upon Shelton, any of its Subsidiaries or the
assets of Shelton or any of its Subsidiaries.
3.10 Taxes and Tax Returns.
Except as may be reflected in Section 3.10 of the Shelton
Disclosure Schedule, each of Shelton and its Subsidiaries has duly filed all
Federal and state tax returns required to be filed by it on or prior to the date
hereof (all such returns being accurate and complete in all material respects)
and has duly paid or made provisions for the payment of all material Taxes and
other governmental charges which have been incurred or are due or claimed to be
due from it by Federal and state taxing authorities on or prior to the date
hereof other than Taxes or other charges (a) which (x) are not yet delinquent or
(y) are being contested in good faith and set forth in Section 3.10 of the
Shelton Disclosure Schedule and (b) have not been finally determined. All
liability with respect to the income tax returns of Shelton and its Subsidiaries
has been satisfied for all years to and including 1991. The IRS has not notified
Shelton of, or otherwise asserted, that there are any material deficiencies with
respect to the income tax returns of Shelton subsequent to 1991. Except as may
be set forth in Section 3.10 of the Shelton Disclosure Schedule, there are no
material disputes pending, or claims asserted for, Taxes or assessments upon
Shelton or any of its Subsidiaries, nor has Shelton or any of its Subsidiaries
been requested to give any currently effective waivers extending the statutory
period of limitation applicable to any Federal or state income tax return for
any period. In addition, Federal and state returns which are accurate and
complete in all material respects have been filed by Shelton and its
Subsidiaries for all periods for which returns were due with respect to income
tax withholding, Social Security and unemployment taxes and the amounts shown on
such Federal and state returns to be due and payable have been paid in full or
adequate provision therefor has been included by Shelton in its consolidated
financial statements as of March 31, 1995.
3.11 Employee Plans.
(a) Section 3.11 of the Shelton Disclosure Schedule sets forth
a true and complete list of each employee benefit plan (within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), arrangement or agreement that is maintained as of the date of this
Agreement (the "Plans") by Shelton or any of its Subsidiaries, all of which
together with Shelton would be deemed a "single employer" within the meaning of
Section 4001 of ERISA or Code Sections 414(b), (c) or (m).
(b) Shelton has heretofore delivered to Webster true, correct
and complete copies of each of the Plans and all related documents, including
but not limited to (i) the actuarial report for such Plan (if applicable) for
each of the last five years, (ii) the most recent determination letter from the
Internal Revenue Service (if applicable) for such Plan, (iii) the current
summary plan description and any summaries of material modification, (iv) all
annual reports (Form 5500) series) for each Plan filed for the preceding five
plan years, (v) all agreements with fiduciaries and service providers relating
to the Plan, and (vi) all substantive correspondence relating to any such Plan
addressed to or received from the Internal Revenue Service, the Department of
Labor, the Pension Benefit Guaranty Corporation or any other governmental
agency.
(c) Except as set forth in Section 3.11 of the Disclosure
Schedule, (i) each of the Plans has been operated and in all material respects
administered in compliance with applicable Laws, including but not limited to
ERISA and the Code, (ii) each of the Plans intended to be "qualified" within the
meaning of Section 401(a) of the Code is so qualified, (iii) with respect to
each
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Plan which is subject to Title IV of ERISA, the present value of accrued
benefits under such Plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such Plan's actuary
with respect to such Plan, did not, as of its latest valuation date, exceed the
then current value of the assets of such Plan allocable to such accrued
benefits, (iv) no Plan provides benefits, including without limitation death or
medical benefits (whether or not insured), with respect to current or former
employees of Shelton or any Shelton Subsidiary beyond their retirement or other
termination of service, other than (w) coverage mandated by applicable Law, (x)
death benefits or retirement benefits under any "employee pension plan," as that
term is defined in Section 3(2) of ERISA, (y) deferred compensation benefits
accrued as liabilities on the books of Shelton or any Shelton Subsidiary, or (z)
benefits the full cost of which is borne by the current or former employee (or
his beneficiary), (v) no liability under the Title IV of ERISA has been incurred
by Shelton or any Shelton Subsidiary that has not been satisfied in full, and no
condition exists that presents a material risk to Shelton or any Shelton
Subsidiary incurring a material liability thereunder, (vi) no Plan is a
"multi-employer pension plan," as such term is defined in Section 3(37) of
ERISA, (vii) all contributions or other amounts payable by Shelton or any
Shelton Subsidiary as of the Effective Time with respect to each Plan in respect
of current or prior plan years have been paid or accrued in accordance with
generally accepted accounting practices and Section 412 of the code, (viii)
neither Shelton nor any Shelton Subsidiary has engaged in a transaction in
connection with which Shelton or any Shelton Subsidiary could be subject to
either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a
tax imposed pursuant to Section 4975 or 4976 of the Code, (ix) to the Knowledge
of Shelton, there are no pending, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any of the plans or any
trusts related thereto, and (x) all Plans could be terminated as of the
Effective Date without material liability; (xi) no Plan, program, agreement or
other arrangement, either individually or collectively, provides for any payment
by Shelton or any Shelton 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; (xii) no "accumulated funding deficiency" as
defined in Section 302(a)(2) of ERISA or Section 412 of the Code, whether or not
waived, and no "unfunded current liability" as determined under Section 412(l)
of the Code exists with respect to any Plan; and (xiii) no Plan has experienced
a "reportable event" (as such term is defined in Section 4043(b) of ERISA) that
is not subject to an administrative or statutory waiver from the reporting
requirement.
3.12 Certain Contracts.
(a) Except as set forth in Section 3.12(a) of the Shelton
Disclosure Schedule, neither Shelton nor any of its Subsidiaries is a party to
or bound by any contract, arrangement or commitment (i) with respect to the
employment of any directors, officers, employees or consultants, (ii) which,
upon the consummation of the transactions contemplated by this Agreement or the
Bank Merger Agreement will (either alone or upon the occurrence of any
additional acts or events) result in any payment (whether of severance pay or
otherwise) becoming due from Webster, Shelton, Shelton Bank, the Surviving
Corporation, the Surviving Bank or any of their respective Subsidiaries to any
director, officer or employee thereof, (iii) which materially restricts the
conduct of any line of business by Shelton or Shelton Bank, (iv) with or to a
labor union or guild (including any collective bargaining agreement) or (v)
(including any stock option plan, stock appreciation rights plan, restricted
stock plan or stock purchase plan) any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the Bank
Merger Agreement, or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement or the Bank Merger Agreement. Shelton has previously delivered to
Webster true, correct and complete copies of all employment, consulting and
deferred compensation agreements to which Shelton or any of its Subsidiaries is
a party. Section 3.12(a) of the Shelton Disclosure Schedule sets forth a list of
all material contracts (as defined in Item 601(b)(10) of Regulation S-K) of
Shelton. Each contract, arrangement or commitment of the type described in this
Section 3.12(a), whether or not set forth in
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Section 3.12(a) of the Shelton Disclosure Schedule, is referred to herein as a
"Shelton Contract," and neither Shelton nor any of its Subsidiaries knows of, or
has received notice of, any violation of any Shelton Contract.
(b) Except as set forth in Section 3.12(b) of the Shelton
Disclosure Schedule, (i) each Shelton Contract is valid and binding and in full
force and effect, (ii) Shelton and each of its Subsidiaries has in all material
respects performed all obligations required to be performed by it to date under
each Shelton Contract, and (iii) no event or condition exists which constitutes
or, after notice or lapse of time or both, would constitute, a material default
on the part of Shelton or any of its Subsidiaries under any such Shelton
Contract.
3.13 Agreements with Regulatory Agencies.
Neither Shelton nor Shelton Bank is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or has adopted
any board resolutions at the request of (each, whether or not set forth on
Section 3.13 of the Shelton 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 Shelton or Shelton Bank been advised by any Governmental
Entity that it is considering issuing or requesting any Regulatory Agreement.
3.14 State Takeover Laws.
The Board of Directors of Shelton has approved the
transactions contemplated by this Agreement, the Bank Merger Agreement and the
Option Agreement such that the provisions of Section 203 of the DGCL and
Sections 9.2 and 9.3 of Shelton's Certificate of Incorporation will not,
assuming the accuracy of the representations contained in Section 4.8 hereof,
apply to this Agreement, the Bank Merger Agreement or the Option Agreement or
any of the transactions contemplated hereby or thereby.
3.15 Environmental Matters.
Except as set forth in Section 3.15 of the Shelton Disclosure
Schedule:
(a) Each of Shelton and the Shelton Subsidiaries is in
compliance in all material respects with all applicable federal and state laws
and regulations relating to pollution or protection of the environment
(including without limitation, laws and regulations relating to emissions,
discharges, releases and threatened releases of Hazardous Material (as
hereinafter defined), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials;
(b) There is no suit, claim, action, proceeding, investigation
or notice pending or threatened (or past or present actions or events that could
form the basis of any such suit, claim, action, proceeding, investigation or
notice), in which Shelton or any Shelton Subsidiary has been or, with respect to
threatened suits, claims, actions, proceedings, investigations or notices may
be, named as a defendant (x) for alleged material noncompliance (including by
any predecessor), with any environmental law, rule or regulation or (y) relating
to any material release or threatened release into the environment of any
Hazardous Material, whether or not occurring at or on a site owned, leased or
operated by Shelton or any Shelton Subsidiary;
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(c) During the period of Shelton's or any Shelton Subsidiary's
ownership or operation of any of its properties, there has not been any material
release of Hazardous Materials in, on, under or affecting any such property.
(d) To the Knowledge of Shelton, neither Shelton nor any
Shelton Subsidiary has made or participated in any loan to any person who is
subject to any suit, claim, action, proceeding, investigation or notice, pending
or threatened, with respect to (i) any alleged material noncompliance as to any
property securing such loan with any environmental law, rule or regulation, or
(ii) the release or the threatened release into the environment of any Hazardous
Material at a site owned, leased or operated by such person on any property
securing such loan.
(e) For purposes of this section 3.15, the term "Hazardous
Material" means any hazardous waste, petroleum product, polychlorinated
biphenyl, chemical, pollutant, contaminant, pesticide, radioactive substance, or
other toxic material, or other material or substance (in each such case, other
than small quantities of such substances in retail containers) regulated under
any applicable environmental or public health statue, law, ordinance, rule or
regulation.
3.16 Reserves for Losses.
All reserves or other allowances for possible losses reflected
in Shelton's most recent financial statements referred to in Section 3.6
complied with all Laws and are adequate under GAAP. Neither Shelton nor Shelton
Bank has been notified by the OTS, the FDIC, the Connecticut Commissioner or
Shelton's independent auditor, in writing or otherwise, that such reserves are
inadequate or that the practices and policies of Shelton or Shelton Bank in
establishing such reserves and in accounting for delinquent and classified
assets generally fail to comply with applicable accounting or regulatory
requirements, or that the OTS, the FDIC, the Connecticut Commissioner or
Shelton's independent auditor believes such reserves to be inadequate or
inconsistent with the historical loss experience of Shelton or Shelton Bank.
Shelton has previously furnished Webster with a complete list of all extensions
of credit and other real estate owned ("OREO") that have been classified by any
bank examiner (regulatory or internal) as other loans specially mentioned,
special mention, substandard, doubtful, loss, classified or criticized, credit
risk assets, concerned loans or words of similar import. Shelton agrees to
update such list no less frequently than monthly after the date of this
Agreement until the earlier of the Closing Date or the date that this Agreement
is terminated in accordance with Section 8.1. All OREO held by Shelton or
Shelton Bank is being carried net of reserves at the lower of cost or fair
market value based on current appraisals.
3.17 Properties and Assets.
Section 3.17 of the Shelton Disclosure Schedule lists (i) all
real property owned by Shelton and each Shelton Subsidiary; (ii) each real
property lease, sublease or installment purchase arrangement to which Shelton or
any Shelton Subsidiary is a party; (iii) a description of each contract for the
purchase, sale, or development of real estate to which Shelton or any Shelton
Subsidiary is a party; and (iv) all items of Shelton's or any Shelton
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 Shelton's consolidated financial statements as of
March 31, 1995 referred to in Section 3.6 hereof, (b) exceptions to title that
do not interfere materially with Shelton's or any Shelton Subsidiary's use and
enjoyment of owned or leased real property (other than OREO), (c) liens for
current real estate taxes not yet delinquent, or being contested in good faith,
properly reserved against (and reflected on the financial statements referred to
in Section 3.6 above), (d) properties and assets sold or transferred in the
ordinary course of business consistent with past practices since March 31, 1995,
and (e) items listed in Section 3.17 of the Shelton Disclosure Schedule, to
Shelton's Knowledge, Shelton and each Shelton Subsidiary have
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good and, as to owned real property, marketable and insurable title to all their
properties and assets, reflected in its consolidated financial statements of
Shelton as of March 31, 1995, free and clear of all liens, claims, charges and
other encumbrances. Shelton and each Shelton Subsidiary, as lessees, have the
right under valid and subsisting leases to occupy, use and possess all property
leased by them, and there has not occurred under any such lease any material
breach, violation or default, and neither Shelton nor any Shelton Subsidiary has
experienced any material uninsured damage or destruction with respect to such
properties since March 31, 1995. To Shelton's Knowledge, all properties and
assets used by Shelton and each Shelton Subsidiary are in good operating
condition and repair suitable for the purposes for which they are currently
utilized and, except as set forth at Section 3.17 of the Shelton Disclosure
Schedule, comply in all material respects with all Laws relating thereto now in
effect or scheduled to come into effect. Shelton and each Shelton 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 Shelton or
any Shelton Subsidiary is a party are valid and binding obligations in
accordance with the terms thereof. Neither Shelton nor any Shelton Subsidiary is
in material default with respect to any such lease, and there has occurred no
default or event which with the lapse of time or the giving of notice, or both,
would constitute a material default under any such lease. Except as set forth at
Section 3.17 of the Shelton Disclosure Schedule, there are no Laws, conditions
of record, or other impediments which interfere with the intended use by Shelton
or any Shelton Subsidiary of any of the property owned, leased, or occupied by
them.
3.18 Insurance.
Section 3.18 of the Shelton Disclosure Schedule contains a
true, correct and complete list of all insurance policies and bonds maintained
by Shelton and any Shelton Subsidiary, including the name of the insurer, the
policy number, the type of policy and any applicable deductibles, and all such
insurance policies and bonds (or other insurance policies and bonds that have,
from time to time, in respect of the nature of the risks insured against and
amount of coverage provided, been substantially similar in kind and amount to
that customarily carried by parties similarly situated who own properties and
engage in businesses substantially similar to that of Shelton and any Shelton
Subsidiary) are in full force and effect and have been in full force and effect.
As of the date hereof, neither Shelton nor any Shelton Subsidiary has received
any notice of cancellation or amendment of any such policy or bond or is in
default under any such policy or bond, no coverage thereunder is being disputed
and all material claims thereunder have been filed in a timely fashion. The
existing insurance carried by Shelton and Shelton Subsidiaries is and will
continue to be, in respect of the nature of the risks insured against and the
amount of coverage provided, substantially similar in kind and amount to that
customarily carried by parties similarly situated who own properties and engage
in businesses substantially similar to that of Shelton and the Shelton
Subsidiaries, and is sufficient for compliance by Shelton and the Shelton
Subsidiaries with all requirements of Law and agreements to which Shelton or any
of the Shelton Subsidiaries is subject or is party. True, correct and complete
copies of all such policies and bonds reflected at Section 3.18 of the Shelton
Disclosure Statement, as in effect on the date hereof, have been delivered to
Webster.
3.19 Liquidation Account.
The liquidation account established by Shelton Bank in
connection with its conversion from the mutual to stock form amounted to less
than $400,000 at March 31, 1995, and has been maintained since its establishment
in accordance with applicable Laws. None of the transactions contemplated by
this Agreement would constitute a complete liquidation of Shelton Bank so as to
require the distribution of such liquidation account of Shelton Bank to any
existing or former account holders.
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3.20 Compliance with Applicable Laws.
Except as set forth at Section 3.20 of the Shelton Disclosure
Schedule, to Shelton's Knowledge, each of Shelton and any Shelton Subsidiary has
complied in all material respects with all Laws applicable to it or to the
operation of its business. Except as set forth at Section 3.20 of the Shelton
Disclosure Schedule, neither Shelton nor any Shelton Subsidiary has received any
notice of any material alleged or threatened claim, violation, or liability
under any such Laws that has not heretofore been cured and for which there is no
remaining liability.
3.21 Loans.
As of the date hereof:
(a) Except as is set forth at Section 3.21(a) of the Shelton
Disclosure Schedule, to Shelton's Knowledge, all loans owned by Shelton or any
Shelton Subsidiary, or in which Shelton or any Shelton Subsidiary has an
interest, comply in all material respects with all Laws, including, but not
limited to, applicable usury statutes, underwriting and recordkeeping
requirements and the Truth in Lending Act, the Equal Credit Opportunity Act, and
the Real Estate Procedures Act, and other applicable consumer protection
statutes and the regulations thereunder.
(b) All loans owned by Shelton or any Shelton Subsidiary, or
in which Shelton or any Shelton Subsidiary has an interest, have been made or
acquired by Shelton in accordance with board of director-approved loan policies,
and except as is set forth at Section 3.21 of the Shelton Disclosure Schedule,
all of such loans are collectible, except to the extent reserves have been made
against such loans in Shelton's consolidated financial statements at March 31,
1995 referred to in Section 3.6 hereof. Each of Shelton and each Shelton
Subsidiary holds mortgages contained in its loan portfolio for its own benefit
to the extent of its interest shown therein; to Shelton's Knowledge, such
mortgages evidence liens having the priority indicated by their terms, subject,
as of the date of recordation or filing of applicable security instruments, only
to such exceptions as are discussed in attorneys' opinions regarding title or in
title insurance policies in the mortgage files relating to the loans secured by
real property or are not material as to the collectability of such loans; and
all loans owned by Shelton and each Shelton Subsidiary are with full recourse to
the borrowers, and, to Shelton's Knowledge, each of Shelton and any Shelton
Subsidiary has taken no action which would result in a waiver or negation of any
rights or remedies available against the borrower or guarantor, if any, on any
loan. To Shelton's Knowledge, all applicable remedies against all borrowers and
guarantors are enforceable except as may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting creditors' rights and except as may
be limited by the exercise of judicial discretion in applying principles of
equity. All loans purchased or originated by Shelton or any Shelton Subsidiary
and subsequently sold by Shelton or any Shelton Subsidiary have been sold
without recourse to Shelton or any Shelton Subsidiary and without any liability
under any yield maintenance or similar obligation. True, correct and complete
copies of loan delinquency reports as of March 31, 1995 prepared by Shelton and
each Shelton Subsidiary, which reports include all loans delinquent or otherwise
in default, have been furnished to Webster. True, correct and complete copies of
the currently effective lending policies and practices of Shelton and each
Shelton Subsidiary also have been furnished to Webster.
(c) Each outstanding loan participation sold by Shelton or any
Shelton 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 Shelton or
any Shelton Subsidiary) proportionately to the share of such loan represented by
such participation without any recourse of such other lender or participant to
Shelton or any Shelton Subsidiary for payment or repurchase of the amount of
such loan represented by the participation or liability under any yield
maintenance or similar obligation. To Shelton's Knowledge, Shelton and any
Shelton Subsidiary have properly fulfilled in all material
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respects its contractual responsibilities and duties in any loan in which it
acts as the lead lender or servicer and has complied in all material respects
with its duties as required under applicable regulatory requirements.
(d) Shelton and each Shelton Subsidiary have properly
perfected or caused to be properly perfected all security interests, liens, or
other interests in any collateral securing any loans made by it.
3.22 Affiliates; Certain Executive Officers.
Each director and 5% or greater shareholder and any other
person who is an "affiliate" (for purposes of Rule 145 under the Securities Act
and for purposes of qualifying the Merger for "pooling-of-interests" accounting
treatment) of Shelton has delivered to Webster concurrently with the execution
of this Agreement, a shareholders agreement, in the form of Exhibit C hereto
(the "Stockholders Agreement"). Messrs. Schaible, Nimons and Rodriguez have also
concurrently with the execution of this Agreement have executed and delivered to
Webster and Shelton an executive officers agreement, in the form of Exhibit G
hereto (the "Executive Officers Agreement") in order to assure compliance with
Section 280G of the Code. The Stockholders Agreement and the Executive Officers
Agreement have been duly and validly executed and delivered by each person that
is a party thereto (assuming due authorization, execution and delivery by
Webster and/or Shelton, as applicable) and constitute valid and binding
obligations of such person, enforceable against such person in accordance with
their terms, except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF WEBSTER
Webster hereby represents and warrants to Shelton as follows:
4.1 Corporate Organization.
(a) Webster is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Webster has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
Webster is duly registered as a savings and loan holding company with the OTS
under HOLA. The Certificate of Incorporation and By-Laws of Webster, copies of
which have previously been made available to Shelton, are true, correct and
complete copies of such documents as in effect as of the date of this Agreement.
(b) Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(c) First Federal is, and the Surviving Bank will be, a
federal savings bank chartered by the OTS under the laws of the United States
with its main office in the State of Connecticut. Bristol, prior to its
conversion to federal charter, is a savings bank chartered under the laws of the
State of Connecticut with its main office in the State of Connecticut. First
Federal and Bristol have, and the Surviving Bank will have, the corporate power
and authority to own or lease all of their properties and assets and to carry on
business as they are now being conducted, and are, or in the case of the
Surviving Bank will be, duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by them or the
character or location of the properties
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and assets owned or leased by them makes such licensing or qualification
necessary. The Charter and By-Laws of First Federal and Bristol, copies of which
have previously been made available to Shelton, are true, correct and complete
copies of such documents as in effect as of the date of this Agreement. The
proposed Charter and By-Laws of the Surviving Bank will be substantially the
same as the Charter and By-Laws of First Federal, except for name and as
otherwise contemplated by this Agreement.
4.2 Capitalization.
(a) The authorized capital stock of Webster consists of
14,000,000 shares of Webster Common Stock, of which 5,498,142 shares were
outstanding (net of 461,424 treasury shares) at May 31, 1995, and 3,000,000
shares of serial preferred stock, par value .01 per share ("Webster Preferred
Stock"), of which 171,869 shares of Series B Cumulative Convertible Preferred
Stock (the "Series B Stock") were outstanding at May 31, 1995. At such date,
Webster had reserved for issuance 546,298 shares upon exercise of outstanding
options and 986,062 shares upon conversion of the Series B Stock. All of the
issued and outstanding shares of Webster Common Stock and Series B Stock have
been duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the ownership
thereof. As of the date of this Agreement, except as set forth above, Webster
does not have and is not bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of Webster Common Stock or Webster Preferred
Stock or any other equity securities of Webster or any securities presenting the
right to purchase or otherwise receive any shares of Webster Common Stock or
Webster Preferred Stock. The shares of Webster Common Stock to be issued
pursuant to the Merger will be duly authorized and validly issued and, at the
Effective Time, all such shares will be fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof.
(b) The authorized capital stock of Merger Sub consists of
1,000 shares of common stock, par value $.01 per share, all of which are issued
and outstanding and owned by Webster free and clear of all liens, charges,
encumbrances and security interests whatsoever, and all of such shares are duly
authorized and validly issued and fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to ownership thereof.
(c) At the Effective Time, the authorized capital stock of the
Surviving Bank will consist of 1,000 shares of common stock, par value $.01 per
share, of which 1,000 shares will be issued and outstanding. At the Effective
Time, all of the outstanding shares of common stock of the Surviving Bank will
be owned by Webster free and clear of all liens, charges, encumbrances and
security interests whatsoever, and all of such shares will then be duly
authorized and validly issued and fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to ownership thereof.
4.3 Authority; No Violation.
(a) Webster has full corporate power and authority to execute
and deliver this Agreement and the Option Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby have been duly and validly approved by the Board of
Directors of Webster. No other corporate proceedings on the part of Webster are
necessary to consummate the transactions contemplated hereby, except for the
approval of this Agreement by a majority of shares of Webster Common Stock voted
at a meeting of Webster's shareholders at which a quorum is present. 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 Shelton) will constitute valid and binding obligations of Webster,
enforceable against Webster in
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accordance with their terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar law affecting creditors' rights and
remedies generally.
(b) Merger Sub has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
approved by the Board of Directors of Merger Sub and by Webster as the sole
shareholder of Merger Sub. No other corporate proceedings on the part of Merger
Sub will be necessary to consummate the transactions contemplated hereby. This
Agreement, upon execution and delivery by Merger Sub, will be duly and validly
executed and delivered by Merger Sub and will (assuming due authorization,
execution and delivery by Shelton) constitute a valid and binding obligation of
Merger Sub, enforceable against Merger Sub in accordance with its terms, except
as enforcement may be limited by general principles of equity whether applied in
a court of law or a court of equity and by bankruptcy, insolvency and similar
laws affecting creditors' rights and remedies generally.
(c) The Board of Directors of Bristol has duly and validly
approved Bristol's conversion from a state savings bank to a federal savings
bank charter, the concurrent renaming of Bristol as Webster Bank, and the merger
of First Federal into Webster Bank, as the surviving federal savings bank in
such merger. The Board of Directors of First Federal has duly and validly
approved the merger of First Federal into Webster Bank, as the surviving federal
savings bank in such merger. Webster, as the sole shareholder of both Bristol
and First Federal has approved such conversion, renaming and merger. All
corporate proceedings necessary to consummate such transactions have been taken
or will be taken prior to the Effective Time.
(d) The Surviving Bank will have full corporate power and
authority to execute and deliver the Bank Merger Agreement and to consummate the
transactions contemplated thereby. The execution and delivery of the Bank Merger
Agreement and the consummation of the transactions contemplated thereby will be
duly and validly approved by the Board of Directors of the Surviving Bank and by
Webster as the sole shareholder of the Surviving Bank prior to the Effective
Time. All corporate proceedings on the part of the Surviving 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
the Surviving Bank, will be duly and validly executed and delivered by the
Surviving Bank and will (assuming due authorization, execution and delivery by
Shelton Bank) constitute a valid and binding obligation of the Surviving Bank,
enforceable against the Surviving Bank in accordance with its terms, except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally.
(e) Except as set forth in Section 4.3(d) of the disclosure
schedule which is being delivered by Webster to Shelton concurrently herewith
(the "Webster Disclosure Schedule"), neither the execution and delivery of this
Agreement by Webster or Merger Sub, the Option Agreement by Webster or the Bank
Merger Agreement by the Surviving Bank, nor the consummation by Webster, Merger
Sub or the Surviving Bank, as the case may be, of the transactions contemplated
hereby or thereby, nor compliance by Webster, Merger Sub or the Surviving Bank
with any of the terms or provisions hereof or thereof, will (i) violate any
provision of the Certificate of Incorporation or By-Laws of Webster, the
Certificate of Incorporation or By-Laws of Merger Sub or the Charter or By-Laws
of the Surviving Bank, as the case may be, or (ii) assuming that the consents
and approvals referred to in Section 4.4 are duly obtained, (x) violate any Laws
applicable to Webster, Merger Sub, the Surviving Bank or any of their respective
properties or assets, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any lien,
pledge, security interest, charge or other encumbrance upon
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any of the respective properties or assets of Webster, the Surviving Bank or
Merger Sub under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Webster, the Surviving Bank or Merger Sub is a
party, or by which they or any of their respective properties or assets may be
bound or affected.
4.4 Regulatory Approvals.
(a) Except for (i) the filing of applications and notices, as
applicable, as to the Merger and the Bank Merger with the OTS under HOLA and the
Bank Merger Act and approval of such applications and notices, (ii) the filing
of any required applications or notices with the FDIC and OTS as to the
subsidiary activities of Shelton Bank which become service corporation or
operating subsidiaries of the Surviving Bank and approval of such applications
and notices, (iii) the State Banking Approvals, (iv) the filing with the
Connecticut Commissioner of an acquisition statement pursuant to Section 36a-184
of the Banking Law of the State of Connecticut prior to the acquisition of more
than 10% of the Shelton Common Stock pursuant to the Option Agreement, if not
exempt, (v) the filing with the SEC of a registration statement on Form S-4 to
register the shares of Webster Common Stock to be issued in connection with the
Merger (including the shares of Webster Common Stock that may be issued upon the
exercise of the options referred to in Section 1.6 hereof), which will include
the Proxy Statement/Prospectus, (vi) the approval of this Agreement by the
requisite vote of the shareholders of Shelton, (vii) the approval for the
issuance of the Webster Common Stock hereunder by a majority of shares of
Webster Common Stock voted at a meeting of the Webster's shareholders at which a
quorum is present, (viii) the filing of the Certificate of Merger with the
Secretary of State pursuant to the DGCL, (ix) the filings required by the Bank
Merger Agreement, (x) the filings required by Webster for the conversion of
Bristol to federal savings bank charter and concurrent renaming of Bristol as
Webster Bank, and for the merger of First Federal into Webster Bank, prior to
the Merger and Bank Merger, (xi) the filings required for the Subsidiary Merger,
and (xii) such filings and approvals as are required to be made or obtained
under the securities or "Blue Sky" laws of various states or with Nasdaq (or
such other exchange as may be applicable) in connection with the issuance of the
shares of Webster Common Stock pursuant to this Agreement, no consents or
approvals of or filings or registrations with any Governmental Entity are
necessary in connection with (1) the execution and delivery by Webster and
Merger Sub of this Agreement and the Option Agreement, (2) the consummation by
Webster and Merger Sub of the Merger and the other transactions contemplated
hereby, (3) the execution and delivery by the Surviving Bank of the Bank Merger
Agreement, and (4) the consummation by the Surviving Bank of the transactions
contemplated by the Bank Merger Agreement.
(b) Webster hereby represents to Shelton that it has no
Knowledge of any reason why approval or effectiveness of any of the
applications, notices or filings referred to in Section 4.4(a) cannot be
obtained or granted on a timely basis.
4.5 Financial Statements; Exchange Act Filings; Books and
Records.
Webster has previously delivered to Shelton true, correct and
complete copies of (a) the consolidated balance sheets of Webster and its
Subsidiaries as of December 31 for the fiscal years 1993 and 1994 and the
related consolidated statements of income changes in shareholders' equity and
cash flows for the fiscal years 1992 through 1994, inclusive, as reported in
Webster's Annual Report on Form 10-K for the fiscal year ended December 31, 1994
filed with the SEC under the Exchange Act, in each case accompanied by the audit
report of KPMG Peat Marwick LLP, independent public accountants with respect to
Webster, and (b) the unaudited consolidated balance sheet of Webster and its
Subsidiaries as of March 31, 1995 and the related comparative unaudited
consolidated statements of income, changes in shareholders' equity and cash
flows for the three month periods then ended March 31, 1995 and 1994. The
financial statements referred to in this
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Section 4.5 (including the related notes, where applicable) fairly present, and
the financial statements referred to in Section 6.9 hereof will fairly present
(subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount), the results of the consolidated
operations and consolidated financial condition of Webster and its Subsidiaries
for the respective fiscal periods or as of the respective dates therein set
forth; each of such statements (including the related notes, where applicable)
comply, and the financial statements referred to in Section 6.9 hereof will
comply, with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto; and each of such statements
(including the related notes, where applicable) has been, and the financial
statements referred to in Section 6.9 hereof will be, prepared in accordance
with GAAP consistently applied during the periods involved, except as indicated
in the notes thereto or, in the case of unaudited statements, as permitted by
Form 10-Q. Webster's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 and all subsequently filed reports under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act comply in all material respects with the
appropriate requirements for such reports under the Exchange Act, and Webster
has previously delivered to Shelton true, correct and complete copies of such
reports. The books and records of Webster and First Federal have been, and are
being, maintained in all material respects in accordance with GAAP and any other
applicable legal and accounting requirements and reflect only actual
transactions.
4.6 Absence of Certain Changes or Events.
Except as may be set forth in Section 4.6 of the Webster
Disclosure Schedule, or as disclosed in Webster's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994, true, correct and complete copies of
which have previously been delivered to Shelton, since December 31, 1994, no
event has occurred which has had, individually or in the aggregate, a Material
Adverse Effect on Webster.
4.7 Compliance with Applicable Law.
Except as set forth in Section 4.7 of the Webster Disclosure
Schedule, to Webster's Knowledge, Webster and each Webster Subsidiary has
complied in all material respects with all Laws applicable to it or to the
operation of its business. Except as set forth in Section 4.7 of the Webster
Disclosure Schedule, neither Webster nor any Webster Subsidiary has received any
notice of any alleged or, threatened claim, violation of or liability or
potential responsibility under any such Laws that has not heretofore been cured
and for which there is no remaining liability.
4.8 Ownership of Shelton Common Stock; Affiliates and
Associates.
(a) As of the date hereof, neither Webster nor any of its
affiliates or associates (as such terms are defined under the Exchange Act), (i)
beneficially own, directly or indirectly, or (ii) is a party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, more than one percent of the outstanding capital
stock of Shelton, excluding the shares of Shelton Common Stock issuable pursuant
to the Option Agreement to be executed subsequent to the execution of the
Agreement.
(b) Neither Webster nor any of its Subsidiaries is an
"affiliate" (as such term is defined in DGCL s.203(c) (1) or an "associate" (as
such term is defined in DGCL s.203(c) (2)) of Shelton.
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4.9 Employee Benefit Plans.
Webster's proxy statement for its 1995 Annual Meeting of
Shareholders and Section 4.9 of the Webster Disclosure Schedule sets forth a
true and complete description of each employee benefit plan arrangement or
agreement that is maintained as of the date of this Agreement (the "Webster
Plans") by Webster or any of its Subsidiaries, all of which together with
Webster would be deemed a "single employer" within the meaning of Section 4001
of ERISA. Webster has heretofore made available for inspection, or delivered (if
requested) to Shelton true, correct and complete copies of each of the Webster
Plans. No "accumulated funding deficiency" as defined in Section 302(a)(2) of
ERISA or Section 412 of the Code, whether or not waived, and no "unfunded
current liability" as determined under Section 412(l) of the Code exists with
respect to any Webster Plan.
4.10 Agreements with Regulatory Agencies.
Except as set forth in Section 4.10 of the Webster Disclosure
Schedule, neither Webster nor any of its affiliates is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or has adopted
any board resolutions at the request of any Governmental Entity that restricts
the conduct of its business or that in any manner relates to its capital
adequacy, its credit policies, its management or its business, nor has Webster,
First Federal or Bristol been advised by any Governmental Entity that it is
considering issuing or requesting any Regulatory Agreement.
4.11 Reserves for Losses.
All reserves or other allowances for possible losses reflected
in Webster's most recent financial statements referred to in Section 4.5
complied with all Laws, and Webster has not been notified by the OTS or
Webster's independent auditor, in writing or otherwise, that such reserves are
inadequate or that the practices and policies of Webster in establishing such
reserves and in accounting for delinquent and classified assets generally fail
to comply with applicable accounting or regulatory requirements, or that the OTS
or Webster's independent auditor believes such reserves to be inadequate or
inconsistent with the historical loss experience of Webster.
4.12 Legal Proceedings.
Except as set forth in Section 4.12 of the Webster Disclosure
Schedule, neither Webster nor any of its Subsidiaries is a party to any, and
there are no pending or, to Webster's Knowledge, threatened, legal,
administrative proceedings, claims, actions or governmental or regulatory
investigations against Webster or any of its Subsidiaries which challenge the
validity or propriety of the transactions contemplated by this Agreement, the
Bank Merger Agreement or the Option Agreement as to which there is a reasonable
probability of success.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of Shelton.
During the period from the date of this Agreement and
continuing until the Effective Time, except as expressly contemplated or
permitted by this Agreement, the Bank Merger Agreement or the Option Agreement
or with the prior written consent of Webster, Shelton and each Shelton
Subsidiary shall carry on their respective businesses in the ordinary course
consistent with past practices and consistent with prudent banking practices.
Shelton will use its reasonable efforts to (x) preserve its business
organization and that of each Shelton Subsidiary intact, (y) keep
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available to itself and Webster the present services of the employees of Shelton
and each Shelton Subsidiary and (z) preserve for itself and Webster the goodwill
of the customers of Shelton and each Shelton Subsidiary and others with whom
business relationships exist. Without limiting the generality of the foregoing,
and except as set forth in the Shelton Disclosure Schedule or as otherwise
contemplated by this Agreement or consented to by Webster in writing, Shelton
shall not, and shall not permit any Shelton 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 Shelton of $.16 per share on the Shelton
Common Stock with declaration, record and payment dates corresponding to the
quarterly dividends paid by Shelton during its fiscal year ended June 30, 1994
and except that any Shelton Subsidiary may declare and pay dividends and
distributions to Shelton);
(b) (i) split, combine or reclassify any shares of its capital
stock or issue, authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock except
upon the exercise or fulfillment of rights or options issued or existing
pursuant to the Shelton Stock Plan in accordance with their present terms, all
to the extent outstanding and in existence on the date of this Agreement, and
except pursuant to the Option Agreement, or (ii) repurchase, redeem or otherwise
acquire (except for the acquisition of Trust Account Shares and DPC Shares, as
such terms are defined in Section 1.4(c) hereof, and the acquisition by the
trustee under Shelton's employee stock ownership plan in accordance with past
practices of up to 4,000 outstanding shares of Shelton Common Stock per quarter)
any shares of the capital stock of Shelton or any Shelton Subsidiary, or any
securities convertible into or exercisable for any shares of the capital stock
of Shelton or any Shelton 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 Shelton Common Stock pursuant to stock
options or similar rights to acquire Shelton Common Stock granted pursuant to
the Shelton Stock Plan and outstanding prior to the date of this Agreement, in
each case in accordance with their present terms and (ii) pursuant to the Option
Agreement;
(d) amend its Certificate of Incorporation, By-Laws or other
similar governing documents;
(e) authorize or permit any of its officers, directors,
employees or agents to solicit, initiate or encourage any inquiries relating to,
or the making of any proposal which constitutes, a "takeover proposal" (as
defined below), or, except to the extent legally required for the discharge of
the fiduciary duties of the Board of Directors of Shelton, based upon a written
opinion of Shelton's outside counsel, negotiate, discuss, recommend or endorse
any takeover proposal, or provide third parties with any nonpublic information,
relating to any such inquiry or proposal or otherwise facilitate any effort or
attempt to make or implement a takeover proposal; provided, however, that
Shelton may communicate information about any such takeover proposal to its
shareholders if, in the judgment of Shelton's Board of Directors based upon a
written opinion of Shelton's outside counsel, such communication is required
under applicable law. Shelton 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. Shelton will
take all actions necessary or advisable to inform the appropriate individuals or
entities referred to in the first sentence hereof of the obligations undertaken
in this Section 5.1(e). Shelton will notify Webster promptly if any such
inquiries or takeover proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with, Shelton, and Shelton will promptly inform Webster
in writing of all of the relevant details with respect to the foregoing. Shelton
and its Board of Directors will oppose any takeover
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proposal from a third party, unless such opposition would be contrary to the
exercise by the Board of Directors of its fiduciary duties. As used in this
Agreement, "takeover proposal" shall mean any offer, proposal or expression of
interest relating to (i) any tender or exchange offer, (ii) merger,
consolidation or other business combination involving Shelton or any Shelton
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, Shelton or Shelton Bank other than the transactions
contemplated or permitted by this Agreement, the Bank Merger Agreement and the
Option Agreement;
(f) make capital expenditures aggregating in excess of
$100,000, except for (i) capital expenditures specified in Shelton's budget for
the fiscal year ending June 30, 1996 (the "Shelton 1996 Budget") and (ii)
capital expenditures relating to the proposed closure and relocation of Shelton
Bank's existing Ansonia branch in accordance with a schedule of such
expenditures (the "Ansonia Branch Budget"), a true, complete and correct copies
of which, in each case, have been provided to Webster prior to the date hereof;
(g) enter into any new line of business;
(h) acquire or agree to acquire, by merging or consolidating
with, or by purchasing an equity interest in or the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire any assets, other
than in connection with foreclosures, settlements in lieu of foreclosure or
troubled loan or debt restructurings, or in the ordinary course of business
consistent with prudent banking practices;
(i) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue or in any of the conditions to the
Merger set forth in Article VII not being satisfied, or in a violation of any
provision of this Agreement 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 June 30,
1994, except as required by changes in GAAP or regulatory accounting principles
as concurred to by Shelton's independent auditors;
(k) (i) except as required by applicable law or to maintain
qualification pursuant to the Code, adopt, amend, renew or terminate any Plan or
any agreement, arrangement, plan or policy between Shelton or any Shelton
Subsidiary and one or more of its current or former directors or officers, (ii)
except for annual increases in the compensation of employees in the ordinary
course of business consistent with past practices (or in the case of Messrs.
Kenneth E. Schaible, William C. Nimons and Ralph J. Rodriguez annual increases
consistent with past practices and not to exceed 5%) or except as required by
applicable law, or (iii) except for the payment after December 31, 1994 of
bonuses consistent with past practices in the aggregate not in excess of
$40,000, $29,063 and $20,250 and $6,825 to Messrs. Schaible, Nimons, Rodriguez
and Gary M. Toole, respectively, with 50% of such amounts in the case of Messrs.
Schaible, Nimons and Rodriguez to relate to their respective performances during
the fiscal year ending June 30, 1995 and the other 50% relating to their
performance between January 1, 1995 and the Effective Time, (A) increase in any
manner the compensation of any employee or director or pay any benefit not
required by any plan or agreement as in effect as of the date hereof (including,
without limitation, the granting of stock options, stock appreciation rights,
restricted stock, restricted stock units or performance units or shares), (B)
enter into, modify (other than as provided in the Executive Officers Agreement)
or renew any contract, agreement, commitment or arrangement providing for the
payment to any director, officer or employee of compensation or benefits, (C)
hire any new employee at an annual compensation in excess of $50,000 (except for
the replacement of existing employees at compensation levels consistent
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with those currently in effect) or any new employee in the trust area, (D) pay
expenses of any non-employee directors for attending conventions or similar
meetings, (E) pay to, or accrue for, employees any unused sick days (or portions
thereof) earned after November 30, 1995, or (F) pay any retention bonuses to any
employees other than as mutually agreed upon by Webster;
(l) except for short-term borrowings with a maturity of one
year or less by Shelton Bank in the ordinary course of business consistent with
past practices, incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity;
(m) sell, purchase, lease, relocate, open or close any banking
or other office, or file an application pertaining to such action with any
Governmental Entity; provided that Shelton Bank may close its existing Ansonia
branch office and relocate that office to a new location if the capital
expenditures and other costs associated with such relocation do not exceed the
capital expenditures and costs for such project reflected in the Ansonia Branch
Budget;
(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 (i) foreclosures, settlements in lieu of foreclosure or
troubled loan or debt restructurings in the ordinary course of business
consistent with past banking practices, or (ii) the Stonebridge Subdivision
located on Riggs Street, Oxford, Connecticut up to an additional $300,000 on a
funding basis consistent with past practices;
(o) make any new loans to, modify the terms of any existing
loan to, or engage in any other transactions with, any Affiliated Person of
Shelton or any Shelton Subsidiary;
(p) make any investment, or incur deposit liabilities, other
than in the ordinary course of business consistent with past practices,
including deposit pricing, and which would not change the risk profile of
Shelton Bank based on its existing deposit and primarily 1-4 family residential
lending policies or make any equity investments;
(q) sell, purchase or lease any real property, except for the
sale of real estate that is the subject of a casualty loss or condemnation or
the sale of OREO on a basis consistent with past practices;
(r) limit its lending activities to 1-4 family residential
first mortgage loans, consumer loans (if unsecured, up to $10,000), home equity
lines or loans, commercial real estate first mortgage loans (up to $250,000 as
to any loan or $500,000 in the aggregate as to related loans, unless relating to
the Stonebridge Subdivision in which case paragraph (n) of this Section 5.1
shall apply), and land acquisition loans to borrowers who intend to construct a
residence on such land (up to the lesser of 75% of the appraised value of such
land or $100,000) in accordance with existing lending policies;
(s) make any investments in derivative securities or engage in
any forward commitment, futures transaction, financial options transaction,
hedging or arbitrage transaction or covered asset trading activities;
(t) sell or purchase any mortgage loan servicing rights; or
(u) agree or commit to do any of the foregoing.
The consent of Webster to any action by Shelton or any Shelton Subsidiary that
is not permitted by any of the preceding paragraphs shall be evidenced by a
writing signed by the President or any Executive Vice President of Webster.
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5.2 Covenants of Webster.
During the period from the date of this Agreement and
continuing until the Effective Time, except as expressly contemplated or
permitted by this Agreement or with Shelton's prior written consent, Webster,
First Federal and Bristol shall carry on their respective businesses and use all
reasonable efforts to preserve intact their present business organizations and
relationships. Without limiting the generality of the foregoing and except as
set forth on Section 5.2 of the Webster Disclosure Schedule or as otherwise
contemplated by this Agreement or consented to in writing by Shelton, Webster
shall not, and shall not permit First Federal or Bristol to:
(a) declare or pay any extraordinary or special dividends on
or make any other extraordinary or special distributions in respect of any of
its capital stock (except that First Federal or Bristol may declare and pay
extraordinary or special dividends and distributions to Webster and except that
Webster may increase the quarterly cash dividend rate on the Webster Common
Stock);
(b) take any action that will result in (i) any of Webster's
representations and warranties set forth in this Agreement being or becoming
untrue, unless the failure of such representations or warranties to be true
would not, individually or in the aggregate, have a Material Adverse Effect on
Webster, or (ii) any of the conditions to the Merger set forth in Article VII
not being satisfied or in a violation of any provision of this Agreement or the
Bank Merger Agreement, except, in every case, as may be required by applicable
law;
(c) change its methods of accounting in effect at March 31,
1995, except in accordance with changes in GAAP or regulatory accounting
principles as concurred to by Webster's independent auditors;
(d) take any other action that would materially adversely
affect or materially delay the ability of Webster to obtain the Requisite
Regulatory Approvals or otherwise materially adversely affect Webster's, First
Federal's or Bristol's ability to consummate the transactions contemplated by
this Agreement; or
(e) agree or commit to do any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters.
(a) Upon the execution and delivery of this Agreement, Webster
and Shelton (as to information to be included therein pertaining to Shelton)
shall promptly cause to be prepared and filed with the SEC a registration
statement of Webster on Form S-4, including the Proxy Statement/Prospectus (the
"Registration Statement") for the purpose of registering the Webster Common
Stock to be issued in the Merger (including the Webster Common Stock that may be
issued upon exercise of the options referred to in Section 1.6 hereof) and for
soliciting the approval of the Merger by the shareholders of Shelton and for
soliciting the approval by the shareholders of Webster for the issuance of the
Webster Common Stock to Shelton's shareholders as part of the Merger. Webster
and Shelton shall use their best efforts to have the Registration Statement
declared effective by the SEC as soon as possible after the filing. Shelton
shall cooperate with Webster in responding to and considering any questions or
comments from the SEC staff regarding the information contained in the
Registration Statement concerning Shelton. If at any time after the Registration
Statement is filed with the SEC, and prior to the Closing Date, any event
relating to Shelton is discovered by Shelton, which should be set forth in an
amendment of, or a supplement to, the Registration Statement, including the
Prospectus/Proxy Statement, Shelton shall promptly so inform Webster, and shall
furnish Webster with all necessary information relating to such event.
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Webster shall thereupon cause an appropriate amendment to the Registration
Statement to be filed with the SEC. Upon the effectiveness of the amendment to
the Registration Statement with the SEC, Shelton (if prior to the meeting of
Shelton's shareholders pursuant to Section 6.3 hereof) will take all necessary
action as promptly as practicable to permit an appropriate amendment or
supplement to be transmitted to Shelton's shareholders entitled to vote at such
meeting. Webster shall also use all reasonable efforts to obtain all necessary
state securities law or "Blue Sky" permits and approvals required to carry out
the transactions contemplated by this Agreement and the Bank Merger Agreement,
and Shelton shall furnish all information concerning Shelton and the holders of
Shelton Common Stock as may be reasonably requested in connection with any such
action.
(b) The parties hereto shall cooperate with each other and use
their best efforts to promptly prepare and file all necessary documentation, to
effect all applications, notices, petitions and filings, and to obtain as
promptly as practicable all permits, consents, approvals and authorizations of
all third parties and Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement (including without
limitation the Merger and the Bank Merger). Shelton and Webster shall have the
right to review in advance, and to the extent practicable each will consult the
other on, in each case subject to applicable laws relating to the exchange of
information, all the information relating to Shelton or Webster, as the case may
be, which appear in any filing made with, or written materials submitted to, any
third party or any Governmental Entity in connection with the transactions
contemplated by this Agreement; provided, however, that nothing contained herein
shall be deemed to provide either party with a right to review any information
provided to any Governmental Entity on a confidential basis in connection with
the transactions contemplated hereby. In exercising the foregoing right, each of
the parties hereto shall act reasonably and as promptly as practicable. The
parties hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to contemplation of the transactions
contemplated herein.
(c) Shelton shall, upon request, furnish Webster with all
information concerning Shelton and its Subsidiaries, directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with the Registration Statement or any other statement, filing,
notice or application made by or on behalf of Webster or First Federal to any
Governmental Entity in connection with the Merger, the Bank Merger or the other
transactions contemplated by this Agreement.
(d) Webster and Shelton shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement which causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval will not be obtained or that
the receipt of any such approval will be materially delayed.
6.2 Access to Information.
(a) Upon reasonable notice and subject to applicable Laws
relating to the exchange of information, Shelton shall, and shall cause each
Shelton Subsidiary to, afford to the officers, employees, accountants, counsel
and other representatives of Webster, access, during normal business hours
during the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, Shelton shall, and
shall cause each Shelton Subsidiary to, make available to Webster (i) a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of Federal
securities laws or Federal or state banking laws and (ii) all other information
concerning its business, properties and personnel as Webster may reasonably
request.
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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 Shelton.
(b) Upon reasonable notice and subject to applicable Laws
relating to the exchange of information, Webster shall, and shall cause First
Federal to, afford to the officers, employees, accountants, counsel and other
representatives of Shelton, access, during normal business hours during the
period prior to the Effective Time, to such information regarding Webster, First
Federal and Bristol as shall be reasonably necessary for Shelton to fulfill its
obligations pursuant to this Agreement or which may be reasonably necessary for
Shelton to confirm that the representations and warranties of Webster contained
herein are true and correct and that the covenants of Webster contained herein
have been performed in all material respects. During the period from the date of
this Agreement to the Effective Time, Webster will cause one or more of its
designated representatives to confer monthly with representatives of Shelton and
to report the general status of the ongoing operations of Webster, First Federal
and Shelton. Shelton will hold all such information in confidence to the extent
required by, and in accordance with, the provisions of the confidentially
agreement which Shelton entered into with Webster.
(c) No investigation by either of the parties or their
respective representatives shall affect the representations and warranties of
the other set forth herein.
(d) Shelton shall provide Webster with true, correct and
complete copies of all financial and other information provided to directors of
Shelton in connection with meetings of its Board of Directors or committees
thereof, which information shall be provided to Webster concurrently with its
provision to directors of Shelton.
6.3 Shareholder Meetings.
Shelton shall take all steps necessary to duly call, give
notice of, convene and hold a meeting of its shareholders within 35 days after
the Registration Statement becomes effective for the purpose of voting upon the
approval of this Agreement. Shelton, through its Board of Directors, shall
recommend to its shareholders approval of this Agreement and the transactions
contemplated hereby, together with any matters incident thereto, and shall
oppose any third party proposal or other action that is inconsistent with this
Agreement or the consummation of the transactions contemplated hereby, unless
Shelton provides Webster with a written opinion of Shelton's legal counsel that
such recommendation or opposition would constitute a breach of fiduciary duty by
Shelton's Board of Directors. Webster shall take all steps necessary to duly
call, give notice of, convene and hold a meeting of its shareholders within 35
days after the Registration Statement becomes effective for the purpose of
voting to approve the issuance of the Webster Common Stock pursuant to this
Agreement and, through its Board of Directors, shall recommend to its
shareholders approval of such issuance. Shelton and Webster shall coordinate and
cooperate with respect to the foregoing matters.
6.4 Legal Conditions to Merger.
Each of Webster and Shelton shall use their reasonable best
efforts (a) to take, or cause to be taken, all actions necessary, proper or
advisable to comply promptly with all legal requirements which may be imposed on
such party with respect to the Merger or the Bank Merger and, subject to the
conditions set forth in Article VII hereof, to consummate the transactions
contemplated by this Agreement and (b) to obtain (and to cooperate with the
other party to obtain) any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity and any other third party which is
required to be obtained by Shelton or Webster in connection with the Merger and
the Bank Merger and the other transactions contemplated by this Agreement.
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6.5 Publication of Combined Financial Results.
Webster shall use its best efforts to publish no later than 90
days after the end of the first month after the Effective Time in which there
are at least 30 days of post-Merger combined operations (which month may be the
month in which the Effective Time occurs), combined sales and net income figures
as contemplated by and in accordance with the terms of SEC Accounting Series
Release No. 135.
6.6 Stock Exchange Listing.
Webster shall cause the shares of Webster Common Stock to be
issued in the Merger to be approved for quotation on the Nasdaq National Market
(or such other exchange on the which the Webster Common Stock has become listed,
or approved for listing) prior to or at the Effective Time.
6.7 Employee Plans.
(a) To the extent permissible under the applicable provisions
of the Code and ERISA, for purposes of crediting periods of service for
eligibility to participate and vesting, but not for benefit accrual purposes,
under employee pension benefit plans (within the meaning of ERISA Section 3(2))
maintained by Webster or the Surviving Bank, as applicable, individuals who are
employees of Shelton or Shelton Bank at the Effective Time will be credited with
periods of service with Shelton or Shelton Bank before the Effective Time as if
such service had been with Webster or the Surviving Bank, as applicable. Similar
credit shall also be given by Webster or the Surviving Bank in calculating
vacation and similar benefits for such employees of Shelton or Shelton Bank
after the Merger.
(b) Shelton shall cause all of its Plans, programs, agreements
and other arrangements to be amended to the extent necessary (i) to assure that
no payments by Shelton or any Shelton Subsidiary to any executive officer of
Shelton or any Shelton Subsidiary would not be deductible under Code Section
162(a)(1) or 404 or would constitute a "parachute payment" within the meaning of
Code Section 280G; and (ii) to have the calculation of severance payments under
any employment or severance agreement with any executive officer of Shelton or
any Shelton Subsidiary be based on the compensation derived by such officer
during the calendar years ended December 31, 1990, 1991, 1992, 1993 and 1994, as
reported on such officer's Form W-2 for each of such years.
(c) Webster and the Surviving Bank will follow a salary
continuance policy as to employees of Shelton or Shelton Bank (except for such
employees who have existing employment or severance agreements) whose employment
is terminated by Webster or the Surviving Bank other than for cause within six
months of the Effective Time of the Merger. Payments under such policy will be
based on two weeks of base salary in the case of "exempt" employees (or one week
of base salary in the case of "nonexempt" salaried employees, or one week of
average weekly hourly wages, calculated on a weekly average basis for the
quarter ended March 31, 1995, in the case of "nonexempt" hourly employees) for
each full year of employment with Shelton or Shelton Bank, with a minimum of
four weeks; with payments to be made upon employment termination. In determining
whether an employee is "exempt" or "nonexempt", Shelton's classifications as of
December 31, 1994 will be followed. In connection with any such termination,
employees shall also be paid for accrued vacation time and for accrued sick days
(50% rate).
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6.8 Indemnification; Directors' and Officers' Insurance.
(a) In the event of any threatened or actual claim, action,
suit, proceeding or investigation, whether civil, criminal or administrative, in
which any person who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or officer or
employee of Shelton or any of its Subsidiaries (the "Indemnified Parties") is,
or is threatened to be, made a party based in whole or in part on, or arising in
whole or in part out of, or pertaining to (i) the fact that he is or was a
director, officer or employee of Shelton, any of the Shelton Subsidiaries or any
of their respective predecessors or (ii) this Agreement or any of the
transactions contemplated hereby, whether in any case asserted or arising before
or after the Effective Time, the parties hereto agree to cooperate and use their
best efforts to defend against and respond thereto to the extent permitted by
the DGCL and the Certificate of Incorporation and By-Laws of Shelton. It is
understood and agreed that after the Effective Time, Webster shall indemnify and
hold harmless, as and to the fullest extent permitted by the DGCL and the
Certificate of Incorporation and By-Laws of Webster, each such Indemnified Party
against any losses, claims, damages, liabilities, costs, expenses (including
reasonable attorney's fees and expenses in advance of the final disposition of
any claim, suit, proceeding or investigation to each Indemnified Party to the
fullest 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 of arising before or after the Effective Time),
the Indemnified Parties may retain counsel reasonably satisfactory to Webster;
provided, however, that (1) Webster shall have the right to assume the defense
thereof and upon such assumption Webster shall not be liable to any Indemnified
Party for any legal expenses of other counsel or any other expenses subsequently
incurred by any Indemnified Party in connection with the defense thereof, except
that if Webster elects not to assume such defense or counsel for the Indemnified
Parties reasonably advises the Indemnified Parties that there are issues which
raise conflicts of interest between Webster and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to Webster, and
Webster shall pay the reasonable fees and expenses of such counsel for the
Indemnified Parties, (2) Webster shall be obligated pursuant to this paragraph
to pay for only one firm of counsel for all Indemnified Parties, and (3) Webster
shall not be liable for any settlement effected without its prior written
consent (which consent shall not be unreasonably withheld or delayed). Webster
shall have no obligation to advance expenses incurred in connection with a
threatened or pending action, suit or preceding in advance of final disposition
of such action, suit or proceeding, unless (i) Webster would be permitted to
advance such expenses pursuant to the DGCL and Webster's Certificate of
Incorporation or By-Laws, and (ii) Webster receives an undertaking by the
Indemnified Party to repay such amount if it is determined that such party is
not entitled to be indemnified by Webster pursuant to the DGCL and Webster's
Certificate of Incorporation or By-Laws. Any Indemnified Party wishing to claim
Indemnification under this Section 6.8, upon learning of any such claim, action,
suit, proceeding or investigation, shall notify Webster thereof, provided that
the failure to so notify shall not affect the obligations of Webster under this
Section 6.8 except to the extent such failure to notify materially prejudices
Webster. Webster's obligations under this Section 6.8 continue in full force and
effect for a period of six years from the Effective Time; provided, however,
that all rights to indemnification in respect of any claim (a "Claim") asserted
or made within such period shall continue until the final disposition of such
Claim.
(b) Webster shall use best efforts to cause the persons
serving as officers and directors of Shelton immediately prior to the Effective
Time to be covered for a period of four years from the Effective Time by the
directors' and officers' liability insurance policy maintained by Shelton
(provided that Webster may substitute therefor policies of substantially the
same coverage and amounts containing terms and conditions which are generally
not less advantageous than such policy) with respect to acts or omissions
occurring prior to the Effective Time which were committed by such officers and
directors in their capacity as such.
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(c) In the event Webster or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Webster
assume the obligations set forth in this section.
(d) The provisions of this Section 6.8 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives after the Effective Time.
6.9 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, Webster will deliver to Shelton and
Shelton will deliver to Webster their respective Quarterly Reports on Form 10-Q,
as filed with the SEC under the Exchange Act. Each party shall deliver to the
other any Current Reports on Form 8-K promptly after filing such reports with
the SEC. As soon as reasonably available, but in no event later than September
28, 1995 (if this Agreement is still in effect and the Merger has not been
consummated by that date), Shelton will deliver to Webster its Annual Report on
Form 10-K for the fiscal year ending June 30, 1995, as filed with the SEC under
the Exchange Act.
6.10 Additional Agreements.
In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement, or
the Bank Merger Agreement, or to vest the Surviving Corporation or the Surviving
Bank with full title to all properties, assets, rights, approvals, immunities
and franchises of any of the parties to the Merger or the Bank Merger, the
proper officers and directors or each party to this Agreement and their
respective Subsidiaries shall take all such necessary action as may be
reasonably requested by, and at the sole expense of, Webster.
6.11 Advice of Changes.
Webster and Shelton shall promptly advise the other party of
any change or event that, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect on it or to cause or
constitute a material breach of any of its representations, warranties or
covenants contained herein. From time to time prior to the Effective Time, each
party will promptly supplement or amend the Disclosure Schedules delivered in
connection with the execution of this Agreement to reflect any matter which, if
existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in such Disclosure Schedules or which is
necessary to correct any information in such Disclosure Schedules which has been
rendered inaccurate thereby. No supplement or amendment to such Disclosure
Schedules 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 Shelton or Webster, as the case may be, with the
respective covenants set forth in Sections 5.1 and 5.2 hereof.
6.12 Current Information.
During the period from the date of this Agreement to the
Effective Time, Shelton will cause one or more of its designated representatives
to confer on a regular and frequent basis (not less than monthly) with
representatives of Webster and to report the general status of the ongoing
operations of Shelton and each Shelton Subsidiary. Shelton will promptly notify
Webster of any
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material change in the normal course of business or in the operation of the
properties of Shelton or any Shelton Subsidiary and of any governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated), or the institution or the threat of significant
litigation involving Shelton or any Shelton Subsidiary, and will keep Webster
fully informed of such events.
6.13 Execution and Authorization of Bank Merger Agreement.
Prior to the Effective Time, (a) Webster shall (i) cause the
Board of Directors of the Surviving Bank to approve the Bank Merger Agreement,
and (ii) cause the Surviving Bank to execute and deliver the Bank Merger
Agreement, and (iii) approve the Bank Merger Agreement as the sole stockholder
of the Surviving Bank, and (b) Shelton shall (i) cause the Board of Directors of
Shelton Bank to approve the Bank Merger Agreement, (ii) cause Shelton Bank to
execute and deliver the Bank Merger Agreement, and (iii) approve the Bank Merger
Agreement as the sole shareholder of Shelton Bank.
6.14 Merger Sub.
Prior to or concurrently with the execution of this Agreement,
Webster shall cause Merger Sub to execute a copy of this Agreement and deliver
such executed copy to each of Webster and Shelton. Prior to the Effective Time,
Webster agrees to cause Merger Sub to take all necessary action to complete the
transactions contemplated hereby subject to the terms and conditions hereof.
6.15 Change in Structure.
In the event that Webster elects to change the structure of
the Bank Merger, the parties agree to modify this Agreement and the various
exhibits hereto to reflect such revised structure. Such revised structure may
provide (i) for Shelton Bank to convert to federal charter and be the surviving
federal savings bank in a merger with First Federal, with the corporate name of
Shelton to be changed to Webster Bank or First Federal, as determined by
Webster, or (ii) for Shelton Bank to merge into Webster Bank, as provided for
herein except for no conversion of Bristol to federal charter so that Webster
Bank, as the surviving bank, would be a state chartered savings bank, or (iii)
for Shelton Bank to merge into First Federal (either under the First Federal or
Webster Bank name, as determined by Webster), as the surviving federal savings
bank. If it appears reasonably likely that regulatory approvals for the
conversion of Bristol to federal charter will not be received on a timely basis
so as to permit the Merger to be consummated by March 31, 1996, Webster and
Shelton will appropriately modify the structure of the Bank Merger in order to
obtain the required regulatory approvals. Webster may also change the corporate
name of the Surviving Bank from Webster Bank to "Webster Bank FSB" or "First
Federal Bank FSB" or such other name as the Board of Directors of Webster may
select. In addition to the foregoing changes in structure of the Bank Merger or
the name of the Surviving Bank, Webster may elect to modify the structure of the
transactions contemplated by this Agreement so long as (i) there are no material
adverse federal income tax consequences to Shelton or its shareholders as a
result of such modification, (ii) the consideration to be paid to the Shelton
shareholders under this Agreement is not thereby changed or reduced in amount,
and (iii) such modification will not be reasonably likely to delay materially or
jeopardize receipt of any required regulatory approvals. In such events, Webster
shall prepare appropriate amendments to this Agreement and the exhibits hereto
for execution by the parties hereto. Webster and Shelton agree to cooperate
fully with each other to effect such amendments.
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ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the
Merger.
The respective obligation of each party to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Shareholder Approvals.
This Agreement shall have been approved and adopted by the
affirmative vote of the holders of at least two-thirds of the outstanding shares
of Shelton Common Stock entitled to vote thereon. The issuance of the Webster
Common Stock in the Merger shall have been approved by the affirmative vote of a
majority of shares of Webster Common Stock voted at a meeting where a quorum is
present.
(b) Stock Exchange Listing.
The shares of Webster Common Stock which shall be issued to
the shareholders of Shelton upon consummation of the Merger shall have been
authorized for quotation on the Nasdaq National Market (or such other exchange
on which the Webster Common Stock may become listed).
(c) Other Approvals.
All regulatory approvals required to consummate the
transactions contemplated hereby (including the Merger, the Bank Merger, the
conversion of Bristol to federal charter and renaming Bristol as Webster Bank,
and the merger of First Federal into Webster Bank) shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired (all such approvals and the expiration of all
such waiting periods being referred to herein as the "Requisite Regulatory
Approvals"). No Requisite Regulatory Approval shall contain a condition that
Webster reasonably deems to be burdensome.
(d) Registration Statement.
The Registration Statement shall have become effective under
the Securities Act, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality.
No order, injunction or decree issued by any court or agency
of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger, the Bank Merger or any
of the other transactions contemplated by this Agreement or the Bank Merger
Agreement shall be in effect. No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits, restricts or makes illegal consummation of
the Merger or the Bank Merger.
(f) Federal Tax Opinion.
Webster and Shelton shall have received from Hogan & Hartson
L.L.P., an opinion, in form and substance reasonably satisfactory to Webster and
Shelton, dated as of the Effective Time, substantially to the effect that on the
basis of facts, representations, and assumptions set forth in such opinions
which are consistent with the state of facts existing at the Effective Time, the
Merger and the Bank Merger will be treated for Federal income tax purposes as
part of one or more
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reorganizations within the meaning of Section 368 of the Code and that
accordingly: no gain or loss will be recognized by shareholders of Shelton with
respect to Webster Common Stock received solely in exchange for Shelton Common
Stock pursuant to this Agreement (except with respect to cash received in lieu
of a fractional share interest in Webster Common Stock). In rendering such
opinion, such counsel may require and, to the extent such counsel deems
necessary or appropriate, may rely upon representations made in certificates of
officers of Shelton, Webster, Merger Sub, their respective affiliates and
others.
7.2 Conditions to Obligations of Webster and Merger Sub.
The obligation of Webster and Merger Sub to effect the Merger
is also subject to the satisfaction or waiver by Webster at or prior to the
Effective Time of the following conditions:
(a) Representations and Warranties.
The representations and warranties of Shelton set forth in
this Agreement shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date;
provided, however, that, for purposes of this paragraph, such representations
and warranties shall be deemed to be true and correct, unless the failure or
failures of such representations and warranties to be so true and correct,
individually or in the aggregate, would have a Material Adverse Effect on
Shelton. Such determination of Material Adverse Effect shall be made as if there
were no materiality or Knowledge qualifications in such representations and
warranties. Webster shall have received a certificate signed on behalf of
Shelton by the Chief Executive Officer and the Chief Financial Officer of
Shelton to the foregoing effect.
(b) Performance of Covenants and Agreements of Shelton.
Shelton shall have performed in all material respects all
covenants and agreements required to be performed by it under this Agreement at
or prior to the Closing Date. Webster shall have received a certificate signed
on behalf of Shelton by the Chief Executive Officer and the Chief Financial
Officer of Shelton to such effect.
(c) Consents Under Agreements.
The consent, approval or waiver of each person (other than the
Governmental Entities referred to in Section 7.1(c)) whose consent or approval
shall be required in order to permit the succession by the Surviving Corporation
or the Surviving Bank pursuant to the Merger or the Bank Merger, as the case may
be, to any obligation, right or interest of Shelton or any Subsidiary of Shelton
under any loan or credit agreement, note, mortgage, indenture, lease, license or
other agreement or instrument shall have been obtained.
(d) No Pending Governmental Actions.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
(e) Legal Opinion.
Webster shall have received the opinion of Schatz & Schatz,
Ribicoff & Kotkin, counsel to Shelton, dated the Closing Date, as to such
matters as Webster may reasonably request. As to any matter in such opinion
which involves matters of fact or matters relating to laws (other than Federal
banking and securities law, Connecticut banking and corporate law, and Delaware
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corporate law), such counsel may rely upon the certificates of officers and
directors of Shelton and of public officials and opinions of local counsel,
reasonably acceptable to Webster.
(f) Accountant's Comfort Letter.
Shelton shall have caused to be delivered on the respective
dates thereof to Webster "comfort letters" from Shelton's independent public
accountants dated the date on which the Registration Statement or last amendment
thereto shall become effective, and dated the date of the Closing, and addressed
to Webster and Shelton, with respect to Shelton's consolidated financial
condition and results of operation, which letters shall be based upon agreed
upon procedures to be specified by Webster, which procedures shall be consistent
with applicable professional standards for comfort letters delivered by
independent accountants in connection with comparable transactions.
(g) Pooling of Interests.
Webster shall have promptly received an opinion of KPMG Peat Marwick
LLP, independent accountants, to the effect that the Merger will be accounted
for as a pooling of interests and such opinion shall not have been withdrawn.
The foregoing shall not apply in the event that Webster prior to the
effectiveness of the Registration Statement advises Shelton that as a result of
actions taken or to be taken by Webster subsequent to the date hereof the Merger
is to be accounted for as a purchase.
7.3 Conditions to Obligations of Shelton.
The obligation of Shelton to effect the Merger is also subject
to the satisfaction or waiver by Shelton at or prior to the Effective Time of
the following conditions:
(a) Representations and Warranties.
The representations and warranties of Webster set forth in
this Agreement shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date;
provided, however, that for purposes of this paragraph, such representations and
warranties shall be deemed to be true and correct, unless the failure or
failures of such representations and warranties to be so true and correct,
individually or in the aggregate, would have a Material Adverse Effect on
Webster. Such determination of Material Adverse Effect shall be made as if there
were no materiality or Knowledge qualifications in such representations and
warranties. Shelton shall have received a certificate signed on behalf of
Webster by the Chief Executive Officer and the Chief Financial Officer of
Webster to the foregoing effect.
(b) Performance of Obligations of Webster.
Webster and Merger Sub shall have each performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date. Shelton shall have received a
certificate signed on behalf of Webster by the Chief Executive Officer and the
Chief Financial Officer of Webster to such effect.
(c) Consents Under Agreements.
The consent or approval of each person (other than the
Governmental Entities referred to in Section 7.1(c)) whose consent or approval
shall be required in connection with the transactions contemplated hereby under
any loan or credit agreement, note, mortgage, indenture,
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lease, license or other agreement or instrument to which Webster, First Federal
or Bristol is a party or is otherwise bound shall have been obtained.
(d) No Pending Governmental Actions.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
(e) Legal Opinion.
Shelton shall have received the opinion of Hogan & Hartson
L.L.P., counsel to Webster, dated the Closing Date, as to such matters as
Shelton may reasonably request. As to any matter in such opinion which involves
matters of fact or matters relating to laws (other than Federal banking and
securities law and Delaware corporate law), such counsel may rely upon the
certificates of officers and directors of Webster and of public officials and
opinions of local counsel, reasonably acceptable to Shelton.
(f) Fairness Opinion.
Shelton shall have received an opinion from Alex. Brown & Sons
Incorporated that the transactions contemplated by this Agreement are fair from
a financial point of view to the holders of Shelton Common Stock, which opinion
shall be dated as of the date of this Agreement and delivered concurrently with
its execution.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination.
This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the shareholders of Shelton or Webster, if
applicable:
(a) by mutual consent of Webster and Shelton in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board;
(b) by either Webster or Shelton upon written notice to the
other party (i) 30 days after the date on which any request or application for a
Requisite Regulatory Approval shall have been denied or withdrawn at the request
or recommendation of the Governmental Entity which must grant such Requisite
Regulatory Approval, unless within the 30-day period following such denial or
withdrawal a petition for rehearing or an amended application has been filed
with the applicable Governmental Entity, provided, however, that no party shall
have the right to terminate this Agreement pursuant to this Section 8.1(b), if
such denial or request or recommendation for withdrawal shall be due to the
failure of the party seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth herein;
(c) by either Webster or Shelton if the Merger shall not have
been consummated on or before March 31, 1996, unless the failure of the Closing
to occur by such date shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and agreements of
such party set forth herein;
(d) by either Webster or Shelton (provided that the
terminating party is not in breach of its obligations under Section 6.3) if the
approval of the shareholders of Shelton or any approval of the shareholders of
Webster required for the consummation of the Merger shall not have
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been obtained by reason of the failure to obtain the required vote at a duly
held meeting of shareholders or at any adjournment or postponement thereof;
(e) by either Webster or Shelton (provided that the
terminating party is not then in breach of any representation, warranty,
covenant or other agreement contained herein that, individually or in the
aggregate, would give the other party the right to terminate this Agreement) if
there shall have been a breach of any of the representations or warranties set
forth in this Agreement on the part of the other party, if such breach,
individually or in the aggregate, has had or is likely to have a Material
Adverse Effect on the other party, and such breach shall not have been cured
within 30 days following receipt by the breaching party of written notice of
such breach from the other party hereto or such breach, by its nature, cannot be
cured prior to the Closing;
(f) by either Webster or Shelton (provided that the
terminating party is not then in breach of any representations, warranty,
covenant or other agreement contained herein that, individually or in the
aggregate, would give the other party the right to terminate this Agreement) if
there shall have been a material breach of any of the covenants or agreements
set forth in this Agreement on the part of the other party, and such breach
shall not have been cured within 30 days following receipt by the breaching
party of written notice of such breach from the other party hereto or such
breach, by its nature, cannot be caused prior to the Closing; and
(g) by Webster, if Shelton or its Board of Directors, for any
reason, (i) fails to call and hold within 35 days of the effectiveness of the
Registration Statement a special meeting of Shelton's shareholders to consider
and approve this Agreement and the transactions contemplated hereby, (ii) fails
to recommend to shareholders the approval of this Agreement and the transactions
contemplated hereby, (iii) fails to oppose any third party proposal that is
inconsistent with the transactions contemplated by this Agreement, or (iv)
violates Section 5.1(e) of this Agreement or would have violated Section 5.1(e)
but for the fiduciary duty exception.
8.2 Effect of Termination.
In the event of termination of this Agreement by either
Webster or Shelton as provided in Section 8.1, this Agreement shall forthwith
become void and have no effect except (i) the last sentences of Sections 6.2(a)
and 6.2(b) and Sections, 8.2, 8.3, 9.2 and 9.3 shall survive any termination of
this Agreement, and (ii) notwithstanding anything to the contrary contained in
this Agreement, no party shall be relieved or released from any liabilities or
damages arising out of its willful or intentional breach of any provision of
this Agreement.
8.3 Amendment.
Subject to compliance with applicable law, this Agreement may
be amended by the parties hereto, by action taken or authorized by their
respective Board of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the shareholders of Shelton
or Webster (if required); provided, however, that after any approval of the
transactions contemplated by this Agreement by Shelton's shareholders, there may
not be, without further approval of such shareholders, any amendment of this
Agreement which reduces the amount or changes the form of the consideration to
be delivered to Shelton shareholders hereunder other than as contemplated by
this Agreement; and provided further, that after any approval required by the
Webster shareholders after the issuance of the Webster Common Stock hereunder,
there may not be, without further approval by such shareholders, any amendment
of the Agreement which increases the number of shares of Webster Common Stock to
be issued under this Agreement. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
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8.4 Extension; Waiver.
At any time prior to the Effective Time, the parties hereto,
by action taken or authorized by their respective Board of Directors, may, to
the extent legally allowed, (a) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party, but such extension or waiver
or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing.
Subject to the terms and conditions of this Agreement and the
Merger Agreement, the closing of the Merger (the "Closing") will take place at
10:00 a.m. at the main offices of Webster on (i) the fifth day after the last
Requisite Regulatory Approval is received and all applicable waiting periods
have expired, (ii) if elected by Webster, the last business day of the month in
which the date specified in the immediately preceding clause occurs, or (iii)
such other date, place and time as the parties may agree (the "Closing Date").
9.2 Nonsurvival of Representations, Warranties and
Agreements.
None of the representations, warranties, covenants and
agreements in this Agreement or in any instrument delivered pursuant to this
Agreement (other than pursuant to the Option Agreement, which shall terminate in
accordance with its terms) shall survive the Effective Time, except for those
covenants and agreements contained herein and therein which by their terms apply
in whole or in part after the Effective Time.
9.3 Expenses; Breakup Fee.
All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense, except (i) as otherwise provided in this paragraph, (ii)
the costs and expenses of printing and mailing the Proxy Statement/Prospectus
shall be shared equally by the parties, and (iii) all filing and other fees paid
to the SEC in connection with the Merger shall be borne by Webster. In the event
that this Agreement is terminated by either Webster or Shelton by reason of a
material breach pursuant to Section 8.1(e) or (f) hereof or by Webster pursuant
to Section 8.1(g) hereof, the other party shall pay all costs and expenses up to
$250,000 incurred by the terminating party in connection with this Agreement and
the transactions contemplated hereby plus a breakup fee of $500,000, unless this
Agreement is terminated by reason of a material breach that is not willful or
intentional, in which case the breakup fee shall be $250,000. In the event that
this Agreement is terminated by either Webster or Shelton under Section 8.1(d)
by reason of the other party's shareholders not having given any required
approval, such other party shall pay all costs and expenses up to $250,000
incurred by the terminating party in connection with this Agreement and the
transactions contemplated hereby. A breakup fee of $250,000 shall be paid by
Shelton (which will be credited against any breakup fee otherwise due under this
Section 9.3) upon the termination of this Agreement by reason of the
shareholders of Shelton failing to approve this Agreement, if (i) at or prior to
the shareholders meeting any takeover proposal has been made by a third party
and has become publicly known or (ii)
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Shelton accepts or agrees to any takeover proposal at any time prior to six
months after such termination.
9.4 Notices.
All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Webster, to:
First Federal Plaza
145 Bank Street
Waterbury, Connecticut 06702
Attn: James C. Smith
Chairman, President and Chief Executive Officer
with a copy to:
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attn: Charles E. Allen, Esq.
and
(b) if to Shelton, to:
Shelton Bancorp, Inc.
375 Bridgeport Avenue
Shelton, CT 06484
Attn: Kenneth E. Schaible
President and Chief Executive Officer
with a copy to:
Schatz & Schatz, Ribicoff & Kotkin
90 State House Square
Hartford, CT 06103
Attn: Stanford N. Goldman, Jr., Esq.
9.5 Interpretation.
When a reference is made in this Agreement to Sections,
Exhibits or Schedules, such reference shall be to a Section of or Exhibit or
Schedule to this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation".
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9.6 Counterparts.
This Agreement may be executed in counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
9.7 Entire Agreement.
This Agreement (including the disclosure schedules, documents
and the instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, other than the
confidentiality agreement entered into between Shelton and Webster, the Bank
Merger Agreement, the Option Agreement and the Stockholder Agreement.
9.8 Governing Law.
This Agreement shall be governed and construed in accordance
with the laws of the State of Delaware, without regard to any applicable
conflicts of law.
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 was otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions thereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
9.10 Severability.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
9.11 Publicity.
Except as otherwise required by law or the rules of Nasdaq
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
Shelton shall, or shall permit any of its Subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to,
or otherwise make any public statement concerning, the transactions contemplated
by this Agreement, the Bank Merger Agreement, the Option Agreement or the
Stockholder Agreement without the consent of the other party, which consent
shall not be unreasonably withheld.
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9.12 Assignment; Limitation of Benefits.
Neither this Assignment nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns. Except as otherwise specifically provided in Section 6.8
hereof, this Agreement (including the documents and instruments referred to
herein) is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder, and the covenants, undertakings and agreements
set out herein shall be solely for the benefit of, and shall be enforceable only
by, the parties hereto and their permitted assigns.
9.13 Additional Definitions.
In addition to any other definitions contained in this
Agreement, the following words, terms and phrases shall have the following
meanings when used in this Agreement.
"Affiliated Person": any director, officer or 5% or greater
shareholder, spouse or other person living in the same household of such
director, officer or shareholder, or any company, partnership or trust in which
any of the foregoing persons is an officer, 5% or greater shareholder, general
partner or 5% or greater trust beneficiary.
"Knowledge": as to any person, and as of the date of the
statement in question, the actual Knowledge of such person's executive officers.
"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 Shelton,
means a condition, event, change or occurrence that is reasonably likely to have
a material adverse effect upon (A) the financial condition, results of
operations, business or properties of Webster or Shelton and its respective
Subsidiaries, taken as a whole (other than as a result of (i) changes in laws or
regulations or accounting rules of general applicability or interpretations
thereof, or (ii) decreases in capital under Financial Accounting Standards No.
115 attributable to general increases in interest rates), or (B) the ability of
Webster or Shelton to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement and, in the case of Shelton, the
Option Agreement.
"Subsidiary": with respect to any party means any corporation,
partnership or other organization, whether incorporated or unincorporated, which
is consolidated with such party for financial reporting purposes.
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<PAGE>
IN WITNESS WHEREOF, Webster, Merger Sub and Shelton have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
WEBSTER FINANCIAL CORPORATION
ATTEST:
By By
--------------------------- -----------------------------
Lee A. Gagnon James C. Smith
Secretary Chairman, President and,
Chief Executive Officer
WEBSTER ACQUISITION CORP.
ATTEST:
By By
--------------------------- -----------------------------
Lee A. Gagnon James C. Smith
Secretary Chairman, President and
Chief Executive Officer
SHELTON BANCORP, INC.
ATTEST:
By By
--------------------------- -----------------------------
William C. Nimons Kenneth E. Schaible
Secretary President and Chief
Executive Officer
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<PAGE>
Exhibit A
ARTICLES OF MERGER
BANK MERGER AGREEMENT
This Bank Merger Agreement is made and entered into this ____ day of
________, 199___, between Webster Bank, a federally-chartered savings bank
("Webster Bank"), and Shelton Savings Bank, a Connecticut-chartered savings bank
("Shelton Bank").
WITNESSETH:
WHEREAS, Webster Financial Corporation, a Delaware corporation
("Webster"), Webster Acquisition Corp., a Delaware corporation ("Merger Sub),
and Shelton Bancorp, a Delaware corporation ("Shelton"), have concurrently
entered into an agreement and plan of merger, dated as of June 20, 1995, as
amended (the "Agreement");
WHEREAS, pursuant to the Agreement, Webster will first acquire Shelton
through a merger of Merger Sub with and into Shelton, as the surviving
corporation, and immediately thereafter Shelton Bank will merger with and into
Webster Bank, as the surviving bank;
WHEREAS, Webster Bank has 1,000 shares of common stock outstanding,
$.01 par value per share, and Shelton Bank has 1,135,170 shares of common stock
outstanding, $1.00 par value per share; and
WHEREAS, all of the issued and outstanding shares of common stock of
Webster Bank, and all of the issued and outstanding shares of common stock of
Shelton Bank, have been voted in favor of the merger of Shelton Bank with and
into Webster Bank;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Agreement, the parties
hereto do mutually agree, intending to be legally bound, as follows:
ARTICLE I
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
1.1 "Bank Merger" shall refer to the merger of Shelton Bank with and
into Webster Bank as provided in Section 2.1 of this Bank Merger Agreement.
<PAGE>
1.2 "Effective Time" shall mean the date and time at which the merger
contemplated by this Bank Merger Agreement becomes effective as provided in
Section 2.2 hereof.
1.3 "Merging Banks" shall collectively refer to Shelton Bank and
Webster Bank.
1.4 "OTS" shall mean the Office of Thrift Supervision.
1.5 "Surviving Bank" shall refer to Webster Bank as the surviving bank
in the Bank Merger. The location of the home office and other offices of the
Surviving Bank shall be as set forth at Annex 1 hereto.
ARTICLE II
TERMS 0F THE BANK MERGER
2.1 The Bank Merger.
(a) Subject to the terms and conditions set forth in the
Agreement at the Effective Time, Shelton Bank shall be merged with and into
Webster Bank pursuant to 12 U.S.C. ss.ss. 1467a(s), 1815(d)(3) and 1828(c), and
pursuant to Section 36a-126(b) of the Banking Law of the State of Connecticut.
Webster Bank shall be the Surviving Bank in the Merger and shall continue to be
regulated by the OTS.
(b) As a result of the Bank Merger, (i) each share of common
stock, par value $1.00 per share, of Shelton Bank issued and outstanding
immediately prior to the Effective Time shall be canceled and (ii) each share of
common stock, par value $.01 per share, of Webster Bank issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding and
shall constitute the only shares of capital stock of the Surviving Bank issued
and outstanding immediately after the Effective Time.
(c) Upon the Effective Time, all assets and property of the
Merging Banks shall immediately, without any further act, become the property of
the Surviving Bank to the same extent as they were the property of the Merging
Banks, and the Surviving Bank shall be a continuation of the entity that
absorbed the Merging Banks. All rights and obligations of the Merging Banks
shall remain unimpaired, and the Surviving Bank shall, upon the Effective Time,
succeed to all those rights and obligations.
(d) Without limiting the terms and provisions of section
2.1(c) above, as a result of the Bank Merger, the Surviving Bank shall assume
and succeed, in accordance with 12 C.F.R. Part 563b, to all of the rights and
obligations of Webster Bank and Shelton Bank relating their respective
liquidation accounts, which liquidation accounts were established (i) in the
case of Webster Bank, in connection with the conversions of First Federal Bank,
a federal savings bank, and
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<PAGE>
Bristol Savings Bank from mutual to stock form of organization, and (ii) in
the case of Shelton Bank, in connection with conversion of Shelton Savings and
Loan Association from mutual to stock form of organization.
2.2 Effective Time. The Bank Merger shall become effective as of the
date specified in the endorsement of this Bank Merger Agreement, as the Articles
of Merger, by the Secretary of the OTS. The Bank Merger shall not be effective
unless and until approved by the OTS and all other "Regulatory Authorities" as
contemplated by the Agreement, including the "Commissioner."
2.3 Name of the Surviving Bank. The name of the Surviving Bank shall
be "Webster Bank."
2.4 Charter. On and after the Effective Time, the charter of Webster
Bank shall be the charter of the Surviving Bank, until amended in accordance
with applicable law.
2.5 By-laws. On and after the Effective Time, the by-laws of Webster
Bank shall be the by-laws of the Surviving Bank, until amended in accordance
with applicable law.
2.6 Directors and Officers. On and after the Effective Time, until
changed in accordance with the charter and by-laws of the Surviving Bank (i) the
directors of the Surviving Bank shall be the directors of Webster Bank
immediately prior to the Effective Time plus one director of Shelton as jointly
selected pursuant to the Agreement; and (ii) the officers of the Surviving Bank
shall be the officers of Webster Bank immediately prior to the Effective Time
plus certain officers of Shelton as determined by Webster in accordance with the
Agreement. The directors and officers of the Surviving Bank shall hold office in
accordance with the charter and by-laws of the Surviving Bank. The number, names
and residence addresses, and terms of directors of the Surviving Bank are as set
forth at Annex 2 hereto.
2.7 Savings Accounts. The savings accounts of the Surviving Bank
issued after the Effective Time shall be issued on the same basis as savings
accounts had been issued by Webster Bank prior to the Bank Merger.
ARTICLE III
MISCELLANEOUS
3.1 Amendments. To the extent permitted by-law, this Bank Merger
Agreement may be amended by a subsequent writing signed by the parties hereto
upon the approval of the board of directors of each of the parties hereto.
3.2 Successors. This Bank Merger Agreement shall be binding on the
successors of Webster Bank and Shelton Bank.
-3-
<PAGE>
In accordance with the procedures set forth in the rules and
regulations of the OTS and other applicable law, Webster Bank and Shelton Bank
have cause this Bank Merger Agreement to be executed by their duly authorized
representatives on the date indicated.
WEBSTER BANK
ATTEST:
By: By:
------------------------------ --------------------------------
Lee A. Gagnon, Secretary James C. Smith, Chairman,
President and Chief Executive
Officer
ATTEST: SHELTON SAVINGS BANK
By: By:
------------------------------ --------------------------------
William C. Nimons, Secretary Kenneth E. Schaible, President,
Chief Executive Officer and
Director
--------------------------------
LeRoy T. Glover, Director
--------------------------------
J. Allen Kosowsky, Director
--------------------------------
Samuel Kreiger, Director
--------------------------------
Joseph A. Pagliaro, Director
--------------------------------
Donald W. Smith, Director
--------------------------------
Charles H. Sullivan, Director
-4-
<PAGE>
Exhibit B
OPTION AGREEMENT
THE TRANSFER OF THE OPTION GRANTED
BY THIS AGREEMENT IS SUBJECT TO RESALE RESTRICTIONS.
OPTION AGREEMENT, dated as of June 20, 1995 (this
"Agreement"), between SHELTON BANCORP, INC., a Delaware corporation ("Issuer"),
and WEBSTER FINANCIAL CORPORATION, a Delaware corporation ("Grantee").
WITNESSETH:
WHEREAS, Grantee and Issuer have entered into an Agreement and
Plan of Merger, dated as of June 20, 1995 (the "Plan"), which was executed by
the parties hereto prior to the execution of this Agreement; and
WHEREAS, as a condition and inducement to Grantee's entering
into the Plan and in consideration therefor, Issuer has agreed to grant Grantee
the Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Plan, the parties
hereto agree as follows:
SECTION 1. Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 267,324 fully paid and non-assessable shares of Common Stock, par value $1.00
per share of Issuer ("Issuer Common Stock") (which number of shares is equal to
19.9% of the number of outstanding shares of Issuer Common Stock on the date
hereof), at a price per share equal to $17.00 (the "Initial Price"); provided,
however, that in the event Issuer issues or agrees to issue any additional
shares of Issuer Common Stock (other than shares issued upon the exercise of
options outstanding as of the date of the Plan in accordance with their terms
pursuant to the Shelton Stock Option Plan) at a price less than the Initial
Price, as adjusted pursuant to Section 5(b) hereof, such price shall be equal to
such lesser price (such price, as adjusted, is hereinafter referred to as the
"Option Price"). The number of shares of Issuer Common Stock that may be
received upon the exercise of the Option and the Option Price are subject to
adjustment as herein set forth.
SECTION 2. (a) Grantee may exercise the Option, in whole or
part, at any time and from time to time following the occurrence of a Purchase
Event (as defined below); provided that the Option shall terminate and be of no
further force
<PAGE>
and effect upon the earliest to occur of the following events (which are
collectively referred to as an "Exercise Termination Event"):
(i) The time immediately prior to the Effective Time;
(ii) 12 months after the first occurrence of a
Purchase Event,
(iii) 12 months after the termination of the Plan
following the occurrence of a Preliminary Purchase Event (as defined
below), unless clause (vii) is applicable;
(iv) upon the termination of the Plan, prior to the
occurrence of a Purchase Event or Preliminary Purchase Event, by both
parties pursuant to Section 8.1(a) of the Plan, by either party
pursuant to Section 8.1(b) or (c) of the Plan or Section 8.1(d) of the
Plan based on any required vote of Grantee's stockholders not being
received, or by Issuer pursuant to Section 8.1(e) or (f) of the Plan;
(v) six months after the termination of the Plan, by
either party pursuant to Section 8.1(d) of the Plan based on the
required vote of Issuer's stockholders not being received, if no
Purchase Event or Preliminary Purchase Event has occurred prior to the
meeting of stockholders (or any adjournment or postponement thereof)
held to vote on the Plan;
(vi) nine months after the termination of the Plan,
by Grantee pursuant to Section 8.1(e) or (f) thereof as a result of a
breach by Issuer, unless such breach was willful or intentional; or
(vii) 18 months after the termination of the Plan, by
Grantee pursuant to Section 8.1(e) or (f) thereof as a result of a
willful or intentional breach by Issuer, or by Grantee pursuant to
Section 8.1(g) of the Plan.
(b) The term "Preliminary Purchase Event" shall mean any of
the following events or transactions occurring on or after the date hereof and
prior to an Exercise Termination Event:
(i) Issuer without having received Grantee's prior
written consent, shall have entered into any letter of intent or
definitive agreement to engage in an Acquisition Transaction (as
defined below) with any person (as defined below) other than Grantee or
any of its subsidiaries (each a "Grantee Subsidiary") or the Board of
Directors of Issuer shall have recommended that the shareholders of
Issuer approve or accept any Acquisition Transaction with any Person
(as the term "person" is defined in Section 3(a)9 and 13(d)(3) of the
Securities Exchange Act of 1934 (the "Exchange Act") and the rules and
regulations thereunder) other than Grantee or any Grantee
-2-
<PAGE>
Subsidiary. For purposes of this Agreement, "Acquisition Transaction"
shall mean (x) a merger, consolidation or other business combination
involving Issuer, (y) a purchase, lease or other acquisition of all or
substantially all of the assets of Issuer, (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange
or otherwise) of Beneficial Ownership (as the term "beneficial
ownership" is defined in Regulation 13d-3(a) of the Exchange Act) of
securities representing 11% or more of the voting power of Issuer;
provided, however that "Acquisition Transaction" shall not include a
transaction entered into after the termination of the Plan in which the
Issuer is the surviving entity, if in connection with such transaction,
no person acquires Beneficial Ownership of 11 percent or more of the
total voting power of the Issuer to be outstanding after giving effect
to such transaction and in which the aggregate voting power of Issuer
acquired by all persons is less than 25 percent of the total voting
power of Issuer;
(ii) Any Person (other than Grantee or any Grantee
Subsidiary) shall have acquired Beneficial Ownership of 11% or more of
the outstanding shares of Issuer Common Stock;
(iii) Any Person (other than Grantee or any Grantee
Subsidiary) shall have made a bona fide proposal to Issuer or, by a
public announcement or written communication that is or becomes the
subject of public disclosure, to Issuer's shareholders to engage in an
Acquisition Transaction (including, without limitation, any situation
in which any Person other than Grantee or any Grantee Subsidiary shall
have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act), or shall have filed a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect
to a tender offer or exchange offer to purchase any shares of Issuer
Common Stock such that, upon consummation of such offer, such person
would have Beneficial Ownership of 11% or more of the then outstanding
shares of Issuer Common Stock (such an offer being referred to herein
as a "Tender Offer" or an "Exchange Offer", respectively));
(iv) There shall exist a willful or intentional
breach under the Plan by Issuer and such breach would entitle Grantee
to terminate the Plan;
(v) The holders of Issuer Common Stock shall not have
approved the Plan at the special meeting of such shareholders held for
the purpose of voting on the Plan, or such special meeting of
shareholders shall not have been held or shall have been canceled
-3-
<PAGE>
prior to termination of the Plan, or Issuer's Board of Directors shall
have failed to recommend, or shall have withdrawn or modified in a
manner adverse to Grantee the recommendation of Issuer's Board of
Directors, that Issuer's shareholders approve the Plan, or if Issuer or
Issuer's Board of Directors fails to oppose any proposal by any Person
(other than Grantee or any Grantee Subsidiary); or
(vi) Any Person (other than Grantee or any Grantee
Subsidiary) shall have filed an application or notice with the Office
of Thrift Supervisor (the "OTS"), the Federal Deposit Insurance
Corporation (the "FDIC"), the Connecticut Banking Commissioner (the
"Commissioner"), or other regulatory or administrative agency or
commission (each, a "Governmental Authority") for approval to engage in
an Acquisition Transaction.
(c) The term "Purchase Event" shall mean any of the following
events or transactions occurring on or after the date hereof and prior to an
Exercise Termination Event:
(i) The acquisition by any Person (other than Grantee
or any Grantee Subsidiary) of Beneficial Ownership (other than on
behalf of the Issuer) of 25% or more of the then outstanding Issuer
Common Stock; or
(ii) The occurrence of a Preliminary Purchase Event
described in Section 2(b)(i) except that the percentage referred to in
clause (z) thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event known to Issuer;
provided, however, that the giving of such notice by Issuer shall not be a
condition to the right of Grantee to exercise the Option.
(e) In the event that Grantee is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the "Option
Notice" and the date of which being hereinafter referred to as the "Notice
Date") specifying (i) the total number of shares of Issuer Common Stock it will
purchase pursuant to such exercise and (ii) the time (which shall be on a
business day that is not less than three nor more than ten business days from
the Notice Date) on which the closing of such purchase shall take place (the
"Closing Date"); such closing to take place at the principal office of the
Issuer; provided, that, if prior notification to or approval of the OTS, the
FDIC, the Commissioner or any other Governmental Authority is required in
connection with such purchase (each, a "Notification" or an "Approval," as the
case may be), (a) Grantee shall promptly file the required notice or application
for approval ("Notice/Application"), (b) Grantee shall expeditiously
-4-
<PAGE>
process the Notice/Application and (c) for the purpose of determining the
Closing Date pursuant to clause (ii) of this sentence, the period of time that
otherwise would run from the Notice Date shall instead run from the later of (x)
in connection with any Notification, the date on which any required notification
periods have expired or been terminated and (y) in connection with any Approval,
the date on which such approval has been obtained and any requisite waiting
period or periods shall have expired. For purposes of Section 2(a) hereof, any
exercise of the Option shall be deemed to occur on the Notice Date relating
thereto. On or prior to the Closing Date, Grantee shall have the right to revoke
its exercise of the Option by written notice to the Issuer given not less than
three business days prior to the Closing Date.
(f) At the closing referred to in Section 2(e) hereof, Grantee
shall pay to Issuer the aggregate purchase price for the number of shares of
Issuer Common Stock specified in the Option Notice in immediately available
funds by wire transfer to a bank account designated by Issuer; provided,
however, that failure or refusal of Issuer to designate such a bank account
shall not preclude Grantee from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in Section 2(f) hereof, Issuer shall
deliver to Grantee a certificate or certificates representing the number of
shares of Issuer Common Stock specified in the Option Notice and, if the Option
should be exercised in part only, a new Option evidencing the rights of Grantee
thereof to purchase the balance of the shares of Issuer Common Stock purchasable
hereunder.
(h) Certificates for Issuer Common Stock delivered at a
closing hereunder shall be endorsed with a restrictive legend substantially as
follows:
The transfer of the shares represented by this certificate is
subject to resale restrictions arising under the Securities Act of
1933, as amended, and applicable state securities laws and to certain
provisions of an agreement between Shelton Bancorp, Inc. and Webster
Financial Corporation, dated as of June 20, 1995. A copy of such
agreement is on file at the principal office of Shelton Bancorp, Inc.
and will be provided to the holder hereof without charge upon receipt
by Shelton Bancorp, Inc. of a written request therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the Securities and Exchange
Commission (the "SEC") or Governmental Authority responsible for administering
any applicable state securities laws or an opinion of counsel, in form and
substance satisfactory to Issuer's counsel, to the effect that such legend is
not required for purposes of the
-5-
<PAGE>
Securities Act or applicable state securities laws; (ii) the reference to the
provisions of this Agreement in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Upon the giving by Grantee to Issuer of an Option Notice
and the tender of the applicable purchase price in immediately available funds
on the Closing Date, unless prohibited by applicable law, Grantee shall be
deemed to be the holder of record of the number of shares of Issuer Common Stock
specified in the Option Notice, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Issuer Common Stock shall not then actually be delivered to Grantee. Issuer
shall pay all expenses and other charges that may be payable in connection with
the preparation, issuance and delivery of stock certificates under this Section
2 in the name of Grantee.
SECTION 3. Issuer agrees: (i) that it shall at all times until
the termination of this Agreement have reserved for issuance upon the exercise
of the Option that number of authorized and reserved shares of Issuer Common
Stock equal to the maximum number of shares of Issuer Common Stock at any time
and from time to time issuable hereunder, all of which shares will, upon
issuance pursuant hereto, be duly authorized, validly issued, fully paid,
non-assessable, and delivered free and clear of all claims, liens, encumbrances
and security interests and not subject to any preemptive rights; (ii) that it
will not, by amendment of its certificate of incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all reasonable action as may from
time to time be requested by the Grantee, at Grantee's expense (including (x)
complying with all premerger notification, reporting and waiting period
requirements specified in 15 U.S.C. s. 18a and regulations promulgated
thereunder and (y) in the event prior approval of or notice to the OTS, the
FDIC, the Commissioner or any other Governmental Authority, under the Home
Owners' Loan Act of 1933, as amended, the Change in Bank Control Act of 1978, as
amended, Section 36a-181 or Section 36a-184, as applicable, of the Connecticut
Bank Holding Company Act, or any other applicable federal or state banking law,
is necessary before the Option may be exercised, cooperating with Grantee in
preparing such applications or notices and providing such information to each
such Governmental Authority as it may require in order to permit Grantee to
exercise the Option and Issuer duly and effectively to issue shares of Issuer
Common Stock pursuant hereto; and (iv) to take all action provided herein to
protect the rights of Grantee against dilution.
-6-
<PAGE>
SECTION 4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer, for other
agreements providing for Options of different denominations entitling the holder
thereof to purchase, on the same terms and subject to the same conditions as are
set forth herein, in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any agreements and related options for which this Agreement (and the
Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date.
SECTION 5. The number of shares of Issuer Common Stock
purchasable upon the exercise of the Option shall be subject to adjustment from
time to time as follows:
(a) In the event of any change in the type or number
of shares of Issuer Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares or other issuances of additional
shares (other than pursuant to the exercise of the Option), the type
and number of shares of Issuer Common Stock purchasable upon exercise
hereof shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional shares of Issuer Common
Stock are to be issued or otherwise become outstanding as a result of
any such change (other than pursuant to an exercise of the Option), the
number of shares of Issuer Common Stock that remain subject to the
Option shall be increased or decreased (as applicable) so that, after
such issuance and together with shares of Issuer Common Stock
previously issued pursuant to the exercise of the Option (as adjusted
on account of any of the foregoing changes in the Issuer Common Stock),
the Option shall equal 19.9% of the number of shares of Issuer Common
Stock then issued and outstanding.
(b) Whenever the number of shares of Issuer Common
Stock purchasable upon exercise hereof is adjusted as provided in this
Section 5, the Option Price shall be adjusted by multiplying the Option
Price by a fraction, the numerator of which shall be equal to the
number of shares of Issuer Common Stock purchasable prior to the
adjustment and the denominator of which shall be equal to the number of
shares of Issuer Common Stock purchasable after the adjustment.
-7-
<PAGE>
SECTION 6. (a) Upon the occurrence of a Purchase Event that
occurs prior to an Exercise Termination Event, Issuer shall, at the request of
Grantee (whether on its own behalf or on behalf of any subsequent holder of the
Option (or part thereof) or of any of the shares of Issuer Common Stock issued
pursuant hereto), promptly prepare, file and keep current a shelf registration
statement under the Securities Act covering any shares issued and issuable
pursuant to the Option and shall use its best efforts to cause such registration
statement to become effective, and to remain current and effective for a period
not in excess of 180 days from the day such registration statement first becomes
effective, in order to permit the sale or other disposition of any shares of
Issuer Common Stock issued upon total or partial exercise of the Option ("Option
Shares") in accordance with any plan of disposition requested by Grantee.
Grantee shall have the right to demand one such registration. Grantee shall
provide all information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. In connection with any such
registration, Issuer and Grantee shall provide each other with representations,
warranties, indemnities and other agreements customarily given in connection
with such registration. If requested by Grantee in connection with such
registration, Issuer and Grantee shall become a party to any underwriting
agreement relating to the sale of such shares, but only to the extent of
obligating themselves in respect of representations, warranties, indemnities and
other agreements customarily included in such underwriting agreements.
Notwithstanding the foregoing, if Grantee revokes any exercise notice or fails
to exercise any Option with respect to any exercise notice pursuant to Section
2(e) hereof, Issuer shall not be obligated to continue any registration process
with respect to the sale of Option Shares issuable upon the exercise of such
Option and Grantee shall not be deemed to have demanded registration of Option
Shares.
(b) In the event that Grantee requests Issuer to file a
registration statement following the failure to obtain any approval required to
exercise the Option as described in Section 9 hereof, the closing of the sale or
other disposition of the Issuer Common Stock or other securities pursuant to
such registration statement shall occur substantially simultaneously with the
exercise of the Option.
(c) Concurrently with the filing of a registration statement
under Section 6(a) hereof, Issuer shall also make all filings required to comply
with state securities laws in such number of states as Grantee may reasonably
request.
SECTION 7. (a) Upon the occurrence of a Purchase Event that
occurs prior to an Exercise Termination Event, (i) at the request (the date of
such request being the "Option Repurchase Request Date") of Grantee, Issuer
shall repurchase the Option from Grantee at a price (the "Option Repurchase
Price") equal to the amount by which (A) the market/offer price (as defined
below) exceeds (B) the Option Price, multiplied by the number of shares for
which the Option may then be exercised and (ii) at the request (the date of such
request being the "Option
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<PAGE>
Share Repurchase Request Date") of the owner of Option Shares from time to time
(the "Owner"), Issuer shall repurchase such number of the Option Shares from the
Owner as the Owner shall designate at a price (the "Option Share Repurchase
Price") equal to the market/offer price multiplied by the number of Option
Shares so designated. The term "market/offer price" shall mean the highest of
(i) the price per share of Issuer Common Stock at which a tender offer or
exchange offer therefor has been made after the date hereof and on or prior to
the Option Repurchase Request Date or the Option Share Repurchase Request Date,
as the case may be, (ii) the price per share of Issuer Common Stock paid or to
be paid by any third party pursuant to an agreement with Issuer (whether by way
of a merger, consolidation or otherwise), (iii) the average of the 20 highest
last sale prices for shares of Issuer Common Stock as reported within the 90-day
period ending on the Option Repurchase Request Date or the Option Share
Repurchase Request Date, as the case may be, and (iv) in the event of a sale of
all or substantially all of Issuer's assets, the sum of the price paid in such
sale for such assets and the current market value of the remaining assets of
Issuer as determined by an investment banking firm selected by Grantee or the
Owner, as the case may be, and reasonably acceptable to Issuer, divided by the
number of shares of Issuer Common Stock outstanding at the time of such sale. In
determining the market/offer price, the value of consideration other than cash
shall be the value determined by an investment banking firm selected by Grantee
or the Owner, as the case may be, and reasonably acceptable to Issuer. The
investment banking firm's determination shall be conclusive and binding on all
parties.
(b) Grantee or the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and/or any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that Grantee or
the Owner, as the case may be, elects to require Issuer to repurchase the Option
and/or the Option Shares in accordance with the provisions of this Section 7. As
promptly as practicable, and in any event within 30 business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto, Issuer shall deliver or
cause to be delivered to Grantee the Option Repurchase Price or to the Owner the
Option Share Repurchase Price or the portion thereof that Issuer could deliver
without causing Shelton Bank's capital to fall below the minimum level required
under applicable regulations of the Federal Deposit Insurance Corporation for
Shelton Bank to be deemed "well capitalized."
(c) Issuer hereby undertakes to use its best efforts to obtain
all required regulatory, shareholder and legal approvals and to file any
required notices as promptly as practicable in order to accomplish any
repurchase contemplated by this Section 7. Nonetheless, to the extent that
Issuer is prohibited under applicable law or regulation, or as a consequence of
the provision as to "well capitalized" in Section 7(a) hereof, from repurchasing
any Option and/or any Option
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<PAGE>
Shares in full, Issuer shall promptly so notify Grantee and/or the Owner and
thereafter deliver or cause to be delivered, from time to time, to Grantee
and/or the Owner, as appropriate, the portion of the Option Repurchase Price and
the Option Share Repurchase Price, respectively, that it is no longer prohibited
from delivering, within five business days after the date on which Issuer is no
longer so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to Section 7(b) hereof is prohibited
as referred to above, from delivering to Grantee and/or the Owner, as
appropriate, the Option Repurchase Price or the Option Share Repurchase Price,
respectively, in full, Grantee or the Owner, as appropriate, may revoke its
notice of repurchase of the Option or the Option Shares either in whole or in
part whereupon, in the case of a revocation in part, Issuer shall promptly (i)
deliver to Grantee and/or the Owner, as appropriate, that portion of the Option
Purchase Price or the Option Share Repurchase Price that Issuer is not
prohibited from delivering after taking into account any such revocation and
(ii) deliver, as appropriate, either (A) to Grantee, a new Agreement evidencing
the right of Grantee to purchase that number of shares of Issuer Common Stock
equal to the number of shares of Issuer Common Stock purchasable immediately
prior to the delivery of the notice of repurchase less the number of shares of
Issuer Common Stock covered by the portion of the Option repurchased or (B) to
the Owner, a certificate for the number of Option Shares covered by the
revocation.
(d) Issuer shall not enter into any agreement with any Person
(other than Grantee or a Grantee Subsidiary) for an Acquisition Transaction
unless the other Person assumes all the obligations of Issuer pursuant to this
Section 7 in the event that Grantee or the Owner elects, in its sole discretion,
to require such other Person to perform such obligations.
(e) Notwithstanding the foregoing provisions of this Section
7, Issuer shall not be required to deliver or cause to be delivered to Grantee
the Option Repurchase Price or to the Owner the Option Share Repurchase Price to
the extent that such delivery would prevent the Acquisition Transaction
described in Section 2(b)(1) from being accounted for as a "poolings of
interest," as determined by Issuer's independent accountants. Issuer shall
advise Grantee or the Owner within 15 business days after either Grantee or
Owner requests information from Issuer as to whether, and to the extent that,
Issuer intends to rely upon this Section 7(e) to preclude Grantee or Owner from
otherwise exercising their rights under this Section 7.
SECTION 8. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into a letter of intent or definitive
agreement (i) to consolidate or merge with any Person (other than Grantee or a
Grantee Subsidiary), and Issuer shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any Person (other
than Grantee or a Grantee Subsidiary) to merge into Issuer, and Issuer shall be
the continuing or surviving
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<PAGE>
corporation, but, in connection with such merger, the then outstanding shares of
Issuer Common Stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property or the then
outstanding shares of Issuer Common Stock shall after such merger represent less
than 50% of the outstanding shares and share equivalents of the merged company,
or (iii) to sell or otherwise transfer all or substantially all of its assets to
any Person (other than Grantee or a Grantee Subsidiary) then, and in each such
case, such letter of intent or definitive agreement governing such transaction
shall make proper provision so that the Option shall, upon the consummation of
such transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option (the "Substitute Option"), at the
election of Grantee, of either (x) the Acquiring Corporation (as defined below)
or (y) any person that controls the Acquiring Corporation (the Acquiring
Corporation and any such controlling person being hereinafter referred to as the
"Substitute Option Issuer").
(b) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock (as is hereinafter defined) as is equal to
the market/offer price (as defined in Section 7 hereof) multiplied by the number
of shares of Issuer Common Stock for which the Option was theretofore
exercisable, divided by the Average Price (as hereinafter defined). The exercise
price of the Substitute Option per share of the Substitute Common Stock (the
"Substitute Purchase Price") shall then be equal to the Option Price multiplied
by a fraction in which the numerator is the number of shares of Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares for which the Substitute Option is exercisable.
(c) The Substitute Option shall otherwise have the same terms
as the Option, provided that if the terms of the Substitute Option cannot, for
legal reasons, be the same as the Option, such terms shall be as similar as
possible and in no event less advantageous to Grantee, provided further that the
terms of the Substitute Option shall include (by way of example and not
limitation) provisions for the repurchase of the Substitute Option and
Substitute Common Stock by the Substitute Option Issuer on the same terms and
conditions as provided in Section 7 hereof.
(d) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or merger with
Issuer (if other than Issuer), (ii) Issuer in a merger in which Issuer
is the continuing or surviving corporation, and (iii) the transferee of
all or any substantial part of Issuer's assets.
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<PAGE>
(ii) "Substitute Common Stock" shall mean the common
stock issued by the Substitute Option Issuer upon exercise of the
Substitute Option.
(iii) "Average Price" shall mean the average closing
price of a share of Substitute Common Stock for the one-year period
immediately preceding the consolidation, merger or sale in question,
but in no event higher than the closing price of the shares of
Substitute Common Stock on the day preceding such consolidation, merger
or sale; provided that if Issuer is the issuer of the Substitute
Option, the Average Price shall be computed with respect to a share of
Issuer Common Stock issued by Issuer, the corporation merging into
Issuer or by any company which controls or is controlled by such
merging corporation, as Grantee may elect.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the aggregate
of the shares of Substitute Common Stock outstanding immediately prior to the
issuance of the Substitute Option. In the event that the Substitute Option would
be exercisable for more than 19.9% of the aggregate of the shares of Substitute
Common Stock but for this clause (e), the Substitute Option Issuer shall make a
cash payment to Grantee equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in this clause (e) over (ii) the
value of the Substitute Option after giving effect to the limitation in this
clause (e). This difference in value shall be determined by a nationally
recognized investment banking firm selected by Grantee and the Substitute Option
Issuer. In addition, the provisions of Section 5(a) hereof shall not apply to
the issuance of any Substitute Option and for purposes of applying Section 5(a)
hereof thereafter to any Substitute Option the percentage referred to in Section
5(a) hereof shall thereafter equal the percentage that the percentage of the
shares of Substitute Common Stock subject to the Substitute Option bears to the
number of shares of Substitute Common Stock outstanding.
SECTION 9. Notwithstanding Sections 2, 6 and 7 hereof, if
Grantee has given the notice referred to in one or more of such Sections, the
exercise of the rights specified in any such Section shall be extended (a) if
the exercise of such rights requires obtaining regulatory approvals (including
any required waiting periods) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights, and (b) to the extent necessary to
avoid liability under Section 16(b) of the Exchange Act by reason of such
exercise; provided that in no event shall any closing date occur more than 12
months after the related notice date, and, if the closing date shall not have
occurred within such period due to the failure to obtain any required approval
by the OTS, the FDIC, the Commissioner or any other Governmental Authority
despite the best efforts of Issuer or the Substitute Option Issuer, as the case
may be, to obtain such approvals, the exercise of the rights shall
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<PAGE>
be deemed to have been rescinded as of the related notice date. In the event (a)
Grantee receives official notice that an approval of the OTS, the FDIC, the
Commissioner or any other Governmental Authority required for the purchase and
sale of the Option Shares will not be issued or granted or (b) a closing date
has not occurred within 12 months after the related notice date due to the
failure to obtain any such required approval, Grantee shall be entitled to
exercise the Option in connection with the concurrent resale of the Option
Shares pursuant to a registration statement as provided in Section 6 hereof.
Nothing contained in this Agreement shall restrict Grantee from specifying
alternative means of exercising rights pursuant to Sections 2, 6 or 7 hereof in
the event that the exercising of any such rights shall not have occurred due to
the failure to obtain any required approval referred to in this Section 9.
SECTION 10. Issuer hereby represents and warrants to Grantee
as follows:
(a) Issuer has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly approved by
the Board of Directors of Issuer and no other corporate proceedings on the part
of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly executed and
delivered by, and constitutes a valid and binding obligation of, Issuer,
enforceable against Issuer in accordance with its terms, subject to any required
Governmental Approval, and except as enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally and except that
the availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
shares of Issuer Common Stock equal to the maximum number of shares of Issuer
Common Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized, validly issued,
fully paid, non-assessable, and will be delivered free and clear of all claims,
liens, encumbrances and security interests and not subject to any preemptive
rights.
SECTION 11. (a) Neither of the parties hereto may assign any
of its rights or delegate any of its obligations under this Agreement or the
Option created hereunder to any other Person without the express written consent
of the other party, except that Grantee may assign this Agreement to a wholly
owned subsidiary
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<PAGE>
of Grantee and Grantee may assign its rights hereunder in whole or in part after
the occurrence of a Preliminary Purchase Event. The term "Grantee" as used in
this Agreement shall also be deemed to refer to Grantee's permitted assigns.
(b) Any assignment of rights of Grantee to any permitted
assignee of Grantee hereunder shall bear the restrictive legend at the beginning
thereof substantially as follows:
The transfer of the option represented by this assignment and
the related option agreement is subject to resale restrictions arising
under the Securities Act of 1933, as amended, and applicable state
securities laws and to certain provisions of an agreement between
Shelton Bancorp, Inc. and Webster Financial Corporation dated as of
June 20, 1995. A copy of such agreement is on file at the principal
office of Shelton Bancorp, Inc. and will be provided to any permitted
assignee of the Option without charge upon receipt of a written request
therefor.
SECTION 12. Each of Grantee and Issuer will use its reasonable
efforts to make all filings with, and to obtain consents of, all third parties
and Governmental Authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
OTS, the FDIC, the Commissioner and any other Governmental Authority for
approval to acquire the shares issuable hereunder.
SECTION 13. The parties hereto acknowledge that damages would
be an inadequate remedy for a breach of this Agreement by either party hereto
and that the obligations of the parties hereto shall be enforceable by either
party hereto through injunctive or other equitable relief. Both parties further
agree to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such equitable relief and that this
provision is without prejudice to any other rights that the parties hereto may
have for any failure to perform this Agreement.
SECTION 14. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that Grantee is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7 hereof, the full number of shares
of Issuer Common Stock provided in Section 1(a) hereof (as adjusted pursuant
hereto), it is the express intention of Issuer to allow Grantee to acquire or to
require Issuer to repurchase
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<PAGE>
such lesser number of shares as may be permissible, without any amendment or
modification hereof.
SECTION 15. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Plan.
SECTION 16. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto shall be governed by
and construed in accordance with the laws of the State of Delaware (but not
including the choice of law rules thereof).
SECTION 17. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute one and the same agreement and shall be effective at the time of
execution and delivery.
SECTION 18. Except as otherwise expressly provided herein,
each of the parties hereto shall bear and pay all costs and expenses incurred by
it or on its behalf in connection with the transactions contemplated hereunder.
SECTION 19. Except as otherwise expressly provided herein or
in the Plan, this Agreement contains the entire agreement between the parties
with respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
SECTION 20. Capitalized terms used in this Agreement and not
defined herein but defined in the Plan shall have the meanings assigned thereto
in the Plan.
SECTION 21. Nothing contained in this Agreement shall be
deemed to authorize or require Issuer or Grantee to breach any provision of the
Plan or any provision of law applicable to the Grantee or Issuer.
SECTION 22. In the event that any selection or determination
is to be made by Grantee or the Owner hereunder and at the time of such
selection or determination there is more than one Grantee or Owner, such
selection shall be made by a majority in interest of such Grantees or Owners.
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<PAGE>
SECTION 23. In the event of any exercise of the option by
Grantee, Issuer and such Grantee shall execute and deliver all other documents
and instruments and take all other action that may be reasonably necessary in
order to consummate the transactions provided for by such exercise.
SECTION 24. Except to the extent Grantee exercises the Option,
Grantee shall have no rights to vote or receive dividends or have any other
rights as a shareholder with respect to shares of Issuer Common Stock covered
hereby.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Option
Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
SHELTON BANCORP, INC.
By: ____________________________________
KENNETH E. SCHAIBLE, President and
Chief Executive Officer
WEBSTER FINANCIAL CORPORATION
By: ____________________________________
JAMES C. SMITH, Chairman, President
and Chief Executive Officer
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<PAGE>
Exhibit C
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT, dated as of June 20, 1995, is
entered into by and among Webster Financial Corporation ("Webster"), a Delaware
corporation, and the nine stockholders of Shelton Bancorp, Inc. ("Shelton"), a
Delaware corporation, named on Schedule I hereto (collectively the
"Stockholders"), who are directors or executive officers of Shelton.
WHEREAS, Webster, Webster Acquisition Corp., a wholly-owned
subsidiary of Webster ("Merger Sub") and Shelton have entered into an Agreement
and Plan of Merger, dated as of June 20, 1995 ("Agreement"), which is
conditioned upon the concurrent execution of this Stockholder Agreement and
which provides for, among other things, the merger of Merger Sub with and into
Shelton, in a stock-for-stock transaction pursuant to which Shelton will become
a wholly-owned subsidiary of Webster (the "Merger");
WHEREAS, in order to induce Webster to enter into or proceed
with the Agreement, each of the Stockholders agrees to, among other things, vote
in favor of the Agreement, the Merger and the other transactions contemplated by
the Agreement in his capacity as a stockholder of Shelton;
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements set forth herein and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. Ownership of Shelton Common Stock. Each Stockholder represents and
warrants that he has or shares the right to vote and dispose of the number of
shares of common stock of Shelton, par value $1.00 per share ("Shelton Stock"),
set forth opposite such Stockholder's name on Section I hereto.
2. Agreements of the Stockholders. Each Stockholder covenants and
agrees that:
(a) Such Stockholder shall, at any meeting of Shelton
stockholders called for the purpose, vote or cause to be voted all
shares of Shelton Stock in which such Stockholder has the right to vote
(whether owned as of the date hereof or hereafter acquired) (i) in
favor of the Agreement, the Merger and the other transactions
contemplated by the Agreement and (ii) against any plan or proposal
pursuant to which Shelton is to be acquired by or merged with, or
pursuant to
<PAGE>
which Shelton purposes to sell all or substantially all of its assets
and liabilities to, any person, entity or group (other than Webster or
any affiliate thereof).
(b) Except as otherwise expressly permitted hereby, such
Stockholder shall not, prior to the consummation of the Merger or the
earlier termination of this Stockholder Agreement in accordance with
its terms, sell, pledge, transfer or otherwise dispose of his shares of
Shelton Stock; provided, however, that this Section 2(b) shall not
apply (i) to a pledge made by such Stockholder to secure a borrowing by
such Stockholder from a bank or securities dealer, if such borrowing is
made by such Stockholder in good faith and without an intent to
circumvent the restrictions in this Stockholder Agreement, (ii) to a
sale, pledge, transfer or other disposition of up to 3,000 shares of
Shelton Stock by LeRoy T. Glover, or (iii) to a sale, pledge, transfer
or other disposition of shares of Shelton Stock acquired subsequent to
the date hereof upon the exercise of options under the Shelton Stock
Option Plan by a Stockholder who is an executive officer of Shelton,
if, in the case of (i), (ii) or (iii), such sale, pledge, transfer or
other disposition occurs no later than the 31st day preceding the
consummation of the Merger. To enable Stockholders to comply with the
foregoing provision, Webster will notify the Stockholders at least 45
days in advance of the date that Webster anticipates that the Merger
will be consummated.
(c) Such Stockholder shall not in his capacity as a
stockholder of Shelton directly or indirectly encourage or solicit or
hold discussions or negotiations with, or provide any information to,
any person, entity or group (other than Webster or an affiliate
thereof) concerning any merger, sale of substantial assets or
liabilities not in the ordinary course of business, sale of shares of
capital stock or similar transaction involving Shelton.
(d) Such Stockholder shall use his best efforts to take or
cause to be taken all action, and to do or cause to be done all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the Merger contemplated by this
Stockholder Agreement.
(e) Such Stockholder has no present plan or intent, and as of
the effective time of the Merger shall have no present plan or intent,
to engage in a sale, exchange, transfer (other than an intrafamily
gift), distribution (including a distribution by a corporation to its
shareholders), redemption, pledge (other than a pledge replacing an
existing pledge of Shelton Stock) or reduction in any way of his risk
of ownership by short sale or otherwise, or other disposition, directly
or
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<PAGE>
indirectly (collectively a "Sale") with respect to any of his shares of
Shelton Stock or any of the shares of Webster common stock, par value
$.01 per share ("Webster Stock") to be received by him for his shares
of Shelton Sock upon the Merger; provided, however, that this Section
2(e) shall not apply to shares of Shelton Stock acquired by such
Stockholder subsequent to the date hereof upon the exercise of options
under the Shelton Stock Option Plan, if such Stockholder is an
executive officer of Shelton. Such Stockholder is not aware of, or
participating in any plan or intent on the part of Shelton's
shareholders (a "Plan") to engage in Sales of the Webster Stock to be
issued in the Merger such that the aggregate fair market value, as of
the effective time of the Merger, of the shares subject to such Sales
would exceed 50% of the aggregate fair market value of all outstanding
Shelton Stock immediately prior to the Merger (the "Outstanding Shelton
Stock"). A Sale of Webster Stock shall be considered to have occurred
pursuant to a Plan if, for example, such Sale occurs in a transaction
that is in contemplation of, or related or pursuant to, the Merger (a
"Related Transaction"). In addition, Shelton Stock (i) exchanged for
cash in lieu of fractional shares of Webster Stock, or (ii) with
respect to which a pre-Merger Sale occurs in a Related Transaction,
shall be considered to be shares of Outstanding Shelton Stock that are
exchanged for shares of Webster Stock which are disposed of pursuant to
a Plan.
(f) Such Stockholder shall not, prior to the public release by
Webster of an earnings report to its stockholders covering at least one
month of operations after consummation of the Merger, sell, pledge
(other than the replacement of an existing pledge of Shelton Stock),
transfer or otherwise dispose of the shares of Webster Stock to be
received by him for his shares of Shelton Stock upon consummation of
the Merger; it being agreed that Webster shall cause such earnings
report to be publicly released within 90 days after the end of the
first month of operations after consummation of the Merger.
(g) Such Stockholder shall comply with all applicable federal
and state securities laws in connection with any sale of Webster Stock
received in exchange for Shelton Stock in the Merger, including the
trading and volume limitations as to sales by affiliates contained in
Rule 145 under the Securities Act of 1933, as amended.
3. Successors and Assigns. A Stockholder may sell, pledge, transfer or
otherwise dispose of his shares of Shelton Stock, provided that such Stockholder
obtains prior written consent of Webster and that any acquiror of such Shelton
Stock agree in writing to be bound by this Stockholder Agreement.
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<PAGE>
4. Termination. The parties agree and intend that this Stockholder
Agreement be a valid and binding agreement enforceable against the parties
hereto and that damages and other remedies at law for the breach of this
Stockholder Agreement are inadequate. This Stockholder Agreement may be
terminated at any time prior to the consummation of the Merger by mutual written
consent of the parties hereto and shall be automatically terminated in the event
that the Agreement is terminated in accordance with its terms; provided,
however, that if the Shelton stockholders fail to approve the Agreement or
Shelton fails to hold a stockholders meeting to vote on the Agreement, then (i)
Section 2(a) clause (ii) hereof shall continue in effect as to any plan or
proposal received by Shelton from any person, entity or group (other than
Webster or any affiliate thereof) prior to the termination of the Agreement or
within six months after such termination and (ii) Section 2(b) hereof shall
continue in effect to preclude a sale, pledge, transfer, or other disposition
directly or indirectly to any such person, entity or group in connection with
any such plan or proposal, except upon consummation of such plan or proposal.
5. Notices. Notices may be provided to Webster and the Stockholders in
the manner specified in the Agreement, with all notices to the Stockholders
being provided to them at Shelton in the manner specified in such section.
6. Governing Law. This Stockholder Agreement shall be governed by the
laws of the State of Delaware, without giving effect to the principles of
conflicts of laws thereof.
7. Counterparts. This Stockholder Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same and each of
which shall be deemed an original.
8. Headings and Gender. The Section headings contained herein are for
reference purposes only and shall not affect in any way the meaning of
interpretation of this Stockholder Agreement. Use of the masculine gender herein
shall be considered to represent the masculine, feminine or neuter gender
whenever appropriate.
9. Regulatory Approval. If any provision of this Agreement requires the
approval of any regulatory authority in order to be enforceable, then such
provision shall not be effective until such approval is obtained; provided,
however, that the foregoing shall not affect the enforceability of any other
provision of this Agreement.
10. Pooling of Interest. In the event that Webster elects to have the
Merger accounted for as a purchase rather than a pooling of interest, this
Agreement shall be modified to the extent that restrictions contained herein are
based only on requirements for a pooling of interest.
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<PAGE>
IN WITNESS WHEREOF, Webster, by a duly authorized officer, and
each of the Stockholders have caused this Stockholder Agreement to be executed
as of the day and year first above written.
WEBSTER FINANCIAL CORPORATION SHELTON STOCKHOLDERS
By:
------------------------ ---------------------------
James C. Smith (LeRoy T. Glover)
Chairman, President and
Chief Executive Officer ---------------------------
(J. Allen Kosowsky)
---------------------------
(Samuel Kreiger)
---------------------------
(William C. Nimons)
---------------------------
(Joseph A. Pagliaro)
---------------------------
(Ralph J. Rodriguez)
---------------------------
(Kenneth E. Schaible)
---------------------------
(Donald W. Smith)
---------------------------
(Charles H. Sullivan)
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<PAGE>
SCHEDULE I
Number of Shares of
Shelton Stock
Name of Stockholder Beneficially Owned
------------------- -------------------
LeRoy T. Glover 18,148
J. Allen Kosowsky 49,446
Samuel Kreiger 24,370
William C. Nimons 30,415
Joseph A. Pagliaro 40,036
Ralph J. Rodriguez 8,998
Kenneth E. Schaible 15,141
Donald W. Smith 14,641
Charles H. Sullivan 1,116
--------
Total: 202,311
========
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Exhibit D
EMPLOYMENT AND CONSULTING AGREEMENT
AGREEMENT, dated as of____ , 199___, between WEBSTER
BANK (the "Bank") and KENNETH E. SCHAIBLE (Schaible).
WHEREAS, the Bank desires to retain the services of Schaible
as an officer for six months and thereafter for three years as an independent
contractor consultant to the Bank;
WHEREAS, the Board of Directors of the Bank has approved and
authorized the entry into this Agreement with Schaible;
WHEREAS, Schaible has heretofore entered into an Employment
Agreement dated August 29, 1994 (the "Prior Agreement") with Shelton Bancorp,
Inc. ("Shelton Bancorp") and Shelton Savings Bank ("Shelton"), which the parties
desire to replace and supersede by entering into this Agreement; and
WHEREAS, the parties desire to enter into this Agreement to
set forth the terms and conditions for the employment and consulting
relationships of Schaible with the Bank to replace and supersede the Prior
Agreement and to provide for the payment of severance to Schaible relating to
the Prior Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. Employment.
(a) The Prior Agreement is hereby terminated,
replaced and superseded and the Prior Agreement shall be of no further force or
effect after the date of this Agreement. Schaible's employment by Shelton
Bancorp shall terminate upon his execution of this Agreement. Schaible's
employment by the Bank shall terminate six months from the date hereof.
(b) Schaible is employed as a Senior Vice President
of the Bank for a six-month period from the date hereof, reporting to the
President of the Bank. As a Senior Vice President, Schaible shall assist the
Bank to assure an efficient and orderly transition and integration of Shelton's
assets, business, operations, customers and employees with those of the Bank,
including the maintenance and expansion of existing depositor and borrowing
relationships especially in the areas previously served by Shelton. In general,
his responsibilities shall be of the type referred to in the second, third,
fourth and fifth sentences of paragraph (c) below.
<PAGE>
(c) Schaible shall serve as an independent contractor
consultant to the Bank for a period of three years, commencing after the end of
the six-month period referred to in paragraph (b) above. Schaible shall provide
consulting services to the Bank with respect to community affairs in the
communities previously served by Shelton and in the communities served by the
Bank, and shall provide the Bank with advice with respect to commercial real
estate lending activities. Schaible shall also consult with the Bank with
respect to existing and new business relationships and opportunities, including
the maintenance of existing depositor and borrower relationships and
opportunities for expansion, especially in the areas previously serviced by
Shelton. Schaible shall also develop plans to expand and develop the trust
business previously conducted by Shelton. Schaible shall also render advisory
and consulting services to the Bank of the type customarily performed by persons
serving in similar consulting capacities, consistent with the knowledge and
experience possessed by Schaible. During such three-year period, Schaible shall
perform such consulting services for up to 20 hours per week during the normal
business hours of the Bank, excluding normal vacation periods. As a consultant,
Schaible will report to the President of the Bank in performing his services
hereunder.
(d) In addition to his duties described above as
Senior Vice President or a consultant to the Bank, Schaible will serve as a
member of the Board of Directors of the Bank, if he is elected to such Board;
Schaible also will serve as Chairman of the Advisory Board to the Bank (the
"Advisory Board") formed pursuant to Section 1.9 of the Agreement and Plan of
Merger dated as of June 20, 1995, by and among Webster Financial Corporation
("Webster"), Webster Acquisition Corp., and Shelton Bancorp (the "Merger
Agreement"). As Chairman of the Advisory Board, he will prepare and distribute
an agenda in advance of each meeting thereof.
(e) During the term of this Agreement, there shall be
no material increase in the duties and responsibilities of Schaible otherwise
than as provided herein, unless the parties otherwise agree in writing. During
the term of this Agreement, Schaible shall not normally be required to provide
services at a location more than 35 miles from the Bank's home office.
(f) The parties acknowledge and agree that after the
first six months of the term of this Agreement, Schaible may accept other
employment or engagements and may participate in any other activities without
seeking the Bank's approval thereof; provided, however, that (i) such other
employment, engagements and activities do not materially interfere with his
ability to perform the services contemplated hereby, and (ii) during the term of
this Agreement, Schaible shall not be employed by or perform services for any
significant competitor of the Bank. The term "significant competitor" shall mean
any commercial bank, savings bank, savings and loan association, or mortgage
banking company, or a holding company affiliate of any of the foregoing, which
at the date of its employment or engagement of Schaible or his
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<PAGE>
performance of services for it has an office out of which Schaible would be
primarily based within 35 miles of the Bank's home office.
2. Compensation. The Bank agrees to pay Schaible during the
term of this Agreement compensation as follows: (i) salary at the rate of
$10,000 per month for the first six months for serving as Senior Vice President
of the Bank; and (ii) for the three year period thereafter for serving as a
consultant to the Bank, consulting fees at the rate of $50,000 annually for the
first of such three years, $40,000 annually for the second of such three years,
and $30,000 annually for the third of such three years. In addition the Bank
will pay or reimburse Schaible for his reasonable and customary business
expenses incurred in connection with his performance of his duties hereunder,
provided that such expenses are incurred and accounted for in accordance with
policies and procedures established by the Bank for employee or consulting
business expenses, as applicable. While serving as Senior Vice President,
Schaible shall be provided with an automobile allowance of $600 per month. The
compensation of Schaible hereunder shall not be decreased at any time during the
term of this Agreement from the amount then in effect, unless Schaible otherwise
agrees in writing. The compensation under this Section 2 shall be payable by the
Bank to Schaible on a bi-weekly basis. Schaible shall not be entitled to receive
any additional fees or other compensation for serving as a director of the Bank,
for serving as a member of any committee of the Board of Directors of the Bank,
or for serving as the Chairman or a member of the Advisory Board.
3. Prior Agreement Termination. In consideration of Schaible's
agreement to terminate the Prior Agreement and his execution of this Agreement,
the Bank shall pay to Schaible for prior services rendered upon his execution of
this Agreement an amount equal to three times Schaible's average annual
compensation that was paid by Shelton Bancorp and Shelton and was includible in
Schaible's gross income for federal income tax purposes, as reflected on his
Forms W-2, for the calendar years ended December 31, 1990, 1991, 1992, 1993, and
1994, reduced by $1.00.
4. Participation in Retirement and Employee Benefit Plans.
(a) As a Senior Vice President of the Bank, Schaible
shall be eligible to participate in the following plans covering officers of the
Bank: employee stock ownership plan (ESOP), defined benefit pension plan, 401(k)
profit sharing plan, group life insurance plan, and health and dental insurance
plans. Schaible's previous service with Shelton shall be included in determining
eligibility and vesting of Schaible for participating in these plans.
(b) As a consultant to the Bank, Schaible shall not
be entitled to participate in any retirement or employee benefit plans
applicable to employees of the Bank, except that, as a result of the reduction
in his hours of service and termination of his employment status, Schaible will
be entitled to continuation coverage (COBRA), at his expense, under the health
and dental insurance plans maintained by the Bank.
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<PAGE>
5. Term. The term of this Agreement shall be for three years
and six months commencing on the date hereof.
6. Standards. Schaible shall perform his duties and
responsibilities under this Agreement in accordance with such reasonable
standards as may be established from time to time by the President of the Bank.
The reasonableness of such standards shall be measured against performance
standards generally prevailing in the savings institutions industry.
7. Termination of Employment.
(a) The Bank may terminate Schaible's employment as a
Senior Vice President or services as a consultant at any time. Schaible shall
have no right to receive compensation or other benefits for any period after
termination for cause by the Bank or voluntary termination by Schaible. The term
"termination for cause" shall mean termination because of Schaible's personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, willful violation
of any law, rule, or regulation (other than traffic violations or similar
offenses) or final cease-and-desist order, or material breach of any provision
of this Agreement. In determining incompetence, the acts or omissions shall be
measured against standards generally prevailing in the savings institutions
industry. Following actual or constructive involuntary termination of Schaible's
employment or consulting services without cause, the Bank shall be obligated to
continue to pay to Schaible his compensation in accordance with Section 2 hereof
for the remaining term of this Agreement. Schaible shall have the obligation to
mitigate damages hereunder in the event of a termination without cause by
seeking other alternative employment or consulting engagements for which he is
reasonably qualified. The amounts payable to Schaible hereunder following
termination without cause shall be reduced by amounts received by Schaible from
such other employment or engagements following such termination; provided, that
any such amounts received for any period subsequent to six months from the date
hereof shall result in such a reduction only to the extent such other employment
or engagements, individually or in the aggregate, involve services of more than
20 hours per week.
(b) If Schaible is suspended and/or temporarily
prohibited from participating in the conduct of the Bank's affairs by a notice
served under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act, as
amended, the Bank's obligations under this Agreement shall be suspended as of
the date of service, unless stayed by appropriate proceedings. If the charges in
the notice are dismissed, the Bank may in its discretion (i) pay Schaible all or
part of the compensation withheld while such contractual obligations were
suspended, and (ii) reinstate in whole or in part any of its obligations which
were suspended.
-4-
<PAGE>
(c) If Schaible is removed and/or permanently
prohibited from participating in the conduct of the Bank's affairs by an order
issued under Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, as
amended, all obligations of the Bank under this Agreement shall terminate as of
the effective date of the order, but vested rights of the parties shall not be
affected.
(d) If the Bank is in default (as defined in Section
3(x)(1) of the Federal Deposit Insurance Act, as amended), all obligations under
this Agreement shall terminate as of the date of default, but this paragraph
shall not affect any vested rights of the parties.
(e) All obligations under this Agreement shall be
terminated, except to the extent determined that continuation of this Agreement
is necessary for the continued operation of the Bank, (i) by the Director of the
Office of Thrift Supervision (the "Director") or his or her designee, at the
time the Federal Deposit Insurance Corporation or Resolution Trust Company
enters into an agreement to provide assistance to or on behalf of the Bank under
the authority contained in Section 13(c) of the Federal Deposit Insurance Act,
as amended, or (ii) by the Director or his or her designee at the time the
Director or his or her designee approves a supervisory merger to resolve
problems related to operation of the Bank or when the Bank is determined by the
Director or his or her designee to be in an unsafe or unsound condition. Any
rights of the parties that have already vested, however, shall not be affected
by any termination hereunder.
(f) Schaible may terminate his services hereunder
upon 30 days' prior written notice to the Bank given after the date hereof,
after which this Agreement (other than Section 7(h) hereof) shall terminate.
(g) Notwithstanding any other provisions of this
Agreement or of any other agreement, contract, or understanding heretofore or
hereafter entered into by Schaible with Shelton Bancorp, Shelton, Webster or the
Bank (the "Other Agreements"), and notwithstanding any formal or informal plan
or other arrangement heretofore or hereafter adopted by Shelton Bancorp,
Shelton, Webster or the Bank for the direct or indirect provision of
compensation to Schaible (including groups or classes of participants or
beneficiaries of which Schaible is a member), whether or not such compensation
is deferred, is in cash, or is in the form of a benefit to or for Schaible (a
"Benefit Plan"), Schaible shall not have any right to receive any payment or
other benefit under this Agreement, any Other Agreement, or any Benefit Plan if
such payment or benefit, taking into account all other payments or benefits to
or for Schaible under this Agreement, all Other Agreements, and all Benefit
Plans, would cause any such payment to Schaible to be considered a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code (a "Parachute
Payment"). In the event that the receipt of any such payment or benefit under
this Agreement, any Other Agreement, or any Benefit Plan would cause Schaible to
be considered to have received a Parachute Payment, then Schaible shall have the
right, in Schaible's sole
-5-
<PAGE>
discretion, to designate those payments or benefits under this Agreement, any
Other Agreements, and/or any Benefit Plans, which should be reduced or
eliminated so as to avoid having the payment to Schaible under this Agreement be
deemed to be a Parachute Payment. In the event that there is a dispute between
the parties as to whether a reduction in such payments to Schaible is required
to prevent such payment from constituting a Parachute Payment, the parties agree
that they shall be bound by the determination of such matter by a partner
resident in Hartford or Stamford, Connecticut of one of the following accounting
firms selected by the Bank (or such other firm as shall be mutually agreed upon
by the parties): Coopers & Lybrand LLP; Deloitte & Touche LLP; Ernst & Young
LLP; or Price Waterhouse LLP. In the event that Schaible would otherwise be
deemed to have received an amount that would constitute a Parachute Payment, the
amount paid to him that exceeds the maximum amount permissible under this
Section 7(g) shall be treated as a loan to him and shall be repaid, with
interest, to the extent necessary to reduce the amount paid to the maximum
permissible amount. The interest rate and other terms of any such loan shall
conform to terms that would be applicable to loans of similar unsecured type
made by the Bank to third parties and to all regulatory requirements. Any such
loan shall be repaid in full six months after the date on which the Bank
notifies Schaible that a loan relationship exists, and may be repaid by Schaible
without prepayment penalty at any time during such six month period.
(h) During the term of this Agreement and for three
years thereafter, Schaible agrees to maintain the confidentiality of, and not to
use, any non-public information which he acquired during his employment or
consulting services concerning Webster, the Bank, their respective subsidiaries
or predecessors, or any director, officer, employee or agent of the aforesaid
entities, including any information as to the customers, business or personnel
practices of such entities. This provision shall survive the termination of this
Agreement.
8. No Assignments. This Agreement is personal to each of the
parties hereto. No party may assign or delegate any rights or obligations
hereunder without first obtaining the written consent of the other party hereto.
However, in the event of the death of Schaible all rights to receive payments
hereunder shall become rights of Schaible's estate.
9. Amendments or Additions. No amendments or additions to this
Agreement shall be binding unless in writing and signed by all parties hereto.
10. Section Headings. The section headings used in this
Agreement are included solely for convenience and shall not affect, or be used
in connection with, the interpretation of this Agreement.
11. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.
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<PAGE>
12. Governing Law. This Agreement shall be governed by the
laws of the United States to the extent applicable and otherwise by the laws of
the State of Connecticut, excluding the choice of law rules thereof.
Attest: WEBSTER BANK
By
- -------------------------- ---------------------------
(Secretary) Chief Executive Officer
EMPLOYEE/CONSULTANT
------------------------------
Kenneth E. Schaible
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<PAGE>
Exhibit E
CONSULTING AGREEMENT
AGREEMENT, dated as of ______, 199___, between WEBSTER
BANK (the "Bank") and WILLIAM C. NIMONS (the "Consultant").
WHEREAS, the Bank desires to obtain the consulting services of
the Consultant as an independent contractor for at least eight months to assist
in the transition and integration of Shelton Savings Bank ("Shelton") into the
Bank;
WHEREAS, the Board of Directors of the Bank has approved and
authorized the entry into this Agreement with the Consultant;
WHEREAS, the Consultant has heretofore entered into an
Employment Agreement dated August 29, 1994 (the "Prior Agreement") with Shelton
Bancorp, Inc. ("Shelton Bancorp") and Shelton, which the parties desire to
terminate, supersede and replace by entering into this Agreement; and
WHEREAS, the parties desire to enter into this Agreement to
set forth the terms and conditions for the consulting relationship of the
Consultant with the Bank, to terminate the Prior Agreement and to provide for
the payment of severance to the Consultant relating to the Prior Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. Services.
(a) The Prior Agreement is hereby terminated,
replaced and superseded and the Prior Agreement shall be of no further force or
effect after the date of this Agreement. The Consultant's employment by Shelton
and Shelton Bancorp shall terminate upon the execution of this Agreement.
(b) The Consultant shall serve as an independent
contractor consultant to the Bank for an eight-month period from the date
hereof. The Consultant shall perform consulting services for up to 20 hours per
week as and when reasonably requested by the Executive Vice President-Chief
Operating Officer of the Bank. The Consultant shall render advisory and
consulting services to the Bank of the type customarily performed by persons
serving in similar consulting capacities, consistent with the knowledge and
experience possessed by the Consultant. The Consultant's services shall include
assisting the Bank in accomplishing an efficient and orderly transition and
integration of Shelton's assets, business, operations, customers and employees
with those of the Bank, including the maintenance and expansion of existing
depositor and borrowing relationships especially in the areas
<PAGE>
previously served by Shelton and consulting services to the Bank with respect to
credit and loan administration and related matters. The Consultant shall perform
his services at the Bank's home office or at such other locations not more than
35 miles from the Bank's home office as the Bank shall designate. The Consultant
shall have sole control of the manner and means of performing his services under
this Agreement and shall complete such services in accordance with his own means
and methods of work. Unless the parties otherwise agree, the Consultant's
services with the Bank shall terminate at the end of the term of this Agreement.
(c) During the term of this Agreement, the Consultant
also shall serve as a member of the Advisory Board created by the Bank in
connection with the acquisition of Shelton Bancorp, without additional
compensation.
(d) The parties acknowledge and agree that the
Consultant's fulfillment of his obligations to the Bank hereunder will not
require the Consultant's full business time. In the time that the Consultant is
not providing services to the Bank, he may accept other employment or
engagements and may participate in any other activities without providing notice
to the Bank or seeking the Bank's approval thereof; provided, however, that such
other employment, engagements and activities (i) do not materially interfere
with his ability to perform the consulting services contemplated hereby, (ii) do
not involve any solicitation of services of any employees of the Bank or
solicitation of banking business from any customers of the Bank, (iii) do not
involve any violation of Section 7(d) hereof, (iv) would not otherwise be
injurious to the business of the Bank, and (v) are disclosed in advance to the
Bank.
2. Compensation. The Bank agrees to pay the Consultant during
the term of this Agreement compensation at the rate of $7,500 per month.
3. Prior Agreement Termination. In consideration of the
Consultant's agreement to terminate the Prior Agreement and his execution of
this Agreement, the Bank shall pay to the Consultant for prior services rendered
upon his execution of this Agreement an amount equal to three times the
Consultant's average annual compensation that was paid by Shelton Bancorp and
Shelton and was includible in the Consultant's gross income for federal income
tax purposes, as reflected on his Forms W-2, for the calendar years ended
December 31, 1990, 1991, 1992, 1993, and 1994, reduced by $1.00.
4. Participation in Retirement and Employee Benefit Plans. The
Consultant shall not be entitled to participate in any plan of the Bank relating
to stock options, stock purchases, pension, thrift, profit sharing, employee
stock ownership, group life insurance, medical coverage, disability insurance,
education, or other retirement or employee benefits that the Bank has adopted or
may adopt for the benefit of its employees, except that, as a result of his
termination of employment, the
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<PAGE>
Consultant will be entitled to continuation coverage (COBRA), at the
Consultant's expense, under the health and dental insurance plan maintained by
the Bank.
5. Term. The term of this Agreement shall be for eight months
commencing on the date hereof, unless earlier terminated pursuant to Section 7
hereof. The parties by mutual agreement may extend the term of this Agreement.
6. Standards. The Consultant shall perform his duties and
responsibilities under this Agreement to the best of his ability and using his
best efforts, in a diligent, timely, professional and workmanlike manner, in
accordance with performance standards generally prevailing in the savings
institutions industry.
7. Termination of Service.
(a) The Bank may terminate the Consultant's services
hereunder at any time. The Consultant shall have no right to receive
compensation or other benefits for any period after termination for cause by the
Bank or voluntary termination by the Consultant. The term "termination for
cause" shall mean termination because of the Consultant's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule, or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order, or material breach of any provision of this
Agreement. In determining incompetence, the acts or omissions shall be measured
against standards generally prevailing in the savings institutions industry.
Following actual or constructive involuntary termination of the Consultant's
services without cause, the Bank shall be obligated to continue to pay to the
Consultant his compensation under Section 2 above for the remaining term of this
Agreement. The Consultant shall have the obligation to mitigate damages
hereunder in the event of a termination without cause by seeking other
alternative employment or consulting engagements for which he is reasonably
qualified. The amounts payable to the Consultant hereunder following termination
without cause shall be reduced by amounts received by the Consultant from such
other employment or engagements following such termination to the extent such
other employment or engagements, individually or in the aggregate, involve
services of more than 20 hours per week.
(b) The Consultant may terminate his services
hereunder upon 15 days' prior written notice to the Bank given after the date
hereof, after which this Agreement (other than Section 7(d) hereof) shall
terminate.
(c) Notwithstanding any other provisions of this
Agreement or of any other agreement, contract, or understanding heretofore or
hereafter entered into by the Consultant with Shelton Bancorp, Shelton, Webster
or the Bank (the "Other Agreements"), and notwithstanding any formal or informal
plan or other arrangement heretofore or hereafter adopted by Shelton Bancorp,
Shelton, Webster or the Bank for the direct or indirect provision of
compensation to the Consultant
-3-
<PAGE>
(including groups or classes of participants or beneficiaries of which the
Consultant is a member), whether or not such compensation is deferred, is in
cash, or is in the form of a benefit to or for the Consultant (a "Benefit
Plan"), the Consultant shall not have any right to receive any payment or other
benefit under this Agreement, any Other Agreement, or any Benefit Plan if such
payment or benefit, taking into account all other payments or benefits to or for
the Consultant under this Agreement, all Other Agreements, and all Benefit
Plans, would cause any such payment to the Consultant to be considered a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code (a
"Parachute Payment"). In the event that the receipt of any such payment or
benefit under this Agreement, any Other Agreement, or any Benefit Plan would
cause the Consultant to be considered to have received a Parachute Payment, then
the Consultant shall have the right, in the Consultant's sole discretion, to
designate those payments or benefits under this Agreement, any Other Agreements,
and/or any Benefit Plans, which should be reduced or eliminated so as to avoid
having the payment to the Consultant under this Agreement be deemed to be a
Parachute Payment. In the event that there is a dispute between the parties as
to whether a reduction in such payments to the Consultant is required to prevent
such payment from constituting a Parachute Payment, the parties agree that they
shall be bound by the determination of such matter by a partner resident in
Hartford or Stamford, Connecticut of one of the following accounting firms
selected by the Bank (or such other firm as shall be mutually agreed upon by the
parties): Coopers & Lybrand LLP; Deloitte & Touche LLP; Ernst & Young LLP; or
Price Waterhouse LLP. In the event that the Consultant would otherwise be deemed
to have received an amount that would constitute a Parachute Payment, the amount
paid to him that exceeds the maximum amount permissible under this Section 7(c)
shall be treated as a loan to him and shall be repaid, with interest, to the
extent necessary to reduce the amount paid to the maximum permissible amount.
The interest rate and other terms of any such loan shall conform to terms that
would be applicable to loans of similar unsecured type made by the Bank to third
parties and to all regulatory requirements. Any such loan shall be repaid in
full six months after the date on which the Bank notifies the Consultant that a
loan relationship exists, and may be repaid by the Consultant without prepayment
penalty at any time during such six month period.
(d) During the term of this Agreement and for three
years thereafter, the Consultant agrees to maintain the confidentiality of, and
not to use, any non-public information which he acquired during his employment
or consulting services concerning Webster, the Bank, their respective
subsidiaries or predecessors, or any director, officer, employee or agent of the
aforesaid entities, including any information as to the customers, business or
personnel practices of such entities. This provision shall survive the
termination of this Agreement.
8. No Assignments. This Agreement is personal to each of the
parties hereto. No party may assign or delegate any rights or obligations
hereunder without first obtaining the written consent of the other party hereto.
However, in the
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<PAGE>
event of the death of the Consultant all rights to receive payments hereunder
shall become rights of the Consultant's estate.
9. Amendments or Additions. No amendments or additions to this
Agreement shall be binding unless in writing and signed by all parties hereto.
10. Section Headings. The section headings used in this
Agreement are included solely for convenience and shall not affect, or be used
in connection with, the interpretation of this Agreement.
11. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.
12. Governing Law. This Agreement shall be governed by the
laws of the United States to the extent applicable and otherwise by the laws of
the State of Connecticut, excluding the choice of law rules thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first above written.
Attest: WEBSTER BANK
By
- ------------------------ -----------------------------
(Secretary) Chief Executive Officer
CONSULTANT
-----------------------------
William C. Nimons
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<PAGE>
Exhibit F
CONSULTING AGREEMENT
AGREEMENT, dated as of ______ , 199___, between WEBSTER
BANK (the "Bank") and RALPH J. RODRIGUEZ (the "Consultant").
WHEREAS, the Bank desires to obtain the consulting services of
the Consultant as an independent contractor for at least eight months to assist
in the transition and integration of Shelton Savings Bank ("Shelton") into the
Bank;
WHEREAS, the Board of Directors of the Bank has approved and
authorized the entry into this Agreement with the Consultant;
WHEREAS, the Consultant has heretofore entered into an
Employment Agreement dated August 29, 1994 (the "Prior Agreement") with Shelton
Bancorp, Inc. ("Shelton Bancorp") and Shelton, which the parties desire to
terminate, supersede and replace by entering into this Agreement; and
WHEREAS, the parties desire to enter into this Agreement to
set forth the terms and conditions for the consulting relationship of the
Consultant with the Bank, to terminate the Prior Agreement and to provide for
the payment of severance to the Consultant relating to the Prior Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. Services.
(a) The Prior Agreement is hereby terminated,
replaced and superseded and the Prior Agreement shall be of no further force or
effect after the date of this Agreement. The Consultant's employment by Shelton
and Shelton Bancorp shall terminate upon the execution of this Agreement.
(b) The Consultant shall serve as an independent
contractor consultant to the Bank for an eight-month period from the date
hereof. The Consultant shall perform consulting services for up to 20 hours per
week as and when reasonably requested by the Executive Vice President-Chief
Financial Officer of the Bank. The Consultant shall render advisory and
consulting services to the Bank of the type customarily performed by persons
serving in similar consulting capacities, consistent with the knowledge and
experience possessed by the Consultant. The Consultant's services shall include
assisting the Bank in accomplishing an efficient and orderly transition and
integration of Shelton's assets, business, operations, customers and employees
with those of the Bank, including the maintenance and expansion of existing
depositor and borrowing relationships especially in the areas
<PAGE>
previously served by Shelton and consulting services to the Bank with respect to
financial reporting and related matters. The Consultant shall perform his
services at the Bank's home office or at such other locations not more than 35
miles from the Bank's home office as the Bank shall designate. The Consultant
shall have sole control of the manner and means of performing his services under
this Agreement and shall complete such services in accordance with his own means
and methods of work. Unless the parties otherwise agree, the Consultant's
services with the Bank shall terminate at the end of the term of this Agreement.
(c) During the term of this Agreement, the Consultant
also shall serve as a member of the Advisory Board created by the Bank in
connection with the acquisition of Shelton Bancorp, without additional
compensation.
(d) The parties acknowledge and agree that the
Consultant's fulfillment of his obligations to the Bank hereunder will not
require the Consultant's full business time. In the time that the Consultant is
not providing services to the Bank, he may accept other employment or
engagements and may participate in any other activities without providing notice
to the Bank or seeking the Bank's approval thereof; provided, however, that such
other employment, engagements and activities (i) do not materially interfere
with his ability to perform the consulting services contemplated hereby, (ii) do
not involve any solicitation of services of any employees of the Bank or
solicitation of banking business from any customers of the Bank, (iii) do not
involve any violation of Section 7(d) hereof, (iv) would not otherwise be
injurious to the business of the Bank, and (v) are disclosed in advance to the
Bank.
2. Compensation. The Bank agrees to pay the Consultant during
the term of this Agreement compensation at the rate of $5,000 per month.
3. Prior Agreement Termination. In consideration of the
Consultant's agreement to terminate the Prior Agreement and his execution of
this Agreement, the Bank shall pay to the Consultant for prior services rendered
upon his execution of this Agreement an amount equal to three times the
Consultant's average annual compensation that was paid by Shelton Bancorp and
Shelton and was includible in the Consultant's gross income for federal income
tax purposes, as reflected on his Forms W-2, for the calendar years ended
December 31, 1990, 1991, 1992, 1993, and 1994, reduced by $1.00.
4. Participation in Retirement and Employee Benefit Plans. The
Consultant shall not be entitled to participate in any plan of the Bank relating
to stock options, stock purchases, pension, thrift, profit sharing, employee
stock ownership, group life insurance, medical coverage, disability insurance,
education, or other retirement or employee benefits that the Bank has adopted or
may adopt for the benefit of its employees, except that, as a result of his
termination of employment, the
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<PAGE>
Consultant will be entitled to continuation coverage (COBRA), at the
Consultant's expense, under the health and dental insurance plan maintained by
the Bank.
5. Term. The term of this Agreement shall be for eight months
commencing on the date hereof, unless earlier terminated pursuant to Section 7
hereof. The parties by mutual agreement may extend the term of this Agreement.
6. Standards. The Consultant shall perform his duties and
responsibilities under this Agreement to the best of his ability and using his
best efforts, in a diligent, timely, professional and workmanlike manner, in
accordance with performance standards generally prevailing in the savings
institutions industry.
7. Termination of Service.
(a) The Bank may terminate the Consultant's services
hereunder at any time. The Consultant shall have no right to receive
compensation or other benefits for any period after termination for cause by the
Bank or voluntary termination by the Consultant. The term "termination for
cause" shall mean termination because of the Consultant's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule, or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order, or material breach of any provision of this
Agreement. In determining incompetence, the acts or omissions shall be measured
against standards generally prevailing in the savings institutions industry.
Following actual or constructive involuntary termination of the Consultant's
services without cause, the Bank shall be obligated to continue to pay to the
Consultant his compensation under Section 2 above for the remaining term of this
Agreement. The Consultant shall have the obligation to mitigate damages
hereunder in the event of a termination without cause by seeking other
alternative employment or consulting engagements for which he is reasonably
qualified. The amounts payable to the Consultant hereunder following termination
without cause shall be reduced by amounts received by the Consultant from such
other employment or engagements following such termination to the extent such
other employment or engagements, individually or in the aggregate, involve
services of more than 20 hours per week.
(b) The Consultant may terminate his services
hereunder upon 15 days' prior written notice to the Bank given after the date
hereof, after which this Agreement (other than Section 7(d) hereof) shall
terminate.
(c) Notwithstanding any other provisions of this
Agreement or of any other agreement, contract, or understanding heretofore or
hereafter entered into by the Consultant with Shelton Bancorp, Shelton, Webster
or the Bank (the "Other Agreements"), and notwithstanding any formal or informal
plan or other arrangement heretofore or hereafter adopted by Shelton Bancorp,
Shelton, Webster or the Bank for the direct or indirect provision of
compensation to the Consultant
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<PAGE>
(including groups or classes of participants or beneficiaries of which the
Consultant is a member), whether or not such compensation is deferred, is in
cash, or is in the form of a benefit to or for the Consultant (a "Benefit
Plan"), the Consultant shall not have any right to receive any payment or other
benefit under this Agreement, any Other Agreement, or any Benefit Plan if such
payment or benefit, taking into account all other payments or benefits to or for
the Consultant under this Agreement, all Other Agreements, and all Benefit
Plans, would cause any such payment to the Consultant to be considered a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code (a
"Parachute Payment"). In the event that the receipt of any such payment or
benefit under this Agreement, any Other Agreement, or any Benefit Plan would
cause the Consultant to be considered to have received a Parachute Payment, then
the Consultant shall have the right, in the Consultant's sole discretion, to
designate those payments or benefits under this Agreement, any Other Agreements,
and/or any Benefit Plans, which should be reduced or eliminated so as to avoid
having the payment to the Consultant under this Agreement be deemed to be a
Parachute Payment. In the event that there is a dispute between the parties as
to whether a reduction in such payments to the Consultant is required to prevent
such payment from constituting a Parachute Payment, the parties agree that they
shall be bound by the determination of such matter by a partner resident in
Hartford or Stamford, Connecticut of one of the following accounting firms
selected by the Bank (or such other firm as shall be mutually agreed upon by the
parties): Coopers & Lybrand LLP; Deloitte & Touche LLP; Ernst & Young LLP; or
Price Waterhouse LLP. In the event that the Consultant would otherwise be deemed
to have received an amount that would constitute a Parachute Payment, the amount
paid to him that exceeds the maximum amount permissible under this Section 7(c)
shall be treated as a loan to him and shall be repaid, with interest, to the
extent necessary to reduce the amount paid to the maximum permissible amount.
The interest rate and other terms of any such loan shall conform to terms that
would be applicable to loans of similar unsecured type made by the Bank to third
parties and to all regulatory requirements. Any such loan shall be repaid in
full six months after the date on which the Bank notifies the Consultant that a
loan relationship exists, and may be repaid by the Consultant without prepayment
penalty at any time during such six month period.
(d) During the term of this Agreement and for three
years thereafter, the Consultant agrees to maintain the confidentiality of, and
not to use, any non-public information which he acquired during his employment
or consulting services concerning Webster, the Bank, their respective
subsidiaries or predecessors, or any director, officer, employee or agent of the
aforesaid entities, including any information as to the customers, business or
personnel practices of such entities. This provision shall survive the
termination of this Agreement.
8. No Assignments. This Agreement is personal to each of the
parties hereto. No party may assign or delegate any rights or obligations
hereunder without first obtaining the written consent of the other party hereto.
However, in the
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<PAGE>
event of the death of the Consultant all rights to receive payments hereunder
shall become rights of the Consultant's estate.
9. Amendments or Additions. No amendments or additions to this
Agreement shall be binding unless in writing and signed by all parties hereto.
10. Section Headings. The section headings used in this
Agreement are included solely for convenience and shall not affect, or be used
in connection with, the interpretation of this Agreement.
11. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.
12. Governing Law. This Agreement shall be governed by the
laws of the United States to the extent applicable and otherwise by the laws of
the State of Connecticut, excluding the choice of law rules thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first above written.
Attest: WEBSTER BANK
By
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(Secretary) Chief Executive Officer
CONSULTANT
------------------------------
Ralph J. Rodriguez
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<PAGE>
Exhibit G
EXECUTIVE OFFICERS AGREEMENT
This EXECUTIVE OFFICERS AGREEMENT, dated as of June 20, 1995,
is entered into by an among Webster Financial Corporation ("Webster"), a
Delaware corporation, Shelton Bancorp, Inc. ("Shelton"), a Delaware corporation,
and Messrs. Kenneth E. Schaible, William C. Nimons and Ralph J. Rodriguez, who
are executive officers of Shelton (collectively, the "Executive Officers" or
individually, an "Executive Officer").
WHEREAS, Webster, Webster Acquisition Corp., a wholly-owned
subsidiary of Webster ("Merger Sub"), and Shelton plan to enter into an
Agreement and Plan of Merger (the "Agreement"), subsequent to the execution of
this Agreement, which provides for, among other things, the merger of Merger Sub
with and into Shelton, in a stock-for-stock transaction pursuant to which
Shelton will become a wholly-owned subsidiary of Webster (the "Merger"); and
WHEREAS, in order to induce Webster to enter in the Agreement
and to enter into employment or consulting agreements, as applicable, upon the
terms set forth in the Agreement with the Executive Officers upon consummation
of the Merger and to enable Shelton to make certain representations contained in
the Agreement relating to compliance with Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements set forth herein and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. Modification of Existing Agreements. Notwithstanding any other
provision of any employment agreement between the Executive Officer and Shelton
or any subsidiary of Shelton (an "Employment Agreement"), or of any other
agreement, contract, or understanding heretofore or hereafter entered into by
the Executive Officer with Shelton or any such subsidiary (the "Other
Agreements"), and notwithstanding any formal or informal plan or other
arrangement heretofore or hereafter adopted by Shelton or any such subsidiary
for the direct or indirect provision of compensation to the Executive Officer
(including groups or classes of participants or beneficiaries of which the
Executive Officer is a member), whether or not such compensation is deferred, is
in cash, or is in the form of a benefit to or for the
<PAGE>
Executive Officer (a "Benefit Plan"), the Executive Officer shall not have any
right to receive any payment or other benefit under the Employment Agreement,
any Other Agreement, or any Benefit Plan if such payment or benefit, taking into
account all other payments or benefits to or for the Executive Officer under the
Employment Agreement, all Other Agreements, and all Benefit Plans, would cause
any payment to the Executive Officer to be considered a "parachute payment"
within the meaning of Section 280G(b)(2) of the Code (a "Parachute Payment"). In
the event that the receipt of any such payment or benefit under the Employment
Agreement, any Other Agreement, or any Benefit Plan would cause the Executive
Officer to be considered to have received a Parachute Payment, then the
Executive Officer shall have the right, in the Executive Officer's sole
discretion, to designate those payments or benefits under the Employment
Agreement, any Other Agreements, or any Benefit Plans, which should be reduced
or eliminated so as to avoid having the payment to the Executive Officer be
deemed to be a Parachute Payment. Kenneth E. Schaible agrees to execute and
deliver at the closing under the Agreement an employment and consulting
agreement in the form of the agreement attached as Exhibit D to the Agreement.
William C. Nimons and Ralph J. Rodriguez respectively agree to execute and
deliver at the closing under the Agreement a consulting agreement in the forms
of the agreements attached as Exhibits E and F to the Agreement.
2. Termination. The parties agree and intend that this Executive
Officers Agreement be a valid and binding agreement enforceable against the
parties hereto. This Executive Officers Agreement may be terminated at any time
prior to the consummation of the Merger by mutual written consent of Webster,
Shelton and the affected Executive Officer and shall be automatically terminated
in the event that the Agreement is terminated in accordance with its terms.
3. Notices. Notices may be provided to Webster and the Executive
Officers in the manner specified in the Agreement, with all notices to the
Executive Officers being provided to them at Shelton in the manner specified in
such section.
4. Counterparts. This Executive Officers Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same and
each of which shall be deemed an original.
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<PAGE>
IN WITNESS WHEREOF, Webster and Shelton, by their duly
authorized officers, and each of the Executive Officers have caused this
Executive Officers Agreement to be executed as of the day and year first above
written.
WEBSTER FINANCIAL CORPORATION SHELTON BANCORP, INC.
By: By:
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James C. Smith Kenneth E. Schaible
Chairman, President and Chief President and Chief
Executive Officer Executive Officer
EXECUTIVE OFFICERS
----------------------------
Kenneth E. Schaible
----------------------------
William C. Nimons
-----------------------------
Ralph J. Rodriguez
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