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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): October 1, 1995
WEBSTER FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-15213 06-1187536
- - ---------------------------- ------------ -------------------
(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
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 5 Other Events
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On October 1, 1995, Webster Financial Corporation ("Webster"), through its
subsidiary, Webster Bank,* entered into a Purchase and Assumption Agreement (the
"Shawmut Agreement") with Shawmut Bank Connecticut, National Association
("Shawmut"), as part of the Fleet/Shawmut Divestiture (as defined), to acquire
20 Shawmut branch banking offices in the greater Hartford, Connecticut banking
market (the "Hartford Banking Market"), including deposits and loans at or
allocated to such offices (the "Shawmut Transaction"). Webster anticipates that
the Shawmut Transaction will be completed during the first quarter of 1996, but
this can not be assured. In connection with the Shawmut Transaction, Webster
received an opinion from Merrill Lynch & Co., its financial advisor, to the
effect that the proposed consideration to be paid or delivered in the manner
contemplated in the Shawmut Transaction is fair to Webster from a financial
point of view. A copy of such opinion is attached hereto as Annex A.
THE SHAWMUT TRANSACTION
Acquired Branches, Deposits and Loans
Upon consummation of the Shawmut Transaction, Webster Bank will acquire 20
Shawmut Branches in the Hartford Banking Market, which at June 30, 1995,
included approximately $1.0 billion of deposit liabilities and $683 million of
loans at or allocated to the Shawmut Branches. The Shawmut Branches are located
in the following Connecticut cities or towns in the Hartford Banking Market:
Berlin, Bristol, Cromwell, East Hartford, Elmwood, Enfield, Farmington,
Glastonbury, Hartford (three offices), Manchester, Middletown, New Britain,
Newington, Simsbury, Southington, West Hartford, Wethersfield and Windsor.
Webster Bank will be acquiring consumer time deposits, savings and money market
deposit accounts, NOW and checking accounts, and business checking and deposit
accounts. The loans to be acquired will consist of first mortgage residential
loans, commercial real estate loans, commercial and industrial loans, home
equity loans, and other consumer installment loans. Of the 20 Shawmut Branches,
nine offices are owned and 11 offices are leased. Webster Bank also will
sublease office space at One Constitution Plaza in downtown Hartford as
headquarters for its commercial banking operations.
Strategic Rationale
The Shawmut Transaction will significantly increase Webster Bank's
commercial and retail banking activities in the Hartford Banking Market. After
giving effect to the Shawmut Transaction, Webster Bank will be the second
largest
_______________
* References herein to "Webster Bank" reflect the merger and renaming of
Webster's wholly-owned subsidiary banks, First Federal Bank, a federal savings
bank ("First Federal") and Bristol Savings Bank, which merger and renaming will
occur immediately prior to the Merger with Shelton Savings Bank, Shelton,
Connecticut.
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independent bank in Connecticut and the largest Connecticut-based bank in the
Hartford Banking Market, based on total deposit market share. Webster Bank will
have banking offices extending from the Massachusetts border through central
Connecticut to the Connecticut shoreline. Over the last ten years, Webster Bank
has expanded its commercial banking operations serving small and medium sized
businesses in its market areas. The Shawmut Transaction will enhance Webster
Bank's ability to provide a broad line of deposit, cash management and other
credit services and a full range of loan services for commercial banking
customers with credit needs up to $10 million.
The Shawmut Transaction will expand Webster Bank's lending capacity and
increase its emphasis on commercial and industrial loans, and commercial real
estate loans to small and medium sized businesses as compared to its traditional
emphasis on retail banking. After the Shawmut Transaction, the amount of
commercial loans in Webster Bank's loan portfolio will increase from
approximately 14% to 19%. Residential first mortgage loans will decrease from
approximately 79% to 74% of Webster Bank's loan portfolio. Consumer loans,
including home equity loans, will remain at approximately 7% of Webster Bank's
loan portfolio.
Webster expects that the Shawmut Transaction, including the Capital
Financing (as defined), will have an accretive effect on its net income, while
reducing tangible book value per share because of the tax deductible core
deposit intangible. After giving effect to the Shawmut Transaction and to the
Capital Financing, Webster Bank's capital is expected at the closing date to
satisfy the regulatory capital ratios required for a "well-capitalized" bank.
See "SELECTED SIGNIFICANT STATISTICAL DATA -- PRO FORMA COMBINED" below.
Background of the Acquisition
As of February 20, 1995, Shawmut National Corporation and Fleet
Financial Group, Inc. ("Fleet") (hereinafter jointly referred to as
"Fleet/Shawmut") entered into an Agreement and Plan of Merger (the
"Fleet/Shawmut Merger"). As a condition of regulatory approval of the
Fleet/Shawmut Merger, Fleet/Shawmut are required to have their subsidiary banks
divest certain branches in Connecticut, Massachusetts, New Hampshire and Rhode
Island to avoid anticompetitive effects that could be caused by the
Fleet/Shawmut Merger (the "Fleet/Shawmut Divestiture"). In August 1995,
Fleet/Shawmut announced guidelines that were designed to foster competition,
preserve jobs and continue to meet customer needs in the states where
divestitures are required. Fleet/Shawmut then solicited preliminary bids from
potential acquirors with respect to the branches to be divested.
In early September 1995, Webster Bank, along with Eagle Federal Savings
Bank, Bristol, Connecticut ("Eagle"), submitted a preliminary joint bid for all
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25 branch banking offices of the Fleet/Shawmut subsidiary banks to be divested
in the Hartford Banking Market. On September 26, 1996, a formal joint bid was
submitted by Webster Bank and Eagle. After extensive negotiations, Fleet/Shawmut
selected Webster Bank and Eagle to acquire all 25 branch banking offices being
divested in the Hartford Banking Market. On October 1, 1995, Webster Bank and
Eagle executed separate purchase and assumption agreements for 20 and five,
respectively, of these offices with Fleet/Shawmut subsidiary banks, which
agreements are required to be consummated concurrently.
Purchase Price
Under the terms of the Shawmut Agreement, Webster Bank will acquire 20
Shawmut Branches for the following purchase price:
(a) Webster Bank will make a cash payment equal to (i) 5.1% of
the average daily balances (including accrued interest) of
assumed deposit liabilities at or allocated to the Shawmut
Branches for the period commencing either 30 days or seven
days prior to the third business day prior to the closing
date, whichever amount is lower, subject to adjustment, as
described below in the last paragraph, less (ii) $2 million;
(b) Webster Bank will pay cash for the stated value of the
real property of the nine owned Shawmut Branches; estimated
payment of approximately $4 million;
(c) Webster Bank will pay cash for the net book value of the
personalty property (excluding automatic teller machines) at
the 20 Shawmut Branches, as of the closing date, based on this
book value; plus the greater of $5,000 or net book value, for
each of the automatic teller machines; estimated payment of
approximately $4 million;
(d) Webster Bank will swap two of its branch banking offices
and related deposits (the "Webster Branches") located in
Fairfield and Stamford, Connecticut to Shawmut (the "Branch
Swap"); Webster Bank to be paid the net book value of the real
and personalty properties (other than automated teller
machines not being transferred) at the two Webster Branches,
but no separate deposit premium;
(e) Webster will issue a five year nontransferable warrant to
Fleet for 300,000 shares of Webster Stock, with an exercise
price of $32.50 per share, subject to certain antidilution
adjustments (see "THE WARRANT" below); and
(f) Webster Bank will agree to make a contingent payment (the
"Contingent Payment") in the event of a Change of Control (as
defined below) of Webster within five years of the closing
date in which Fleet would be entitled to receive a cash
payment from First Federal equal
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to (i) the excess of the offer price per share of Webster
Stock over (ii) $32.50, multiplied by (iii) 150,000 (see
"CONTINGENT PAYMENT" below).
At June 30, 1995, there were approximately $1 billion in deposit
liabilities at or allocated to the 20 Shawmut Branches and $177 million in
deposit liabilities at the two Webster Branches. Webster Bank will receive a
cash payment from Shawmut for the net deposit liabilities at closing date, less
(i) the aggregate cash payments described in (a), (b) and (c) above, less (ii)
the unpaid principal balances (based on the general ledger balances), plus
accrued interest, on approximately $683 million in loans to be acquired that are
at or allocated to the Shawmut Branches, plus (iii) the net book value of the
real and personalty properties at the two Webster Branches as described in (d)
above.
Pursuant to purchase and assumption agreements between Eagle
and Fleet/Shawmut subsidiary banks (the "Eagle Purchase Agreements") and subject
to all required regulatory approvals, Eagle will acquire five branch banking
offices from the subsidiary banks, with estimates of approximately $290 million
in deposit liabilities and $49 million in loans to be acquired. The cash deposit
premium to be paid to the Fleet/Shawmut subsidiary banks by Webster Bank and
Eagle combined is required to average 5.5% of the total amount of the deposit
liabilities to be acquired by both Webster Bank and Eagle combined. The 5.1%
deposit premium referred to above to be paid by Webster Bank will be increased
or decreased so as to achieve the 5.5% average deposit premium with Eagle on a
combined basis.
The Warrant
At the closing of the Shawmut Transaction, Webster will issue to Fleet
a warrant for 300,000 shares of Webster Stock (the "Warrant"). The exercise
price will be $32.50 per share, subject to customary pro rata antidilution
adjustments in the event of an issuance of Webster Stock (or securities
convertible into or exercisable for Webster Stock) at a price per share of less
than $32.50. Such adjustments will not be applicable as to Webster Stock issued
in the Capital Financing, in the Merger involving Shelton, pursuant to
employee/director benefit plans of Webster, upon the conversion of Webster's
Series B convertible preferred stock, or pursuant to Webster's dividend
reinvestment plan. The Warrant may be exercised in whole, but not in part,
within five years of the date of issuance, but not within the first two years
from the closing date, unless a Change of Control of Webster has occurred, as
defined below. The Warrant may not be sold or otherwise transferred by Fleet.
The $32.50 exercise price represents a premium of 25% over the approximately
$26.00 market price of the Webster Stock prevailing at the time of the
negotiation of the Shawmut Transaction.
As defined in the Warrant, a "Change of Control" will be deemed to have
occurred in the event that any person or company: (i) acquires voting rights as
to more than 25% of the outstanding Webster Stock or (ii) executes a definitive
merger or other acquisition agreement with Webster. However, no Change in
Control will
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be deemed to have occurred, if the directors of Webster serving prior to such
acquisition of Webster Stock or execution of such definitive agreement (or
successor directors selected by such continuing directors and unaffiliated with
such acquiror) will continue to constitute at least 50% of the parent holding
company board of directors after such acquisition.
In the event that a Change of Control of Webster is deemed to have
occurred, Fleet would have the right to sell the Warrant to Webster (the "Put").
The price of the Put would be an amount equal to the number of shares issuable
under the Warrant, multiplied by (i) the cash price for the Webster Stock set
forth in the definitive agreement relating to the Change of Control transaction
(or, in the case of a stock for stock transaction, an amount equal to the five
day trailing average closing price of the acquiror's stock following the public
announcement of the transaction, multiplied by the exchange ratio), less (ii)
the then exercise price per share of the shares issuable under the Warrant. The
Put, however, would not be available if the Change of Control transaction would
be accounted for as a pooling of interests and Webster's independent
accountants, within ten business days of the exercise of the Put, issue an
opinion indicating that the exercise of the Put would result in the inability to
account for the Change of Control transaction as a pooling of interests. If
Fleet disagrees with such accounting opinion, Webster, at its expense, will
promptly submit the matter to the accounting staff of the Securities and
Exchange Commission ("SEC") for an interpretation which will be controlling.
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The Standstill Agreement
Webster and Fleet also will enter into a standstill agreement at the
time of the closing of the Shawmut Transaction (the "Standstill Agreement").
Under the Standstill Agreement, for a period of five years, Fleet will (a) vote
all shares of Webster Stock it holds (including shares obtained upon exercise of
the Warrant) on all matters (including the election of directors) as recommended
by the Webster Board of Directors and (b) will not initiate a tender offer for
shares of Webster Stock or participate in a publicly announced tender offer for
Webster that is opposed by the Webster Board of Directors. However, if during
such five year period a bona fide third party announces or makes an unsolicited
offer to acquire more than 25% of the Webster Stock, that is not solicited by
the Webster Board of Directors, Webster will permit Fleet to make an acquisition
proposal to the Webster Board of Directors or release Fleet from the
restrictions set forth in the Standstill Agreement. Fleet also has agreed that
it will not sell the shares of Webster Stock issued upon exercise of the Warrant
in a private sale transaction (i) to any person as to whom Webster has advised
Fleet has filed a Form 13-D or 13-G under the Exchange Act as to beneficial
ownership of more than 5% of the Webster Stock or (ii) to any person whom Fleet
knows or who confirms to Fleet that such person beneficially owns, or would
beneficially own upon such purchase, more than 4.9% of the then outstanding
Webster Stock. All voting restrictions will terminate upon Fleet's sale of the
Webster Stock issued under the Warrant or upon the execution of a definitive
agreement relating to a Change of Control of Webster, as defined in the Warrant.
Contingent Payment
Pursuant to the Shawmut Agreement, Webster Bank and Fleet will enter
into a contingent payment agreement at the time of the closing of the Shawmut
Transaction (the "Contingent Payment Agreement."). If Webster executes a
definitive agreement that would result, if completed, in a Change of Control of
Webster (as defined in the Warrant), Fleet would be entitled to a cash payment
from Webster Bank equal to 150,000 times an amount equal to (i) the cash price
per share for the Webster Stock as set forth in the definitive agreement
relating to the Change of Control transaction (or in the case of a stock for
stock transaction, the five day trailing average closing price of the acquiror's
stock following the public announcement of the transaction multiplied by the
exchange ratio, as defined in the definitive agreement relating to the Change of
Control transaction), less (ii) $32.50 (the "Contingent Payment"). The
Contingent Payment also will be due (a) within 30 days of the public
announcement of a tender offer supported by the Webster Board of Directors or
(b) upon the consummation of a tender offer that the Webster Board of Directors
has not recommended to its shareholders.
Fleet would not be entitled to receive the Contingent Payment in cash
as to any Change of Control transaction that would be accounted for as a pooling
of interests, if Fleet receives an opinion from Webster's independent
accountants, within ten business days of Fleet's written request for payment,
indicating that
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payment of the Contingent Payment would result in the inability to account for
the Change of Control transaction as a pooling of interests. In such event, the
Contingent Payment would be made, at Fleet's option, either (a) by Webster
issuing Webster Stock to Fleet immediately before the consummation of the Change
of Control transaction, having a market value equal to the cash amount of the
Contingent Payment, or (b) in cash, plus interest at the "prime rate" as
published from time to time by The Wall Street Journal, at such time as
Webster's independent accountants certify that a cash payment by Webster Bank of
the Contingent Payment would not result in the inability to treat the Change of
Control transaction as a pooling of interests method of accounting.
The Sublease Agreement
Pursuant to the Shawmut Agreement, Webster Bank and Fleet Bank,
National Association ("Fleet Bank") will enter into a sublease agreement with
respect to a total of 50,000 square feet of office space in One Constitution
Plaza in downtown Hartford (the "Sublease Agreement") at the time of the closing
of the Shawmut Transaction. The Sublease Agreement will provide that Webster
Bank will sublease office space from Fleet Bank at One Constitution Plaza until
December 31, 2003. Under the terms of the Sublease Agreement, Webster Bank will
sublease 20,000 square feet of office space commencing on the closing date, and
will add an additional 10,000 square feet on each of January 1, 1997, January 1,
1998 and January 1, 1999. The Sublease Agreement will provide that Webster Bank
will assume and pay its pro rata portion of taxes and operating expenses over
base rent, based on its sublease percentage of the total square footage leased
by Fleet Bank. Webster Bank will also be entitled to its pro rata portion of the
build-out provisions contained in the master lease agreement relating to One
Constitution Plaza.
Capital Financing
Webster intends to raise additional capital through an issuance of
equity and/or debt securities prior to the consummation of the Shawmut
Transaction ("Capital Financing") so as to assure that Webster Bank will have
sufficient capital to obtain the regulatory approvals required for the Shawmut
Transaction. Webster currently expects to raise net proceeds of approximately
$27 million through the sale of approximately 1.1 million additional shares of
Webster Stock in an underwritten public offering. The net proceeds will be
contributed by Webster as equity capital to Webster Bank in order to increase
its regulatory capital ratios, which would otherwise have decreased as a result
of its increase in size due to the Shawmut Transaction. There can be no
assurance as to the amount of capital that will be raised or the number of
shares of Webster Stock or other securities that will be issued.
Pursuant to the Shawmut Agreement, Webster has agreed to file a
registration statement with the SEC relating to the Capital Financing by
November 15, 1995, and to have the registration statement declared effective by
January 31, 1996, unless prior to such date Webster obtains a "firm commitment
underwriting
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letter" from a reputable investment banking firm as to the Capital Financing.
Webster has selected a nationally recognized investment banking firm as lead
manager for the underwritten public offering of additional shares of Webster
Stock. Webster intends to file the registration statement prior to November 15,
1995. Webster expects to have the registration statement declared effective
prior to January 31, 1996, provided that Webster has then entered into an
underwriting agreement with the investment banking firms that would underwrite
the sale of the additional shares of Webster Stock. While this cannot be
assured, Webster anticipates entering into the underwriting agreement and
commencing the public offering prior to January 31, 1996 or alternatively
receiving a firm commitment underwriting letter from the lead manager by such
date.
Shawmut could terminate the Shawmut Agreement if the Merger with
Shelton is not consummated by December 31, 1995, unless Webster obtains a
"highly confident letter" by January 15, 1996 from a reputable investment
banking firm as to Webster being able to raise the capital necessary to complete
the Shawmut Transaction. While this cannot be assured, Webster expects to obtain
such letter by January 15, 1996, if necessary. Webster has not conditioned its
obligation to complete the Shawmut Transaction upon the consummation of the
Merger with Shelton.
Effect of Shawmut Transaction on Proportion of BIF/SAIF Deposit Premiums
Webster Bank's deposits will be insured by the Federal Deposit
Insurance Corporation ("FDIC") through the Bank Insurance Fund ("BIF"). After
giving effect to the Shawmut Transaction, approximately 71% of Webster Bank's
deposits will then be assessed at BIF premium rates and only 29% of its deposits
will then be assessed at Savings Association Insurance Fund ("SAIF") premium
rates. This compares with approximately 59% BIF and 41% SAIF before the Merger
with Shelton and approximately 63% BIF and 37% SAIF after the Merger prior to
the Shawmut Transaction.
Regulatory Approvals for the Shawmut Transaction
Consummation of the Shawmut Transaction is conditioned upon the receipt
of all required regulatory approvals. An application for approval by the Office
of Thrift Supervision ("OTS") as Webster Bank's primary federal regulator, is
expected to be filed prior to November 15, 1995. Subject to completion of the
Capital Financing, Webster is not aware of any reasons why the approval of the
OTS for the Shawmut Transaction should not be received on a timely basis.
However, this cannot be assured. Webster does not anticipate the need to obtain
any other regulatory approval for the Shawmut Transaction.
In addition to the OTS regulatory approval needed to be obtained by
Webster for the Shawmut Transaction, other regulatory approvals must be received
by Fleet/Shawmut, including various bank regulatory agency approvals for the
Fleet/Shawmut Merger and Fleet/Shawmut Divestiture and no objection from the
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United States Department of Justice. Webster can provide no assurances as to
receipt of such regulatory approvals by Fleet/Shawmut.
OTS regulatory approval is required to be received by Eagle as to its
acquisition of branches from Fleet/Shawmut under the Eagle Purchase Agreements.
Such acquisition by Eagle is required to be consummated concurrently with the
Shawmut Transaction by Webster. While Webster expects that Eagle will receive
OTS regulatory approval on a timely basis, this cannot be assured.
Conditions to the Shawmut Transaction
The respective obligations of Webster and Shawmut to effect the Shawmut
Transaction are subject to various conditions, including the following: (a) the
prior consummation of the Fleet/Shawmut Merger; (b) the receipt of all required
regulatory approvals (without material conditions) to the Shawmut Transaction
and the expiration of any related regulatory waiting periods; (c) the completion
of the Capital Financing; (d) customary closing conditions, such as continued
accuracy of representations and warranties, delivery of legal opinions,
officers' certificates and transfer and assignment documents at the closing; (e)
the execution and delivery of the Warrant, the Standstill Agreement, the
Contingent Payment Agreement and the Sublease Agreement; and (f) the concurrent
consummation of the acquisition by Eagle under the Eagle Purchase Agreements.
In the event of a Change of Control of Webster (as defined in the
Warrant Agreement) prior to the closing of the Shawmut Transaction, Shawmut at
its option may terminate the Shawmut Agreement.
Conduct of Business Pending the Shawmut Transaction
The Shawmut Agreement contains various restrictions on the operations
of the branches to be sold while the Shawmut Transaction is pending. In general,
the Shawmut Agreement obligates Shawmut (and Webster Bank vis a vis the Webster
Branches) to (a) conduct its business of banking in the usual, regular and
ordinary course, consistent with past practices; (b) to use reasonable efforts
to maintain and preserve intact its relationships with branch employees, and
advantageous business relationships, including branch customers; and (c) to take
no action that would adversely affect or delay the ability of any party to
obtain any regulatory approval. Branch employees may not be transferred to any
facilities other than the branches to be acquired, except upon the request of a
branch employee.
Accounting Treatment
The Shawmut Transaction is intended to be accounted for as a "purchase"
by Webster.
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PRO FORMA COMBINED STATEMENT OF CONDITION
The following Pro Forma Combined Statement of Condition as of June 30,
1995 combines the pro forma combined statement of financial condition of Webster
and Shelton Bancorp Inc., as reflected in the Joint Proxy Statement/Prospectus
with the Shawmut assets acquired and liabilities assumed as if the Merger, the
Shawmut Transaction and the Capital Financing had occurred on June 30, 1995,
after giving effect to the Pro Forma adjustments described in the accompanying
notes.
The Pro Forma Combined Statement of Condition should be read in
conjunction with the separate historical consolidated financial statements and
notes of Webster and of Shelton incorporated by reference or appearing in the
Joint Proxy Statement/Prospectus and the Pro Forma Combined Statements of
Webster and Shelton appearing in the Joint Proxy Statement/Prospectus. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" herein. The Pro Forma Combined
Statement of Condition is not necessarily indicative of the consolidated
financial position that would have been achieved had the Merger, the Capital
Financing and the Shawmut Transaction been consummated on the date indicated.
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PRO FORMA COMBINED STATEMENT OF CONDITION
AT JUNE 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
Pro Forma Fleet Assets Purchase Pro Forma
Combined Acquired And Accounting Combined
Webster/ Liabilities And Other Webster/
Shelton Assumed Adjustments Shelton/Shawmut
----------- ------------ ------------ ------------
(In Thousands)
<S> <C> <C> <C> <C>
ASSETS
Cash and Due from Depository Institutions.......... $ 33,960 $ 304,074 $ (307,000)(b) $ 31,034
Interest-bearing Deposits.......................... 42,672 -- -- 42,672
Securities......................................... 168,583 -- -- 168,583
Mortgage-backed Securities......................... 837,367 -- (147,000)(c) 690,367
Loans Receivable, Net.............................. 1,873,375 682,777(a) (12,000)(d) 2,544,152
Accrued Interest Receivable........................ 19,534 5,000 -- 24,534
Premises and Equipment, Net........................ 36,135 8,149 4,000 (e) 48,284
Segregated Assets, Net............................. 124,319 -- -- 124,319
Other Real Estate Acquired Through Foreclosure
and In-Substance Foreclosure, Net................ 21,719 -- -- 21,719
Core Deposit Intangible............................ 5,095 -- 45,000 (f) 50,095
Prepaid Expenses and Other Assets.................. 27,649 -- -- 27,649
----------- ----------- ----------- -----------
TOTAL ASSETS.................................... $ 3,190,408 $ 1,000,000 $ (417,000) $ 3,773,408
=========== =========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits........................................... $ 2,465,291 $ 1,000,000(a) $ (277,000)(b) $ 3,188,291
Federal Home Loan Bank Advances.................... 411,505 -- (170,000)(c) 241,505
Other Borrowings................................... 43,130 -- -- 43,130
Advanced Payments by Borrowers for Taxes
and Insurance.................................... 16,273 -- -- 16,273
Accrued Expenses and Other Liabilities............. 86,659 -- 3,000 (g) 89,659
----------- ----------- ----------- -----------
Total Liabilities............................... 3,022,858 1,000,000 (444,000) 3,578,858
SHAREHOLDERS' EQUITY............................... 167,550 -- 27,000 (h) 194,550
----------- ----------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY......................................... $ 3,190,408 $ 1,000,000 $ (417,000) $ 3,773,408
=========== =========== =========== ===========
</TABLE>
The Pro Forma Combined Statement of Condition does not include results of
operations subsequent to June 30, 1995, which are expected to increase
shareholders' equity.
The Pro Forma Combined Statement of Condition has not been adjusted to reflect
any of the improvements in operating efficiencies that Webster anticipates may
occur in the future due to the Merger with Shelton or the Shawmut Transaction.
See footnotes on following page.
SELECTED SIGNIFICANT STATISTICAL DATA - PRO FORMA COMBINED
AT JUNE 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Pro Forma Combined Combined Webster/
Webster/Shelton Shelton/Shawmut
--------------- -----------------
<S> <C> <C>
Book value per common share................................. $22.33 $22.63
Tangible book value per common share........................ 21.57 16.24 (i)
Common shares outstanding (000's)........................... 6,734 7,839
Shareholders' equity to total assets........................ 5.25% 5.16%
Nonaccrual loans and OREO to total assets................... 1.87% 1.58%
Allowance for loan losses to nonaccrual loans............... 118.22% 131.82%
Allowance for loan and OREO losses to nonaccrual loans and OREO 74.82% 83.21%
</TABLE>
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Notes to Pro Forma Combined Financial Statements
(a) The weighted average interest rates at June 30, 1995 for the loans
acquired and deposits assumed in the Shawmut Transaction were 7.91% and
2.72%, respectively.
(b) As part of the Shawmut Transaction, Webster will swap two of its
Fairfield County branch banking offices (the "Branch Swap"), the effect
of which is expected to reduce cash and deposits by approximately $177
million. The weighted average interest rate at June 30, 1995 of the
deposits being swapped is 4.78%. Included below is a summary of the
projected effect on cash of the Branch Swap, the effect of adjustments
to cash for estimated run-off of assumed deposits of $100 million and
the acquired loan repayments and prepayments of principal balances of
$15 million. Such deposit run-off is based on actual activity from July
1, 1995 to September 30, 1995 and projections up to the date of the
Shawmut Transaction closing. The amounts reflected as loan repayments
and prepayments of principal are primarily estimates of such activity
from July 1, 1995 to the date of the Shawmut Transaction closing. The
remaining $45 million projected reduction in cash represents the
estimated net impact of the Shawmut Transaction, Capital Financing and
other adjustments as described in footnote (b) below.
(In thousands)
Branch Swap....................................... $ (177,000)
Projected deposit run-off......................... (100,000)
------------
Total cash adjustments related to deposits...... (277,000)
------------
Projected loan prepayments........................ 15,000
Net cash reduction................................ (45,000)
------------
Total adjustments to Cash....................... $ (307,000)
============
(c) Webster expects to sell approximately $147 million of available for
sale mortgage-backed securities with a weighted average interest rate
at June 30, 1995 of approximately 7.20% and use excess cash to payoff
approximately $170 million of outstanding Federal Home Loan Bank
advances with a weighted average interest rate at June 30, 1995 of
approximately 6.20%. Such transactions will assist Webster Bank to
continue as a "well-capitalized" bank for regulatory capital ratio
purposes after giving effect to the Shawmut Transaction. Also, see
Capital Financing, as described in footnote (h) below.
(d) Purchase accounting and other adjustments related to the acquired loan
portfolio reflect additional loan loss reserves, projected repayments
and prepayments of principal balances offset by mark to market premium
adjustments.
(e) The stated book value of premises and equipment acquired estimated at
$8.1 million approximates market value. Webster expects to purchase
approximately $4 million of additional data processing and other
equipment.
(f) Represents a tax deductible core deposit intangible estimated at
approximately $45 million based on $900 million of deposit liabilities
assumed (after the projected deposit run-off).
(g) Includes estimated transaction costs of approximately $3 million
(principally financial advisory and other professional fees and
computer conversion costs).
13
<PAGE>
(h) In the Capital Financing, Webster expects to raise approximately $27
million in net shareholders' equity in an underwritten public offering
of additional shares of Webster Stock. On this basis and using a market
price of $26.25 per share of Webster Stock (the closing price of
Webster Stock on the Nasdaq National Market on September 29, 1995,
which was the last business day immediately preceding the announcement
of the Shawmut Transaction), Webster would issue approximately 1.1
million shares of Webster Stock in the Capital Financing. There can be
no assurance that the Capital Financing will be consummated or as to
the price per share of the additional shares of Webster Stock to be
issued.
(In thousands)
Estimated common equity raised...................... $ 29,000
Estimated expenses (including underwriting discount)
related to the sale of common equity............... (2,000)
------------
Estimated net proceeds from the sale of
common equity.................................... $ 27,000
============
(i) On a Webster/Shelton/Shawmut pro forma combined basis, the tangible
book value per share is computed by subtracting the tax deductible core
deposit intangible estimated at approximately $50 million from common
shareholders' equity estimated at approximately $177 million, divided
by the common shares outstanding estimated at approximately 7.8 million
shares.
PRO FORMA COMBINED SUMMARY
After giving effect to both the Merger with Shelton and the Shawmut
Transaction, Webster at June 30, 1995 would have pro forma combined total assets
of approximately $3.8 billion. Webster Bank would then be the second largest
independent bank in Connecticut and the largest Connecticut based bank in the
Hartford Banking Market, basd on total deposit market share. Webster's pro forma
combined loans receivable would increase as of that date from approximately $1.9
billion, after giving effect to the Merger with Shelton, to approximately $2.5
billion after also giving effect to the Shawmut Transaction. The pro forma
weighted average interest rate of Webster's total earning assets of 7.48% at
June 30, 1995 after giving effect to the Merger with Shelton would increase to
approximately 7.60% after also giving effect to the Shawmut Transaction. Total
deposits at June 30, 1995 on a pro forma combined basis would increase from
approximately $2.5 billion after giving effect to the Merger with Shelton to
approximately $3.2 billion after also giving effect to the Shawmut Transaction.
The pro forma weighted average interest rate of Webster's total interest bearing
liabilities of 4.49% at June 30, 1995 after giving effect to the Merger with
Shelton would decrease to approximately 4.00% after also giving effect to the
Shawmut Transaction. The pro forma weighted average interest rate spread of
2.99% at June 30, 1995 after giving effect to the Merger with Shelton would
increase to approximately 3.60% after also giving effect to the Shawmut
Transaction. The assets being acquired and the liabilities being assumed in the
Shawmut Transaction will be the amounts outstanding at the date of consummation
of the Shawmut Transaction, which is expected to occur in the first quarter of
1996. The amounts and weighted average rates will change from the June 30, 1995
amounts and weighted average rates shown above due to interest-rate repricing,
principal repayments and prepayments and other changes in balances of the assets
being acquired and the liabilities being assumed. References herein to the
Shawmut Transaction include the pro forma adjustments shown in the preceding
footnotes.
14
<PAGE>
ANNEX A
Investment Banking Group
World Financial Center
North Tower
New York, New York 10281-1325
212/449-1000
[LOGO] Merrill Lynch
October 1, 1995
Board of Directors
Webster Financial Corporation
First Federal Plaza
Waterbury, CT 06702
Members of the Board:
Webster Financial Corporation ("Webster"), acting through its
wholly-owned subsidiary, First Federal Bank ("First Federal"), has entered into
a purchase and assumption agreement dated October 1, 1995 (the "Agreement") with
Shawmut Bank Connecticut, National Association ("Shawmut") pursuant to which
First Federal will acquire certain assets and assume certain liabilities (the
"Acquisition Transaction") of Shawmut (the "Hartford Commercial Bank Divestiture
Package") in consideration of payment of the purchase price determined pursuant
to Article III of the Agreement (the "Consideration"). We understand that the
Acquisition Transaction is occurring in the context of Fleet Financial Group's
("Fleet") divestiture of certain assets and certain liabilities of Shawmut in
conjunction with Fleet's pending acquisition of Shawmut.
You have asked us whether, in our opinion, the proposed
Consideration to be paid or delivered in the manner contemplated in the
Agreement is fair to Webster from a financial point of view.
In arriving at the opinion set forth below, we have, among
other things:
(1) Reviewed Webster's Annual Reports, Forms 10-K and
related financial information for the three fiscal
years ended December 31, 1994 and Webster's Quarterly
Reports on Form
<PAGE>
10-Q and the related unaudited financial information
for the quarterly periods ending March 31, 1995 and
June 30, 1995;
(2) Reviewed certain information furnished to us by
Webster, including financial and other forecasts and
assumptions, relating to the business, earnings,
assets and prospects of Webster;
(3) Reviewed certain information provided to us by Fleet
relating to the assets and liabilities of the
Hartford Commercial Bank Divestiture Package;
(4) Conducted discussions with members of senior
management of Webster concerning the financial
condition, businesses, assets and prospects of
Webster and such senior management's views as to the
financial forecasts and pro forma analysis of
Webster;
(5) Compared the proposed deposit premium to be paid in
the Acquisition Transaction with deposit premiums in
certain transactions which we deemed to be relevant;
(6) Reviewed the pro forma balance sheets and estimated
income statements for Webster as prepared by the
management of Webster and analyzed, based upon
information provided by Webster's senior management,
the pro forma impact of the Acquisition Transaction
on the earnings and tangible book value per share,
consolidated capitalization and certain balance sheet
and profitability ratios of Webster, including the
impact of an assumed capital financing plan as more
completely described in the agreement (the "Equity
Offering");
(7) Compared the results of operations of Webster with
that of certain publicly traded companies which we
deemed to be relevant;
(8) Reviewed certain information and reports and
conducted discussions with certain members of senior
management of Webster concerning this information and
reports related to Webster's review of Fleet;
(9) Reviewed the Agreement dated October 1, 1995; and
(10) Reviewed such other financial studies and analyses
and performed such other investigations and took into
account such other matters as we deemed necessary to
the rendering of this opinion.
<PAGE>
In preparing our opinion, we have assumed and relied on the
accuracy and completeness of all of the financial and other information supplied
or otherwise made available to us by Webster and Fleet, and we have not
independently verified such information or undertaken an independent evaluation
or appraisal of the assets or liabilities of Webster or Fleet or any of their
respective subsidiaries, nor have we been furnished any such independent
evaluation or appraisal. We have also assumed and relied upon the senior
management of Webster as to the reasonableness and achievability of the
financial and operating forecasts (and the assumptions and bases therefor)
provided to, and discussed with, us. In that regard, we have assumed with your
consent that such forecasts, including without limitation, financial forecasts
resulting from the Acquisition Transaction and projections regarding future
economic conditions and results of operations reflect the best currently
available estimates and judgments of Webster's senior management as to the
future financial performance of Webster or the Hartford Connecticut Commercial
Bank Divestiture Package, as the case may be, and that such projections and
forecasts will be realized in the amounts and the time periods currently
estimated by the senior management of Webster. We are not experts in the
evaluation of allowances for loan losses, and we have not assumed any
responsibility for making an independent evaluation of the adequacy of the
allowance for loan losses of the Hartford Commercial Bank Divestiture Package
nor have we reviewed any individual credit files, and we have assumed that the
aggregate allowances for loan losses are adequate to cover such losses. In
addition, we are not experts in the evaluation of the loans and other assets to
be acquired and the liabilities to be assumed in connection with the Acquisition
Transaction as provided for in the Agreement and have assumed, with your
permission, that all such assets and liabilities have the market valuations
ascribed to them in the financial records supplied by the senior management of
Webster, and we have not assumed any responsibility for undertaking an
independent inquiry as to the accuracy of such valuations. Our opinion is
necessarily based on economic, market and other conditions as in effect on, and
the information made available to us as of, the date hereof.
Our opinion is being rendered without regard to (i) the
necessity for, or level of, any restrictions, obligations or undertakings which
may be imposed or required by or upon Webster or First Federal in the course of
obtaining regulatory approval for the Acquisition Transaction, including any
restrictions imposed under applicable law on the ability of First Federal to pay
dividends to Webster following consummation of the Acquisition Transaction and
related transactions, and (ii) any financial or other effects of the conversion
of Bristol Savings Bank, the renaming of Bristol Savings Bank as Webster Bank
and the merger of First Federal with and into Webster Bank as contemplated in
the Agreement. Our opinion is also based on the assumption that Webster will be
able to complete the Equity Offering and take all of the other actions
contemplated to be taken by it in the Agreement, and this opinion is not
addressed to the fairness of any of the foregoing.
<PAGE>
We have been retained by the Board of Directors of Webster as
an independent contractor to act as financial advisor to Webster with respect to
the Acquisition Transaction and will receive a fee for our services. We have, in
the past, provided financial advisory and financing services to Webster and
Fleet and certain of their respective affiliates and have received customary
fees for the rendering of such services. In addition, in the ordinary course of
business, we may actively trade debt and/or equity securities of Webster and
Fleet and/or their respective affiliates for our own account and the accounts of
our customers, and we therefore may from time to time hold a long or short
position in such securities.
Our opinion is directed to the Board of Directors of Webster,
and, while we understand that no stockholder meeting is necessary for approval
of the Acquisition Transaction, our opinion does not constitute nor should it be
construed as constituting a recommendation to any stockholder of Webster as to
how such stockholder should vote at any stockholder meeting of Webster that may
be held in connection with the Acquisition Transaction.
This opinion is directed only to the proposed Consideration
and is solely for the confidential use the Board of Directors of Webster and may
not be reproduced, summarized, described or referred to or given to any person
without our prior written consent, which consent shall not be unreasonably
withheld. Notwithstanding the foregoing, it is understood that this opinion can
be summarized and reproduced (in such form as Merrill Lynch shall approve) in
connection with the description of the Acquisition Transaction in the joint
proxy statement/prospectus relating to shareholder approval for the issuance of
additional shares of Webster common stock in its pending acquisition of Shelton
Bancorp, Inc.
On the basis of, and subject to the foregoing, we are of the
opinion that the proposed Consideration to be paid in the Acquisition
Transaction is fair to Webster from a financial point of view.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By
-----------------------------------
Director
Investment Banking Group
<PAGE>
Item 7. Financial Statements and Exhibits.
c. Exhibits
*2. Purchase and Assumption Agreement between First Federal
Bank, a federal savings bank and Shawmut Bank Connecticut,
National Association, dated as of October 1, 1995.
* Previously filed
<PAGE>
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
----------------------------------
John V. Brennan
Executive Vice President,
Chief Financial Officer and Treasurer
Date: October 18, 1995
<PAGE>
Exhibit 2
Purchase and Assumption Agreement between First Federal Bank, a federal
savings bank and Shawmut Bank Connecticut, National Association, dated
as of October 1, 1995.
<PAGE>
PURCHASE AND ASSUMPTION AGREEMENT
between
FIRST FEDERAL BANK, A FEDERAL SAVINGS BANK
and
SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION
Dated as of October 1, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
ARTICLE I DEFINITIONS
Section 1.1 Defined Terms......................................................................1
Section 1.2 Accounting Terms...................................................................7
ARTICLE II PURCHASE AND SALE OF ASSETS
AND ASSIGNMENT AND ASSUMPTION
OF LIABILITIES.....................................................................7
Section 2.1 Purchase and Sale of Assets........................................................7
Section 2.2 Assumed Liabilities; No Other Liabilities Assumed..................................8
Section 2.3 Items in Transit...................................................................9
Section 2.4 Liabilities Honored................................................................9
Section 2.5 Actions with Respect to IRA and Keogh Plan Deposit Liabilities.....................9
ARTICLE III PURCHASE PRICE; PAYMENT;
SETTLEMENT; AND ALLOCATION........................................................10
Section 3.1 Purchase Price ...................................................................10
Section 3.2 Payment at Closing................................................................11
Section 3.3 Adjustment of Estimated Payment Amount............................................11
Section 3.4 Allocation of Purchase Price......................................................11
Section 3.5 Proration; Other Closing Date Adjustment..........................................12
ARTICLE IV TAXES ......................................................................12
Section 4.1 Sales and Use Taxes ..............................................................12
Section 4.2 Information Reports...............................................................12
ARTICLE V CLOSING ......................................................................12
Section 5.1 Closing Date......................................................................12
Section 5.2 Place of Closing..................................................................13
Section 5.3 Seller Deliveries.................................................................13
Section 5.4 Purchaser Deliveries..............................................................14
ARTICLE VI CONDITIONS TO OBLIGATIONS OF SELLER...............................................15
Section 6.1 Conditions to Obligations of Seller...............................................15
ARTICLE VII CONDITIONS TO OBLIGATIONS OF PURCHASER............................................15
Section 7.1 Conditions to Obligations of Purchaser ...........................................15
i
<PAGE>
ARTICLE VIII REPRESENTATIONS AND WARRANTIES
OF SELLER ......................................................................16
Section 8.1 Organization......................................................................16
Section 8.2 Authority ....................................................................16
Section 8.3 Non-Contravention.................................................................16
Section 8.4 Compliance with Law...............................................................16
Section 8.5 Legal Proceedings.................................................................16
Section 8.6 Personalty ......................................................................17
Section 8.7 Loans ......................................................................17
Section 8.8 Tenants; Branch Leases............................................................17
Section 8.9 Financial and Deposit Data........................................................17
Section 8.10 Limitations on Representation and Warranties......................................17
Section 8.11 Branch Operating Contracts and Defaults...........................................17
ARTICLE IX REPRESENTATIONS AND WARRANTIES
OF PURCHASER..........................................................18
Section 9.1 Organization......................................................................18
Section 9.2 Authority.........................................................................18
Section 9.3 Non-Contravention.................................................................18
Section 9.4 Legal Proceedings.................................................................18
Section 9.5 Regulatory Matters................................................................18
Section 9.6. Financing Available...............................................................18
ARTICLE X COVENANTS OF SELLER...............................................................19
Section 10.1 Regulatory Approvals..............................................................19
Section 10.2 Conduct of Business...............................................................19
Section 10.3 Corporate and Other Consents......................................................19
Section 10.4 Nonsolicitation...................................................................20
Section 10.5 Data Processing and Transfer Services............................................20
Section 10.6 Cooperation...................................................................... 20
ARTICLE XI COVENANTS OF PURCHASER............................................................20
Section 11.1 Regulatory Approvals and Standards................................................20
Section 11.2 Corporate and Other Consents; Compliance with Law; Real Property..................21
Section 11.3 Solicitation of Accounts..........................................................21
Section 11.4 Nonsolicitation of Seller's Employees.............................................21
Section 11.5 Notice to Loan Customers..........................................................22
Section 11.6 Transferred Employees.............................................................22
Section 11.7 Transfer of Deposit Liabilities...................................................23
ARTICLE XII ENVIRONMENTAL DUE DILIGENCE; EMPLOYEE
AND CUSTOMER NOTICES; ETC.............................................23
Section 12.1 Environmental Due Diligence ......................................................23
Section 12.2 Access to Branches by Purchaser...................................................24
Section 12.3 Communications to Employees; Training.............................................24
Section 12.4 Communications with Branch Customers..............................................24
ii
<PAGE>
ARTICLE XIII INDEMNITY ........................................................................25
Section 13.1 Seller's Indemnity................................................................25
Section 13.2 Purchaser's Indemnity.............................................................25
Section 13.3 Indemnification Procedure.........................................................26
Section 13.4. Nonsolicitation...................................................................26
Section 13.5 Survival..........................................................................26
Section 13.6. Basket............................................................................26
ARTICLE XIV ADDITIONAL LOAN PURCHASES.........................................................26
Section 14.1 Additional Commercial Loan Purchase...............................................26
Section 14.2 Additional Residential Mortgage Loans.............................................27
ARTICLE XV WEBSTER BRANCH PURCHASE...........................................................27
Section 15.1 Purchase and Sale of Assets and Assumed Liabilities...............................27
Section 15.2 Taxes, Closing, Conditions........................................................28
Section 15.3 Employee and Customer Notices, Etc................................................28
Section 15.4 Webster Bank Employee.............................................................28
Section 15.5 Other Applicable Provisions.......................................................28
ARTICLE XVI POST CLOSING MATTERS..............................................................29
Section 6.1 Settlement Procedures.............................................................29
Section 6.2 Further Assurances................................................................29
Section 6.3 Notice of Branch Transfer.........................................................29
Section 6.4 Access to and Retention of Books and Records......................................29
Section 6.5 Deposit Histories.................................................................29
Section 6.6 Appraisal of Real Property........................................................30
ARTICLE XVII MISCELLANEOUS.....................................................................30
Section 17.1 Expenses ......................................................................30
Section 17.2 Communications, Notices, etc. ....................................................31
Section 17.3 Trade Names and Trademarks........................................................31
Section 17.4 Termination; Extension of Closing Date............................................31
Section 17.5 Brokers-Finders...................................................................32
Section 17.6 Modification and Waiver...........................................................32
Section 17.7 Binding Effect; Assignment........................................................32
Section 17.8 Confidentiality...................................................................32
Section 17.9 Entire Agreement; Governing Law...................................................33
Section 17.10 Consent to Jurisdiction; Waiver of Jury Trial.....................................33
Section 17.11 Severability......................................................................33
Section 17.12 Counterparts......................................................................34
Section 17.13 Notices ......................................................................34
Section 17.14 Interpretation....................................................................35
Section 17.15 Specific Performance..............................................................35
</TABLE>
iii
<PAGE>
LIST OF SCHEDULES
-----------------
Schedule 1.1(a) Assumed Severance Obligations
Schedule 1.1(b) Branch Employees
Schedule 1.1(c) Branches
Schedule 1.1(d) Branch Leases
Schedule 1.1(e) Deposit Liabilities
Schedule 1.1(f) Loans and Additional Representations and Warranties
Schedule 1.1(g) Personalty and Excluded Personalty
Schedule 1.1(h) Real Property
Schedule 1.1(i) Terms of Warrant Agreement, Standstill Agreement,
Contingent Payment Agreement and Hartford Sublease
Agreement
Schedule 3.4 Allocation of Purchase Price
Schedule 5.3(a) Form of Quitclaim Deed
Schedule 5.3(b) Form of Bill of Sale for the Personalty
Schedule 5.3(c) Form of Assignment and Assumption Agreement
Schedule 5.3(d) Form of Lease Assignment
Schedule 5.3(e) Form of Landlord Consent
Schedule 5.3(f) Seller's Officer's Certificate
Schedule 5.4(d) Purchaser's Officer's Certificate
Schedule 8.8 Tenants and Branch Lease Defaults
Schedule 10.3 Tenant's Certificates for Branch Leases
Schedule 14.1 Additional Commercial Loans
iv
<PAGE>
PURCHASE AND ASSUMPTION AGREEMENT
---------------------------------
Agreement dated as of October 1, 1995 between FIRST FEDERAL BANK, a
federal savings bank with its principal offices at First Federal Plaza,
Waterbury, Connecticut 06702 ("Purchaser"), and SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION, a national bank with its principal offices at 777 Main
Street, Hartford, Connecticut 06115 ("Seller").
WHEREAS, Purchaser is a wholly-owned subsidiary of Webster Financial
Corporation, a holding company organized under the laws of the State of Delaware
("Webster"); and
WHEREAS, upon (i) the conversion of Bristol Savings Bank, a Connecticut
chartered savings bank and a wholly-owned subsidiary of Webster, to a federal
savings bank; (ii) the concurrent renaming of Bristol Savings Bank as "Webster
Bank", and (iii) the merger of Purchaser with and into Webster Bank as the
surviving savings bank, the Purchaser shall then be Webster Bank; and
WHEREAS, Seller desires to sell, and Purchaser desires to acquire,
certain assets of Seller in accordance with the terms and provisions of this
Agreement; and
WHEREAS, Seller desires to assign to Purchaser, and Purchaser desires
to assume from Seller, certain liabilities of Seller in accordance with the
terms and provisions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants contained herein, subject to the terms and conditions set
forth herein, Seller and Purchaser agree as follows:
ARTICLE I
DEFINITIONS
-----------
Section 1.1. Defined Terms. As used herein, the following terms shall
have the following meanings:
"Accrued Interest" shall mean (a) with respect to the Deposit
Liabilities or the Webster Bank Deposit Liabilities, the interest that has been
accrued but not paid or credited on the Deposit Liabilities or the Webster Bank
Deposit Liabilities, as the case may be, and (b) with respect to the Loans,
interest, fees, costs and other charges that have accrued on or been charged to
the Loans but not paid by the applicable borrower, or a guarantor or surety
therefor, or otherwise collected by offset or recourse to collateral for the
applicable Loan.
"ADA" shall mean the Americans with Disabilities Act of 1990, as
amended, 104 STAT. 327.
"Additional Residential Pool" shall have the meaning set forth in
Section 14.2 hereof.
"Adjusted Payment Amount" shall have the meaning specified in Section
3.3(a).
"Affiliate" shall mean as to any person, a person controlled by,
controlling or under common control with, the former person, or a director,
officer, partner, joint venture or member of the former person or the latter
person.
"Appraised Value" shall have the meaning set forth in Section 14.6(e).
"Assets" shall have the meaning specified in Section 2.1.
"Assignment and Assumption Agreement" shall have the meaning set forth
in Section 5.3(c).
<PAGE>
"Assumed Liabilities" shall have the meaning specified in Section 2.2.
"Assumed Severance Obligations" shall mean Seller's obligations under
its severance plans described on Schedule 1.1(a) attached hereto relating to the
transactions contemplated hereby, including without limitation, its obligations
to pay severance and provide benefits to any Transferred Employee or any Branch
Employee who is not a Transferred Employee, upon or following any termination or
deemed termination by Seller or Purchaser of any such employee, on or before the
first anniversary of the date of the consummation of the transactions
contemplated in the Parent Merger Agreement.
"Board" shall mean the Board of Governors of the Federal Reserve
System.
"Branch Customers" shall mean the persons named as the owners of the
deposit accounts relating to the Deposit Liabilities, the primary obligors under
the Loans and the parties to Safe Deposit Agreements with the Seller.
"Branch Employees" shall mean the employees of the Seller listed on
Schedule 1.1(b) attached hereto, subject to any transfers permitted pursuant to
Section 10.2 and replacement in the ordinary course of business of employees who
shall leave Seller's employ between the date hereof and the Closing Date.
"Branches" shall mean the Seller's branches listed on Schedule 1.1(c)
attached hereto.
"Branch Leases" shall mean the leases for the Branches listed on
Schedule 1.1(d) attached hereto.
"Branch Related Employees" shall mean such other employees of Seller
involved in branch management, administration and operations or small business
or commercial lending, as shall be designated by Seller from time to time
hereafter in writing to Purchaser for possible interviews for employment with
Purchaser.
"Capital Financing" shall mean any transaction pursuant to which
Webster raises, through the sale of additional common stock, preferred stock or
long-term debt of Webster, the capital required to obtain the Regulatory
Approvals.
"Capital Financing Date" shall mean the date on which Webster
consummates the Capital Financing.
"CERCLA" shall mean Comprehensive Environmental Response, Compensation,
and Liability Act, as amended, 42 U.S.C. 9601 et seq.
"Change in Control" shall be deemed to have occurred in the event that
any person (i) acquires voting rights to more than 25% of the outstanding shares
of common stock of Webster or (ii) executes a definitive merger or other
acquisition agreement with Webster, unless the directors of Webster serving
prior to such acquisition of Webster common stock or execution of such
definitive agreement (or successor directors selected by such continuing
directors and unaffiliated with such acquiror) will continue to constitute at
least 50% of the parent holding company's board of directors after such
acquisition.
"Closing" shall have the meaning specified in Section 5.2.
"Closing Date" shall have the meaning specified in Section 5.1.
"Commercial Loans" shall mean as of any date Loans (other than small
business loans) which would be reported by Seller on Schedule RC-C to its
Consolidated Report of Condition for Insured Commercial and State-Chartered
Savings Banks (or any successor regulatory report thereto) as "commercial and
industrial loans" if such Loans were held by Seller and had non-negative
principal balances as of the end of a calendar quarter.
"Competitive Business" shall have the meaning specified in Section
10.4.
2
<PAGE>
"Confidentiality Agreement" shall mean that certain letter agreement
between Purchaser and one or both of Fleet or Shawmut dated as of August 9,
1995.
"Contingent Payment Agreement" shall mean the Contingent Payment
Agreement dated as of the Closing Date between Fleet and Purchaser, which
Contingent Payment Agreement shall incorporate the terms set forth on Schedule
1.1(i) hereof.
"Customer Notice" shall have the meaning specified in Section 12.4.
"Deposit Liabilities" or "Deposit Liability" shall mean deposit
liabilities with respect to accounts, which are booked by Seller at the Branches
as of the date hereof, and deposit liabilities with respect to the accounts
listed on Schedule 1.1(e) attached hereto, in each case as of the close of
business on the Closing Date, which are defined as deposits in the Federal
Deposit Insurance Act, 12 U.S.C. 1813, including in each case collected and
uncollected deposits plus Accrued Interest, except that Deposit Liabilities
shall not include the Excluded Deposits.
"Deposit Premium" shall have the meaning set forth in Section 3.1(a)(i)
hereof.
"Draft Closing Statement" shall mean a draft closing statement dated as
of the close of business of the third business day preceding the Closing Date
setting forth an estimate of the Purchase Price (including all adjustments and
prorations thereto) and the Deposit Liabilities.
"Eagle" shall mean Eagle Federal Savings Bank, a federal savings bank.
"Eagle Purchase Agreements" shall mean that certain Purchase and
Assumption Agreement dated as of the date hereof between Eagle and Shawmut Bank
Connecticut, National Association and that certain Purchase and Assumption
Agreement dated as of the date hereof between Eagle and Fleet Bank, National
Association.
"Environmental Consultant" shall have the meaning specified in Section
12.1.
"Environmental Due Diligence Date" shall mean the thirtieth (30th) day
following the execution hereof or, if such day shall not be a business day, the
next business day thereafter.
"Environmental Due Diligence Period" shall mean the period commencing
on the date hereof and ending on the Environmental Due Diligence Date.
"Environmental Hazard" shall mean the presence of any hazardous
substance (as defined in CERCLA or RCRA) in violation of any Environmental Laws.
"Environmental Laws" shall mean CERCLA and RCRA and similar state
environmental laws.
"Estimated Payment Amount" shall have the meaning specified in Section
3.2.
"Estimated Purchase Price" shall mean the estimate of the Purchase
Price set forth on the Draft Closing Statement.
"Excluded Deposits" shall mean (a) deposit liabilities with respect to
accounts, which are booked by Seller at any Branch as of the date hereof and are
held by Seller under or pursuant to any judgment, decree or order of any court;
(b) deposit liabilities with respect to accounts registered in the name of a
trust for which Seller serves as trustee other than IRA and Keogh Plan deposits,
which are booked by Seller at any Branch as of the date hereof; (c) deposit
liabilities with respect to accounts, which are booked by Seller at any Branch
as of the date hereof and for which Seller serves as guardian or custodian
(other than IRA and Keogh Plan deposit liabilities); (d) the Excluded IRA/Keogh
Deposits; and (e) deposit liabilities with respect to sweep accounts relating to
any investment services provided by Seller or its Affiliates, in each case as of
the close of business on the Closing Date.
3
<PAGE>
"Excluded IRA/Keogh Deposits" shall have the meaning specified in
Section 2.5.
"Excluded Personalty" shall mean (a) artwork, supplies, signs, trade
fixtures or equipment specifically identifying or relating to Seller or any of
its Affiliates, and teller station computer hardware located at the Branches,
(b) software, source and object code, user manuals and related documents and all
updates, upgrades or other revisions thereto and all copies or duplicates
thereof, (c) computers, printers, modems, peripheral equipment and other
computer hardware, and (d) any other personal property of Seller located at the
Branches identified on Schedule 1.1(g), less any such items consumed or disposed
of, plus new similar items acquired or obtained, in the ordinary course of the
operation of the Branches through the close of business on the Closing Date.
"Federal Funds Rate" shall mean, for the period involved, the average
of the interest rates for each day of the period set forth in H.15(519) opposite
the caption "Federal Funds (Effective)". H.15(519) means the weekly statistical
release designated as such, or any successor publication, published by the
Board.
"Final" as applied to any governmental order or action, shall mean that
such order or action has not been stayed, vacated or otherwise rendered
ineffective and either (a) the time period for taking an appeal therefrom shall
have passed without an appeal therefrom having been taken, or (b) if any such
appeal shall have been dismissed or resolved, all applicable periods for further
appeal of such order or action shall have passed.
"Final Approval Date" shall mean the date upon which the last of the
following has occurred: (a) all Regulatory Approvals have been obtained; (b) the
publication of all regulatory notices; (c) the filing of all regulatory reports;
and (d) the expiration of all regulatory comment and waiting periods.
"Fleet" shall mean Fleet Financial Group, Inc., a Rhode Island
corporation.
"Hartford Sublease Agreement" shall mean the Sublease Agreement between
Fleet Bank, National Association and Purchaser dated as of the Closing Date
which will contain customary terms and conditions, and which shall incorporate
the additional terms set forth on Schedule 1.1(i) hereto.
"Identified Loans" shall have the meaning set forth in Section 2.1(c).
"Identified Mortgage Loans" shall have the meaning set forth in Section
2.1(c).
"Investment Banker" shall mean Keefe, Bruyette & Woods, Inc. or CS
First Boston Corporation.
"IRA" shall mean an Individual Retirement Account.
"Items" shall mean (a) transfers of funds by wire or through the
Automated Clearing House, checks, drafts, negotiable orders of withdrawal,
entitlement payment transfers, and items of the like kind which are drawn on or
deposited and credited to the Deposit Liabilities, and (b) payments, advances,
disbursements, fees, reimbursements and items of a like kind which are debited
or credited to the Loans.
"Landlord Consents" shall have the meaning set forth in Section 5.3(e).
"Lease Agreement" shall mean a lease entered into pursuant Sections
2.1(b) or 12.1 upon such specific terms and conditions as contemplated by such
Sections and such other terms and conditions as are customary and reasonable in
a "triple net" lease of a bank branch facility.
"Lease Assignments" shall have the meaning set forth in Section 5.3(d).
"Loan Value" shall mean as of any date the unpaid principal balance of
the Loans (based on the general ledger balances) plus Accrued Interest thereon.
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"Loans" shall mean:
(a) consumer installment loans and other consumer loans, which
are not secured by real estate, and home equity loans (i) to Branch
Customers named as owners of deposit accounts relating to the Deposit
Liabilities or (ii) allocated to the Branches as of the date hereof or
from the date hereof through the Closing Date pursuant to Seller's
customary practice;
(b) small business loans made through Seller's community
banking program to (i) Branch Customers named as owners of deposit
accounts relating to the Deposit Liabilities or (ii) allocated to the
Branches as of the date hereof or from the date hereof through the
Closing Date pursuant to the allocation method used by Seller in this
transaction;
(c) (i) commercial and industrial and commercial real estate
loans (other than the small business loans described in (b) above), and
(ii) first mortgage residential loans, as described on Annex A and
Annex B to Schedule 1.1(f) attached hereto; and
(d) pending applications to Seller or unfunded commitments of
Seller to (i) any Branch Customers or (ii) any obligors described on
such Annexes or of loans described in (a)(ii) or (b)(ii) above,
subject to (i) any repayments or prepayments, in whole or in part, advances,
credits, debits, charges or other actions affecting the balance of any such
loans as of the date hereof from the date hereof through the close of business
on the Closing Date, and (ii) the removal or substitution of any commercial and
first mortgage residential loans pursuant to Section 2.1(c), and all collateral
held as security therefor or in which a security interest, lien or mortgage has
been granted, together with Accrued Interest thereon and including, where
applicable, zero balance revolving credit loans, all as of the close of business
on the Closing Date, and Seller's loan files and records relating thereto.
"Marketable Title" shall have the meaning set forth in Section 5.3(a).
"Material Condition" applicable to Seller or Purchaser shall mean with
respect to any Regulatory Approval obtained by either Seller or Purchaser, a
condition or requirement, which does not relate to or arise from the Community
Reinvestment Act (or any amendment, modification or successor thereto or similar
federal or state statute thereto) or compliance therewith or performance of its
obligations thereunder, included in such Regulatory Approval that, individually
or in the aggregate, would (a) result in a material adverse effect on either
Seller or Purchaser, as applicable, or (b) reduce the benefits to Seller or
Purchaser, as applicable, of the transactions contemplated by the Agreement in
so material a manner that it would not have entered into this Agreement had such
condition or requirement been known as of the date hereof.
"Notice of Proposed Transfer" shall have the meanings set forth in
Section 2.1(d) hereto.
"Parent Merger" shall mean the merger of Shawmut with and into Fleet
pursuant to the Parent Merger Agreement.
"Parent Merger Agreement" shall mean the Agreement and Plan of Merger
between Fleet and Shawmut dated as of February 20, 1995, as amended from time to
time.
"Personalty" shall mean all of the personal property of Seller located
in the Branches consisting of the trade fixtures, shelving, furniture,
equipment, telephone systems, security systems, safe deposit boxes (exclusive of
contents), vaults and supplies, including without limitation the items
designated on Schedule 1.1(g) attached hereto, less any items consumed or
disposed of, plus new items acquired or obtained, in the ordinary course of the
operation of the Branches through the close of business on the Closing Date, but
excluding the Excluded Personalty, even if such Excluded Personalty is listed on
Schedule 1.1(g).
"Purchase Price" shall have the meaning specified in Section 3.1.
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"Purchaser" shall have the meaning specified in the Preamble.
"Purchaser's Account" shall have the meaning specified in Section 3.2.
"Quitclaim Deed" shall have the meaning set forth in Section 5.3(a).
"RCRA" shall mean the Resource Conservation and Recovery Act of 1976,
as amended, 42 U.S.C. 6921 et seq.
"Real Property" shall mean the parcels of real property and
improvements thereon for the Branches listed on Schedule 1.1(h).
"Real Property Purchase Price" shall mean, with respect to any parcel
or parcels of Real Property relating to a Branch, the purchase price specified
on Schedule 1.1(h).
"Registration Statement" shall mean any registration statement filed
with the Securities and Exchange Commission by Webster in connection with the
Capital Financing.
"Regulatory Approvals" shall have the meaning specified in Section
6.1(c).
"Residential Mortgage Loan" shall mean a Loan described in (c)(ii) of
the definition thereof.
"Right of First Refusal" shall have the meaning set forth in Section
2.1(b) hereto.
"Safe Deposit Agreements" shall mean the agreements relating to safe
deposit boxes located in the Branches.
"Seller" shall have the meaning specified in the Preamble.
"Servicing Agreement" shall mean a Servicing Agreement between Seller,
as servicer, and Purchaser, as owner, containing such terms and conditions,
including without limitation such provisions as are standard and customary in
Fleet affiliated bank servicing agreements and which shall also provide that,
for the first three (3) months following the Closing Date, the servicing fee
shall be One Hundred Twenty ($120) Dollars per Residential Mortgage Loan on an
annualized basis, and thereafter the servicing fee shall be the customary third
party servicing fee in Fleet affiliated bank servicing agreements.
"Shawmut" shall mean Shawmut National Corporation, a Delaware
corporation.
"Shelton Transaction" shall mean the acquisition of Shelton Bancorp,
Inc. by Webster.
"Standstill Agreement" shall mean the Standstill Agreement between
Fleet and Webster dated as of the Closing Date, which Standstill Agreement shall
incorporate the terms set forth on Schedule 1.1(i) hereof.
"Tenant Leases" shall mean leases or subleases between Seller and the
tenants, if any, listed on Schedule 8.8.
"Transferred Employees" shall mean Branch Employees and Branch Related
Employees who accept offers of employment from Purchaser contemplated by Section
11.6(a).
"Warrant Agreement" shall mean the Warrant Agreement between Fleet and
Webster dated as of the Closing Date, which Warrant Agreement shall incorporate
the terms set forth on Schedule 1.1(i) hereof.
"Webster" shall have the meaning set forth in the preamble hereto.
"Webster Bank Assets" shall have the meaning set forth in Section
15.1(c) hereof.
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"Webster Bank Assumed Liabilities" shall have the meaning set forth in
Section 15.1(d) hereof.
"Webster Bank Branches" shall have the meaning set forth in Section
15.1(a) hereof.
"Webster Bank Deposit Liabilities" shall have the meaning set forth in
Section 15.2(d)(i) hereof.
Section 1.2. Accounting Terms. All accounting terms not otherwise
defined herein shall have the respective meanings assigned to them in accordance
with "generally accepted accounting principles" consistently applied as are in
effect from time to time in the United States of America.
ARTICLE II
PURCHASE AND SALE OF ASSETS AND
ASSIGNMENT AND ASSUMPTION OF LIABILITIES
----------------------------------------
Section 2.1. Purchase and Sale of Assets.
(a) Upon the Closing Date, Seller shall sell, convey, assign,
transfer and deliver to Purchaser, and Purchaser shall purchase and
accept from Seller, all of Seller's right, title and interest in and to
the following (collectively, the "Assets"):
(i) the Real Property;
(ii) the Personalty;
(iii) the Loans; and
(iv) the Branch Leases, Tenant Leases and Safe
Deposit Agreements.
(b) Notwithstanding anything to the contrary contained in any
Section hereof, other than Section 12.1(d)(ii), if Seller shall be
unable to deliver Marketable Title to Real Property on which a Branch
is located on the Closing Date and Purchaser elects not to acquire such
Real Property with such exceptions as render title thereto not to be
Marketable Title, Seller and Purchaser shall lease such Real Property
pursuant to a Lease Agreement for the current market rental as agreed
to by the parties hereto or, if no such agreement is reached within
thirty (30) days of the Closing Date, as determined pursuant to an
appraisal for such Branch obtained pursuant to Section 14.6; provided
that such Lease Agreement shall provide as follows:
(i) Seller may sell such Real Property to any person,
subject to such Lease Agreement, for any price, subject to a
right of first refusal as set forth in subsection 2.1(d)
hereto (the "Right of First Refusal");
(ii) Such Lease Agreement shall be for a term of one
(1) year, which shall automatically renew for a term of one
(1) year at the end of the term and each renewal term on the
same terms and conditions, except as to rental, which shall be
changed to the then current market rental, as agreed to by the
parties hereto or, if no such agreement as to such market
rental shall have been reached within thirty (30) days of the
commencement of the applicable renewal term, as determined
pursuant to an appraisal for such Branch obtained pursuant to
Section 14.6; provided that such Lease Agreement shall be
terminable by Seller, or its successors and assigns thereto,
or Purchaser upon such number of days written notice as shall
equal the greater of (A) the minimum
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number of days permitted to close such Branch under applicable
law, or (B) one hundred twenty (120) days; and
(iii) In the event it is able to deliver Marketable
Title, Seller may by written notice given on or prior to the
first anniversary of the Closing Date require Purchaser to
purchase such Real Property, whether or not such Lease
Agreement has been terminated, for the applicable Real
Property Purchase Price, or, thereafter, so long as such Lease
Agreement has not been terminated prior to the giving of such
notice, for the fair market value as agreed to by the parties
hereto or, if no such agreement is reached within thirty (30)
days of such notice, as determined by appraisal in the manner
described in Section 14.6.
(c) On or prior to the Closing Date Seller may:
(i) in its reasonable discretion by written notice to
Purchaser provide for (A) the substitution of a new
residential mortgage loan for a Residential Mortgage Loan (x)
which has been paid in full prior to the Closing Date or (y)
with respect to which the representations and warranties made
by Seller in Section 8.7 or Schedule 1.1(f) shall be untrue as
of the Closing Date (in either case, an "Identified Mortgage
Loan"), provided, however, that such substituted residential
mortgage loan shall be similar to such Identified Mortgage
Loan in principal amount, interest rate and other terms, or
(B) the removal of such Identified Mortgage Loan from the
Loans. Such Identified Mortgage Loan shall no longer be deemed
a Residential Mortgage Loan for the purposes hereof from and
after the date of any such substitution or removal and any
such new loan shall be deemed a Residential Mortgage Loan from
and after the date of any such substitution; or
(ii) with respect to any Loan other than a
Residential Mortgage Loan with respect to which the
representations and warranties made by Seller in Section 8.7
or Schedule 1.1(f) shall be untrue as of the Closing Date
(such other Loan being herein called an "Identified Loan")
provide for (A) with the written consent of Purchaser, the
substitution for such Identified Loan of a new loan similar to
such Identified Loan in principal amount, interest rate and
other terms , or (B) in its reasonable discretion by written
notice to Purchaser, the removal of such Identified Loan from
the Loans. Such Identified Loan shall no longer be deemed a
Loan for the purposes hereof from and after the date of any
such substitution or removal and any such new loan shall be
deemed a Loan from and after the date of any such
substitution.
(d) (i) In the event that Seller desires to sell Real Property
pursuant to Subsection 2.1(b) hereto, it shall provide Purchaser with
written notice of such intent to sell and the terms of such proposed
sale ("Notice of Proposed Transfer"). During the fifteen (15) day
consecutive period commencing on the date of Purchaser's receipt of the
Notice of Proposed Transfer, Purchaser shall have the first option to
purchase the Real Property, before the same may be sold to any other
person. Purchaser must give written notice of its election to purchase
during such fifteen (15) day period.
(ii) The purchase price to be paid by Purchaser for
the Real Property shall be equal to the purchase price proposed to be
paid by a third party purchaser.
Section 2.2. Assumed Liabilities; No Other Liabilities Assumed.
(a) Upon the Closing Date, Purchaser agrees to assume, pay,
perform and discharge, and to indemnify and hold harmless Seller
against all of the following liabilities and obligations of Seller
arising from and after the close of business on the Closing Date
(collectively, the "Assumed Liabilities"):
(i) the Deposit Liabilities;
(ii) the Branch Leases and Tenant Leases;
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(iii) the Safe Deposit Agreements;
(iv) the Loans;
(v) the IRA and Keogh Plan accounts included in the
Deposit Liabilities, as contemplated by Section 2.5; and
(vi) the Assumed Severance Obligations.
(b) Purchaser shall not assume or be bound by any duties,
responsibilities, obligations or liabilities of Seller of any kind or nature,
known, unknown, contingent or otherwise, other than the Assumed Liabilities.
Notwithstanding anything to the contrary contained herein, Purchaser shall not
assume, and Seller shall remain obligated to pay, perform and discharge and
shall indemnify and hold harmless Purchaser against, any liabilities and
obligations of Seller arising prior to the close of business on the Closing
Date.
Section 2.3. Items in Transit. Purchaser shall obtain the benefit of
all Items relating to or originating from the Branches which are in transit as
of the close of business on the Closing Date, except Purchaser shall bear the
risk of any such Item relating to Deposit Liabilities if Seller has placed a
hold, in accordance with the provisions of Regulation CC adopted by the Board
(12 C.F.R. Part 229) as amended from time to time, on the account on which such
Item is drawn in an amount equal to any uncollected Items and Purchaser pays
such Item before the expiration of such hold. If any Item relating to or
originating from any Branch is in transit on the Closing Date and is returned to
any Branch, Purchaser shall make a reasonable effort to collect such returned
Item and charge same back to the applicable Deposit Liability account (or
another Deposit Liability account of the holder of the account on which such
Item is drawn to the extent permitted by applicable law) to the extent funds are
available therein; provided, however, that, if charging such Item back to a
Deposit Liability account would result in a negative balance in such account,
Purchaser shall charge back such Item to the extent funds are available in such
Deposit Liability account and shall promptly return it to Seller, which shall
promptly reimburse Purchaser for the difference between the amount of such Item
and the amount charged back to such Deposit Liability account, except with
respect to an Item paid by Purchaser before the expiration of a hold properly
placed on the Deposit Liability account to which such Item relates.
Section 2.4. Liabilities Honored. It is Seller's intent that all
Deposit Liability transactions will be referred to Purchaser; provided however
that, if, on or after the Closing Date, Seller shall, inadvertently and in good
faith honor and pay any Deposit Liabilities which are presented to Seller for
due payment, Purchaser shall make a diligent effort to charge the applicable
Deposit Liability account to which the payment relates and, to the extent funds
are available in such Deposit Liability account, Purchaser shall promptly
disburse said moneys to Seller. In the event sufficient funds are not available
to cover such payment, Purchaser shall make diligent effort to collect any
shortfall of funds from the applicable account holder.
Section 2.5. Actions With Respect to IRA and Keogh Plan Deposit
Liabilities.
(a) Seller shall (i) resign as of the close of business on the
Closing Date as the trustee or custodian, as applicable, of each IRA
Deposit Liability and Keogh Plan Deposit Liability of which it is the
trustee or custodian, (ii) to the extent permitted by the documentation
governing each such IRA or Keogh Plan and applicable law, appoint
Purchaser as successor trustee or custodian, as applicable, of each
such IRA or Keogh Plan, and Purchaser agrees to accept each such
trusteeship or custodianship and assume all fiduciary obligations with
respect thereto as of the close of business on the Closing Date, and
(iii) deliver to the IRA grantor or Keogh Plan named fiduciary of each
such IRA or Keogh Plan such notice of the foregoing as is required by
the documentation governing each such IRA or Keogh Plan or applicable
law. If, pursuant to the terms of the documentation governing any such
IRA or Keogh Plan or applicable law, (x) Seller is not permitted to
name Purchaser as successor trustee or custodian or the IRA grantor or
Keogh Plan named fiduciary objects in writing to such assignment, or is
entitled to, and does, in fact, name a successor trustee or custodian
other than Purchaser, or (y) such IRA or Keogh Plan includes assets,
which are not deposit liabilities of Seller and are not being
transferred to Purchaser, and the assumption of the
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deposit liabilities of Seller included in such IRA or Keogh Plan would
result in a loss of qualification of such IRA or Keogh Plan under the
Internal Revenue Code or applicable Internal Revenue Service
regulations, all deposits liabilities of Seller held under such IRA or
Keogh Plan shall be excluded from the Deposit Liabilities (such
excluded deposits liabilities being herein called the "Excluded
IRA/Keogh Deposits").
(b) The Deposit Liabilities include certain IRAs of account
owners who have attained the age of 70 1/2 years with respect to each
of which the account owner is required under applicable law to take a
minimum distribution by December 31st of each year after the account
owner attains the age of 70 1/2 years. Effective as of the close of
business on the Closing Date, Purchaser hereby assumes the obligation
to make such minimum distributions and agrees to pay each such minimum
distribution required to be paid under applicable law with respect to
such IRAs by December 31st of the calendar year in which the Closing
occurs and, in consideration thereof on the Closing Date, Seller shall
transfer to Purchaser an amount equal to such minimum distributions
required to be paid with respect to such IRAs by such December 31st by
Purchaser as Deposit Liabilities.
ARTICLE III
PURCHASE PRICE; PAYMENT;
SETTLEMENT; AND TAX ALLOCATION
------------------------------
Section 3.1. Purchase Price. (a) The "Purchase Price" for the Assets
shall be an amount computed as follows:
(i) an amount equal to 5.1% (the "Deposit Premium") of the
average aggregate daily balances (including Accrued Interest) of
Deposit Liabilities for the period commencing either (y) thirty (30)
days prior to the third business day prior to the Closing Date and
ending on such third business day prior to the Closing Date or (z)
seven (7) days prior to the third business day prior to the Closing
Date and ending on such third business day prior to the Closing Date,
whichever is lower, subject to adjustment as set forth in Section
3.1(b) hereof; PLUS
(ii) the aggregate Real Property Purchase Prices for the Real
Property Purchase Prices for all of the Real Property; PLUS
(iii) the net book value of the Personalty (excluding the
automatic teller machines) as reflected on the books of Seller as of
the close of business on the Closing Date; PLUS
(iv) the greater of (y) Five Thousand Dollars ($5,000) or (z)
the net book value, as reflected on the books of Seller as of the close
of business on the Closing Date, for each of the automatic teller
machines; PLUS
(v) the Loan Value of the Loans as of the close of business on
the Closing Date; MINUS
(vi) Two Million Dollars ($2,000,000).
(b) The Deposit Premium shall be adjusted on the third business day
prior to the Closing Date as necessary so that Seller and its Affiliates shall
receive an aggregate deposit premium equal to 5.5% of the aggregate total
Deposit Liabilities being assumed by (i) Purchaser pursuant to the terms hereof
and (ii) Eagle pursuant to the terms of the Eagle Purchase Agreements.
Section 3.2. Payment at Closing. On the Closing Date, Seller shall pay
to Purchaser by wire transfer of immediately available Federal Funds to such
account as Purchaser shall advise Seller at the Closing ("Purchaser's
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Account") the amount by which the aggregate balance (including Accrued Interest)
of the Deposit Liabilities as of the close of business on the third business day
preceding the Closing Date exceeds the Estimated Purchase Price (the "Estimated
Payment Amount").
Section 3.3. Adjustment of Estimated Payment Amount.
(a) On or before 12:00 noon on the tenth business day following the
Closing Date, Seller shall deliver to Purchaser a statement setting forth the
amount of the Deposit Liabilities and cash and cash equivalents held in the
Branches and the Purchase Price as determined in accordance with the provisions
of this Agreement as of the close of business on the Closing Date and shall make
available such work papers, schedules and other supporting data as may be
reasonably requested by Purchaser to enable it to verify such determination.
Such statement shall also set forth the amount (the "Adjusted Payment Amount")
by which the amount of such Deposit Liabilities exceeded the aggregate of the
Purchase Price and such cash and cash equivalents, calculated as of the close of
business on the Closing Date.
(b) On or before 12:00 noon on the fifteenth business day after the
Closing Date, Seller shall pay to Purchaser by wire transfer of immediately
available Federal Funds to Purchaser's Account an amount equal to the excess of
the Adjusted Payment Amount over the Estimated Payment Amount, plus interest on
such excess amount from the Closing Date to but excluding the payment date, at
the Federal Funds Rate or, if the Estimated Payment Amount exceeds the Adjusted
Payment Amount, Purchaser shall pay to the Seller by wire transfer of
immediately available Federal Funds to such account as Seller shall advise
Purchaser an amount equal to such excess, plus interest from the Closing Date to
but excluding the payment date.
Section 3.4. Tax Allocation of Purchase Price.
(a) Purchaser and Seller agree that, upon final determination of the
Purchase Price, the Purchase Price shall be allocated (for tax purposes) to the
Assets in accordance with Schedule 3.4 attached hereto.
(b) For income tax reporting requirements imposed pursuant to Section
1060 of the Internal Revenue Code of 1986, as amended, Purchaser and Seller
shall report the transaction contemplated by this Agreement in accordance with
the allocation specified in Schedule 3.4. In the event any party hereto receives
notice of an audit in respect of the allocation of the Purchase Price specified
herein, such party shall immediately notify the other party in writing as to the
date and subject of such audit.
(c) If any federal, state or local tax return report or filing by
Purchaser or Seller relating to the transactions contemplated hereby is
challenged by the taxing authority with which such return, report or filing was
filed on the basis of the allocation set forth in Schedule 3.4, as finally
adjusted, the filing party shall assert and maintain in good faith the validity
and correctness of such allocation during the audit thereof until the issuance
by the taxing authority of a "30 Day Letters", or a determination of liability
equivalent thereto, to such party, whereupon such party shall, in its sole
discretion, have the right to pay, compromise, settle, dispute or otherwise deal
with its alleged tax liability. If such a tax return, report or filing is
challenged as herein described, the party filing such return, report or filing
shall keep the other party apprised of its decisions and the current status and
progress of all administrative and judicial proceedings, if any, that are
undertaken at the election of such party.
(d) If either party (including permitted successors and assigns
thereof) to this Agreement defaults under this Section 3.4, it shall pay as
damages to the other party, so long as such other party is not in default under
this Section 3.4, an amount which, after reduction for all taxes which would be
incurred (calculated at the highest marginal rate applicable in the relevant
jurisdictions) as a result of receiving said amount, is equal to the result (but
not less than zero) of subtracting the amount in (ii) below from the amount in
(i) below:
(i) The total amount of income or gains taxes (including
interest and penalties calculated at the highest marginal rate applicable in the
relevant jurisdictions) to all jurisdictions imposing such taxes upon the
nondefaulting party with respect to the transactions contemplated hereby; and
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(ii) The total amount of income or gains taxes which would
have been incurred (including interest and penalties calculated at the highest
marginal rate applicable in the relevant jurisdictions) to all jurisdictions
imposing such taxes upon the nondefaulting party with respect to the
transactions contemplated hereby, if such taxing jurisdictions had accepted the
allocations specified in Schedule 3.4.
Section 3.5. Proration; Other Closing Date Adjustments. Except as
otherwise specifically provided in this Agreement, it is the intention of the
parties that Seller will operate the Branches for its own account until the
close of business on the Closing Date, and that Purchaser shall operate the
Branches, hold the Loans and assume the Deposit Liabilities and any other
liabilities of Seller assumed by Purchaser pursuant hereto for its own account
from and after the Closing Date. Thus, except as otherwise specifically provided
in this Agreement, all items of income and expense shall be prorated as of the
close of business on the Closing Date, and settled between Seller and Purchaser
on the Closing Date, whether or not such adjustment would normally be made as of
such time. Items of proration will be handled at Closing as an adjustment to the
Purchase Price unless otherwise agreed by the parties hereto.
ARTICLE IV
TAXES
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Section 4.1. Sales and Use Taxes. Except as otherwise provided in this
Agreement, any sales, use or similar taxes which are payable or arise as a
result of this Agreement or the consummation of the transactions contemplated
hereby shall be paid by Purchaser on the Closing Date. Purchaser shall indemnify
and hold harmless Seller from and against any such taxes, including those
arising upon subsequent audit by any taxing authority, including interest and
penalties. If such sales and use taxes are treated as a proration pursuant to
Section 3.4, Seller agrees to remit such taxes to the proper authority on or
before the date the same shall become due, accompanied by such tax returns as
may be required to be filed with such payment. Purchaser and Seller will
cooperate in the preparation of any filings or returns.
Section 4.2. Information Reports. With respect to the calendar year in
which the Closing occurs, for Federal or state income tax reporting purposes
Seller will report all interest accrued and paid with respect to all Deposit
Liabilities and all interest received with respect to Loans up to the close of
business on the Closing Date. Purchaser will report all interest accrued and
paid with respect to all Deposit Liabilities and all interest received with
respect to Loans from and after the Closing Date (except that all interest
accrued and paid on tax-deferred certificates of deposit shall be reported by
Purchaser).
ARTICLE V
CLOSING
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Section 5.1. Closing Date.
(a) The "Closing Date" shall be a Friday, which is a business
day, not later than thirty (30) days after the last of the following
events to occur:
(i) the Final Approval Date;
(ii) the date on which the transactions contemplated
by the Parent Merger Agreement shall have been consummated,
and
(iii) the Capital Financing Date.
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(b) It is anticipated that the Closing Date shall coincide
with the conversion of Seller's account information as to the Deposit
Liabilities and the Loans onto Purchaser's data processing system. The
parties shall work diligently to be able to complete conversion on the
anticipated Closing Date. However, notwithstanding the foregoing, in
the event of an extraordinary data processing occurrence on or prior to
the Closing Date which prevents conversion, then at Seller's option (i)
the Closing Date may be postponed, or (ii) the Closing shall take place
and Seller shall assist Purchaser in servicing the Deposit Liabilities
and the Loans upon such terms and for such fees as are customarily
charged in such arrangements.
(c) The Closing Date shall be mutually agreed to by Seller and
Purchaser.
Section 5.2. Place of Closing. The "Closing" shall take place at 10:00
a.m. on the Closing Date, but shall be effective as of the close of business on
the Closing Date, in the offices of Edwards & Angell, 2700 Hospital Trust Plaza,
Providence, Rhode Island.
Section 5.3. Seller Deliveries. At the Closing, Seller shall deliver to
Purchaser:
(a) Quitclaim deeds for the Real Property in the form of
Schedule 5.3(a) attached hereto, pursuant to which the Real Property
shall be transferred to Purchaser "AS IS", "WHERE IS" and with all
faults (the "Quitclaim Deeds"); provided that, with respect to each
parcel of Real Property, Seller shall only be required to convey to
Purchaser good and marketable fee simple title to the Real Property,
which is in a condition that permits a reputable title insurance
company of national standing and typically accepted by reputable
commercial lenders to issue an owner's title insurance policy in at
least the amount of the Real Property Purchase Price applicable
thereto, subject only to such exceptions as would not render title
unmarketable and other customary exceptions to title not affecting
insurability of title ("Marketable Title");
(b) A bill of sale for the Personalty in the form of Schedule
5.3(b) attached hereto, pursuant to which the Personalty shall be
transferred to Purchaser "AS IS" "WHERE IS" and with all faults;
(c) An assignment and assumption agreement with respect to the
Deposit Liabilities, Loans, Tenant Leases and Safe Deposit Agreements
in the form of Schedule 5.3(c) attached hereto, to which shall be
attached updated Schedules 1.1(e) and 1.1(f) setting forth the Deposit
Liabilities, Excluded Deposits and Loans as of the close of business of
the third business day preceding the Closing Date (the "Assignment and
Assumption Agreement");
(d) Lease assignment and assumption agreements with respect to
each of the Branch Leases in the form of Schedule 5.3(d) attached
hereto (the "Lease Assignments");
(e) Subject to the provisions of Section 10.3, such consents
of landlords under the Branch Leases as shall be required pursuant to
the terms of such Branch Leases to the assignment of the Branch Leases
to Purchaser in the form of Schedule 5.3(e) attached hereto (the
"Landlord Consents");
(f) An Officer's Certificate in the form of Schedule 5.3(f)
attached hereto;
(g) An opinion of Edwards & Angell, counsel to Seller, dated
the Closing Date, in form and substance reasonably satisfactory to
Purchaser to the effect that: (i) Seller is a national bank, duly
organized, validly existing and in good standing under the laws of the
United States, with full corporate power and authority to enter into
and perform its obligations under this Agreement; and (ii) this
Agreement has been duly and validly authorized, executed and delivered
by Seller and (assuming due authorization, execution and delivery by
Purchaser) is a legal, valid and binding obligation of Seller
enforceable against Seller in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws of general applicability relating to or
affecting creditors' rights, or the limiting effect of rules of law
governing specific performance, equitable relief and other equitable
remedies or the waiver of rights or remedies;
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(h) The Draft Closing Statement;
(i) Seller's resignation as trustee or custodian, as
applicable, with respect to each IRA or Keogh Plan account included in
the Deposit Liabilities and designation of Purchaser as successor
trustee or custodian with respect thereto, as contemplated by Section
2.5;
(j) The Standstill Agreement; and
(k) Such other documents necessary to effect the transactions
contemplated hereby as Purchaser shall reasonably request.
Section 5.4. Purchaser Deliveries. At the Closing, Purchaser shall
deliver to Seller:
(a) The Assignment and Assumption Agreement;
(b) Purchaser's acceptance of its appointment as successor
trustee or custodian, as applicable, of the IRA and Keogh Plan accounts
included in the Deposit Liabilities and assumption of the fiduciary
obligations of the trustee or custodian with respect thereto, as
contemplated by Section 2.5;
(c) The Lease Assignments and, as contemplated by Section
11.2, such other instruments and documents as any landlord under a
Branch Lease may reasonably require as necessary or desirable for
providing for the assumption by Purchaser of a Branch Lease, each such
instrument and document in the form and substance reasonably
satisfactory to the parties and dated as of the Closing Date;
(d) An Officer's Certificate in the form of Schedule 5.4(d)
attached hereto;
(e) An opinion of Purchaser's counsel, dated the Closing Date,
in the form and substance reasonably satisfactory to Seller, to the
effect that (i) Purchaser is a federal savings bank, duly organized,
validly existing and in good standing under the laws of the United
States with full corporate power and authority to enter into and
perform its obligations under this Agreement; and (ii) this Agreement
has been duly and validly authorized, executed and delivered by
Purchaser and (assuming due authorization, execution and delivery by
Seller) is a legal, valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws of general applicability relating to or
affecting creditors' rights, or the limiting effect of rules of law
governing specific performance, equitable relief and other equitable
remedies or the waiver of rights or remedies;
(f) The Draft Closing Statement;
(g) The Hartford Sublease Agreement;
(h) The Warrant Agreement;
(i) The Standstill Agreement;
(j) The Contingent Payment Agreement; and
(k) Such other documents necessary to effect the transactions
contemplated hereby as Seller shall reasonably request.
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ARTICLE VI
CONDITIONS TO OBLIGATIONS OF SELLER
-----------------------------------
Section 6.1. Conditions to Obligations of Seller. The obligations of
Seller under this Agreement are subject to the satisfaction (or, if applicable,
waiver in the sole discretion of Seller, except as to the condition described in
(c)), as of the Closing, of each of the following conditions:
(a) All of the covenants required by this Agreement to be
complied with and performed by Purchaser on or before the Closing Date
shall have been duly complied with and performed in all material
respects;
(b) The representations and warranties made by Purchaser
herein or in any certificate or other document delivered pursuant to
the provisions hereof or thereof or in connection with the transactions
contemplated hereby or thereby shall be correct in all material
respects, on and as of the Closing Date, with the same force and effect
as though such representations and warranties had been made on the
Closing Date;
(c) Approvals in writing of all relevant regulatory agencies
shall have been obtained by Purchaser, and approvals in writing of all
relevant regulatory agencies, where applicable, shall have been
obtained by Seller, and all necessary conditions, including any
additional governmental approvals, permissions or consents (including
consents of third parties, where applicable), if any, including the
giving of all legally required notices and the expiration of all
legally required waiting or protest periods, of or relating to
licenses, approvals and consents shall have been met (all of such
approvals, conditions, permissions, licenses and consents being herein
collectively called the "Regulatory Approvals"), and such Regulatory
Approvals shall include no Material Condition applicable to Seller;
(d) Seller shall have received the items to be delivered by
Purchaser pursuant to Section 5.4;
(e) The transactions contemplated in the Parent Merger
Agreement shall have been consummated; and
(f) The transactions contemplated in the Eagle Purchase
Agreements shall be consummated concurrent with the transactions
contemplated herein.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF PURCHASER
--------------------------------------
Section 7.1. Conditions to Obligations of Purchaser. The obligations of
Purchaser under this Agreement are subject to the satisfaction (or, if
applicable, waiver in the sole discretion of Purchaser, except as to the
condition described in (c)) as of the Closing, of each of the following
conditions:
(a) All of the covenants required by this Agreement to be
complied with and performed by Seller on or before the Closing Date
shall have been duly complied with and performed in all material
respects;
(b) All of the representations and warranties made by Seller
herein or in any certificate or other document delivered pursuant to
the provisions hereof or thereof or in connection with the transactions
contemplated hereby or thereby shall be correct in all material
respects, on and as of the Closing Date, with the same force and effect
as though such representations and warranties had been made on the
Closing Date;
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(c) The Regulatory Approvals, which shall include no Material
Condition applicable to Purchaser, shall have been obtained;
(d) The Estimated Payment Amount shall have been paid by
Seller to Purchaser, as contemplated by Section 3.2;
(e) Purchaser shall have received the items to be delivered by
Seller pursuant to Section 5.3;
(f) The Capital Financing shall have been consummated; and
(g) The transactions contemplated in the Eagle Purchase
Agreements shall be consummated concurrent with the transactions
contemplated herein.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller represents and warrants to Purchaser as follows:
Section 8.1. Organization. Seller is a national bank duly, organized,
validly existing and in good standing under the laws of the United States.
Section 8.2. Authority. Seller has the power and authority to enter
into and perform this Agreement. This Agreement and the execution, delivery and
performance hereof have been duly authorized and approved by the Board of
Directors of Seller, and this Agreement constitutes a valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms,
except as enforcement may be limited by federal and state regulators of Seller
or by bankruptcy, insolvency, reorganization, moratorium or other laws of
general applicability relating to or affecting creditors' rights, or the
limiting effect of rules of law governing specific performance, equitable relief
and other equitable remedies or the waiver of rights or remedies.
Section 8.3. Non-Contravention. The execution and delivery of this
Agreement by Seller do not and, subject to the receipt of all required approvals
and consents, the consummation of the transactions contemplated by this
Agreement will not constitute (a) a breach or violation of or default under any
law, rule, regulation, judgment, order, governmental permit or license,
agreement, indenture, or instrument of Seller or to which Seller is subject,
which breach, violation, or default would have an adverse effect on Seller or
the business or properties of the Branches; or (b) a breach or violation of or a
default under the charter or Bylaws of Seller or any material contract or other
instrument to which Seller is a party or by which Seller is bound.
Section 8.4. Compliance with Law. The business and operations of the
Branches have been and are being conducted in accordance with all applicable
laws, rules and regulations of all authorities (other than Environmental Laws or
the ADA), the penalty or liability for the violation of which, if imposed or
asserted, could have a material adverse effect on the business, operations,
revenues, financial condition, property or business properties of the Branches.
Section 8.5. Legal Proceedings. There are no actions, suits, or
proceedings, whether civil, criminal or administrative, pending or, to Seller's
best knowledge, threatened against or affecting Seller which could have an
adverse effect on the Branches, Assets, Loans, Deposit Liabilities, or
consummation of the transactions contemplated hereby.
Section 8.6. Personalty. Seller has good and marketable title to the
Personalty, free and clear of all liens and encumbrances.
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Section 8.7. Loans.
(a) Each of the Loans is based upon valid, binding and
enforceable agreements to which Seller has good and marketable title,
free and clear of all liens and encumbrances.
(b) the collateral for each of the Loans that is secured is
(i) the collateral described in the applicable security agreement,
mortgage, pledge, collateral assignment or other security document, and
(ii) is subject to a valid, enforceable and perfected lien of the type
provided therein.
(c) Seller has not conveyed the Loans or any interest therein.
(d) The additional representations and warranties, if any, set
forth in Schedule 1.1(f) attached hereto, which shall be deemed made
and shall be true and correct as of the Closing Date.
Except as set forth in this Section 8.7 or Schedule 1.1(f), Seller has not made,
is not making and shall not be deemed to have made any representation as to the
creditworthiness, credit history or financial condition of any primary or
secondary obligor under any Loan, or any guarantor or surety thereof, in this
Agreement or any agreement, instrument or other document executed in connection
with any of the transactions contemplated hereby or provided or prepared
pursuant hereto or in connection with any of the transactions contemplated
hereby.
Section 8.8. Tenants; Branch Leases
(a) Except for the tenants listed on Schedule 8.8 attached
hereto, there are no tenants or other occupants of the Real Property.
(b) Except as set forth in Schedule 8.8, each of the Branch
Leases is in full force and effect, and Seller is not in default under
any of its obligations thereunder.
Section 8.9. Financial and Deposit Data. All financial, Deposit
Liability and Loan information regarding the Branches provided to Purchaser by
Seller was accurate and complete in all material respects as of the date when
provided; provided that certain of such historical information may not reflect
the allocation of certain Deposit Liabilities and Loans to the Branches in
connection with Fleet's application to the Board with respect to the
transactions contemplated by the Parent Merger Agreement.
Section 8.10. Limitations on Representations and Warranties.
Notwithstanding anything to the contrary contained herein:
(a) Seller makes no warranties as to the physical condition of
the Branches or Personalty, all of which are being sold "AS IS" "WHERE
IS" and with all faults at the Closing Date.
(b) Seller makes no representations or warranties to Purchaser
as to whether, or the length of time during which, any accounts
relating to Depository Liabilities will be maintained by the depositors
at the Branches after the Closing Date.
Section 8.11. Branch Operating Contracts and Defaults. No event has
occurred and remains uncured that constitutes a default by Seller or results in
a right of acceleration, termination of any similar right by any party (or
would, but for the passage of time or the giving of notice, constitute a default
or result in such a right of acceleration, termination or similar right) under
any material contract relating to the operation of the Branches.
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ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser represents and warrants to Seller as follows:
Section 9.1. Organization. Purchaser is a federal savings bank, duly
organized, validly existing and in good standing under the laws of the United
States.
Section 9.2. Authority. Purchaser has the corporate power and authority
to enter into and perform this Agreement. This Agreement and the execution,
delivery and performance hereof have been duly authorized and approved by the
Board of Directors of Purchaser, and this Agreement constitutes a valid and
binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws of general applicability relating to or
affecting creditors' rights, or the limiting effect of rules of law governing
specific performance, equitable relief and other equitable remedies or the
waiver of rights or remedies.
Section 9.3. Non-Contravention. The execution and delivery of this
Agreement by Purchaser do not and, subject to the receipt of all required
approvals and consents, the consummation of the transactions contemplated by
this Agreement will not constitute (a) a breach or violation of or default under
any law, rule, regulation, judgment, order, governmental permit or license,
agreement, indenture or instrument of Purchaser or to which it is subject, which
breach, violation or default would have a material and adverse effect on
Purchaser, or (b) a breach or violation of or a default under the charter or
Bylaws of Purchaser or any material contract or other instrument to which it is
a party or by which it is bound.
Section 9.4. Legal Proceedings. There are no actions, suits, or
proceedings, whether civil, criminal or administrative, pending or, to
Purchaser's best knowledge, threatened against or affecting Purchaser which
could have a material adverse effect on the consummation of the transactions
contemplated hereby.
Section 9.5. Regulatory Matters. To Purchaser's best knowledge:
(a) As of the date hereof, subject to the completion of the
Capital Financing and without giving effect to the transactions
contemplated hereby, and following the consummation of the transactions
contemplated hereby, on a pro forma basis Purchaser will (i) be at
least "adequately capitalized", as defined in the Federal Deposit
Insurance Act, as amended (12 U.S.C. 1831o), and (ii) meet all capital
requirements, standards and ratios required by each state or federal
bank regulator with jurisdiction over Purchaser, including without
limitation, any such higher requirement, standard or ratio as shall
apply to institutions engaging in the acquisition of insured
institution deposits, assets or branches, and no such regulator is
likely to, or has indicated that it will, condition any of the
Regulatory Approvals upon an increase in Purchaser's capital or
compliance with any capital requirement, standard or ratio.
(b) Purchaser will not be required to divest deposit
liabilities, branches, loans or any business or line of business as a
condition to the receipt of any of the Regulatory Approvals.
(c) Each of the subsidiaries or Affiliates of Purchaser, which
is an insured depository institution, was rated "Satisfactory" or
"Outstanding" following its most recent Community Reinvestment Act
examination by the regulatory agency responsible for its supervision.
Purchaser has received no notice of and has no knowledge of any planned
or threatened objection by any community group to the transactions
contemplated hereby.
Section 9.6. Financing Available. Purchaser's ability to pay the
Purchase Price hereunder shall not be contingent on raising equity capital,
obtaining specific financing therefor, consent of any lender or any other
matter, except for Capital Financing and receipt of required Regulatory
Approvals.
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ARTICLE X
COVENANTS OF SELLER
-------------------
Seller covenants and agrees with Purchaser as follows:
Section 10.1 Regulatory Approvals. Seller shall use its best efforts to
assist Purchaser in obtaining the Regulatory Approvals. Seller shall provide
Purchaser or the appropriate regulatory authorities all information reasonable
required to be submitted by Seller in connection with the Regulatory Approvals.
Section 10.2. Conduct of the Business. From the date hereof through the
Closing Date, Seller shall (a) conduct its business of banking in the usual,
regular and ordinary course consistent with past practice, (b) use reasonable
efforts to maintain and preserve intact its relationships with its Branch
Employees and advantageous business relationships, including relationships with
the Branch Customers, and (c) take no action which would adversely affect or
delay the ability of any party hereto to obtain any Regulatory Approval or to
perform its covenants and agreements under this Agreement. Without limiting the
effect of the foregoing sentence, Seller shall not transfer any of the Branch
Employees to any of its facilities other than the Branches from the date hereof
through the Closing Date, except upon the request of a Branch Employee, which
has not been solicited, induced or otherwise sought by Seller.
Section 10.3. Corporate and Other Consents.
(a) Seller shall use its best efforts to secure all necessary
corporate and other non-regulatory consents (except those involving
Purchaser) and shall provide certified copies to Purchaser upon
Purchaser's request.
(b) Seller shall promptly comply with all applicable laws,
regulations, and rulings in connection with this Agreement and the
consummation of the transactions contemplated hereby.
(c) (i) Seller shall use its best efforts (which shall not
require Seller to pay any money or other consideration to any
person or to initiate any claim or proceeding against any
person) to cause every landlord under a Branch Lease, the
consent of which is required under the terms of such Branch
Lease to the assignment of such Branch Lease to Purchaser, to
execute in favor of Purchaser a Landlord Consent.
(ii) Notwithstanding anything to the contrary contained in
this Agreement, Seller's failure to obtain a Landlord Consent
from a landlord under a Branch Lease after using such best
efforts to obtain the same shall not entitle Purchaser to
terminate this Agreement and Purchaser shall remain obligated
to perform all of its obligations hereunder with respect to
the applicable Branch, including without limitation the
assumption of the Deposit Liabilities relating thereto and the
payment of the full Purchase Price without any reduction or
adjustment, but excluding only its obligation to assume such
Branch Lease.
(iii) If Seller shall be unable to deliver a Landlord Consent
with respect to a Branch Lease, Seller shall (A) deliver to
Purchaser at the Closing a certificate from Seller, as tenant
under the applicable Branch Lease in the form of Schedule 10.3
attached hereto (B) make available to Purchase the space
necessary for the operations of the applicable Branch for a
cost equal to the rent and other amounts payable under such
Branch Lease, and (C) indemnify and hold harmless Purchaser
against any cost and expense (including reasonable attorneys'
fees) relating to any claim, proceeding or action commenced by
the applicable landlord, but in no event shall Purchaser be
indemnified for its actual or consequential damages or
nonlitigation costs or expenses relating to or arising from
its eviction from such space or relocation of such Branch.
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Section 10.4. Nonsolicitation. For a period of eighteen (18) months
following the Closing Date, neither Seller nor any of its Affiliates shall (a)
solicit Branch Customers, which are obligors of Commercial Loans that are
acquired and assumed by Purchaser as of the close of business on the Closing
Date, for Commercial Loan business, or (b) use a list of the Branch Customers to
directly solicit insured deposit account or consumer or small business lending
business (the "Competitive Business") from the Branch Customers. Notwithstanding
the foregoing sentence Seller, Fleet, Shawmut and their respective Affiliates
shall be permitted to (a) engage in advertising, solicitations or marketing
campaigns, programs or other efforts not primarily directed to or targeted at
such Branch Customers or such obligors of Commercial Loans, including without
limitation such campaigns, programs or efforts in connection with other lending,
deposit, safe deposit, trust or other financial services relationships with such
Branch Customers or such obligors, (b) engage in lending, deposit, safe deposit,
trust or other financial services relationships existing as of the Closing Date
with such Branch Customers or such obligors, which are not acquired or assumed
by Purchaser pursuant hereto, through other branch offices of Seller, (c)
respond to unsolicited inquiries by such Branch Customers or such obligors with
respect to banking or other financial services, including without limitation
Commercial Loans, and (d) provide notices or communications relating to the
transactions contemplated hereby in accordance with the provisions hereof.
Section 10.5. Data Processing and Transfer Services. Each party hereto
agrees to provide to the other data processing and transfer services as shall be
reasonably necessary for the conversion and transfer of information concerning
the Deposit Liabilities and the Loans into Purchaser's data processing system.
After execution of this Agreement, each party hereto shall provide to the other
computer file instructions which maintain information on the deposit and loan
accounts, together with operational procedures necessary to implement the
transfer of the information to Purchaser. Seller and Purchaser shall each
designate an individual to serve as liaison from the date hereof through the
Closing Date concerning operational matters. Seller shall continue to provide
post-closing assistance to Purchaser as may be reasonably necessary.
Section 10.6. Cooperation. Seller shall use its reasonable efforts to
cooperate with Purchaser in providing all financial and other information
related to the business operations, revenues, financial condition, property or
business properties of the Branches as may be needed for inclusion in the
Registration Statement and in other securities or regulatory filings of
Purchaser or its Affiliates relating to the transactions contemplated herein.
ARTICLE XI
COVENANTS OF PURCHASER
----------------------
Purchaser covenants and agrees with Seller as follows:
Section 11.1. Regulatory Approvals and Standards.
(a) Purchaser will use its best efforts to obtain as
expeditiously as possible the Regulatory Approvals and will use its
best efforts to prepare and file within thirty (30) days after the
execution of this Agreement all necessary applications of Purchaser for
Regulatory Approvals. As of the Closing Date, Purchaser will satisfy
each and all of the standards and requirements reasonably within its
control imposed as a condition to obtaining or necessary to comply with
Regulatory Approvals. Purchaser shall pay any fees charged by any
regulatory authorities to which it must apply for any of the Regulatory
Approvals. Purchaser shall take no action which would adversely affect
or delay the ability of any party hereto to obtain any Regulatory
Approval or to perform its covenants and agreements under this
Agreement.
(b) From the date hereof through the Closing Date, Purchaser
shall (i) remain "adequately capitalized", as defined in the Federal
Deposit Insurance Act (12 U.S.C. 1831o), and (ii) meet all capital
requirements, standards and ratios required by each state or federal
bank regulator with jurisdiction over Purchaser, including without
limitation, any such higher requirement, standard or ratio as shall
apply to institutions engaging in the acquisition of insured
institution deposits, assets or branches.
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Section 11.2. Corporate and Other Consents; Compliance with Law; Real
Property.
(a) Purchaser shall use its best efforts to secure all
necessary corporate and other non-regulatory consents (except those
involving Seller) and shall provide certified copies to Seller upon
Seller's request.
(b) Purchaser shall promptly comply with all applicable laws,
regulations, and rulings in connection with this Agreement and the
consummation of the transactions contemplated hereby.
(c) Purchaser shall provide such financial and other
information as shall be reasonably requested by landlords under the
Branch Leases in connection with obtaining the Landlord Consents.
Notwithstanding anything to the contrary contained herein, Purchaser
agrees that the form of Landlord Consent with respect to a Branch Lease
may be modified at the request of a landlord to incorporate any and all
conditions, terms and agreements such landlord may require with respect
to such landlord's required consent to the assignment of such Branch
Lease to Purchaser; provided that such conditions, terms and agreements
do not constitute a material or monetary modification or alteration of
the terms, covenants and conditions of such Branch Lease or otherwise
impose any burden on Seller or Purchaser not otherwise contemplated by
such Branch Lease.
(d) Purchaser shall promptly order any title certificates or
title searches required in connection with the transfer of the Real
Property under applicable state or local practice or necessary to
obtain the title insurance described in Section 5.3(a).
Section 11.3. Solicitation of Accounts. Prior to the Closing Date,
neither Purchaser nor any of its Affiliates shall attempt directly to solicit
Branch Customers through advertising specifically referencing or targeted to
such Branch Customers nor transact their respective businesses in a way which
would (a) specifically induce such Branch Customers to close Deposit Liability
accounts and open accounts directly with Purchaser or any of its Affiliates or
(b) otherwise result in the transfer of all or a portion of an existing Deposit
Liability from Seller. Notwithstanding the foregoing sentence Purchaser and its
Affiliates shall be permitted to (w) engage in advertising, solicitations or
marketing campaigns not primarily directed to or targeted at such Branch
Customers, (x) engage in lending, deposit, safe deposit, trust or other
financial services relationships with branch customers of Purchaser or its
Affiliates who are also Branch Customers, (y) respond to unsolicited inquiries
by such Branch Customers with respect to banking or other financial services,
and (z) provide notices or communications relating to the transactions
contemplated hereby in accordance with the provisions hereof.
Section 11.4. Nonsolicitation of Seller's Employees. In consideration
of, among matters, the willingness of Seller to provide Purchaser with the
opportunity to interview and hire any of the Branch Related Employees, Purchaser
agrees that, except in accordance with Section 11.6, for a period of one year
following the Closing Date, neither Purchaser nor any of its Affiliates shall on
behalf of itself and each of its Affiliates, directly or indirectly, solicit for
employment, solicit as an independent contractor or consultant, induce to
terminate employment with Seller or otherwise interfere with Seller's employment
relationship with, any Branch Employee or Branch Related Employee, who is not
employed by Purchaser pursuant to Section 11.6, or any other employee or officer
of Seller, Fleet, Shawmut or any of their respective Affiliates, whose
responsibilities or duties relate to banking or other businesses of Seller,
Fleet, Shawmut or any of their respective Affiliates within the state (or
states) in which the Branches are located. It is expressly acknowledged by the
parties hereto that Purchaser may employ or retain as an independent contractor
or consultant any such Branch Employee, Transferred Employee or other employee
or officer who shall terminate his or her employment with Seller, Fleet, Shawmut
or any of their respective Affiliates without any such direct or indirect
solicitation by Purchaser or who shall be terminated by Seller, Fleet, Shawmut
or any of their respective Affiliates; provided that such employment or
retention shall not be prohibited by any agreement between such Branch Employee,
Transferred Employee or other employee or officer and Seller, Fleet, Shawmut or
any of their respective Affiliates.
Section 11.5. Notice to Loan Customers. Subject to the provisions of
Sections 12.4 and 15.2 herein, upon or after the mailing of Customer Notices,
Purchaser agrees to provide, in accordance with standard practice, all
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Branch Customers with relationships as to the Loans with written notice of
Purchaser's intent to purchase the Loans. Seller agrees to provide all Loan
customers with all additional legally required notices of the assignment or
transfer of the Loans.
Section 11.6. Transferred Employees.
(a) Purchaser (i) shall offer employment to all Branch
Employees, and (ii) may, but shall not be obligated to, offer
employment to any Branch Related Employee following the Final Approval
Date and in any event at least twenty (20) days prior to the Closing
Date upon terms and conditions described below. Subject to the
provisions of this Section, Transferred Employees will be subject to
the employment terms, conditions and rules applicable to other
employees of Purchaser. Nothing contained in this Agreement shall be
construed as an employment contract between Purchaser and any
Transferred Employees.
(b) To the extent permitted under, and in accordance with, the
terms and conditions of Purchaser's 401(k) plan, Transferred Employees
may "rollover" any eligible distributions of their accounts in Seller's
qualified pension or profit-sharing plans to Purchaser's 401(k) plan.
(c) Purchaser shall be solely responsible for any activity in
connection with interviewing the Branch Employees, Branch Related
Employees and other employees of Seller, provided, however, that Seller
shall use its best efforts to make such Branch Employees, Branch
Related Employees and other employees available for interviewing by
Purchaser. Purchaser indemnifies and holds Seller harmless from and
against any claim, liability, losses, costs or expenses, including
reasonable attorneys' fees, resulting or arising from Purchaser's acts
or omissions in connection with said interviews.
(d) Seller shall have the right to continue to employ after
the Closing Date any Branch Employee or Branch Related Employee, who is
not a Transferred Employee, or to release any such Branch Employee or
Branch Related Employee in its sole discretion.
(e) Each Transferred Employee shall be provided employment
subject to the following terms and conditions:
(i) Salary shall be equivalent to base salary paid by
Seller to such Transferred Employee as of the close of
business on the Closing Date.
(ii) Vacation benefits shall be equivalent to
vacation benefit provided by Seller to such Transferred
Employee as of the close of business on the Closing Date.
(iii) Purchaser shall treat each Transferred Employee
as a new hire of Purchaser but shall provide such Transferred
Employee with credit for the period of years of service with
Seller towards the calculation of eligibility for such
purposes as vacation, severance and other similar benefits and
participation and vesting in Purchaser's qualified pension or
profit sharing plan (other than Webster's employee stock
ownership plan), as such plans may exist (but not for purpose
of benefit accruals, including without limitation, funding of
accrued pension or profit sharing plans for such Transferred
Employee with respect to any period prior to the Closing
Date).
(iv) Each Transferred Employee shall be eligible to
participate in the medical and dental plans of Purchaser, as
such plans may exist, effective as of the Closing Date and any
pre-existing conditions provisions of such plans shall be
waived with respect to such Transferred Employee.
(v) Upon conclusion of his or her short term
disability or temporary leave of absence, subject to the terms
and conditions of the Purchaser's plans and policies and
applicable law, each Transferred Employee on such leave shall
receive the salary and vacation benefit in effect when he or
she went on leave, shall otherwise be treated as a Transferred
Employee and, to the extent
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practicable, shall be offered by Purchaser the same or a
substantially equivalent position to his or her position with
Seller prior to leave.
(vi) Upon the first anniversary of the consummation
of the transactions contemplated by the Parent Merger
Agreement, each Transferred Employee, who is still employed by
Purchaser, shall be eligible for benefits under any severance
or similar plans maintained by Purchaser with credit for the
period of years service with Seller towards the calculation of
benefits.
(f) Except as provided in Section 12.3, Purchaser shall not be
responsible for any benefits of the Branch Employees up to the Closing
Date.
11.7. Transfer of Deposit Liabilities. Seller, on behalf of itself and
its Affiliates, hereby covenants and agrees that it will, for all purposes,
treat the Deposit Liabilities assumed by Purchaser pursuant to the terms hereof
as Deposit Liabilities insured by the Bank Insurance Fund, and that it will not
reduce the amount of Deposit Liabilities it reports as insured by the Savings
Association Insurance Fund by reason of the transfer of such Deposit Liabilities
to Purchaser.
ARTICLE XII
ENVIRONMENTAL DUE DILIGENCE; EMPLOYEE AND CUSTOMER NOTICES; ETC.
----------------------------------------------------------------
Section 12.1 Environmental Due Diligence.
(a) Purchaser may conduct at its own expense environmental
audits by an independent qualified environmental engineer or consultant
(the "Environmental Consultant") of the Real Property during the
Environmental Due Diligence Period. In the event Purchaser conducts a
Phase I audit, Purchaser shall use its best efforts to commence such
audit within seven (7) days from the date hereof.
(b) In the event the Phase I audit of any of the Real Property
is not completed within the Environmental Due Diligence Period through
no fault of Purchaser or its Environmental Consultant, Purchaser may
request an extension of the Environmental Due Diligence Period for a
reasonable period not exceeding fifteen (15) days solely to permit
completion of such Phase I audit.
(c) In the event that as a result of such Phase I audit,
Purchaser elects in the exercise of its reasonable business judgment to
conduct a Phase II environmental audit by the Environmental Consultant
of any of the Real Property, upon receipt of written notice of such
election and a copy of any report prepared with respect to such Phase I
audit evidencing a reasonable basis for such election prior to the
conclusion of the Environmental Due Diligence Period, Seller shall
extend such Environmental Due Diligence Period for an additional thirty
(30) days solely to permit completion of such Phase II audit.
(d) In the event that during the Environmental Due Diligence
Period or any extension thereof pursuant to this Section, Purchaser
shall notify Seller in writing that the Environmental Consultant has
discovered an Environmental Hazards at or on any parcel of the Real
Property, the remediation of which, in the reasonable judgment of the
Environmental Consultant, is or will be the responsibility of Seller,
or Purchaser should it acquire such parcel, and will cost more than
$25,000, Seller may elect to:
(i) make an adjustment to the Purchase Price for the
estimated remediation costs of any such Environmental Hazard,
which shall not have been remediated on or prior to the
Closing Date, in excess of $25,000 with respect to such parcel
of Real Property; or
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(ii) take such remediation steps as are necessary to
make the Real Property comply with Environmental Laws by the
Closing Date (or make provisions to such remediation steps
following the Closing Date as shall be reasonably satisfactory
to Purchaser); or
(iii) lease to Purchaser such parcel of Real Property
for a period of ten (10) years pursuant to a Lease Agreement;
provided that if, during the term of such Lease Agreement or
renewal or extension thereof, Seller shall deliver to
Purchaser a report of a qualified environmental engineer or
consultant certifying that the Environmental Hazard at or on
any such leased parcel of Real Property has been remediated to
the extent required under applicable Environmental Laws,
Purchaser shall be required to purchase such parcel of Real
Property, at the Real Property Purchase Price, in the event
such report is delivered within six (6) months of the Closing
Date, and, thereafter, at the fair market value of such real
property as agreed to by the parties hereto or, if no such
agreement is reached within thirty (30) days of delivery of
such report, as determined pursuant to an appraisal pursuant
to Section 14.6.
(e) Purchaser agrees that it and its Environmental Consultant
shall conduct any Phase I or II audits or other investigations pursuant to this
Section with reasonable care and subject to customary practices among
environmental consultants and engineers, including without limitation, following
completion thereof the restoration of any site to the extent practicable to its
condition prior to such audit or investigation and the removal of all monitoring
wells.
Section 12.2. Access to Branches by Purchaser. Upon execution of this
Agreement, Seller shall provide Purchaser and its representatives, accountants
and counsel reasonable access to the Branches, Branch Employees, Branch Related
Employees, depository records, Loan files, and all other documents and other
information concerning the Branches as Purchaser may reasonably request in order
for Purchaser to perform a review of the same; provided that with respect to
Branch Employees Seller's sole obligation shall be to provide Purchaser with
information concerning the name, position, date of hire and salary of Branch
Employees and shall not be required to provide any information concerning its
"credit scoring" system or any other proprietary information as to its business,
branch or credit practices, policies or procedures. Seller shall provide
Purchaser assistance in Purchaser's investigation relating to the Branches,
Assets and Deposit Liabilities; provided that Purchaser's investigation shall be
conducted in a manner which does not unreasonably interfere with Seller's normal
operations, customers and employee relations and provided further, that if
Purchaser's investigation occurs during non-business hours, the expenses
incurred by Seller as a result of such investigation during non-business hours
shall be paid by Purchaser to Seller prior to or on the Closing Date.
Section 12.3. Communications to Employees; Training. Seller and
Purchaser agree that promptly following the execution of this Agreement,
meetings, joint or several, of Seller and Purchaser as the parties may agree,
shall be held at the Branches or at such other location as Purchaser and Seller
shall mutually agree, to announce Purchaser's proposed acquisition of the
Branches to the Branch Employees. Seller and Purchaser shall mutually agree as
to the scope and content of all initial communications to the Branch Employees.
Thereafter, Purchaser shall be permitted to meet with the Branch Employees
working at the Branches on the date of this Agreement, at times mutually
convenient to Purchaser and Seller to discuss employment opportunities with
Purchaser. Seller may temporarily transfer employees from other branches to the
Branches, but none of such employees shall be treated as Branch Employees. From
and after the Final Approval Date, Purchaser shall be permitted to conduct
training sessions during normal business hours or at other times with the Branch
Employees; provided that Purchaser will in good faith attempt to schedule such
training sessions in a manner which does not unreasonably interfere with
Seller's normal business operations. Purchaser shall reimburse the Branch
Employees for transportation costs to and from the location where Purchaser
shall train such employees and compensate the Branch Employees at their
respective applicable standard or overtime rates for the time spent in such
training.
Section 12.4. Communications with Branch Customers.
(a) Following each of (i) the date all applications and other
filings for Regulatory Approvals required to effect the transactions
contemplated hereby have been filed, (ii) the Final Approval Date, on a
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date certain which is mutually agreeable to the parties which is prior
to the Closing Date and (iii) such earlier date as the parties hereto
shall mutually select Seller and Purchaser shall each send statements
to the Branch Customers announcing the transactions contemplated hereby
(such statements being herein called "Customer Notices"). The form and
content of each Customer Notice shall be subject to the approval of
both parties and the cost of printing and mailing a party's Customer
Notice shall be borne solely by it. Following the Final Approval Date,
each party shall also be entitled to provide at its own expense such
notices or communications to Branch Customers relating to the
transactions contemplated hereby, as it deems appropriate or as may be
required; provided that the text of any such notice or communication
and the timing of such notice or communication which is provided prior
to the Closing shall be approved in advance by the other party, which
approval shall not unreasonably be withheld or delayed.
(b) Except as specifically provided herein, in no event will
Purchaser or any of its Affiliates contact any customer of the Branches
prior to receipt of Regulatory Approval without the prior written
consent of Seller, which consent shall not be unreasonably withheld;
provided that Purchaser and its Affiliates may contact such customers
in connection with (i) advertising, solicitations or marketing
campaigns not primarily directed to or targeted at such customers, (ii)
lending, deposit, safe deposit, trust or other financial services
relationships of Purchaser with such customers existing as of the date
hereof or obtained without violating the terms of this Agreement, (iii)
unsolicited inquiries by such customers to Purchaser with respect to
banking or other financial services, and (iv) notices or communications
relating to the transactions contemplated hereby in accordance with the
provisions hereof.
ARTICLE XIII
INDEMNITY
---------
Section 13.1. Seller's Indemnity. Except as otherwise provided in this
Agreement, Seller shall indemnify, hold harmless and defend Purchaser, its
Affiliates, and their respective officers, agents and employees from and against
all claims, losses, liabilities, demands and obligations (including reasonable
legal fees and expenses) which Purchaser or any of its Affiliates shall receive,
suffer or incur arising out of or resulting from (a) any liability of Seller not
assumed by Purchaser hereunder, (b) any actions taken or omitted to be taken by
Seller prior to the Closing Date and relating to the Branches, Assets, Assumed
Liabilities, Branch Employees, Branch Related Employees, and any suits or
proceedings commenced in connection therewith (other than proceedings to prevent
or limit the consummation of this Agreement), and (c) the breach of any material
representation, warranty or covenant made by Seller in this Agreement.
Section 13.2. Purchaser's Indemnity. Except as otherwise provided in
this Agreement, Purchaser shall indemnify, hold harmless and defend Seller, its
Affiliates and their respective officers, agents and employees from and against
all claims, losses, liabilities, demands and obligations (including reasonable
legal fees and expenses) which Seller or any of its Affiliates shall receive,
suffer or incur arising out of or resulting from (a) any liability of Seller
assumed by Purchaser hereunder, (b) any actions taken or omitted to be taken by
Purchaser from or after the Closing Date and relating to the Branches, Assets,
Assumed Liabilities, Branch Employees, Branch Related Employees, and any suits
or proceedings commenced in connection therewith (other than proceedings to
prevent or limit the consummation of the transactions contemplated in this
Agreement), (c) any actions taken or omitted by Purchaser or its Environmental
Consultant in connection with any Phase I or II audit or other investigation
conducted pursuant to Section 12.1, and (d) the breach of any material
representation, warranty or covenant made by Purchaser in this Agreement.
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Section 13.3. Indemnification Procedure. Promptly after receipt by
either party of notice of the assertion of any claim or the commencement of any
action, suit or proceeding with respect to this Agreement, such party
("Indemnified Party") shall give written notice thereof to the other party
("Indemnitor") and will thereafter keep the Indemnitor reasonably informed with
respect thereto, provided that failure of the Indemnified Party to give the
Indemnitor prompt notice as provided herein shall not relieve the Indemnitor of
its obligations hereunder except to the extent, if any, it shall have been
prejudiced thereby. In case any such action, suit or proceeding is brought
against an Indemnified Party, the Indemnitor shall be entitled to join in (and,
in its discretion, to assume) the defense thereof with counsel satisfactory to
the Indemnified Party, provided, however, that the Indemnified Party shall be
entitled to join in the defense of any such action, suit or proceeding with
counsel of its own choice at the expense of the Indemnitor if, in the good faith
judgment of the Indemnified Party's counsel, representation by the Indemnitor's
counsel may present a conflict of interest or that there may be defenses
available to the Indemnified Party which are different from or in addition to
those available to the Indemnitor. The Indemnitor will not settle any claim,
action, suit or proceeding which would give rise to the Indemnitor's liability
under its indemnity unless such settlement includes as an unconditional term
thereof the giving by the claimant or plaintiff of a release of the Indemnified
Party, in form and substance satisfactory to the Indemnified Party and its
counsel, from all liability with respect to such claim, action, suit or
proceeding. If the Indemnitor assumes the defense of any claim, action, suit or
proceeding as provided in this Section, the Indemnified Party shall be permitted
to join in the defense thereof with counsel of its own selection but at its own
expense except as provided above. If the Indemnitor shall not assume the defense
of any claim, action, suit or proceeding, the Indemnified Party may defend
against such claim, action, suit or proceeding in such manner as it may deem
appropriate, provided that an Indemnified Party shall not settle any claim,
action, suit or proceeding which would give rise to the Indemnitor's liability
under its indemnity without the prior written consent of the Indemnitor, which
consent shall not be unreasonably withheld or delayed.
Section 13.4. Nonsolicitation. Notwithstanding anything to the contrary
contained herein, if Seller or any of its Affiliates shall breach its covenants
set forth in Section 10.4 and obtain a relationship for Competitive Business
from a Branch Customer through a solicitation not permitted by such Section,
Purchaser's sole remedy with respect thereto shall be to notify Seller in
writing thereof on or before eighteen months following the Closing Date, in
which event Seller shall, to the extent practicable, transfer any deposit or
loan account relating to such relationship to Purchaser. Any such deposit
account will be transferred to Purchaser without regard to the Deposit Premium
and any such loans shall be transferred to Purchaser at the Loan Value thereof.
Section 13.5. Survival. All indemnities contained in or made pursuant
to this Agreement shall survive the Closing, until the date which is one (1)
year after the Closing Date, except as to any claim for which written notice
shall have been given prior to such date.
Section 13.6. Basket. Notwithstanding anything to the contrary
contained in Sections 13.1 and 13.2, no party shall be entitled to
indemnification pursuant to Section 13.1 or 13.2 until its aggregate claims for
indemnification under such applicable Section against the other party shall be
in excess of One Hundred Eighty-Seven Thousand Dollars ($187,000), at which time
such party shall be entitled to indemnification for the full amount of its
indemnifiable claims above such amount.
ARTICLE XIV
ADDITIONAL LOAN PURCHASES
-------------------------
Section 14.1. Additional Commercial Loan Purchase. Within thirty (30)
days from the date hereof, Purchaser may, by written notice to Seller, offer to
purchase on the Closing Date any or all of the loans described on Schedule 14.1
hereof. Seller may, in its sole discretion, reject any offer to purchase any
loan described on Schedule 14.1, unless the purchase price offered for such loan
shall be equal to the Loan Value applicable thereto, less the reserve associated
with such loan as reflected on the books of Seller on the date hereof. Seller
shall, by written notice to the Purchaser, within thirty (30) days of receipt of
any offer to purchase, accept or reject Purchaser's offer with respect to such
loans.
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Section 14.2 Additional Residential Mortgage Loans.
(a) Seller hereby agrees to use its best efforts to fund between One
Hundred Fifty Million Dollars ($150,000,000) and Two Hundred Million Dollars
($200,000,000) of the Deposit Liabilities being assumed by Purchaser pursuant to
the terms hereof through the transfer of residential mortgage loans to Seller
(the "Additional Residential Pool"), which Additional Residential Pool Seller
and Purchaser mutually agree are to be eligible for securitization. Seller
agrees that Purchaser shall have the option whether to accept or reject the
Additional Residential Pool within thirty (30) days of receipt of information
relating to the Additional Residential Pool.
(b) For purposes of this Section 14.2, the value of any loan included
in the Additional Residential Pool shall be equal to its Loan Value.
(c) The Additional Residential Pool loans transferred by Seller to
Purchaser pursuant to the terms hereof shall be transferred on a "servicing
retained by seller" basis, and Seller or its Affiliates shall be entitled to
secure a customary servicing fee, unless otherwise agreed.
ARTICLE XV
WEBSTER BRANCH PURCHASE
-----------------------
Section 15.1 Purchase and Sale of Assets and Assumed Liabilities.
(a) On the Closing Date, Purchaser shall sell, convey, assign, transfer
and deliver to Seller, and Seller shall purchase and accept from Purchaser, all
of Purchaser's right, title and interest in the Webster Bank Assets relating to
Purchaser's branch offices located at 1177 Post Road, Fairfield, Connecticut and
56 West Broad Street, Stamford, Connecticut (collectively the "Webster Bank
Branches").
(b) On the Closing Date, Seller agrees to assume, pay, perform and
discharge, and to indemnify and hold harmless Purchaser against the Webster Bank
Assumed Liabilities arising from and after the close of business on the Closing
Date.
(c) For purposes of this Agreement, the "Webster Bank Assets" shall
mean:
(i) The parcels of real property and the improvements thereon
relating to the Webster Bank Branches; and
(ii) All of the personal property of Purchaser located in the
Webster Bank Branches, consisting of the trade fixtures, shelving,
furniture, equipment, telephone systems, security systems, safe deposit
boxes (exclusive of contents), vaults and supplies, except automated
teller machines and personalty of the type constituting Excluded
Property.
(d) For purposes of this Agreement, the "Webster Bank Assumed
Liabilities" shall mean:
(i) deposit liabilities with respect to accounts which are
booked by Purchaser at the Webster Bank Branches as of the close of business on
the Closing Date, which are defined as deposits in the Federal Deposit Insurance
Act, 12 U.S.C. 1813, including in each case collected and uncollected deposits
plus Accrued Interest (the "Webster Bank Deposit Liabilities").
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(e) Seller shall not assume or be bound by any duties,
responsibilities, obligations or liabilities of Purchaser of any kind or nature,
known or unknown, contingent or otherwise, other than the Webster Bank Assumed
Liabilities. Notwithstanding anything to the contrary contained herein, Seller
shall not assume, and Purchaser shall remain obligated to pay, perform and
discharge and shall indemnify and hold harmless Seller against, any liabilities
and obligations of Purchaser arising prior to the close of business on the
Closing Date.
Section 15.2. Taxes, Closing, Conditions. With respect to the
transactions referred to in Section 15.1,
(a) Articles V, VI and VII shall apply, except that the term
"Purchaser" shall mean Shawmut Bank Connecticut, National Association and the
term "Seller" shall mean Webster Bank;
(b) With respect to Section 5.3;
(i) Schedule 5.3(a) shall be replaced with Schedule 15.3(a), a
form of quitclaim deed for the Webster Bank Branches.
(ii) Schedule 5.3(b) shall be replaced with Schedule 15.3(b),
a bill of sale for the Personalty at the Webster Bank Branches.
(iii) Schedule 5.3(c) shall be replaced with Schedule 15.3(c),
an assignment and assumption agreement with respect to the Webster Assumed
Liabilities.
(c) With respect to Section 5.4:
(i) The Assignment and Assumption Agreement shall refer to the
form contained in Schedule 15.3(c).
Section 15.3. Employee and Customer Notices; Etc. With respect to the
transactions set forth in Section 15.1, Article XII shall apply, and the term
"Purchaser" shall be deemed to be "Shawmut Bank Connecticut, National
Association" and the term "Seller" shall mean "Webster Bank".
Section 15.4 Webster Bank Employees.
(a) With respect to each employee located at the Webster Bank Branches,
Seller hereby agrees to (i) hire such employee, or (ii) assume Purchaser's
obligations under its severance plan to pay severance and provide benefits to
such employee, upon the termination or deemed termination by Seller or Purchaser
of such employee, on or before the first anniversary of the transactions
contemplated in the Parent Merger Agreement.
(b) In the event that Seller shall hire any Webster Bank Branch
employee, Seller agrees to provide employment to such employee in accordance
with the provision of Section 11.6(e) hereof.
(c) For purposes of this Section 15.4, any references to Seller in
Section 11.6(e) shall mean Webster Bank, any references to Purchaser shall mean
Shawmut Bank Connecticut, National Association, and any references to
Transferred Employees shall mean Webster Bank Branch employees hired by Shawmut
Bank Connecticut, National Association.
Section 15.5 Other Applicable Provisions. Other applicable provisions
of this Agreement shall apply to the purchase by Seller of the Webster Bank
Branches, unless the context otherwise requires or such provisions are
inconsistent with this Article XV or are otherwise inappropriate.
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ARTICLE XVI
POST CLOSING MATTERS
--------------------
Section 16.1. Settlement Procedures. Seller shall establish settlement
procedures for the forwarding to Purchaser of Items for the Deposit Liabilities
and Loans assumed and purchased by Purchaser that come into Seller's possession
on or after the Closing Date. To the extent that Seller bears any of the cost
for couriers to deliver Items outside of the state (or states) in which the
Branches are located , Purchaser will reimburse Seller for such cost. Seller
agrees to maintain such settlement procedures for at least thirty (30) days
following the Closing Date. Any government checks shall continue to be processed
under the settlement procedures for a period of three (3) months from the
Closing Date.
Section 16.2. Further Assurances. On and after the Closing Date:
(a) Except as specifically provided otherwise herein, Seller
shall assist Purchaser in the orderly transition of the operations of
the Branches and shall give such further assurances and execute,
acknowledge and deliver all such instruments as may be necessary and
appropriate to effectively vest in Purchaser title in the Assets in the
manner contemplated hereby; and
(b) Except as specifically provided otherwise herein,
Purchaser shall give such further assurances to Seller and shall
execute, acknowledge and deliver all such acknowledgments and other
instruments and take such further action as may be necessary and
appropriate to effectively relieve and discharge Seller from any
obligations remaining with respect to the Deposit Liabilities or other
liabilities of Seller assumed by Purchaser hereunder.
Section 16.3. Notice of Branch Transfer. As soon as practicable after
the Closing Date, Purchaser shall (a) change the name on all documents,
including loan documentation and deposit and withdrawal forms provided in the
Branches, and facilities relating to the Branches to Purchaser's name or to a
name which is not in any way similar to Seller's name, (b) notify all persons
who are Branch Customers on the Closing Date of such change, (c) use it best
efforts to issue all necessary checkbooks, passbooks, and other materials issued
to Branch Customers bearing such new name within six (6) months of Closing Date,
and (d) provide appropriate notice to all other appropriate regulatory
authorities required as a result, of the consummation of the transactions
contemplated hereby.
Section 16.4. Access to and Retention of Books and Records. On the
Closing Date, to the extent practicable, Purchaser shall receive possession of,
and all right, title and interest in, all books and records relating to and
located at the Branches which are in the possession of Seller; provided that for
a period of at least six (6) years from the Closing Date, each party shall have
reasonable access to said books and records of the other party and the books and
records of the Branches and the requesting party, at its own expense, may make
copies and extracts when such copies and extracts are required by regulatory
authorities, for litigation purposes, accounting purposes or as otherwise
appropriate; provided further that in the event that as of the end of such
period, any tax year of the Seller is under examination by any taxing authority,
such books and records shall be maintained by Purchaser until a final
determination of the tax liability of Seller for that year has been made. If
such copies or extracts require use of a party's equipment or facilities, the
user shall reimburse the other party for all costs incurred, including without
limitation employee expenses. Notwithstanding the foregoing, neither party shall
have any obligation to retain records beyond any statutorily required or
commonly acceptable time limit. Purchaser agrees to maintain records with
respect to the Branches for the applicable period. Notwithstanding anything to
the contrary contained herein, the obligations of the parties hereto under this
Section shall be subject to all applicable laws relating to the confidentiality
of bank records.
Section 16.5. Deposit Histories. In case of any dispute with or inquiry
by any Branch Customer whose Deposit Liability account is subject to this
Agreement, which dispute or inquiry relates to the servicing of such account by
Seller prior to the date for which a deposit history has been provided to
Purchaser, Seller will provide Purchaser with the appropriate information where
available and to the extent not already provided to Purchaser
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regarding the Deposit Liability account and copies of pertinent documents or
instruments with respect to such dispute or inquiry so as to permit Purchaser to
respond to the Deposit Liability account holder within a period of time and in a
manner which would comply with standard banking practices and customs.
Section 16.6. Appraisal of Real Property.
(a) As contemplated by Sections 2.1(b) and 12.1(d), either
party may designate by written notice to the other an independent
certified appraiser or appraisers to determine the fair market value of
the Real Property or its fair rental value.
(b) Unless such other party shall object in writing within ten
(10) days of receipt of such designation, such appraiser or appraisers
shall conduct appraisals of the fair market or rental value of the Real
Property and deliver two copies of reports thereof to each of Seller
and Purchaser.
(c) In the event the other party shall so object to the first
party's designation, the other party's written objection shall
designate an independent certified appraiser or appraisers acceptable
to it, which shall conduct such appraisals and deliver such copies of
reports thereof unless the first party shall object in writing to the
appraiser or appraisers designated by the other party within ten (10)
days of such objection.
(d) In the event the first party shall so object to the other
party's designation, the appraisers designated by Seller and the
Purchaser shall mutually designate an independent certified appraiser
to conduct such appraisals and deliver such copies of reports thereof.
(e) The fair market or rental value of the Real Property (the
"Appraised Value") as determined by the appraiser or appraisers
designated pursuant to (a), (c) or (d) above shall be final and binding
upon the parties hereto.
(f) The parties hereto shall each pay one half of the cost of
retaining the appraiser or appraisers which determines the Appraised
Value in accordance with this Section.
(g) Without limiting or restricting in any manner the
procedure or method utilized by the appraisers or appraiser to
determine the Appraised Value in accordance with the terms hereof, the
reports of appraisals prepared pursuant hereto shall include such
appraiser's or appraisers' determination of the fair market rental
value of the Real Property for use as a bank branch.
ARTICLE XVI
MISCELLANEOUS
-------------
Section 17.1. Expenses. Except as otherwise provided herein, Seller and
Purchaser each shall pay all of their own out-of-pocket expenses in connection
with this Agreement, including appraisal, accounting, consulting, professional
and legal fees, if any, whether or not the transactions contemplated by this
Agreement are consummated. Purchaser shall pay all (a) recording, filing or
other fees, cost and expenses (including fees, costs and expenses for (i)
preparation of title certificates or searches, surveys, inspections,
environmental audits or other investigations, (ii) filing of any forms
(including without limitation tax forms) with governmental instrumentalities in
connection with the transfer of the Real Property or Personalty, and (iii)
recording instruments or documents evidencing any transfers of interests in real
property), and (b) costs and expenses relating to the preparation, execution and
recording of assignments of mortgages, financing statements, notes, security
agreements or other instruments (other than the items to be delivered by Seller
pursuant to Section 5.3), applicable to or arising in connection with the
transfer, assignment or assumption of the Loans (and mortgages, financing
statements, notes, security agreements and other instruments relating thereto),
the Real Property, the Branch Leases or the Personalty, but Seller shall pay any
real property
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<PAGE>
transfer stamps or taxes imposed on any transfers or interest in real property
and any fees or charges payable to landlords in connection with Landlord
Consents.
Section 17.2. Communications, Notices, etc. Subject to regulatory
restrictions and the provisions of Sections 12.4 and 17.8:
(a) Purchaser shall, at Purchaser's expense and subject to the
provisions of this Section, be entitled after the date hereof to
communicate with, and deliver information, notices, brochures,
bulletins, press releases and other communications to Branch Employees,
Branch Related Employees, Branch Customers and members of the
communities in which the Branches are located, concerning the
transactions contemplated by this Agreement and the business and
operations of Purchaser, and Seller shall assist Purchaser by providing
upon Purchaser's request mailing lists of such Branch Employees, Branch
Related Employees and Branch Customers, or by itself mailing such
materials or communications to such persons; and
(b) Purchaser and Seller shall each furnish to the other
copies of the text of all notices, advertisements, information or
communications, written or oral, proposed to be sent or transmitted by
the furnishing party to Branch Employees, Branch Related Employees,
Branch Customers or the public generally regarding the proposed or
actual transfer of Deposit Liabilities and/or the purchase and sale of
the Branches (including any public notices required to be given by law
or regulation in connection with such transactions or applications for
approval thereof), and the furnishing party shall not send or transmit
such notices, advertisements, information or communications or
otherwise make them public unless and until the prior consent of the
other party shall have been received (such consent not to be
unreasonably withheld or delayed).
Section 17.3. Trade Names and Trademarks. Purchaser shall not acquire
hereunder any right to the use of any trade name, trademark or service mark, if
any, of Fleet, Shawmut or any of their respective Affiliates.
Section 17.4. Termination; Extension of Closing Date. This Agreement
shall terminate and shall be of no further force or effect as between the
parties hereto, except as to the liability for actual direct damages due to
breach of any representation, warranty or covenant occurring or arising prior to
the date of termination, upon the occurrence of any of the following:
(a) Upon mutual agreement of the parties;
(b) Immediately, upon receipt by Purchaser or Seller of notice
from any regulatory authority that Purchaser or Seller, as the case may
be, has been denied any Regulatory Approval by Final order;
(c) Upon written notice by either party to the other if the
Closing has not occurred within six (6) months of the date hereof,
unless the parties shall by mutual agreement extend the time for
Closing;
(d) Automatically following termination of the Parent Merger
Agreement;
(e) Upon written notice by Seller, if the Shelton Transaction
is not consummated by December 31, 1995, unless Seller has received a
"highly confident letter" by January 15, 1996 from a reputable
investment banking firm as to Webster being able to raise all of the
financing necessary to complete the transactions contemplated herein;
(f) Upon written notice and at Seller's sole discretion, upon
the occurrence of any of the events specified below:
(i) if the Registration Statement has not been filed
with the Securities and Exchange Commission by the later of (y)
November 15, 1995 or (z) the date which is thirty (30) days after
Seller
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<PAGE>
provides Webster with the financial information as of September 30,
1995 relating to the assets, branches and assumed deposit liabilities
needed for inclusive in such filing; or
(ii) if the Registration Statement has not been
declared effective by the Securities and Exchange Commission by January
31, 1996, unless Webster has received a firm commitment underwriting
letter for the Capital Financing from a reputable investment banking
firm by January 31, 1996; or
(g) Immediately, at Seller's sole discretion, upon a Change In
Control of Webster.
Section 17.5. Brokers-Finders.
(a) Except Merrill Lynch & Co., Purchaser hereby represents
and warrants to Seller that it has not employed or agreed to retain any
broker of finder in connection with the transactions contemplated by
this Agreement, and Purchaser agrees to indemnify Seller against any
claim arising out of any such employment of or agreement to retain any
such broker or finder by Purchaser.
(b) Except the Investment Bankers, Seller hereby represents
and warrants to Purchaser that it has not employed or agreed to retain
any broker of finder in connection with the transactions contemplated
by this Agreement, and Seller agrees to indemnify Purchaser against any
claim arising out of any such employment of or agreement to retain any
such broker or finder by Seller.
Section 17.6. Modification and Waiver. No modification of any provision
of this Agreement shall be binding unless in writing and executed by the party
sought to be bound thereby. Performance of or compliance with any covenant given
herein or satisfaction of any condition to the obligations of either party
hereunder may be waived by the party to whom such covenant is given or whom such
condition is intended to benefit, except to the extent any such condition is
required by law; provided, any such waiver must be in writing.
Section 17.7. Binding Effect; Assignment. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that neither this
Agreement nor any rights, privileges, duties or obligations of the parties
hereto may be assigned by either such party prior to the day after the Closing
Date without the written consent of the other party hereto, and provided further
that in the case of any such assignment the assigning party shall also remain
responsible as a party hereto.
Section 17.8. Confidentiality.
(a) From and after execution hereof, the parties hereto and
their Affiliates shall keep confidential the terms of this Agreement
and the negotiations relating hereto and all documents and information
obtained by a party from another party in connection with the
transactions contemplated hereby (collectively, the "Confidential
Information") (except (i) to the extent that the Agreement and such
negotiations need to be disclosed to obtain the Regulatory Approvals or
to obtain any required regulatory approval or consent relating to the
Parent Merger and transactions relating thereto or any merger or
similar transaction involving Purchaser or Webster, (ii) for
disclosures made in accordance with the terms and conditions of this
Agreement, (iii) to the extent required by applicable law, securities,
banking or other laws or rules of any national securities exchange or
as necessary to inform rating agencies or investors in securities of
Webster, or (iv) as previously made public by either party).
(b) From the date hereof through the Closing Date, neither
Purchaser nor any of its Affiliates shall use the Confidential
Information obtained by it to compete with Seller or any of its
Affiliates, and neither party shall use the Confidential Information
otherwise than in connection with this Agreement or as contemplated
hereby.
(c) This section shall survive the termination or consummation
of this Agreement.
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<PAGE>
(d) In the event of termination of this Agreement, neither
Purchaser nor any of its Affiliates shall use any Confidential
Information obtained by it from Seller to solicit accounts or other
business from customers of the Branches and each party shall
immediately return the Confidential Information obtained by it from
another party or its affiliates (and all copies thereof).
(e) In the event any term or provision of this Agreement shall
be inconsistent with any term or provision of the Confidentiality
Agreement, such term or provision of this Agreement shall prevail and
such term or provision of the Confidentiality Agreement shall be
interpreted so as to be consistent with this Agreement.
Section 17.9. Entire Agreement; Governing Law. This Agreement, together
with the exhibits attached hereto and made a part hereof, contain the entire
agreement between the parties hereto with respect to the transactions covered
and contemplated hereunder, and supersedes all prior agreements or
understandings between the parties hereto relating to the subject matter hereof,
including the Confidentiality Agreement (except as otherwise provided in Section
17.8 hereof). This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut.
Section 17.10. Consent to Jurisdiction; Waiver of Jury Trial. EACH
PARTY HERETO, TO THE EXTENT IT MAY LAWFULLY DO SO, HEREBY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF CONNECTICUT AND THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT, AS WELL AS TO THE JURISDICTION
OF ALL COURTS FROM WHICH AN APPEAL MAY BE TAKEN OR OTHER REVIEW SOUGHT FROM THE
AFORESAID COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING
ARISING OUT OF SUCH PARTY'S OBLIGATIONS UNDER OR WITH RESPECT TO THIS AGREEMENT
OR ANY OF THE AGREEMENTS, INSTRUMENTS OR DOCUMENTS CONTEMPLATED HEREBY, AND
EXPRESSLY WAIVES ANY AND ALL OBJECTIONS IT MAY HAVE AS TO VENUE IN ANY OF SUCH
COURTS.
EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY CONCERNED WITH THIS AGREEMENT OR
ANY OF THE AGREEMENTS, INSTRUMENTS OR DOCUMENTS CONTEMPLATED HEREBY. NO PARTY
HERETO, NOR ANY ASSIGNEE OR SUCCESSOR OF A PARTY HERETO TO SHALL SEEK A JURY
TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION PROCEDURE
BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY OF THE AGREEMENTS,
INSTRUMENTS OR DOCUMENTS CONTEMPLATED HEREBY. NO PARTY WILL SEEK TO CONSOLIDATE
ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN
WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED . THE PROVISIONS OF THIS
HAVE BEEN FULLY DISCUSSED BY THE PARTIES HERETO, AND THE PROVISIONS SHALL BE
SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO
ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED
IN ALL INSTANCES.
THE PARTIES HERETO ACKNOWLEDGE THAT THE TRANSACTION DESCRIBED IN AND
CONTEMPLATED BY THIS AGREEMENT AND THE RELATED DOCUMENTS DESCRIBED HEREIN IS A
COMMERCIAL TRANSACTION AND THEY AND EACH OF THEM, HEREBY VOLUNTARILY AND
KNOWINGLY WAIVE ANY RIGHTS TO NOTICE AND HEARING UNDER CHAPTER 903a OF THE
CONNECTICUT GENERAL STATURES OR OTHER STATURES AFFECTING PREJUDGMENT REMEDIES
AND AUTHORIZE EACH PARTY'S ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY
WITHOUT COURT ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THIS
WAIVER.
Section 17.11. Severability. In the event that any provision of this
Agreement which both Seller and Purchaser agree is not material shall be held
invalid, illegal, or unenforceable in any respect, the validity, legality, and
enforceability of the remaining provisions contained in this Agreement shall not
in any way be affected or impaired thereby, and this Agreement shall otherwise
remain in full force and effect.
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<PAGE>
Section 17.12. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties hereto.
Section 17.13. Notices. All notices, consents, requests, instructions,
approvals, waivers, stipulations and other communications provided for herein to
be given by one party hereto to the other party shall be deemed validly given,
made or served, if in writing and delivered personally or sent by certified
mail, return receipt requested, nationally recognized overnight delivery
service, or facsimile transmission, if to Seller addressed to:
Shawmut Bank Connecticut, National Association
c/o Brian T. Moynihan
Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, Rhode Island 02903
Facsimile Number: (401) 278-5527
with copies to:
William C. Mutterperl, Esq.
Senior Vice President, General Counsel
and Secretary
Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, RI 02903
Facsimile number: (401) 278-5527
J. Michael Shepherd
Executive Vice President, General Counsel
and Secretary
Shawmut National Corporation
One Federal Street
Boston, MA 02211
Facsimile number: (617) 556-8004
and to:
V. Duncan Johnson, Esq.
Edwards & Angell
2700 Hospital Trust Tower
Providence, Rhode Island 02903
Facsimile number: (401) 276-6611
and if to Purchaser addressed to:
Webster Financial Corporation
First Federal Plaza
Waterbury, CT 06702
Attn: James C. Smith
Chairman, President and Chief Executive Officer
34
<PAGE>
with a copy to:
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, DC 20004
Attn: Charles E. Allen, Esq.
Notice by certified mail shall be deemed to be received three (3) business days
after mailing of the same. Either party may change the persons or addresses to
whom or to which notices may be sent by written notice to the other.
Section 17.14. Interpretation. Any reference herein to a Section,
Exhibit or Schedule shall be deemed a reference to a Section of, or Exhibit of
Schedule to, this Agreement. The Section and Article headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 17.15. Specific Performance. The parties hereto acknowledge
that monetary damages could not adequately compensate either party hereto in the
event of a breach of this Agreement by the other, that the former party would
suffer irreparable harm in the event of such breach and that the former party
shall have, in addition to any other rights or remedies it may have at law or in
equity, specific performance and injunctive relief as a remedy for the
enforcement hereof.
35
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, by their duly authorized representatives, as of the day and year first
above written.
SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION
By:
---------------------------------
Title:
36
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, by their duly authorized representatives, as of the day and year first
above written.
FIRST FEDERAL BANK,
a federal savings bank
By:
---------------------------------
Title:
37
<PAGE>
Schedule 3.4
Allocation of Purchase Price
Subject to the provisions of Section 3.4, and any adjustments pursuant
to Sections 3.3 and 3.5, the Purchase Price shall be allocated as follows:
Deposit Premium -- The amount determined pursuant to
Section 3.1(a)
Real Property -- The Real Property Purchase Price
Personalty -- The amount determined pursuant to
Section 3.1(c)
Loans -- The amount determined pursuant to Section
3.1(d)
38
<PAGE>
SCHEDULE 1.1(f)
A. The following representations and warranties are applicable to all of the
Loans:
1. Any and all requirements of any federal, state or local law,
including, without limitation, usury, truth-in-lending, fair
lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity or disclosure laws
applicable to the origination of each Loan have been complied
with in all material respects.
2. No promissory note related to a Loan is subject to any right of
rescission, set-off, counterclaim or defense, including the
defense of usury, nor will the operation of any of the terms of
any promissory note or any related mortgage or deed of trust, if
any, render any promissory note or mortgage or deed of trust, if
any, (a) unenforceable in whole or in part, or (b) subject to
any right of rescission, set-off, counterclaim or defense,
including the defense of usury, and, no such right of
rescission, set-off, counterclaim or defense has been asserted
with respect thereto.
3. None of the terms of (a) any promissory note related to any Loan
or (b) any related mortgage or deed of trust, if any, or (c) any
other related security agreement, if any, have been impaired,
waived, altered or modified in any material respect, except as
may be set forth in the related loan file or except as may be
required in connection with the servicing of the Loan in the
ordinary course of business after the date hereof.
4. None of the CRE and C&I Loans is an out-of-state loan and no
Loan is made to an employee of Seller or its Affiliates, other
than Branch Employees or Branch Related Employees hired by
Purchaser.
B. The following representations and warranties are only applicable to each
of the Loans which is a residential real estate loan secured by first
mortgages (the "First Mortgage Loans"):
1. The information set forth on the First Mortgage Loan Annex
attached hereto as Annex A is true, complete and correct in all
material respects.
2. Each promissory note related to a First Mortgage Loan (a "First
Mortgage Note") and the related mortgage, deed of trust or other
instrument creating a lien on an estate in fee simple or a
leasehold estate in real property (a "First Mortgage"), are
genuine and each is the legal, valid and binding obligation of
the maker thereof, enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by general equity
principles (regardless of whether such enforcement is considered
in a proceeding in equity or at law).
3. Each First Mortgage is a valid, existing and enforceable first
lien on the real property securing the indebtedness of the
mortgagor under the related First Mortgage Loan (the "First
Mortgaged Property"), including all improvements on the First
Mortgaged Property, subject only to (x) the lien of real
property taxes and assessments not yet due and payable, (y)
covenants, conditions and restrictions, rights of way, easements
and other matters of public record as of the date of recording
of such First Mortgage acceptable to mortgage lending
institutions generally or specifically reflected in the
appraisal, title policy or attorney's opinion of title which may
have been obtained in connection with the origination of such
First Mortgage Loan, and (z) other matters to which like
properties are commonly subject that do not, individually or in
the aggregate, materially interfere with the benefits of the
security intended to be provided by such First Mortgage.
<PAGE>
4. In the event that a First Mortgage constitutes a deed of trust,
a trustee, duly qualified under applicable law to serve as such,
has been properly designated and currently so serves, and is
named in such First Mortgage, and no fees or expenses are or
will become payable by the Purchaser to the trustee under the
deed of trust, except in connection with a trustee's sale after
default by the related mortgagor.
5. Each First Mortgage Loan is (a) covered by an ALTA mortgagee
title insurance policy or other form of policy or insurance
acceptable to the Federal National Mortgage Association ("FNMA")
or the Federal Home Loan Mortgage Corporation ("FHLMC"), which
is issued by a title or other insurer acceptable to FNMA or
FHLMC, and insures the originator of such First Mortgage Loan
and its successors and assigns as to the first priority lien of
such First Mortgage in the originalprincipal amount of the
related First Mortgage Loan, or, with respect to an adjustable
rate First Mortgage Loan, against any loss by reason of the
invalidity or unenforceability of the lien resulting from the
provisions of the First Mortgage providing for adjustment in the
interest rate and monthly payment, subject only to (x) the lien
of real property taxes and assessments not yet due and payable,
(y) covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date of
recording of such First Mortgage acceptable to mortgage lending
institutions generally in the area in which the First Mortgaged
Property is located or specifically reflected in the appraisal,
title policy or attorney's opinion of title which may have been
obtained in connection with the origination of such First
Mortgage Loan, and (z) other matters to which like properties
are commonly subject that do not, individually or in the
aggregate, materially interfere with the benefits of the
security intended to be provided by such First Mortgage, or (b)
the subject of an attorney's opinion of title with respect to
such First Mortgage given by an attorney licensed in the
jurisdiction where the related First Mortgaged Property is
located to the effect that such First Mortgage is a valid first
lien (subject to the exceptions contained in (x), (y) and (z) of
this paragraph (5)). No claims have been made under such
insurance policy, and no prior holder of such First Mortgage,
including the Seller, has done, by act or omission, anything
that may impair the coverage of such insurance policy.
6. Each First Mortgaged Property is covered by a hazard insurance
policy issued by an insurer covering such hazards in such
amounts as is customary for, and generally accepted by, mortgage
lending institutions in the area where the related First
Mortgaged Property is located.
7. The proceeds of each First Mortgage Loan have been fully
disbursed and there is no requirement for future advances
thereunder and all requirements as to completion of any on-site
or off-site improvement and to the disbursement of any escrow
funds therefor have been complied with. All costs, fees and
expenses incurred in making or closing such First Mortgage Loan
and the recording of the related First Mortgage were paid and
the mortgagor is not entitled to any refund of any amounts paid
or due under such First Mortgage Note or the related First
Mortgage.
8. With respect to each First Mortgage Loan identified on Annex A
as being covered by private mortgage insurance, Federal Housing
Administration insurance or a Veterans' Administration guaranty,
all actions of the Seller reasonably necessary to keep such
insurance or guaranty valid, binding and enforceable have been
taken.
9. With respect to any First Mortgaged Property which is a
condominium, all maintenance and other assessments due and owing
pursuant to or in accordance with agreements and instruments
establishing and governing such condominium have been paid
within 120 days of written notice thereof to the Seller.
2
<PAGE>
10. Each First Mortgage and related First Mortgage Note contain
customary and enforceable provisions such as to render the
rights and remedies of the holder thereof adequate for the
realization against the related First Mortgaged Property of the
benefits of the security provided thereby, including (a) in the
case of a First Mortgage designated as a deed of trust, by
trustee's sale and (b) otherwise by judicial foreclosure. No
mortgagor has notified the Seller and the Seller has no
knowledge of any relief requested or allowed to any such
mortgagor under the Soldiers' and Sailors' Civil Relief Act of
1940.
11. With respect to any First Mortgage Loan where the interest rate
is not fixed for the term of such First Mortgage Loan, the
mortgage interest rate on each interest adjustment date has been
properly and accurately adjusted, the monthly payment on each
payment adjustment date has been properly and accurately
adjusted, and the amortization of principal and interest on each
payment adjustment date has been properly and accurately
calculated.
12. As of the Closing Date, no First Mortgage Loan is more than
thirty days delinquent.
C. The following representations and warranties are only applicable to each
of the Loans which is a home equity line of credit (the "HELOC Loans"):
1. Each promissory note related to a HELOC Loan (a "HELOC Note")
and the related mortgage, deed of trust or other instrument
creating a lien on an estate in fee simple or a leasehold estate
in real property (a "HELOC Mortgage"), if any, is genuine and
each is the legal, valid and binding obligation of the maker
thereof, enforceable in accordance with its terms, except as
such enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement
of creditors' rights generally and by general equity principles
(regardless of whether such enforcement is considered in a
proceeding in equity or at law).
2. As of the Closing Date, no HELOC Loan is more than ninety days
delinquent.
D. The following representations and warranties are only applicable to each
of the Loans which is a consumer loan other than a First Mortgage Loan or
a HELOC Loan (the "Other Consumer Loans"):
1. Each promissory note related to an Other Consumer Loan and the
related mortgage, deed of trust or other instrument creating a
lien on an estate in fee simple or a leasehold estate in real
property, if any, or any other related security agreement, if
any, is genuine and each is the legal, valid and binding
obligation of the maker thereof, enforceable in accordance with
its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by
general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
2. As of the Closing Date, no Other Consumer Loan is more than
ninety days delinquent.
3
<PAGE>
E. The following representations and warranties are only applicable to each
of the Loans for commercial purposes which is not secured by real estate
(the "C&I Loans"):
1. The information set forth on the Commercial Loan Annex (with
respect to C&I Loans) attached hereto as Annex B is true,
complete, and correct in all material respects.
2. Each promissory note related to a C&I Loan and any related
security agreement, if any, is genuine and each is the legal,
valid and binding obligation of the maker thereof, enforceable
in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights
generally and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity
or at law).
3. As of the Closing Date, no C&I Loan that was current (not more
than thirty days delinquent) as of the date of the Agreement is
more than thirty days delinquent and no C&I Loan is more than
ninety days delinquent.
F. The following representations and warranties are applicable to each of
the Loans for commercial purposes which is secured by real estate (the
"CRE Loans"):
1. The information set forth on the Commercial Loan Annex (with
respect to CRE Loans) attached hereto as Annex B is true,
complete, and correct in all material respects.
2. Each promissory note related to a CRE Loan and any related
mortgage, deed of trust or other instrument creating a lien on
an estate in fee simple or a leasehold estate in real property
(a "CRE Mortgage"), if any, and any related security agreement,
if any, is genuine and each is the legal, valid and binding
obligation of the maker thereof, enforceable in accordance with
its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by
general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
3. As of the Closing Date, no CRE Loan that was current (not more
than thirty days delinquent) as of the date of the Agreement is
more than thirty days delinquent and no CRE Loan is more than
ninety days delinquent.
4. Each CRE Loan is covered by an ALTA title insurance policy or
other form of policy or insurance customarily accepted by
institutional lenders in the jurisdiction where the property
securing the CRE Loan (the "CRE Mortgaged Property") is located,
issued by a title or other insurer customarily accepted by
institutional lenders in the jurisdiction where the CRE
Mortgaged Property is located, and insures the originator of the
CRE Loan and its successors and assigns as to the priority of
the lien of the related CRE Mortgage in the original principal
amount of the related CRE Loan, subject only to (x) the lien of
real property taxes and assessments not yet due and payable, (y)
covenants, conditions and restrictions, rights of way, easements
and other matters of public record as of the date of area in
which the CRE Mortgaged Property is located or specifically
reflected in
4
<PAGE>
with the origination of such CRE Loan, and (z) other matters to
which like properties are commonly subject that do not,
individually or in the aggregate, materially interfere with the
benefits of the security intended to be provided by such CRE
Mortgage.
5. No written notice has been issued by any governmental authority
or any party entitled to enforce a restrictive covenant
affecting the CRE Mortgaged Property to the effect that any
zoning law, ordinance, regulation or restrictive covenant was
violated as of the closing of the related CRE Loan by the
maintenance, operation, occupancy or use of the CRE Mortgaged
Property, such that the violation would adversely affect the
current operation, current occupancy or current use of the CRE
Mortgaged Property.
G. Capitalized terms used herein but not otherwise defined shall have the
meanings set forth in the Agreement.
H. If any representation or warranty set forth in this Schedule 1.1(f) shall
be inconsistent with any representation or warranty set forth in the
Agreement, including without limitation Section 8.7 thereof, such
representation and warranty in the Agreement shall be deemed to be
amended so as to be consistent with such representation or warranty
herein.
5
<PAGE>
Schedule 1.1(i)
A. Terms of Warrant Agreement
Fleet will receive a warrant (the "Warrant") for 300,000 shares of the
common stock of Webster Financial Corporation ("Webster"). The principal terms
of the Warrant are:
Exercise Price: $32.50 per share of Common Stock; adjusted
- - -------------- pursuant to the "Dilution Protection" as defined
below.
Exercise: The Warrant will be exercisable, in whole at any
- - -------- time after the second anniversary of the date of
issuance (the "Issuance Date") and until the
fifth anniversary of the Issuance Date, except
such Warrant will be exercisable prior to the
second anniversary of the Issuance Date in the
event Webster enters into a definitive agreement
which would result, if completed, in a Change of
Control. A "Change of Control" shall be deemed
to have occurred in the event that any person or
company (i) acquires voting rights to more than
25% of the outstanding shares of Webster Common
Stock or (ii) executes a definitive merger or
other acquisition agreement to acquire Webster,
unless the directors of Webster serving prior to
such acquisition of Webster Common Stock or the
execution of such definitive agreement (or
successor directors selected by such continuing
directors and unaffiliated with such acquiror)
will continue to constitute at least 50% of the
parent holding company's board of directors
after consummation of such acquisition.
Transfer of Warrant: The Warrant may not be transferred or assigned
- - ------------------- without the consent of Webster, except to a
wholly-owned subsidiary of Fleet.
Put: If at any time from and after the Issuance Date
- - --- Webster enters into a definitive agreement
relating to a Change of Control, Fleet shall
have the right to sell the Warrant to Webster
(the "Put"), and, upon exercise of such right,
Webster shall purchase the Warrant for an amount
equal to the product of (A) the number of shares
of Webster Common Stock
<PAGE>
issuable under the Warrant (the "Underlying
Common Stock") and (B) (i) the cash price for
the Webster Common Stock set forth in the
definitive agreement relating to the Change in
Control transaction (or in the case of a stock
for stock transaction, the five day trailing
average closing price of the acquiror's stock
following the public announcement of the
transaction, multiplied by the exchange ratio,
as defined in the definitive agreement relating
to the Change in Control transaction), less (ii)
the then exercise price per share of the
Underlying Common Stock under the Warrant;
provided, however, that the Put shall not be
available if the Change in Control transaction
is to be accounted for as a "pooling of
interests" and Webster's independent
accountants, within 10 business days of the
exercise of the Put, issue an opinion indicating
that the exercise of the Put would result in the
inability to account for the Change in Control
transaction as a pooling of interests; if Fleet
disagrees with such opinion, Webster at its sole
expense shall promptly submit the matter to the
SEC for an interpretation, which shall be
controlling.
Dilution Protection: The Warrant will provide customary pro rata
- - ------------------- antidilution protection, including protection
against issuance of Webster Common Stock, or
rights to acquire same, or securities
convertible or exchangeable therefor, at a price
per share of Webster Common Stock less than the
then exercise price; which protection shall not
apply to issuances pursuant to employee/director
benefit plans, dividend reinvestment plans, the
Capital Financing, conversion of existing
convertible securities and the Shelton Bancorp,
Inc. transaction.
Registration Rights: The holders of the Underlying Common Stock will
- - ------------------- have one demand and customary piggyback
registration rights, at Webster's expense, upon
customary terms and conditions.
Indemnification: Fleet and its Affiliates shall be entitled to
- - --------------- customary indemnification.
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B. Terms of Standstill For the period commencing on the Closing Date
Agreement and ending on the fifth anniversary thereof,
Fleet agrees that (A) it will vote any shares of
Webster Common Stock held by it (including
shares obtained upon the exercise of the
Warrant) in the manner recommended by Webster's
Board of Directors and (B) it will not initiate
a tender offer for shares of Webster Common
Stock or other hostile acquisition proposal or
participate in a publicly announced tender offer
for Webster that is opposed by Webster's Board
of Directors; provided, however, that if during
such period a bonafide third party publicly
announces or publicly makes an unsolicited offer
to acquire more than 25% of the Webster Common
Stock which is not solicited by the Webster's
Board of Directors, Webster will permit Fleet to
make an acquisition proposal to the Webster
Board of Directors or release Fleet from the
restrictions set forth herein. All restrictions
shall terminate upon Fleet's sale of the Webster
Common Stock or upon the execution of a
definitive agreement relating to a Change of
Control of Webster.
Fleet also agrees that it will not sell the
Underlying Common Stock to any person in a
private sale transaction (y) as to whom Webster
has notified Fleet in writing is a person who
has filed a Form 13-D or 13-G with the
Securities and Exchange Commission in respect of
its ownership of Webster's Common Stock or (z)
who Fleet knows or who confirms to Fleet that it
holds, or would hold upon such purchase, more
than 4.9% of the then outstanding shares of
Webster Common Stock.
C. Terms of Contingent Payment The Contingent Payment Agreement shall provide
Agreement that Webster Bank shall pay to Fleet within 30
days of the execution of a definitive agreement
which would result, if completed, in a Change in
Control
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of Webster, (a) in the case of a cash
transaction, the cash price for the Webster
Common Stock as set forth in the definitive
agreement relating to the Change in Control
transaction (or in the case of a stock for stock
transaction, the five day trailing average
closing price of the acquiror's stock following
the public announcement of the transaction,
multiplied by the exchange ratio, as defined in
the definitive agreement relating to the Change
in Control transaction), less (b) $32.50
multiplied by (c) 150,000 (the "Contingent
Payment").
The Contingent Payment shall also be due (a)
within 30 days of the public announcement of a
tender offer supported by Webster's Board of
Directors or (b) upon the consummation of a
tender offer which Webster's Board of Directors
has not recommended to its shareholders, as
reflected in a Schedule 14d-9 filed by Webster
in opposition to the tender offer.
Fleet will not require the Contingent Payment to
be paid in cash as to any Change in Control
transaction to be accounted for by the "pooling
of interests" method of accounting, if Fleet
receives an opinion from Webster's independent
accountants, within 10 business days of Fleet's
written request for payment, indicating that the
payment of the Contingent Payment in cash would
result in the inability to account for the
Change in Control transaction by the pooling of
interests method of accounting. In such event,
the Contingent Payment shall be made, at Fleet's
option, either (a) by issuing Webster Common
Stock to Fleet immediately before the
consummation of the Change in Control having a
market value equal to the cash amount of the
Contingent Payment or (b) in cash, plus interest
at the "prime rate" as published from time to
time by The Wall Street Journal, at such time as
Webster's independent accountants certify that
such Contingent Payment will not result in the
inability to treat the Change in Control
transaction by the "pooling of interests" method
of accounting.
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D. Terms of Hartford Sublease Agreement
The Hartford Sublease Agreement will provide that Purchaser will
sublease space from Seller at One Constitution Plaza, Hartford, Connecticut (the
"Building"). Such Sublease Agreement will contain customary terms and conditions
and will provide that Seller will sublease usable, contiguous, rentable space as
follows:
(a) 20,000 square feet commencing on the Closing Date;
(b) an additional 10,000 square feet commencing on
January 1, 1997;
(c) an additional 10,000 square feet commencing on
January 1, 1998; and
(d) an additional 10,000 square feet commencing on
January 1, 1999.
Such Sublease Agreement will also provide that Purchaser will
assume and pay its pro rata portion of taxes and operating
expenses over base rent, based on its percentage of the total
square footage of the Building.
The Sublease Agreement will expire on December 31, 2003.
The Sublease Agreement will provide that Purchaser shall be
entitled to its pro rata portion of any build-out provisions
contained in the master lease agreement relating to the
Building.
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