UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported), October 26, 1997
WEBSTER FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-15213 06-1187536
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(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
Webster Plaza, Waterbury, Connecticut 06702
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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.
On October 26, 1997, Webster Financial Corporation ("Webster")
and Eagle Financial Corp. ("Eagle") entered into an Agreement and Plan of Merger
dated as of such date (the "Agreement"). The Agreement is filed as Exhibit 2.1
hereto and is hereby incorporated herein by reference.
In connection with the execution and delivery of the
Agreement, Webster and Eagle entered into a Stock Option Agreement dated as of
October 26, 1997 (the "Option Agreement"). The Option Agreement is filed as
Exhibit 99.1 hereto and is hereby incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits
Exhibit No. Description
2.1 Agreement and Plan of Merger, dated
as of October 26, 1997, by and
between Webster Financial
Corporation and Eagle Financial
Corp.
2.2 Stock Option Agreement, dated as of
October 26, 1997, by and between
Webster Financial Corporation and
Eagle Financial Corp.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WEBSTER FINANCIAL CORPORATION
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(Registrant)
/s/ John V. Brennan
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John V. Brennan
Executive Vice President,
Chief Financial Officer
and Treasurer
Date: November 24, 1997
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
WEBSTER FINANCIAL CORPORATION
AND
EAGLE FINANCIAL CORP.
DATED AS OF
OCTOBER 26, 1997
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TABLE OF CONTENTS
Page
ARTICLE I THE MERGER............................................. 2
1.1 The Merger............................................. 2
1.2 Effective Time......................................... 2
1.3 Effects of the Merger.................................. 2
1.4 Conversion of Eagle Common Stock....................... 2
1.5 Webster Common Stock................................... 4
1.6 Options................................................ 4
1.7 Certificate of Incorporation........................... 5
1.8 By-Laws................................................ 5
1.9 Directors and Officers................................. 5
1.10 Tax Consequences....................................... 6
1.11 Accounting Treatment................................... 6
2.
ARTICLE II EXCHANGE OF SHARES.............................................. 6
2.1 Webster to Make Shares Available....................... 6
2.2 Exchange of Shares..................................... 6
ARTICLE II-A DISCLOSURE SCHEDULE; STANDARDS FOR
REPRESENTATIONS AND WARRANTIES....................... 8
2A.1 Disclosure Schedule.................................... 8
2A.2 Standards.............................................. 9
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF EAGLE............................................. 9
3.1 Corporate Organization................................. 9
3.2 Capitalization......................................... 10
3.3 Authority; No Violation................................ 12
3.4 Consents and Approvals................................. 13
3.5 Loan Portfolio; Reports................................ 14
3.6 Financial Statements; Exchange Act
Filings; Books and Records............................ 15
3.7 Broker's Fees.......................................... 16
3.8 Absence of Certain Changes or Events................... 16
3.9 Legal Proceedings...................................... 17
3.10 Taxes and Tax Returns.................................. 17
3.11 Employee Plans......................................... 18
3.12 Certain Contracts...................................... 21
3.13 Agreements with Regulatory Agencies.................... 22
3.14 State Takeover Laws;
Certificate of Incorporation.......................... 22
3.15 Environmental Matters.................................. 23
3.16 Reserves for Losses.................................... 24
3.17 Properties and Assets.................................. 24
3.18 Insurance.............................................. 25
3.19 Compliance with Applicable Laws........................ 26
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3.20 Loans.................................................. 26
3.21 Ownership of Webster Common Stock...................... 27
3.22 Eagle DRIP............................................. 28
3.23 Fairness Opinion....................................... 28
3.24 Tax and Accounting Treatment of Merger................. 28
3.25 Rights Agreement....................................... 28
3.26 Eagle Information...................................... 28
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF WEBSTER........................................... 29
4.1 Corporate Organization................................. 29
4.2 Capitalization......................................... 29
4.3 Authority; No Violation................................ 30
4.4 Regulatory Approvals................................... 32
4.5 Financial Statements; Exchange Act
Filings; Books and Records............................ 33
4.6 Absence of Certain Changes or Events................... 34
4.7 Compliance with Applicable Law......................... 34
4.8 Ownership of Eagle Common Stock;
Affiliates and Associates............................. 35
4.9 Employee Benefit Plans................................. 35
4.10 Agreements with Regulatory Agencies.................... 35
4.11 Tax and Accounting Treatment of Merger................. 35
4.12 Legal Proceedings...................................... 36
4.13 Reserves for Losses.................................... 36
4.14 Broker's Fees.......................................... 36
4.15 Fairness Opinion....................................... 37
4.16 Taxes.................................................. 37
4.17 Webster Information.................................... 37
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS........................ 38
5.1 Covenants of Eagle..................................... 38
5.2 Covenants of Webster................................... 43
5.3 Merger Covenants....................................... 43
5.4 Employment and Other Agreements........................ 44
ARTICLE VI ADDITIONAL AGREEMENTS........................................... 44
6.1 Regulatory Matters..................................... 44
6.2 Access to Information.................................. 46
6.3 Stockholder Meetings................................... 47
6.4 Legal Conditions to Merger............................. 47
6.5 Stock Exchange Listing................................. 48
6.6 Employees.............................................. 48
6.7 Indemnification........................................ 49
6.8 Subsequent Interim and Annual Financial
Statements............................................ 51
6.9 Additional Agreements.................................. 51
6.10 Advice of Changes...................................... 51
6.11 Current Information.................................... 52
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6.12 Execution and Authorization of
Bank Merger Agreement................................. 52
6.13 Change in Structure.................................... 52
6.14 Transaction Expenses of Eagle.......................... 52
6.15 Affiliate Agreements................................... 53
ARTICLE VII CONDITIONS PRECEDENT........................................... 53
7.1 Conditions to Each Party's Obligation
To Effect the Merger.................................. 53
7.2 Conditions to Obligations of Webster................... 55
7.3 Conditions to Obligations of Eagle..................... 56
ARTICLE VIII TERMINATION AND AMENDMENT..................................... 57
8.1 Termination............................................ 57
8.2 Effect of Termination.................................. 61
8.3 Amendment.............................................. 61
8.4 Extension; Waiver...................................... 62
ARTICLE IX GENERAL PROVISIONS.............................................. 62
9.1 Closing................................................ 62
9.2 Nonsurvival of Representations,
Warranties and Agreements............................. 62
9.3 Expenses............................................... 62
9.4 Notices................................................ 63
9.5 Interpretation......................................... 64
9.6 Counterparts........................................... 64
9.7 Entire Agreement....................................... 64
9.8 Governing Law.......................................... 64
9.9 Enforcement of Agreement............................... 65
9.10 Severability........................................... 65
9.11 Publicity.............................................. 65
9.12 Assignment; Limitation of Benefits..................... 65
9.13 Additional Definitions................................. 66
EXHIBITS
A Form of Articles of Combination and
Bank Merger Agreement
B Form of Option Agreement
C Form of Certificate of Merger
D Form of Agreement of Eagle Affiliates
E Form of Agreement of Webster Affiliates
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of October 26, 1997 (this
"Agreement"), is entered into by and between Webster Financial Corporation, a
Delaware corporation ("Webster") and Eagle Financial Corp., a Delaware
corporation ("Eagle").
WHEREAS, the Boards of Directors of Webster and Eagle have determined that
it is in the best interests of their respective companies and stockholders to
consummate the business combination transaction provided for herein in which
Eagle will, subject to the terms and conditions set forth herein, merge with and
into Webster, with Webster being the surviving corporation in such merger (the
"Merger");
WHEREAS, prior to the consummation of the Merger, Webster and Eagle will
respectively cause Webster Bank, a federal savings bank and wholly-owned
subsidiary of Webster, and Eagle Bank ("Eagle Bank"), a federally chartered
savings bank and wholly-owned subsidiary of Eagle, to enter into a merger
agreement, in the form attached hereto as Exhibit A (the "Bank Merger
Agreement"), providing for the merger (the "Bank Merger") of Eagle Bank with and
into Webster Bank, with Webster Bank being the "Surviving Bank" of the Bank
Merger, and it is intended that the Bank Merger be consummated immediately after
consummation of the Merger;
WHEREAS, as an inducement to Webster to enter into this Agreement, Eagle
will enter into an option agreement, in the form attached hereto as Exhibit B
(the "Option Agreement"), with Webster immediately following the execution of
this Agreement pursuant to which Eagle will grant Webster an option to purchase,
under certain circumstances, an aggregate number of newly issued shares of
common stock equal to 19.9% of the outstanding shares of common stock, par value
$.01 per share, of Eagle ("Eagle Common Stock") and otherwise upon the terms and
conditions therein contained; and
WHEREAS, the Merger is intended to be treated as a "reorganization" within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended,
and as a "pooling of interests" under generally accepted accounting principles;
and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger;
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NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER.
Subject to the terms and conditions of this Agreement, in accordance with
the Delaware General Corporation Law (the "DGCL") at the Effective Time (as
defined in Section 1.2 hereof), Eagle shall merge with and into Webster, with
Webster being the surviving corporation (hereinafter sometimes called the
"Surviving Corporation") in the Merger. Upon consummation of the Merger, the
corporate existence of Eagle shall cease and the Surviving Corporation shall
continue to exist as a Delaware corporation.
1.2 EFFECTIVE TIME.
The Merger shall become effective on the Closing Date (as defined in
Section 9.1 hereof), as set forth in the certificate of merger (the "Certificate
of Merger") in the form attached as Exhibit C hereto which shall be filed with
the Secretary of State of the State of Delaware on the Closing Date. The term
"Effective Time" shall be the date and time when the Merger becomes effective on
the Closing Date, as set forth in the Certificate of Merger.
1.3 EFFECTS OF THE MERGER.
At and after the Effective Time, the Merger shall have the effects set
forth in Sections 259 and 261 of the DGCL.
1.4 CONVERSION OF EAGLE COMMON STOCK.
(a) At the Effective Time, subject to Sections 1.4(b), 1.4(c), 1.4(d)
and 8.1(h) hereof, each share of Eagle Common Stock issued and outstanding prior
to the Effective Time, together with the rights (the "Eagle Rights") attached
thereto issued pursuant to the Rights Agreement, dated as of October 22, 1996
(the "Eagle Rights Agreement"), between Eagle and The First National Bank of
Boston, as Rights Agent, shall, by virtue of this Agreement and without any
action on the part of the holder thereof, be converted into and exchangeable for
0.84 shares (the "Exchange Ratio") of the common stock, par value $.01 per
share, of Webster (the "Webster Common Stock"),
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together with the number of rights ("Webster Rights") issued pursuant to the
Rights Agreement, dated as of February 5, 1996 (the "Webster Rights Agreement"),
between Webster and Chemical Mellon Shareholder Services, L.L.C., as Rights
Agent, associated therewith. Notwithstanding any other provision of this
Agreement other than Sections 1.4(b) and 8.1(h), no more than 5,893,366 shares
of Webster Common Stock (the "Maximum Share Amount") shall be issued or become
issuable in connection with the Merger and the other transactions contemplated
by this Agreement (including shares issued or issuable in respect of shares of
any capital stock of Eagle, including Eagle Common Stock, or any right to
acquire any such capital stock).
(b) All of the shares of Eagle Common Stock converted into Webster
Common Stock pursuant to this Article I shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each certificate (each a
"Certificate") previously representing any such shares of Eagle Common Stock
shall thereafter represent the right to receive (i) the number of whole shares
of Webster Common Stock and (ii) cash in lieu of fractional shares into which
the shares of Eagle Common Stock represented by such Certificate have been
converted pursuant to this Section 1.4(b) and Section 2.2(e) hereof.
Certificates previously representing shares of Eagle Common Stock shall be
exchanged for certificates representing whole shares of Webster Common Stock and
cash in lieu of fractional shares issued in consideration therefor upon the
surrender of such Certificates in accordance with Section 2.2 hereof, without
any interest thereon. If after the date hereof and prior to the Effective Time
Webster should split or combine its common stock, or pay a dividend or other
distribution in such common stock, then the Exchange Ratio and the Maximum Share
Amount shall be appropriately adjusted to reflect such split, combination,
dividend or distribution.
(c) At the Effective Time, all shares of Eagle Common Stock that are
owned by Eagle as treasury stock and all shares of Eagle Common Stock that are
owned directly or indirectly by Webster or Eagle or any of their respective
Subsidiaries (other than shares of Eagle Common Stock held directly or
indirectly in trust accounts, managed accounts and the like or otherwise held in
a fiduciary capacity that are beneficially owned by third parties (any such
shares, and shares of Webster Common Stock which are similarly held, whether
held directly or indirectly by Webster or Eagle, as the case may be, being
referred to herein as "Trust Account Shares") and other than any shares of Eagle
Common Stock held by Webster or Eagle or any of their respective Subsidiaries in
respect of a debt previously contracted (any such shares of Eagle Common Stock,
and shares of Webster Common Stock which are similarly held, whether held
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directly or indirectly by Webster or Eagle, being referred to herein as "DPC
Shares")) shall be canceled and shall cease to exist and no stock of Webster or
other consideration shall be delivered in exchange therefor. All shares of
Webster Common Stock that are owned by Eagle or any of its Subsidiaries (other
than Trust Account Shares and DPC Shares) shall become treasury stock of
Webster.
(d) Certificates for fractions of shares of Webster Common Stock will
not be issued. In lieu of a fraction of a share of Webster Common Stock, each
holder of Eagle Common Stock otherwise entitled to a fraction of a share of
Webster Common Stock shall be entitled to receive an amount of cash equal to (i)
the fraction of a share of the Webster Common Stock to which such holder would
otherwise be entitled, multiplied by (ii) the market value of the Webster Common
Stock, which shall be deemed to be the average of the daily closing prices per
share for Webster Common Stock for the twenty consecutive trading days on which
shares of Webster Common Stock are actually traded (as reported on the Nasdaq
Stock Market National Market) ending on the third trading day preceding the
Closing Date. Following consummation of the Merger, no holder of Eagle Common
Stock shall be entitled to dividends or any other rights in respect of any such
fraction.
1.5 WEBSTER COMMON STOCK.
Each share of Webster Common Stock issued and outstanding immediately prior
to the Effective Time shall be unchanged and shall remain issued and outstanding
as common stock of the Surviving Corporation.
1.6 OPTIONS.
At the Effective Time, each option granted by Eagle to purchase shares of
Eagle Common Stock which is outstanding and unexercised immediately prior
thereto shall be converted automatically into an option to purchase shares of
Webster Common Stock in an amount and at an exercise price determined as
provided below (and otherwise subject to the terms of the Eagle Financial Corp.
Stock Option Plan (the "Eagle Stock Plan"), the BFS Bancorp, Inc. Stock Option
Plan (the "BFS Plan") or the Eagle Financial Corp. 1988 Stock Option Plan (the
"1988 Plan") (the Eagle Stock Plan, the BFS Plan and the 1988 Plan collectively
the "Eagle Stock Plans"), in each case, under which such option was granted):
(1) The number of shares of Webster Common Stock to be subject to the
option immediately after the Effective Time shall be equal to the product of the
number of shares
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of Eagle Common Stock subject to the option immediately before the Effective
Time, multiplied by the Exchange Ratio, provided that any fractional shares of
Webster Common Stock resulting from such multiplication shall be rounded down to
the nearest share; and
(2) The exercise price per share of Webster Common Stock under the
option immediately after the Effective Time shall be equal to the exercise price
per share of Eagle Common Stock under the option immediately before the
Effective Time divided by the Exchange Ratio, provided that such exercise price
shall be rounded to the nearest cent.
The adjustment provided herein shall be and is intended to be effected in a
manner which is consistent with Section 424(a) of the Internal Revenue Code of
1986, as amended (the "Code"). The duration and other terms of the option
immediately after the Effective Time shall be the same as the corresponding
terms in effect immediately before the Effective Time, except that all
references to Eagle or Eagle Bank in the Eagle Stock Plans (and the
corresponding references in the option agreement documenting such option) shall
be deemed to be references to Webster.
1.7 CERTIFICATE OF INCORPORATION.
At the Effective Time, the Certificate of Incorporation of Webster, as in
effect at the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation.
1.8 BY-LAWS.
At the Effective Time, the By-Laws of Webster, as in effect immediately
prior to the Effective Time, shall be the By-Laws of the Surviving Corporation.
1.9 DIRECTORS AND OFFICERS.
At the Effective Time, the directors and officers of Webster immediately
prior to the Effective Time shall continue to be directors and officers of the
Surviving Corporation. Three directors of Eagle, to be selected by the Board of
Directors of Webster in consultation with Eagle, shall be invited to serve as
additional members (the "New Members") of the Board of Directors of Webster. The
New Members will receive directors fees on the same basis as other non-employee
directors of Webster. In addition, the other non-employee directors of Eagle
serving immediately prior to the Effective Time will be invited to serve on an
advisory board to Webster after the Bank Merger for a period not less than 24
months following the Effective
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Time. Such advisory directors will each be paid a retainer of $3,250 per quarter
and a meeting fee of $1,750 per meeting for such service, such advisory board to
meet not less frequently than 4 times per year.
1.10 TAX CONSEQUENCES.
It is intended that the Merger, either alone or in conjunction with the
Bank Merger, shall constitute a reorganization within the meaning of Section
368(a) of the Code, and that this Agreement shall constitute a "plan of
reorganization" for the purposes of the Code.
1.11 ACCOUNTING TREATMENT.
It is intended that the Merger shall be accounted for as a "pooling of
interests" under generally accepted accounting principles ("GAAP").
ARTICLE II
EXCHANGE OF SHARES
2.1 WEBSTER TO MAKE SHARES AVAILABLE.
At or prior to the Effective Time, Webster shall deposit, or shall cause to
be deposited, with Webster's transfer agent, American Stock Transfer & Trust
Company, or such other bank, trust company or transfer agent as Webster may
select (the "Exchange Agent"), for the benefit of the holders of Certificates,
for exchange in accordance with this Article II, certificates representing the
shares of Webster Common Stock and the cash in lieu of fractional shares (such
cash and certificates for shares of Webster Common Stock, being hereinafter
referred to as the "Exchange Fund") to be issued pursuant to Section 1.4 and
paid pursuant to Section 2.2(a) hereof in exchange for outstanding shares of
Eagle Common Stock.
2.2 EXCHANGE OF SHARES.
(a) As soon as practicable after the Effective Time, the Exchange Agent
shall mail to each holder of record of a Certificate or Certificates a form
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing the
shares of Webster Common Stock and the cash in lieu of fractional shares into
which the shares of Eagle Common Stock represented by such Certificate or
Certificates shall have been converted pursuant
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to this Agreement. Eagle shall have the right to review both the letter of
transmittal and the instructions prior to such documents being finalized. Upon
surrender of a Certificate for exchange and cancellation to the Exchange Agent,
together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor (x) a certificate
representing that number of whole shares of Webster Common Stock to which such
holder of Eagle Common Stock shall have become entitled pursuant to the
provisions of Article I hereof and (y) a check representing the amount of cash
in lieu of fractional shares, if any, which such holder has the right to receive
in respect of the Certificate surrendered pursuant to the provisions of this
Article II, and the Certificate so surrendered shall forthwith be canceled. No
interest will be paid or accrued on the cash in lieu of fractional shares and
unpaid dividends and distributions, if any, payable to holders of Certificates.
(b) No dividends or other distributions declared after the Effective
Time with respect to Webster Common Stock and payable to the holders of record
thereof shall be paid to the holder of any unsurrendered Certificate until the
holder thereof shall surrender such Certificate in accordance with this Article
II. After the surrender of a Certificate in accordance with this Article II, the
record holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of Webster Common Stock represented by such
Certificate. No holder of an unsurrendered Certificate shall be entitled, until
the surrender of such Certificate, to vote the shares of Webster Common Stock
into which his Eagle Common Stock shall have been converted.
2.3 If any certificate representing shares of Webster Common Stock is
to be issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed (or accompanied
by an appropriate instrument of transfer) and otherwise in proper form for
transfer, and that the person requesting such exchange shall pay to the Exchange
Agent in advance any transfer or other taxes required by reason of the issuance
of a certificate representing shares of Webster Common Stock in any name other
than that of the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not payable.
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(a) After the close of business on the day immediately prior to the
Effective Time, there shall be no transfers on the stock transfer books of Eagle
of the shares of Eagle Common Stock which were issued and outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates representing such shares are presented for transfer to the Exchange
Agent, they shall be canceled and exchanged for certificates representing shares
of Webster Common Stock as provided in this Article II.
(b) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Eagle for six months after the Effective Time shall be returned
to Webster. Any stockholders of Eagle who have not theretofore complied with
this Article II shall thereafter look only to Webster for payment of their
shares of Webster Common Stock, cash in lieu of fractional shares and unpaid
dividends and distributions on Webster Common Stock deliverable in respect of
each share of Eagle Common Stock such stockholder holds as determined pursuant
to this Agreement, in each case, without any interest thereon. Notwithstanding
the foregoing, none of Webster, Eagle, the Exchange Agent or any other person
shall be liable to any former holder of shares of Eagle Common Stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Webster,
the posting by such person of a bond in such amount as Webster may reasonably
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the shares of Webster Common Stock and cash in
lieu of fractional shares deliverable in respect thereof pursuant to this
Agreement.
ARTICLE II-A
DISCLOSURE SCHEDULE; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
2A.1 Disclosure Schedule. Prior to the execution and delivery hereof,
Eagle has delivered to Webster a schedule (the "Eagle Disclosure Schedule"
setting forth, among other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure requirements contained
in a provision hereof or as an exception
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to one or more of such party's representations or warranties contained in
Article III or to one or more of its covenants contained in Article V; provided,
however, that (a) subject to Section 3.18, no such item is required to be set
forth by either party hereto in a Disclosure Schedule as an exception to a
representation or warranty if its absence would not result in the related
representation or warranty being deemed untrue or incorrect under the standard
established by Section 2A.2, and (b) the mere inclusion of an item in a
Disclosure Schedule as an exception to a representation or warranty shall not be
deemed an admission by a party that such item represents a material exception or
fact, event or circumstance or that such item has had or would have a Material
Adverse Effect (as defined in Section 9.13) with respect to such party.
2A.2 Standards. No representation or warranty of Eagle contained in
Article III or of Webster contained in Article IV shall be deemed untrue or
incorrect for any purpose under this Agreement, and no party hereto shall be
deemed to have breached a representation or warranty for any purpose under this
Agreement, as a consequence of the existence or absence of any fact,
circumstance or event unless such fact, circumstance or event, individually or
when taken together with all other facts, circumstances or events inconsistent
with any representations or warranties contained in Article III, in the case of
Eagle, or Article IV, in the case of Webster, has had or would be reasonably
certain to have a Material Adverse Effect with respect to Eagle or Webster,
respectively.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EAGLE
Eagle hereby makes the following representations and warranties to
Webster as set forth in this Article III, each of which is being relied upon by
Webster as a material inducement to it to enter into and perform this Agreement.
3.1 CORPORATE ORGANIZATION.
(a) Eagle is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Eagle has the corporate power
and authority to own or lease all of its properties and assets and to carry on
its business as it is now being conducted, and is duly licensed or qualified to
do business in each jurisdiction in which the nature of any material business
conducted by it or the character or location of any material properties or
assets owned or leased by it makes such licensing or qualification necessary.
Eagle is duly registered as a savings and loan holding company with the Office
of Thrift Supervision (the "OTS") under the
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Home Owners' Loan Act of 1933 (the "HOLA"). The Restated Certificate of
Incorporation and By-Laws of Eagle, copies of which have previously been
delivered to Webster, are true, correct and complete copies of such documents as
in effect as of the date of this Agreement.
(b) Eagle Bank is a federally chartered savings bank duly organized,
validly existing and in good standing under the laws of the United States. The
deposit accounts of Eagle Bank are insured by the Federal Deposit Insurance
Corporation (the "FDIC") through the Savings Association Insurance Fund (the
"SAIF") to the fullest extent permitted by law, and all premiums and assessments
required in connection therewith have been paid by Eagle Bank. Eagle Bank is the
only subsidiary of Eagle that is a "Significant Subsidiary" as such term is
defined in Regulation S-X promulgated by the Securities and Exchange Commission
(the "SEC"). Eagle Bank has the corporate or other power and authority to own or
lease all of its properties and assets and to carry on its business as it is now
being conducted and is duly licensed or qualified to do business in each
jurisdiction in which the nature of any material business conducted by it or the
character or the location of any material properties or assets owned or leased
by it makes such licensing or qualification necessary. The Certificate of
Incorporation and By-Laws of Eagle Bank, copies of which have previously been
delivered to Webster, are true, correct and complete copies of such documents as
in effect as of the date of this Agreement.
3.2 CAPITALIZATION.
(a) The authorized capital stock of Eagle consists of 8,000,000 shares
of Eagle Common Stock and 2,000,000 shares of serial preferred stock, par value
$.01 per share (the "Eagle Preferred Stock"). As of the date hereof, there are
(x) 6,316,537 shares of Eagle Common Stock issued and outstanding and an
additional 47,373 shares of Eagle Common Stock held in Eagle's treasury, (y) no
shares of Eagle Common Stock reserved for issuance upon exercise of outstanding
stock options or otherwise, except for (i) 580,491 shares of Eagle Common Stock
reserved for issuance pursuant to the Eagle Stock Plans (of which options for
518,688 shares are currently outstanding), (ii) 180,687 shares of Eagle Common
Stock reserved for issuance pursuant to the Eagle DRIP (as defined herein) and
(iii) 1,256,991 shares of Eagle Common Stock reserved for issuance upon exercise
of the option to be issued to Webster pursuant to the Option Agreement, and (z)
no shares of Eagle Preferred Stock issued or outstanding, held in Eagle's
treasury or reserved for
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issuance upon exercise of outstanding stock options or otherwise, except for
8,000 shares of Series A Participating Preferred Stock, par value $.01 per
share, of Eagle reserved for issuance upon exercise of the Eagle Rights. All of
the issued and outstanding shares of Eagle Common Stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. Except for the Option Agreement and the Eagle Stock Plans, Eagle does
not have and is not bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of Eagle Common Stock or Eagle Preferred Stock or any
other equity security of Eagle or any securities representing the right to
purchase or otherwise receive any shares of Eagle Common Stock or any other
equity security of Eagle. The names of the optionees, the date of each option to
purchase Eagle Common Stock granted, the number of shares subject to each such
option and the price at which each such option may be exercised under the Eagle
Stock Plans are set forth in Section 3.2(a) of the Eagle Disclosure Schedule,
and no such option expires more than 10 years from the date of the grant
thereof. Since September 30, 1997 Eagle has not issued any shares of its capital
stock or any securities convertible into or exercisable for any shares of its
capital stock, other than pursuant to the exercise of director or employee stock
options granted prior to September 30, 1997, under the Eagle Stock Plans and
pursuant to the Eagle Financial Corp. Dividend Reinvestment Plan and Stock
Purchase Plan (the "Eagle DRIP").
(b) Section 3.2(b) of the Eagle Disclosure Schedule sets forth a true,
correct and complete list of all Subsidiaries of Eagle as of the date of this
Agreement. Eagle owns, directly or indirectly, all of the issued and outstanding
shares of capital stock of each of its Subsidiaries, free and clear of all
liens, charges, encumbrances and security interests whatsoever, and all of such
shares are duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. No Eagle Subsidiary has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital stock or
any other equity security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock or any other
equity security of such Subsidiary.
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3.3 AUTHORITY; NO VIOLATION.
(a) Eagle has full corporate power and authority to execute and deliver
this Agreement and the Option Agreement and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Option Agreement and the consummation of the transactions contemplated
hereby and thereby have been duly and validly approved by the Board of Directors
of Eagle. The Board of Directors of Eagle has directed that this Agreement and
the transactions contemplated hereby be submitted to Eagle's stockholders for
approval at a special meeting of such stockholders and, except for the adoption
of this Agreement by the requisite vote of Eagle's stockholders and the
requisite approval, if any, of Eagle stockholders in connection with the Option
Agreement pursuant to the Eagle Restated Certificate of Incorporation, no other
corporate proceedings on the part of Eagle (except for matters related to
setting the date, time, place and record date for the special meeting) are
necessary to approve this Agreement or the Option Agreement or to consummate the
transactions contemplated hereby or thereby. This Agreement has been, and the
Option Agreement will be, duly and validly executed and delivered by Eagle and
(assuming due authorization, execution and delivery by Webster of this Agreement
and of the Option Agreement) this Agreement constitutes, and the Option
Agreement will constitute, a valid and binding obligation of Eagle, enforceable
against Eagle in accordance with its terms, except as enforcement may be limited
by general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally.
(b) Eagle Bank has full corporate or other power and authority to
execute and deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby will be duly and
validly approved by the Board of Directors of Eagle Bank, and by Eagle as the
sole stockholder of Eagle Bank prior to the Effective Time. All corporate
proceedings on the part of Eagle Bank necessary to consummate the transactions
contemplated thereby will have been taken prior to the Effective Time. The Bank
Merger Agreement, upon execution and delivery by Eagle Bank, will be duly and
validly executed and delivered by Eagle Bank and will (assuming due
authorization, execution and delivery by Webster Bank) constitute a valid and
binding obligation of Eagle Bank, enforceable against Eagle Bank in accordance
with its terms, except as enforcement may be limited by general principles of
equity whether applied
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in a court of law or a court of equity and by bankruptcy, insolvency and similar
laws affecting creditors' rights and remedies generally.
(c) Neither the execution and delivery of this Agreement and the Option
Agreement by Eagle or the Bank Merger Agreement by Eagle Bank, nor the
consummation by Eagle or Eagle Bank, as the case may be, of the transactions
contemplated hereby or thereby, nor compliance by Eagle or Eagle Bank with any
of the terms or provisions hereof or thereof, will (i) violate any provision of
the Restated Certificate of Incorporation or By-Laws of Eagle or the Certificate
of Incorporation or By-Laws of Eagle Bank, or (ii) assuming that the consents
and approvals referred to in Section 3.4 hereof are duly obtained, (x) violate
any Laws (as defined in Section 9.13) applicable to Eagle or Eagle Bank, or any
of their respective properties or assets, or (y) violate, conflict with, result
in a breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of Eagle or Eagle
Bank under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Eagle or Eagle Bank is a party, or by which
they or any of their respective properties or assets may be bound or affected.
3.4 CONSENTS AND APPROVALS.
(a) Except for (i) the filing of applications and notices, as
applicable, as to the Merger and the Bank Merger with the OTS under the HOLA and
the Bank Merger Act and approval of such applications and notices, (ii) the
filing with the SEC of a registration statement on Form S-4 to register the
shares of Webster Common Stock to be issued in connection with the Merger
(including the shares of Webster Common Stock that may be issued upon the
exercise of the options referred to in Section 1.6 hereof), which will include
the joint proxy statement/prospectus (the "Joint Proxy Statement/Prospectus") to
be used in soliciting the requisite approvals of Webster stockholders and Eagle
stockholders at special meetings of such stockholders (the "Eagle Meeting" and
the "Webster Meeting," respectively) to be held in connection with this
Agreement and the transactions contemplated hereby, (iii) the approval of this
Agreement by the requisite vote of the stockholders of Eagle and the requisite
approval, if any, of Eagle stockholders in connection with the Option Agreement
pursuant to the Eagle
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Restated Certificate of Incorporation, (iv) the approval of this Agreement by
the requisite vote of the stockholders of Webster, (v) the filing of the
Certificate of Merger with the Secretary of State of Delaware pursuant to the
DGCL and (vi) the filings required in connection with the Bank Merger Agreement
and the Bank Merger, no consents or approvals of or filings or registrations
with any court, administrative agency or commission or other governmental
authority or instrumentality (each a "Governmental Entity"), or with any third
party are necessary in connection with (1) the execution and delivery by Eagle
of this Agreement and the Option Agreement, (2) the consummation by Eagle of the
Merger and the other transactions contemplated hereby, (3) the execution and
delivery by Eagle Bank of the Bank Merger Agreement, (4) the consummation by
Eagle of transactions contemplated by the Option Agreement; and (5) the
performance by Eagle Bank of the Bank Merger Agreement and the transactions
contemplated thereby, except, in each case, for such consents, approvals or
filings, the failure of which to obtain will not have a material adverse effect
on the ability of Webster to consummate the transactions contemplated hereby.
(b) Eagle hereby represents to Webster that, as of the date of this
Agreement, it has no knowledge of any reason why approval or effectiveness of
any of the applications, notices or filings referred to in Section 3.4(a) cannot
be obtained or granted on a timely basis.
3.5 LOAN PORTFOLIO; REPORTS.
(a) Except as disclosed on Schedule 3.5(a), neither Eagle nor Eagle
Bank is a party to any written or oral loan agreement, note or borrowing
arrangement (including, without limitation, leases, credit enhancements,
commitments, guarantees and interest-bearing assets) (collectively, "Loans"),
with any director, officer or five percent or greater stockholder of Eagle or
any of its Subsidiaries, or any Affiliated Person (as defined in Section 9.13)
of the foregoing. Within 10 business days after the date hereof, Eagle shall
provide to Webster a list of each employee of Eagle or its Subsidiaries with
which Eagle or Eagle Bank is a party to any Loan.
(b) Eagle and Eagle Bank have timely filed all reports, registrations
and statements, together with any amendments required to be made with respect
thereto, that they were required to file since December 31, 1995 with (i) the
OTS, (ii) the FDIC, (iii) the SEC and (iv) any self-regulatory organization
("SRO") (collectively "Regulatory Agencies"). As of its respective date, each
such report, registration, statement and amendment complied in all material
respects with all rules and
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regulations promulgated by the applicable Regulatory Agency and did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that information as of a later date shall be deemed to modify
information as of an earlier date. Except for normal examinations conducted by a
Regulatory Agency in the regular course of the business of Eagle and its
Subsidiaries, no Governmental Entity is conducting, or has conducted, any
proceeding or investigation into the business or operations of Eagle or Eagle
Bank since December 31, 1995.
3.6 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
Eagle has previously delivered to Webster true, correct and complete copies
of (i) the audited consolidated balance sheets of Eagle and its Subsidiaries as
of September 30 for the fiscal years 1995 and 1996 and the related audited
consolidated statements of income, shareholders' equity and cash flows for the
fiscal years 1994 through 1996, inclusive, as reported in Eagle's Annual Report
on Form 10-K for the fiscal year ended September 30, 1996 filed with the SEC
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in
each case accompanied by the audit report of KPMG Peat Marwick LLP, independent
public accountants with respect to Eagle, (ii) in draft form, the consolidated
balance sheet of Eagle and its Subsidiaries as of September 30, 1997 and the
related consolidated statements of income, shareholders' equity and cash flows
for the fiscal year ended September 30, 1997 in the form Eagle expects to file
under the Exchange Act in connection with its Form 10-K for the fiscal year
ended September 30, 1997 and (iii) the unaudited consolidated balance sheets of
Eagle and its Subsidiaries as of June 30, 1997 and 1996 and the related
unaudited consolidated statements of income, shareholders' equity and cash flows
for the interim periods ended June 30, 1997 and 1996, as reported on Eagle's
Quarterly Report on Form 10-Q for the period ended June 30, 1997 filed with the
SEC under the Exchange Act. The financial statements referred to in this Section
3.6 (including the related notes, where applicable) fairly present, and the
financial statements referred to in Section 6.8 hereof will fairly present
(subject, in the case of the unaudited and draft statements, to recurring audit
adjustments normal in nature and amount), the results of the consolidated
operations and consolidated financial condition of Eagle and its Subsidiaries
for the respective fiscal periods or as of the respective dates therein set
forth; each of such statements (including the related notes, where applicable)
comply, and the financial statements referred to in Section 6.8 hereof will
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comply, with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto and each of such statements
(including the related notes, where applicable) has been, and the financial
statements referred to in Section 6.8 hereof will be prepared in accordance with
GAAP consistently applied during the periods involved, except in each case as
indicated in such statements or in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q or, in the case of draft
statements, subject to revisions that in the aggregate will not be material.
Eagle's Annual Report on Form 10-K for the fiscal year ended September 30, 1996
and all reports subsequently filed under Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act (the "Eagle Exchange Act Reports") comply in all material
respects with the appropriate requirements for such reports under the Exchange
Act, and Eagle has previously delivered or made available to Webster true,
correct and complete copies of such reports. The books and records of Eagle and
Eagle Bank have been, and are being, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting requirements.
3.7 BROKER'S FEES.
Neither Eagle nor any Eagle Subsidiary nor any of their respective officers
or directors has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any of the
transactions contemplated by this Agreement, the Bank Merger Agreement or the
Option Agreement, except that Eagle has engaged, and will pay a fee or
commission to Sandler O'Neill & Partners, L.P. ("Sandler O'Neill") in accordance
with the terms of a letter agreement between Sandler O'Neill and Eagle, dated
October 20, 1997, a true, complete and correct copy of which has been previously
delivered by Eagle to Webster.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in any Eagle Exchange Act Report filed with the
SEC prior to the date of this Agreement, since September 30, 1996 (i) neither
Eagle nor any of its Subsidiaries has incurred any material liability, except as
contemplated by this Agreement or in the ordinary course of their business, (ii)
neither Eagle nor any of its Subsidiaries has discharged or satisfied any
material lien or paid any material obligation or liability (absolute or
contingent), other than in the ordinary course of business; (iii) neither Eagle
nor any of its Subsidiaries has sold, assigned, transferred, leased, exchanged
or otherwise disposed of any of its material
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properties or assets other than in the ordinary course of business; (iv) neither
Eagle nor any of its Subsidiaries has suffered any material damage, destruction,
or loss, whether as a result of fire, explosion, earthquake, accident, casualty,
labor trouble, requisition or taking of property by any Regulatory Authority,
flood, windstorm, embargo, riot, act of God or other casualty or event, whether
or not covered by insurance; (v) neither Eagle nor any of its Subsidiaries has
cancelled or compromised any debt, except for debts charged off or compromised
in accordance with the past practice of Eagle or such Subsidiary, as the case
may be, and (vi) no event has occurred which has had or is reasonably certain to
have, individually or in the aggregate, a Material Adverse Effect on Eagle.
(b) Since September 30, 1996, Eagle and its Subsidiaries have carried
on their respective businesses in the ordinary and usual course consistent with
their past practices.
3.9 LEGAL PROCEEDINGS.
(a) Neither Eagle nor any of its Subsidiaries is a party to any, and
there are no pending or threatened, legal, administrative, arbitration or other
proceedings, claims, actions or governmental or regulatory investigations of any
nature against Eagle or any of its Subsidiaries in which there is a reasonable
probability of any material recovery against or other material adverse effect
upon Eagle or any of its Subsidiaries or which challenge the validity or
propriety of the transactions contemplated by this Agreement, the Bank Merger
Agreement or the Option Agreement as to which there is a reasonable probability
of success.
(b) There is no injunction, order, judgment or decree imposed upon
Eagle, any of its Subsidiaries or the assets of Eagle or any of its
Subsidiaries.
3.10 TAXES AND TAX RETURNS.
(a) Each of Eagle and its Subsidiaries has duly filed all material
Federal, state, local and foreign Tax Returns required to be filed by it on or
prior to the date hereof (all such returns being accurate and complete in all
material respects) and has duly paid or made provisions for the payment of all
material Taxes which have been incurred or are due or claimed to be due from it
by Federal, state, local and foreign taxing authorities on or prior to the date
hereof. All liability with respect to the income tax returns of Eagle and its
Subsidiaries has been satisfied for all years to and including 1996. The
Internal Revenue Service ("IRS") has not notified Eagle of, or otherwise
asserted, that there are any material
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deficiencies with respect to the income tax returns of Eagle. There are no
material disputes pending, or claims asserted for, Taxes or assessments upon
Eagle or any of its Subsidiaries, nor has Eagle or any of its Subsidiaries been
requested to give any waivers extending the statutory period of limitation
applicable to any Federal, state or local income tax return for any period.
For the purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies, penalties or other assessments imposed by any United
States federal, state, local or foreign taxing authority, including, but not
limited to income, excise, property, sales, transfer, franchise, payroll,
withholding, social security or other taxes, including any interest, penalties
or additions attributable thereto.
For purposes of this Agreement, "Tax Return" shall mean any return,
report, information return or other document (including any related or
supporting information) with respect to Taxes.
(b) Eagle Funding Corp. (i) will be, for the taxable year ended
December 31, 1997 and at the Effective Time, a "real estate investment trust" as
defined in Section 856(a) of the Code, (ii) will meet, for the taxable year
ended December 31, 1997 and at the Effective Time, the requirements of Section
857(a) of the Code, (iii) will not be, for the taxable year ended December 31,
1997 or at the Effective Time, described in Section 856(c)(7) of the Code, (iv)
has not had, and at the Effective Time will not have had, any "net income
derived from prohibited transactions" within the meaning of Section 857(b)(6) of
the Code, (v) has not, and at the Effective Time will not have, issued any stock
or securities as part of a multiple party financing transaction described in
Internal Revenue Service Notice 97-21, 1997-11 I.R.B. 2, and (vi) will be, for
the taxable year ended December 31, 1997 and at the Effective Time, a "Qualified
Real Estate Investment Trust" of which Eagle Bank will be for the taxable year
ended December 31, 1997 and at the Effective Time, a "Qualified Dividend
Recipient" (as those terms are defined in Connecticut Public Act 97-119, 1997
Ct. ALS 119, 1997 Ct. P.A. 119, 1997 Ct. SB 1205). As of December 31, 1997,
persons (not including Eagle Bank or any person that is a "related person,"
employee or director of Eagle Bank) will have outstanding cash capital
contributions to Eagle Funding Corp. that, in the aggregate, exceed 5 percent of
the fair market value of the aggregate "real estate assets," valued as of
December 31, 1997, then held by Eagle Funding Corp. (as such terms are used in
Connecticut Public Act 97-119, 1997 Ct. ALS 119, 1997 Ct. P.A. 119, 1997 Ct. SB
1205).
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3.11 EMPLOYEE PLANS.
(a) Section 3.11(a) of the Eagle Disclosure Schedule sets forth a true
and complete list of each employee benefit plan (within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), arrangement or agreement that is maintained or contributed to as of
the date of this Agreement, or that has within the last six years been
maintained or contributed to, by Eagle or any of its Subsidiaries or any other
entity which together with Eagle would be deemed a "single employer" within the
meaning of Section 4001 of ERISA or Code Sections 414(b), (c), (m) or (o) (an
"ERISA Affiliate") or under which Eagle or any Subsidiary or ERISA Affiliate has
any liability (collectively, the "Plans").
(b) Eagle has heretofore made available to Webster true, correct and
complete copies of each of the Plans and all related documents, including but
not limited to (i) the actuarial report for such Plan (if applicable) for the
last year, (ii) the most recent determination letter from the Internal Revenue
Service (if applicable) for such Plan, (iii) the current summary plan
description and any summaries of material modification, (iv) all annual reports
(Form 5500 series) for each Plan filed for the preceding plan year, (v) all
agreements with fiduciaries and service providers relating to the Plan, and (vi)
all substantive correspondence relating to any such Plan addressed to or
received from the Internal Revenue Service, the Department of Labor, the Pension
Benefit Guaranty Corporation or any other governmental agency.
(c) Except as set forth at Section 3.11(c) of the Eagle Disclosure
Schedule, (i) each of the Plans has been operated and administered in all
material respects in compliance with applicable Laws, including but not limited
to ERISA and the Code, (ii) each of the Plans intended to be "qualified" within
the meaning of Section 401(a) of the Code is so qualified, (iii) with respect to
each Plan which is subject to Title IV of ERISA, the present value of accrued
benefits under such Plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such Plan's actuary
with respect to such Plan, did not, as of its latest valuation date, exceed the
then current value of the assets of such Plan allocable to such accrued
benefits, and there has not been a material adverse change in the financial
condition of such Plans, (iv) no Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured), with respect to
current or former employees of Eagle or any Eagle Subsidiary beyond their
retirement or other
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termination of service, other than (w) coverage mandated by applicable Law, (x)
death benefits or retirement benefits under a Plan that is an "employee pension
plan," as that term is defined in Section 3(2) of ERISA, (y) deferred
compensation benefits under a Plan that are accrued as liabilities on the books
of Eagle or any Eagle Subsidiary, or (z) benefits the full cost of which is
borne by the current or former employee (or his beneficiary), (v) Eagle and its
Subsidiaries have reserved the right to amend, terminate and modify any Plan
providing post-retirement death or medical benefits, (vi) no material liability
under Title IV of ERISA has been incurred by Eagle, any Eagle Subsidiary or any
ERISA Affiliate that has not been satisfied in full, and no condition exists
that presents a material risk to Eagle or any Eagle Subsidiary incurring a
material liability thereunder, (vii) none of Eagle, its Subsidiaries or any
ERISA Affiliate has incurred, and Eagle does not expect that any such entity
will incur, any withdrawal liability with respect to a "multiemployer pension
plan" (as such term is defined in Section 3(37) of ERISA) under Title IV of
ERISA, or any material liability in connection with the termination or
reorganization of a multiemployer pension plan, (viii) all contributions or
other amounts payable by Eagle or any Eagle Subsidiary as of the Effective Time
with respect to each Plan and all other liabilities of each such entity with
respect to each Plan in respect of current or prior plan years have been paid or
accrued in accordance with generally accepted accounting practices and Section
412 of the Code, (ix) neither Eagle nor any Eagle Subsidiary has engaged in a
transaction in connection with which Eagle or any Eagle Subsidiary is subject to
either a material civil penalty assessed pursuant to Section 409 or 502(i) of
ERISA or a material tax imposed pursuant to Section 4975 or 4976 of the Code,
(x) to the knowledge of Eagle, there are no pending, threatened or anticipated
claims (other than routine claims for benefits) by, on behalf of or against any
of the Plans or any trusts related thereto, (xi) no Plan, program, agreement or
other arrangement, either individually or collectively, provides for any payment
by Eagle or any Eagle Subsidiary that would not be deductible under Code
Sections 162(a)(1), 162(m) or 404 or that would constitute a "parachute payment"
within the meaning of Code Section 280G, nor is there outstanding under any such
Plan, program, agreement or arrangement, any limited stock appreciation right or
any similar right or instrument that could reasonably be expected to prevent the
Merger from being accounted for as a pooling-of-interests, (xii) no "accumulated
funding deficiency," as defined in Section 302(a)(2) of ERISA or Section 412 of
the Code, whether or not waived, and no "unfunded current liability," as
determined under Section 412(l) of the Code, exists with respect to any Plan,
and (xiii) no Plan has experienced a "reportable event" (as such term is defined
in Section 4043(c) of ERISA) that is
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not subject to an administrative or statutory waiver from the reporting
requirement.
3.12 CERTAIN CONTRACTS.
(a) Except as set forth at Section 3.12 of the Eagle Disclosure
Schedule, neither Eagle nor any of its Subsidiaries is a party to or bound by
any contract, arrangement or commitment (i) with respect to the employment of
any directors, officers, employees or consultants, (ii) which, upon the
consummation of the transactions contemplated by this Agreement or the Bank
Merger Agreement will (either alone or upon the occurrence of any additional
acts or events) result in any payment (whether of severance pay or otherwise)
becoming due from Webster, Eagle, Eagle Bank, Webster Bank or any of their
respective Subsidiaries to any director, officer or employee thereof, (iii)
which materially restricts the conduct of any line of business by Eagle or Eagle
Bank or of any current or future affiliates thereof, (iv) with or to a labor
union or guild (including any collective bargaining agreement), (v) (including
any stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan) any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the Bank Merger Agreement,
or the value of any of the benefits of which will be calculated on the basis of
any of the transactions contemplated by this Agreement or the Bank Merger
Agreement, (vi) that is material and is not made in the ordinary course of
business or pursuant to which Eagle or any of its Subsidiaries is or may become
obligated to invest in or contribute capital to any Eagle Subsidiaries, (vii)
not fully disclosed in the financial statements contemplated by Section 3.6 that
relates to borrowings of money (or guarantees thereof by Eagle, or any Eagle
Subsidiary), other than in the ordinary course of business, or (viii) is a lease
or similar arrangement with annual rental payments of $100,000 or more. Eagle
has previously delivered or made available to Webster true, correct and complete
copies of all employment, consulting and deferred compensation agreements to
which Eagle or any of its Subsidiaries is a party. Section 3.12(a) of the Eagle
Disclosure Schedule sets forth a list of all material contracts (as defined in
Item 601(b)(10) of Regulation S-K) of Eagle. Each contract, arrangement or
commitment of the type described in this Section 3.12(a), whether or not set
forth in Section 3.12(a) of the Eagle Disclosure Schedule, is referred to herein
as a "Eagle Contract," and neither Eagle nor any of its Subsidiaries has
received notice of, nor do any executive officers of such entities know of, any
violation or imminent violation of any Eagle Contract by any other party
thereto.
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(b) (i) Each Eagle Contract is valid and binding and in full force and
effect, (ii) Eagle and each of its Subsidiaries has in all material respects
performed all obligations required to be performed by it to date under each
Eagle Contract, and (iii) no event or condition exists which constitutes or,
after notice or lapse of time or both, would constitute, a material default on
the part of Eagle or any of its Subsidiaries under any such Eagle Contract.
3.13 AGREEMENTS WITH REGULATORY AGENCIES.
Neither Eagle nor Eagle Bank is subject to any cease-and-desist or other
order issued by, or is a party to any written agreement, consent agreement or
memorandum of understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any order or directive by, or has been
a recipient of any extraordinary supervisory letter from, or has adopted any
board resolutions at the request of (each, whether or not set forth on Section
3.13 of the Eagle Disclosure Schedule, a "Regulatory Agreement"), any
Governmental Entity that restricts the conduct of its business or that in any
manner relates to its capital adequacy, its credit policies, its management or
its business, nor has Eagle or Eagle Bank been advised by any Governmental
Entity that it is considering issuing or requesting any Regulatory Agreement.
3.14 STATE TAKEOVER LAWS; CERTIFICATE OF INCORPORATION.
The Board of Directors of Eagle has approved the offer of Webster to enter
into this Agreement, the Bank Merger Agreement and the Option Agreement, and has
approved Eagle's entering into this Agreement, the Bank Merger Agreement and the
Option Agreement, and the transactions contemplated thereby, such that under the
DGCL (including, without limitation, Section 203 thereof) and Eagle's Restated
Certificate of Incorporation (including, without limitation, Articles 10, 12,
and 13 thereof) the only vote of Eagle stockholders necessary to consummate the
transactions contemplated hereby (including the Bank Merger and, subject to any
additional vote of Eagle stockholders required pursuant to Article 13 of the
Eagle Restated Certificate of Incorporation, the transactions contemplated by
the Option Agreement) is the approval of the holders of at least a majority of
the outstanding Eagle Common Stock entitled to vote thereon at the Eagle Meeting
or any adjournment or postponement thereof.
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3.15 ENVIRONMENTAL MATTERS.
(a) Each of Eagle and the Eagle Subsidiaries is in compliance in all
material respects with all applicable federal and state laws and regulations
relating to pollution or protection of the environment (including without
limitation, laws and regulations relating to emissions, discharges, releases and
threatened releases of Hazardous Material (as hereinafter defined)), or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials;
(b) There is no suit, claim, action, proceeding, investigation or
notice pending or to the knowledge of Eagle's and Eagle Bank's executive
officers threatened (or to the knowledge of Eagle's and Eagle Bank's executive
officers past or present actions or events that could reasonably be expected to
form the basis of any such suit, claim, action, proceeding, investigation or
notice), in which Eagle or any Eagle Subsidiary has been or, with respect to
threatened suits, claims, actions, proceedings, investigations or notices may
be, named as a defendant (x) for alleged material noncompliance (including by
any predecessor), with any environmental law, rule or regulation or (y) relating
to any material release or threatened release into the environment of any
Hazardous Material, whether or not occurring at or on a site owned, leased or
operated (directly or indirectly in a fiduciary capacity) by Eagle or any Eagle
Subsidiary;
(c) To the knowledge of Eagle's and Eagle Bank's executive officers,
there has not been any release of Hazardous Materials in, on, under or affecting
any such property;
(d) To the knowledge of Eagle's and Eagle Bank's executive officers,
neither Eagle nor any Eagle Subsidiary has made or participated in any loan to
any person who is subject to any suit, claim, action, proceeding, investigation
or notice, pending or threatened, with respect to (i) any alleged material
noncompliance as to any property securing such loan with any environmental law,
rule or regulation, or (ii) the release or the threatened release into the
environment of any Hazardous Material at any property securing such loan.
(e) For purposes of this section 3.15, the term "Hazardous Material"
means any hazardous waste, petroleum product, polychlorinated biphenyl,
chemical, pollutant, contaminant, pesticide, radioactive substance, lead paint
or other toxic material, or other material or substance (in each such case,
other than small quantities of such substances in retail
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containers) regulated under any applicable environmental or public health
statute, law, ordinance, rule or regulation.
3.16 RESERVES FOR LOSSES.
All reserves or other allowances for possible losses reflected in Eagle's
most recent financial statements referred to in Section 3.6 complied with all
Laws and are adequate under GAAP. Neither Eagle nor Eagle Bank has been notified
by the OTS, the FDIC, any other regulatory authority or by Eagle's independent
auditor, in writing or otherwise, that such reserves are inadequate or that the
practices and policies of Eagle or Eagle Bank in establishing such reserves and
in accounting for delinquent and classified assets generally fail to comply with
applicable accounting or regulatory requirements, or that the OTS, the FDIC, any
other regulatory authority or Eagle's independent auditor believes such reserves
to be inadequate or inconsistent with the historical loss experience of Eagle or
Eagle Bank. Eagle has previously furnished or made available to Webster a
complete list of all extensions of credit and other real estate owned ("OREO")
that have been classified by any bank examiner (regulatory or internal) as other
loans specially mentioned, special mention, substandard, doubtful, loss,
classified or criticized, credit risk assets, concerned loans or words of
similar import. All OREO held by Eagle or Eagle Bank is being carried net of
reserves at the lower of cost or net realizable value.
3.17 PROPERTIES AND ASSETS.
Section 3.17 of the Eagle Disclosure Schedule lists as of the date of this
Agreement (i) all real property owned by Eagle and each Eagle Subsidiary; (ii)
each real property lease, sublease or installment purchase arrangement to which
Eagle or any Eagle Subsidiary is a party; (iii) a description of each contract
for the purchase, sale, or development of real estate to which Eagle or any
Eagle Subsidiary is a party; and (iv) all items of Eagle's or any Eagle
Subsidiary's tangible personal property and equipment with a book value of
$50,000 or more or having any annual lease payment of $25,000 or more. Except
for (a) items reflected in Eagle's consolidated financial statements as of June
30, 1997 referred to in Section 3.6 hereof, (b) exceptions to title that do not
interfere materially with Eagle's or any Eagle Subsidiary's use and enjoyment of
owned or leased real property (other than OREO), (c) liens for current real
estate taxes not yet delinquent, or being contested in good faith, properly
reserved against, (d) properties and assets sold or transferred in the ordinary
course of business consistent with past practices since June 30, 1997, and (e)
items listed in Section 3.17 of the Eagle Disclosure Schedule,
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Eagle and each Eagle Subsidiary have good and, as to owned real property,
marketable and insurable title to all their properties and assets, reflected in
the consolidated financial statements of Eagle as of June 30, 1997, free and
clear of all liens, claims, charges and other encumbrances. Eagle and each Eagle
Subsidiary, as lessees, have the right under valid and subsisting leases to
occupy, use and possess all property leased by them. All properties and assets
used by Eagle and each Eagle Subsidiary are in good operating condition and
repair (subject to ordinary wear and tear) suitable for the purposes for which
they are currently utilized and comply in all material respects with all Laws
relating thereto now in effect. Eagle and each Eagle Subsidiary enjoy peaceful
and undisturbed possession under all leases for the use of all property under
which they are the lessees, and all leases to which Eagle or any Eagle
Subsidiary is a party are valid and binding obligations in accordance with the
terms thereof. Neither Eagle nor any Eagle Subsidiary is in material default
with respect to any such lease, and there has occurred no default by Eagle or
Eagle Bank or event which with the lapse of time or the giving of notice, or
both, would constitute a material default under any such lease. There are no
Laws, conditions of record, or other impediments which interfere with the
intended use by Eagle or any Eagle Subsidiary of any of the property owned,
leased, or occupied by them.
3.18 INSURANCE.
Notwithstanding anything to the contrary in Article II-A, Section 3.18 of
the Eagle Disclosure Schedule contains a true, correct and complete list of all
insurance policies and bonds maintained by Eagle and any Eagle Subsidiary,
including the name of the insurer, the policy number, the type of policy and any
applicable deductibles. The existing insurance carried by Eagle and Eagle
Subsidiaries is and will continue to be, in respect of the nature of the risks
insured against and the amount of coverage provided, substantially similar in
kind and amount to that customarily carried by parties similarly situated who
own properties and engage in businesses substantially similar to that of Eagle
and the Eagle Subsidiaries, and is sufficient for compliance by Eagle and the
Eagle Subsidiaries with all requirements of Law and agreements to which Eagle or
any of the Eagle Subsidiaries is subject or is party. True, correct and complete
copies of all such policies and bonds reflected at Section 3.18 of the Eagle
Disclosure Schedule, as in effect on the date hereof, have been delivered or
made available to Webster.
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3.19 COMPLIANCE WITH APPLICABLE LAWS.
Each of Eagle and any Eagle Subsidiary has complied in all material
respects with all Laws applicable to it or to the operation of its business.
Neither Eagle nor any Eagle Subsidiary has received any notice of any material
alleged or threatened claim, violation, or liability under any such Laws that
has not heretofore been cured and for which there is no remaining liability.
3.20 LOANS.
As of the date hereof:
(a) All loans owned by Eagle or any Eagle Subsidiary, or in which Eagle
or any Eagle Subsidiary has an interest, comply in all material respects with
all Laws, including, but not limited to, applicable usury statutes, underwriting
and recordkeeping requirements and the Truth in Lending Act, the Equal Credit
Opportunity Act and the Real Estate Procedures Act, and other applicable
consumer protection statutes and the regulations thereunder.
(b) All loans owned by Eagle or any Eagle Subsidiary, or in which Eagle
or any Eagle Subsidiary has an interest, have been made or acquired by Eagle in
all material respects in accordance with board of director-approved loan
policies. Each of Eagle and each Eagle Subsidiary holds mortgages contained in
its loan portfolio for its own benefit to the extent of its interest shown
therein; such mortgages evidence liens having the priority indicated by their
terms, subject, as of the date of recordation or filing of applicable security
instruments, only to such exceptions as are discussed in attorneys' opinions
regarding title or in title insurance policies in the mortgage files relating to
the loans secured by real property or are not material as to the collectability
of such loans; and all loans owned by Eagle and each Eagle Subsidiary are with
full recourse to the borrowers, and each of Eagle and any Eagle Subsidiary has
taken no action which would result in a waiver or negation of any rights or
remedies available against the borrower or guarantor, if any, on any loan, other
than in the ordinary course of business. All applicable remedies against all
borrowers and guarantors are enforceable except as may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights and
except as may be limited by the exercise of judicial discretion in applying
principles of equity. Except as set forth at Section 3.20(b) of the Eagle
Disclosure Schedule, all loans purchased or originated by Eagle or any Eagle
Subsidiary and subsequently sold by Eagle or any Eagle Subsidiary have been sold
without
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recourse to Eagle or any Eagle Subsidiary and without any liability under any
yield maintenance or similar obligation. True, correct and complete copies of
loan delinquency reports as of September 30, 1997 prepared by Eagle and each
Eagle Subsidiary, which reports include all loans delinquent or otherwise in
default, have been furnished or made available to Webster. True, correct and
complete copies of the currently effective lending policies and practices of
Eagle and each Eagle Subsidiary also have been furnished or made available to
Webster.
(c) Except as set forth in Section 3.20(c) of the Eagle Disclosure
Schedule, each outstanding loan participation sold by Eagle or any Eagle
Subsidiary was sold with the risk of non-payment of all or any portion of that
underlying loan to be shared by each participant (including Eagle or any Eagle
Subsidiary) proportionately to the share of such loan represented by such
participation without any recourse of such other lender or participant to Eagle
or any Eagle Subsidiary for payment or repurchase of the amount of such loan
represented by the participation or liability under any yield maintenance or
similar obligation. Eagle and any Eagle Subsidiary have properly fulfilled in
all material respects its contractual responsibilities and duties in any loan in
which it acts as the lead lender or servicer and has complied in all material
respects with its duties as required under applicable regulatory requirements.
(d) Eagle and each Eagle Subsidiary have properly perfected or caused
to be properly perfected all security interests, liens, or other interests in
any collateral securing any loans made by it.
3.21 OWNERSHIP OF WEBSTER COMMON STOCK.
Except as set forth at Section 3.21 of the Eagle Disclosure Schedule,
neither Eagle nor any of its directors, officers, 10% or greater stockholders or
affiliates (i) beneficially own, directly or indirectly, or (ii) is a party to
any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of, in each case, any shares of outstanding capital
stock of Webster (other than those agreements, arrangements or understandings
specifically contemplated hereby).
3.22 EAGLE DRIP.
Eagle has suspended the Eagle DRIP such that from the date hereof, no
issuances or purchases of Eagle Common Stock
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under the Eagle DRIP shall be permitted, nor shall any other obligations
thereunder accrue.
3.23 FAIRNESS OPINION.
Eagle has received an opinion from Sandler O'Neill to the effect that, in
its opinion, the Exchange Ratio pursuant to this Agreement is fair to the
holders of Eagle Common Stock from a financial point of view.
3.24 TAX AND ACCOUNTING TREATMENT OF MERGER.
As of the date of this Agreement, Eagle is not aware of any fact or state
of affairs that could cause the Merger not to be treated as a "reorganization"
under Section 368(a) of the Code or to qualify for "pooling-of-interests"
accounting treatment.
3.25 RIGHTS AGREEMENT.
Subject to the execution of an amendment to the Eagle Rights Agreement
which has been approved by Eagle's Board of Directors and shall be executed
promptly after the date of this Agreement, Eagle has taken or will take all
action (including, if required, redeeming all of the outstanding Eagle Rights
issued pursuant to the Eagle Rights Agreement or amending or terminating the
Eagle Rights Agreement) so that the entering into of this Agreement and the
Option Agreement and the consummation of the transactions contemplated hereby
and thereby do not and will not result in the grant of any rights to any person
under the Eagle Rights Agreement or enable or require the Eagle Rights to be
exercised, distributed or triggered.
3.26 EAGLE INFORMATION.
The information relating to Eagle and its Subsidiaries to be provided by
Eagle to be contained in the Joint Proxy Statement/Prospectus and the
Registration Statement will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances in which they are made, not misleading. The Joint
Proxy Statement/Prospectus (except for such portions thereof that relate only to
Webster or any of its Subsidiaries) will comply in all material respects with
the provisions of the Exchange Act and the rules and regulations thereunder.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF WEBSTER
Webster, on behalf of itself and Webster Bank, hereby makes the following
representations and warranties to Eagle as set forth in this Article IV, each of
which is being relied upon by Eagle as a material inducement to enter into and
perform this Agreement.
4.1 CORPORATE ORGANIZATION.
(a) Webster is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Webster has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
Webster is duly registered as a savings and loan holding company with the OTS
under HOLA. The Restated Certificate of Incorporation and By-Laws of Webster,
copies of which have previously been made available to Eagle, are true, correct
and complete copies of such documents as in effect as of the date of this
Agreement.
(b) Webster Bank is a federal savings bank chartered by the OTS under
the laws of the United States with its main office in the State of Connecticut.
Webster Bank has the corporate power and authority to own or lease all of its
properties and assets and to carry on business as is now being conducted, and is
duly licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary. The Charter and By-Laws of Webster Bank, copies of
which have previously been made available to Eagle, are true, correct and
complete copies of such documents as in effect as of the date of this Agreement.
4.2 CAPITALIZATION.
(a) The authorized capital stock of Webster as of the date hereof
consists of 30,000,000 shares of Webster Common Stock, of which 13,554,224
shares were outstanding (net of 83,639 treasury shares) at September 30, 1997
and 3,000,000 shares of serial preferred stock, par value $.01 per share
("Webster Preferred Stock"), 14,000 of which are designated as Series C
Preferred Stock, none of which were outstanding at
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September 30, 1997. At such date, there were options outstanding to purchase
754,744 shares of Webster Common Stock. All of the issued and outstanding shares
of Webster Common Stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. As of the date of this Agreement,
except as set forth above, Webster does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of Webster
Common Stock or Webster Preferred Stock or any other equity securities of
Webster or any securities representing the right to purchase or otherwise
receive any shares of Webster Common Stock or Webster Preferred Stock, other
than (i) a warrant to purchase 300,000 shares of Webster Common Stock issued to
Fleet Financial Group and a contingent payment arrangement with Fleet Financial
Group as described in the Form 8-K filed by Webster with the Securities and
Exchange Commission for such event, (ii) pursuant to that certain Rights
Agreement between Webster and American Stock Transfer & Trust Co and (iii)
pursuant to that certain Escrow Agreement between Webster, American Stock
Transfer & Trust Co., as Escrow Agent, and certain former shareholders of Sachem
Trust National Association. The shares of Webster Common Stock to be issued
pursuant to the Merger are duly authorized and, at the Effective Time, all such
shares will be validly issued, fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof.
(b) The authorized capital stock of Webster Bank consists of 2,000
shares of common stock, par value $.01 per share, 1,000 of which are issued and
outstanding, and 1,000 shares of preferred stock, par value $.01 per share, none
of which is issued or outstanding. The outstanding shares of common stock of
Webster Bank are owned by Webster free and clear of all liens, charges,
encumbrances and security interests whatsoever, and all of such shares are duly
authorized and validly issued and fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to ownership thereof.
4.3 AUTHORITY; NO VIOLATION.
(a) Webster has full corporate power and authority to execute and
deliver this Agreement and the Option Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly approved
by the Board of Directors of Webster. Except for
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the adoption and approval of this Agreement by the requisite vote of the Webster
stockholders, no other corporate proceedings on the part of Webster are
necessary to consummate the transactions contemplated hereby. This Agreement has
been, and the Option Agreement will be, duly and validly executed and delivered
by Webster and (assuming due authorization, execution and delivery by Eagle)
this Agreement constitutes a valid and binding obligation of Webster,
enforceable against Webster in accordance with its terms, except as enforcement
may be limited by general principles of equity whether applied in a court of law
or a court of equity and by bankruptcy, insolvency and similar law affecting
creditors' rights and remedies generally.
(b) Webster Bank has full corporate power and authority to execute and
deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby will be duly and
validly approved by the Board of Directors of Webster Bank, and by Webster as
the sole stockholder of Webster Bank prior to the Effective Time. All corporate
proceedings on the part of Webster Bank necessary to consummate the transactions
contemplated thereby will have been taken prior to the Effective Time. The Bank
Merger Agreement, upon execution and delivery by Webster Bank, will be duly and
validly executed and delivered by Webster Bank and will (assuming due
authorization, execution and delivery by Eagle Bank) constitute a valid and
binding obligation of Webster Bank, enforceable against Webster Bank in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally.
(c) Neither the execution and delivery of this Agreement or the Option
Agreement by Webster or the Bank Merger Agreement by Webster Bank, nor the
consummation by Webster or Webster Bank, as the case may be, of the transactions
contemplated hereby or thereby, nor compliance by Webster or Webster Bank, as
the case may be, with any of the terms or provisions hereof or thereof, will (i)
violate any provision of the Restated Certificate of Incorporation or Bylaws of
Webster or the Charter or By-Laws of Webster Bank, as the case may be, or (ii)
assuming that the consents and approvals referred to in Section 4.4 are duly
obtained, (x) violate any Laws applicable to Webster or Webster Bank or any of
their respective properties or assets, or (y) violate, conflict with, result in
a breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or
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both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of Webster or
Webster Bank under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Webster or Webster Bank is a party, or by
which they or any of their respective properties or assets may be bound or
affected.
4.4 REGULATORY APPROVALS.
(a) Except for (i) the filing of applications and notices, as
applicable, as to the Merger and the Bank Merger with the OTS under HOLA and the
Bank Merger Act and approval of such applications and notices, (ii) the filing
with the SEC of a registration statement on Form S-4 to register the shares of
Webster Common Stock to be issued in connection with the Merger (including the
shares of Webster Common Stock that may be issued upon the exercise of the
options referred to in Section 1.6 hereof), which will include the Joint Proxy
Statement/Prospectus, (iii) the approval of this Agreement by the requisite vote
of the stockholders of Eagle and the requisite approval, if any, of Eagle
stockholders in connection with the Option Agreement pursuant to the Eagle
Restated Certificate of Incorporation, (iv) the approval of this Agreement by
the requisite vote of the stockholders of Webster, (v) the filing of the
Certificate of Merger with the Secretary of State of Delaware pursuant to the
DGCL, (vi) the filings in connection with the Bank Merger Agreement and the
transactions contemplated thereby and (vii) such filings and approvals as are
required to be made or obtained under the securities or "Blue Sky" laws of
various states or with Nasdaq (or such other exchange as may be applicable) in
connection with the issuance of the shares of Webster Common Stock pursuant to
this Agreement, no consents or approvals of or filings or registrations with any
Governmental Entity are necessary in connection with (1) the execution and
delivery by Webster of this Agreement and the Option Agreement, (2) the
performance by Webster of this Agreement and the transactions contemplated
hereby, (3) the execution and delivery by Webster Bank of the Bank Merger
Agreement, and (4) the consummation by Webster Bank of the transactions
contemplated by the Bank Merger Agreement except for such consents, approvals or
filings the failure of which to obtain will not have a material adverse effect
on the ability of Eagle to consummate the transactions contemplated thereby.
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(b) Webster hereby represents to Eagle that, as of the date of this
Agreement, it has no knowledge of any reason why approval or effectiveness of
any of the applications, notices or filings referred to in Section 4.4(a) cannot
be obtained or granted on a timely basis.
(c) Webster and Webster Bank have timely filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that they were required to file since December 31, 1993,
with any Regulatory Agencies. As of its respective date, each such report,
registration, statement and amendment complied in all material respects with all
rules and regulations promulgated by the applicable Regulatory Agency and did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except for normal examinations conducted by a Regulatory Agency in
the regular course of the business of Webster and its Subsidiaries, no
Governmental Entity is conducting, or has conducted, any proceeding or
investigation into the business or operations of Webster since December 31,
1993.
4.5 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
Webster has previously delivered to Eagle true, correct and complete copies
of (i) the audited consolidated statements of condition of Webster and its
Subsidiaries as of December 31 for the fiscal years 1995 and 1996 and the
related audited consolidated statements of income, changes in shareholders'
equity and cash flows for the fiscal years 1994 through 1996, inclusive, as
reported in Webster's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 filed with the SEC under the Exchange Act, in each case
accompanied by the audit report of KPMG Peat Marwick LLP, independent public
accountants with respect to Webster; and (ii) the unaudited consolidated
statements of condition of Webster and its Subsidiaries as of June 30, 1997 and
1996 and the related unaudited consolidated statements of income, changes in
shareholders' equity and cash flows for the interim periods ended June 30, 1997
and 1996, as reported on Webster's Quarterly Report on Form 10-Q for the period
ended June 30, 1997 filed with the SEC under the Exchange Act. The financial
statements referred to in this Section 4.5 (including the related notes, where
applicable) fairly present, and the financial statements referred to in Section
6.8 hereof will fairly present (subject, in the case of the unaudited
statements, to recurring audit adjustments normal
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in nature and amount), the results of the consolidated operations and
consolidated financial condition of Webster and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth; each
of such statements (including the related notes, where applicable) comply, and
the financial statements referred to in Section 6.8 hereof will comply, with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto; and each of such statements (including the
related notes, where applicable) has been, and the financial statements referred
to in Section 6.8 hereof will be, prepared in accordance with GAAP consistently
applied during the periods involved, except as indicated in the notes thereto
or, in the case of unaudited statements, as permitted by Form 10-Q. Webster's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996 and all
subsequently filed reports under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act comply in all material respects with the
appropriate requirements for such reports under the Exchange Act, and Webster
has previously delivered or made available to Eagle true, correct and complete
copies of such reports. The books and records of Webster and Webster Bank have
been, and are being, maintained in all material respects in accordance with GAAP
and any other applicable legal and accounting requirements and reflect only
actual transactions.
4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in Webster's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 and all reports subsequently filed by
Webster under Sections 13(a), 13(e), 14 or 15(d) of the Exchange Act, true,
correct and complete copies of which have previously been delivered or made
available to Eagle, since December 31, 1996, no event has occurred which has
had, individually or in the aggregate, a Material Adverse Effect on Webster.
(b) Since September 30, 1996, Webster and its Subsidiaries have carried on
their respective businesses in the ordinary and usual course consistent with
their past practices.
4.7 COMPLIANCE WITH APPLICABLE LAW.
Webster and each Webster Subsidiary has complied in all material respects
with all Laws applicable to it or to the operation of its business. Neither
Webster nor any Webster Subsidiary has received any notice of any alleged or
threatened claim, violation of or liability or potential responsibility under
any such Laws that has not heretofore been cured and for which there is no
remaining liability.
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4.8 OWNERSHIP OF EAGLE COMMON STOCK; AFFILIATES AND ASSOCIATES.
(a) Except for this Agreement, neither Webster nor any of its affiliates or
associates (as such terms are defined under the Exchange Act), (i) beneficially
own, directly or indirectly, or (ii) is a party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of, in
each case, more than five percent of the outstanding capital stock of Eagle,
excluding the shares of Eagle Common Stock issuable pursuant to the Option
Agreement to be executed subsequent to the execution of the Agreement.
4.9 EMPLOYEE BENEFIT PLANS.
Webster has heretofore made available for inspection, or delivered (if
requested) to Eagle true, correct and complete copies of each employee benefit
plan arrangement or agreement that is maintained as of the date of this
Agreement (the "Webster Plans") by Webster or any of its Subsidiaries. No
"accumulated funding deficiency" as defined in Section 302(a)(2) of ERISA or
Section 412 of the Code, whether or not waived, and no "unfunded current
liability" as determined under Section 412(l) of the Code exists with respect to
any Webster Plan. The Webster Plans are in compliance in all material respects
with the applicable requirements of ERISA and the Code.
4.10 AGREEMENTS WITH REGULATORY AGENCIES.
Neither Webster nor any of its affiliates is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a party
to any commitment letter or similar undertaking to, or is subject to any order
or directive by, or has been a recipient of any extraordinary supervisory letter
from, or has adopted any board resolutions at the request of (each, whether or
not set forth on Section 4.10 of the Webster Disclosure Schedule, a "Regulatory
Agreement"), any Governmental Entity that restricts the conduct of its business
or that in any manner relates to its capital adequacy, its credit policies, its
management or its business, nor has Webster or Webster Bank been advised by any
Governmental Entity that it is considering issuing or requesting any Regulatory
Agreement.
4.11 TAX AND ACCOUNTING TREATMENT OF MERGER.
As of the date of this Agreement, Webster is not aware of any fact or state
of affairs that could cause the Merger not to be treated as a "reorganization"
under Section
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368(a) of the Code or to qualify for "pooling-of-interests" accounting
treatment.
4.12 LEGAL PROCEEDINGS.
(a) Neither Webster nor any of its Subsidiaries is a party to any, and
there are no pending or threatened, legal, administrative, arbitration or other
proceedings, claims, actions or governmental or regulatory investigations of any
nature against Webster or any of its Subsidiaries in which there is a reasonable
probability of any material recovery against or other material adverse effect
upon Webster or any of its Subsidiaries or which challenge the validity or
propriety of the transactions contemplated by this Agreement, the Bank Merger
Agreement or the Option Agreement as to which there is a reasonable probability
of success.
(b) There is no injunction, order, judgment or decree imposed upon Webster,
any of its Subsidiaries or the assets of Webster or any of its Subsidiaries.
4.13 RESERVES FOR LOSSES.
All reserves or other allowances for possible losses reflected in Webster's
most recent financial statements referred to in Section 4.5 complied with all
Laws and are adequate under GAAP. Neither Webster nor Webster Bank has been
notified by the OTS, the FDIC, any other regulator authority or by Webster's
independent auditor, in writing or otherwise, that the reserves or other
allowances for possible loan losses reflected in Webster's most recent financial
statements referred to in Section 4.5 are inadequate or that the practices and
policies of Webster or Webster Bank in establishing such reserves and in
accounting for delinquent and classified assets generally fail to comply with
applicable accounting or regulatory requirements or that the OTS, the FDIC, any
other regulatory authority or Webster's independent auditor believes such
reserves to be inadequate or inconsistent with the historical loss experience of
Webster or Webster Bank. Webster has previously furnished Eagle with a complete
list of all OREO that have been classified by any bank examiner (regulatory or
internal) as other loans specially mentioned, special mention, substandard,
doubtful, loss, classified or criticized, credit risk assets, concerned loans or
words of similar import. All OREO held by Webster or Webster Bank is being
carried net of reserves at the lower of cost or net realizable value.
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4.14 BROKER'S FEES.
Neither Webster nor any Webster Subsidiary nor any of their respective
officers or directors has employed any broker or finder or incurred any
liability for any broker's fees, commissions or finder's fees in connection with
any of the transactions contemplated by this Agreement, the Bank Merger
Agreement or the Option Agreement, except that Webster has engaged, and will pay
a fee or commission to Merrill, Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") in accordance with the terms of a letter agreement between
Merrill Lynch and Webster, dated October 21, 1997, a true, complete and correct
copy of which has been previously delivered or made available by Webster to
Eagle.
4.15 FAIRNESS OPINION.
Webster has received an opinion from Merrill Lynch to the effect that, in
its opinion, the Exchange pursuant to this Agreement is fair to Webster from a
financial point of view.
4.16 TAXES.
Each of Webster and its Subsidiaries has duly filed all material Federal,
state, local and foreign Tax Returns required to be filed by it on or prior to
the date hereof (all such returns being accurate and complete in all material
respects) and has duly paid or made provisions for the payment of all material
Taxes which have been incurred or are due or claimed to be due from it by
Federal, state, local and foreign taxing authorities on or prior to the date
hereof. All liability with respect to the income tax returns of Webster and its
Subsidiaries has been satisfied for all years to and including 1996. The
Internal Revenue Service ("IRS") has not notified Webster of, or otherwise
asserted, that there are any material deficiencies with respect to the income
tax returns of Webster. There are no material disputes pending, or claims
asserted for, Taxes or assessments upon Webster or any of its Subsidiaries, nor
has Webster or any of its Subsidiaries been requested to give any waivers
extending the statutory period of limitation applicable to any Federal, state or
local income tax return for any period.
4.17 WEBSTER INFORMATION.
The information relating to Webster and its Subsidiaries to be provided by
Webster to be contained in the Joint Proxy Statement/Prospectus and the
Registration Statement will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein,
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in light of the circumstances in which they are made, not misleading. The Joint
Proxy Statement/Prospectus (except for such portions thereof that relate only to
Eagle or any of its Subsidiaries) will comply in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder. The
Registration Statement will comply in all material respects with the provisions
of the Securities Act and the rules and regulations thereunder.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 COVENANTS OF EAGLE.
During the period from the date of this Agreement and continuing until the
Effective Time, except as expressly contemplated or permitted by this Agreement,
the Bank Merger Agreement or the Option Agreement, or with the prior written
consent of Webster, Eagle and each Eagle Subsidiary shall carry on their
respective businesses in the ordinary course consistent with past practices and
consistent with prudent banking practices. Eagle will use its reasonable best
efforts to (x) preserve its business organization and that of each Eagle
Subsidiary intact, (y) keep available to itself and Webster the present services
of the employees of Eagle and each Eagle Subsidiary and (z) preserve for itself
and Webster the goodwill of the customers of Eagle and each Eagle Subsidiary and
others with whom business relationships exist. Without limiting the generality
of the foregoing, and except as set forth in the Eagle Disclosure Schedule or as
otherwise contemplated by this Agreement or consented to by Webster in writing,
Eagle shall not, and shall not permit any Eagle Subsidiary to:
(a) declare or pay any dividends on, or make other distributions in
respect of, any of its capital stock
(except for the payment of regular quarterly cash dividends by Eagle of $0.25
per share on the Eagle Common Stock with declaration, record and payment dates
corresponding to the quarterly dividends paid by Eagle during its fiscal year
ended September 30, 1996 and except that any Eagle Subsidiary may declare and
pay dividends and distributions to Eagle). Until the Effective Time, Eagle and
Webster shall coordinate with the other declaration of any dividends or other
distributions with respect to the Eagle Common Stock and the Webster Common
Stock and the record dates and payment dates relating thereto, it being the
intention of the parties that holders of shares of Eagle Common Stock or Webster
Common Stock shall not receive more than one dividend, or fail to receive one
dividend, for any single calendar quarter on their shares of Eagle Common Stock
(including
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any shares of Webster Common Stock received in exchange therefor in the Merger)
or Webster Stock, as the case may be.
(b) (i) split, combine or reclassify any shares of its capital stock or
issue, authorize or propose the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock except upon the
exercise or fulfillment of rights or options issued and outstanding as of the
date hereof pursuant to the Eagle Stock Plans in accordance with their present
terms, and except pursuant to the Option Agreement, or (ii) repurchase, redeem
or otherwise acquire (except for the acquisition of Trust Account Shares and DPC
Shares, as such terms are defined in Section 1.4(c) hereof) any shares of the
capital stock of Eagle or any Eagle Subsidiary, or any securities convertible
into or exercisable for any shares of the capital stock of Eagle or any Eagle
Subsidiary;
(c) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares, or enter into any agreement with respect to any of the
foregoing, other than (i) the issuance of Eagle Common Stock pursuant to stock
options or similar rights to acquire Eagle Common Stock granted pursuant to the
Eagle Stock Plans and outstanding prior to the date of this Agreement, in each
case in accordance with their present terms and (ii) pursuant to the Option
Agreement;
(d) amend its Restated Certificate of Incorporation, By-Laws or other
similar governing documents;
(e) authorize or permit any of its officers, directors, employees or
agents to, directly or indirectly, solicit, initiate or encourage any inquiries
relating to, or the making of any proposal from, hold discussions or
negotiations with or provide any information to, any person, entity or group
(other than Webster) concerning any Acquisition Transaction (as defined below);
provided, however, that Eagle may, and may authorize and permit its officers,
directors, employees or agents to, provide or cause to be provided information
and may participate in such discussions or negotiations if the Board of
Directors of Eagle, after having consulted with and considered the advice of
outside counsel, has determined that the failure to provide such information or
participate in such negotiations or discussions could cause the members of such
Board of Directors to breach their fiduciary duties under applicable laws. Eagle
shall promptly communicate to Webster the material terms of any proposal,
whether written or oral, which it may receive
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in respect of any such Acquisition Transaction and whether it is having
discussions or negotiations with a third party about an Acquisition Transaction
or providing information in connection with, or which may lead to, an
Acquisition Transaction with a third party. Eagle will promptly cease and cause
to be terminated any existing activities, discussions or negotiations previously
conducted with any parties other than Webster with respect to any of the
foregoing. As used in this Agreement, "Acquisition Transaction" shall mean any
offer, proposal or expression of interest relating to (i) any tender or exchange
offer involving Eagle or any Eagle Subsidiary, (ii) merger, consolidation or
other business combination involving Eagle or any Eagle Subsidiary, or (iii) the
acquisition in any manner of a substantial equity interest in, or a substantial
portion of the assets, out of the ordinary course of business, of, Eagle or
Eagle Bank other than the transactions contemplated or permitted by this
Agreement, the Bank Merger Agreement and the Option Agreement;
(f) make capital expenditures aggregating in excess of $100,000, other
than related to the matters and in no more than the amounts set forth on Section
5.1(f) of the Eagle Disclosure Schedule;
(g) enter into any new line of business;
(h) acquire or agree to acquire, by merging or consolidating with, or
by purchasing an equity interest in or the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire any assets, other than in
connection with foreclosures, settlements in lieu of foreclosure or troubled
loan or debt restructurings, or in the ordinary course of business consistent
with prudent banking practices;
(i) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue or in any of the conditions to the Merger set forth in
Article VII not being satisfied, or in a violation of any provision of this
Agreement or the Bank Merger Agreement, except, in every case, as may be
required by applicable Law;
(j) change its methods of accounting in effect at September 30, 1996
except as required by changes in GAAP or regulatory accounting principles as
concurred to by Eagle's independent auditors;
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(k) (i) except as required by applicable law or to maintain
qualification pursuant to the Code, adopt, amend, renew (other than through
operation of evergreen provisions or renewals of the agreements set forth in
Section 5.1(k) of the Eagle Disclosure Schedule consistent with past practice)
or terminate any Plan or any agreement, arrangement, plan or policy between
Eagle or any Eagle Subsidiary and one or more of its current or former
directors, officers or employees, (ii) other than normal annual increases in
pay, consistent with past practice, for employees not subject to an employment,
change of control or severance agreement, increase in any manner the
compensation of any employee or director or pay any benefit not required by any
Plan or agreement as in effect as of the date hereof (including, without
limitation, the granting of stock options, stock appreciation rights, restricted
stock, restricted stock units or performance units or shares), (iii) enter into,
modify or renew (other than through operation of evergreen provisions or
renewals of the agreements set forth in Section 5.1(k) of the Eagle Disclosure
Schedule consistent with past practice) any contract, agreement, commitment or
arrangement providing for the payment to any director, officer or employee of
compensation or benefits, other than normal annual increases in pay, consistent
with past practice, for employees not subject to an employment, change of
control or severance agreement, and except for the retention and incentive bonus
arrangements described on Section 5.1(k) of the Eagle Disclosure Schedule, (iv)
hire any new employee at an annual compensation in excess of $30,000, (v) pay
expenses of any employees or directors for attending conventions or similar
meetings which conventions or meetings are held after the date hereof, except as
set forth on Section 5.1(k) of the Eagle Disclosure Schedule, (vi) promote to a
rank of vice president or more senior any employee, or (vii) pay any retention
or other bonuses to any employees except for the retention and incentive bonus
arrangements described on Section 5.1(k) of the Eagle Disclosure Schedule;
(l) incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity other than in the ordinary
course of business consistent with past practice;
(m) except as set forth in Section 5.1(m) of the Eagle Disclosure
Schedule, sell, purchase, enter into a lease, relocate, open or close any
banking or other office, or file an application pertaining to such action with
any Governmental Entity;
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(n) make any equity investment or commitment to make such an investment
in real estate or in any real estate development project, other than in
connection with foreclosure, settlements in lieu of foreclosure, or troubled
loan or debt restructuring, in the ordinary course of business consistent with
past banking practices;
(o) make any new loans to, modify the terms of any existing loan to, or
engage in any other transactions (other than routine banking transactions) with,
any Affiliated Person of Eagle or any Eagle Subsidiary;
(p) make any investment, or incur deposit liabilities, other than in
the ordinary course of business consistent with past practices, or make any
equity investments;
(q) except as set forth in Section 5.1(q) of the Eagle Disclosure
Schedule, purchase any loans or sell, purchase or lease any real property,
except for the sale of real estate that is the subject of a casualty loss or
condemnation or the sale of OREO on a basis consistent with past practices;
(r) originate (i) any loans except in accordance with existing Eagle
Bank lending policies, (ii) unsecured consumer loans in excess of $10,000, (iii)
commercial real estate first mortgage or other commercial loans in excess of
$250,000 as to any loan or $500,000 in the aggregate as to related loans, or
loans to related persons, or (iv) land acquisition loans to borrowers who intend
to construct a residence on such land in excess of the lesser of 75% of the
appraised value of such land or $100,000, except in each case for (A) loans for
which written commitments have been issued by Eagle Bank as of the date hereof,
as disclosed in Section 5.1(r) of the Eagle Disclosure Schedule, (B) renewals of
loans existing as of the date of this Agreement or loans permitted pursuant to
this Section 5.1(r) and (C) increases in the principal amount of loans existing
as of the date of this Agreement, subject to a limit of 30% of the principal
amount of such loans as of the date of this Agreement or $500,000, whichever is
less.
(s) make any investments in any equity or derivative securities or
engage in any forward commitment, futures transaction, financial options
transaction, hedging or arbitrage transaction or covered asset trading
activities or make any investments in any investment security with a maturity of
greater than one year;
(t) sell or purchase any mortgage loan servicing rights; or
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(u) agree or commit to do any of the actions set forth in clauses (a) -
(t) of this Section 5.1.
The consent of Webster to any action by Eagle or any Eagle Subsidiary that is
not permitted by any of the preceding paragraphs shall be evidenced only by a
writing signed by the President or any Executive Vice President of Webster or,
in the case of 5.1(r), the Chief Credit Policy Officer of Webster.
5.2 COVENANTS OF WEBSTER.
During the period from the date of this Agreement and continuing until the
Effective Time, except as expressly contemplated or permitted by this Agreement
or with Eagle's prior written consent, Webster shall not, and shall not permit
Webster Bank to:
(a) take any action that will result in any of Webster's
representations and warranties set forth in this Agreement being or becoming
untrue or any of the conditions to the Merger set forth in Article VII not being
satisfied or in a violation of any provision of this Agreement or the Bank
Merger Agreement, except, in every case, as may be required by applicable Law;
or
(b) take any other action that would materially adversely affect or
materially delay the ability of Webster to obtain the Requisite Regulatory
Approvals or otherwise materially adversely affect Webster's and Webster Bank's
ability to consummate the transactions contemplated by this Agreement.
5.3 MERGER COVENANTS.
Notwithstanding that Eagle believes that it has established all reserves
and taken all provisions for possible loan losses required by GAAP and
applicable laws, rules and regulations, Eagle recognizes that Webster may have
adopted different loan, accrual and reserve policies (including loan
classifications and levels of reserves for possible loan losses). In that
regard, and in general, from and after the date of this Agreement to the
Effective Time, Eagle and Webster shall consult and cooperate with each other in
order to formulate the plan of integration for the Merger, including, among
other things, with respect to conforming immediately prior to the Effective
Time, based upon such consultation, Eagle's loan, accrual and reserve policies
to those policies of Webster to the extent consistent with GAAP; provided, that
any change in Eagle's policies in connection with such matters need not be
effected until Webster irrevocably agrees in writing that (i) all conditions to
Webster's obligation to consummate the Merger
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have been satisfied, (ii) that Webster will waive any and all rights that it may
have to terminate this Agreement and (iii) Webster will complete the Merger.
5.4 EMPLOYMENT AND OTHER AGREEMENTS.
Following the Merger, Webster agrees that it shall honor the existing
written deferred compensation, employment, change of control and severance
contracts with directors and employees of Eagle and Eagle Bank that are listed
at Section 5.4 of the Eagle Disclosure Schedule; provided, however, that
in making the foregoing agreement, Webster will honor such contracts only to the
extent that, as represented at Section 3.11 hereof, none of such deferred
compensation, employment, change of control and severance contracts, nor any
other Eagle Plan, program, agreement or other arrangement under which any such
director or employee is a beneficiary, either individually or collectively,
provides for any payment by Eagle or any Eagle Subsidiary that would not be
deductible under Code Sections 162(a)(1) or 404 or that would constitute a
"parachute payment" within the meaning of Code Section 280G. In addition,
following the Merger, Webster agrees that it shall continue to provide the
benefits set forth in Section 5.4-A of the Eagle Disclosure Schedule as provided
therein.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS.
(a) Upon the execution and delivery of this Agreement, Webster and
Eagle (as to information to be included therein pertaining to Eagle) shall
promptly cause to be prepared and filed with the SEC a registration statement of
Webster on Form S-4, including the Joint Proxy Statement/Prospectus (the
"Registration Statement") for the purpose of registering the Webster Common
Stock to be issued in the Merger, and for soliciting the adoption and approval
of this Agreement and the Merger by the stockholders of Eagle and Webster.
Webster and Eagle shall use their reasonable best efforts to have the
Registration Statement declared effective by the SEC as soon as possible after
the filing thereof. The parties shall cooperate in responding to and considering
any questions or comments from the SEC staff regarding the information contained
in the Registration Statement. If at any time after the Registration Statement
is filed with the SEC, and prior to the Closing Date, any event relating to
Eagle is discovered by Eagle which should be set forth in an amendment of, or a
supplement to, the Registration Statement, including the Joint
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Proxy Statement/Prospectus, Eagle shall promptly inform Webster, and shall
furnish Webster with all necessary information relating to such event, whereupon
Webster shall promptly cause an appropriate amendment to the Registration
Statement to be filed with the SEC. Upon the effectiveness of such amendment,
each of Eagle and Webster (if prior to the meeting of its respective
stockholders pursuant to Section 6.3 hereof) will take all necessary action as
promptly as practicable to permit an appropriate amendment or supplement to be
transmitted to its stockholders entitled to vote at such meeting. Webster shall
also use reasonable efforts to obtain all necessary state securities law or
"Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement and the Bank Merger Agreement and Eagle shall
furnish all information concerning Eagle and the holders of Eagle Common Stock
as may be reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use their
best efforts to promptly prepare and file all necessary documentation, to effect
all applications, notices, petitions and filings, and to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable to consummate
the transactions contemplated by this Agreement (including without limitation
the Merger and the Bank Merger). Eagle and Webster shall have the right to
review in advance, and to the extent practicable each will consult the other on,
in each case subject to applicable laws relating to the exchange of information,
all the information relating to Eagle or Webster, as the case may be, which
appears in any filing made with, or written materials submitted to, any third
party or any Governmental Entity in connection with the transactions
contemplated by this Agreement; provided, however, that nothing contained herein
shall be deemed to provide either party with a right to review any information
provided to any Governmental Entity on a confidential basis in connection with
the transactions contemplated hereby. In exercising the foregoing right, each of
the parties hereto shall act reasonably and as promptly as practicable. The
parties hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to consummation of the transactions
contemplated herein.
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(c) Eagle shall, upon request, furnish Webster with all information
concerning Eagle and its directors, officers and stockholders and such other
matters as may be reasonably necessary or advisable in connection with the
Registration Statement or any other statement, filing, notice or application
made by or on behalf of Webster to any Governmental Entity in connection with
the Merger or the other transactions contemplated by this Agreement.
(d) Webster and Eagle shall promptly advise each other upon receiving
any communication from any Governmental Entity whose consent or approval is
required for consummation of the transactions contemplated by this Agreement
which causes such party to believe that there is a reasonable likelihood that
any Requisite Regulatory Approval (as defined in Section 7.1(c) hereof) will not
be obtained or that the receipt of any such approval will be materially delayed.
6.2 ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable Laws relating to
the exchange of information, Eagle shall accord to the officers, employees,
accountants, counsel and other representatives of Webster, access, during normal
business hours during the period prior to the Effective Time, to all its and
Eagle Bank's properties, books, contracts, commitments and records and, during
such period, Eagle shall make available to Webster (i) a copy of each report,
schedule, registration statement and other document filed or received by it
(including Eagle Bank) during such period pursuant to the requirements of
federal securities laws or federal or state banking laws and (ii) all other
information concerning its (including Eagle Bank) business, properties and
personnel as Webster may reasonably request. Webster shall receive notice of all
meetings of the Eagle and Eagle Bank's Board of Directors and any committees
thereof, and of any management committees (in all cases, at least as timely as
all Eagle and Eagle Bank, as the case may be, representatives to such meetings
are required to be provided notice). One representative of Webster, who shall be
a senior officer of Webster, shall be permitted to attend all meetings of the
Board of Directors (except for the portion of such meetings which relate to the
Merger or such other matters deemed confidential ("Confidential Matters") of
Eagle or Eagle Bank, as the case may be) and such meetings of committees of the
Board of Directors and management of Eagle and Eagle Bank which Webster desires.
Webster will hold all such information in confidence to the extent required by,
and in accordance with, the provisions of the confidentiality agreement which
Webster entered into with Eagle dated October 15, 1997 (the "Confidentiality
Agreement").
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(b) Upon reasonable notice and subject to applicable Laws relating to
the exchange of information, Webster shall afford to the officers, employees,
accountants, counsel and other representatives of Eagle, access, during normal
business hours during the period prior to the Effective Time, to such
information regarding Webster as shall be reasonably necessary for Eagle to
fulfill its obligations pursuant to this Agreement or which may be reasonably
necessary for Eagle to confirm that the representations and warranties of
Webster contained herein are true and correct and that the covenants of Webster
contained herein have been performed in all material respects. Eagle will hold
all such information in confidence to the extent required by, and in accordance
with, the provisions of the Confidentiality Agreement.
(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein.
(d) Eagle shall provide Webster with true, correct and complete copies
of all financial and other information provided to directors of Eagle and Eagle
Bank in connection with meetings of their Boards of Directors or committees
thereof.
6.3 STOCKHOLDER MEETINGS.
Each of Webster and Eagle shall take all steps necessary to duly call, give
notice of, convene and hold a meeting of its stockholders within 40 days after
the Registration Statement becomes effective for the purpose of voting upon the
approval of this Agreement and the Merger. Management and the Board of Directors
of each of Webster and Eagle shall recommend to Webster's and Eagle's
stockholders, as the case may be, approval of this Agreement, including the
Merger, and the transactions contemplated hereby, together with any matters
incident thereto; and in each case shall oppose any third party proposal or
other action that is inconsistent with this Agreement or the consummation of the
transactions contemplated hereby (subject in each case to compliance with its
fiduciary duties as advised by counsel). Eagle and Webster shall coordinate and
cooperate with respect to the foregoing matters.
6.4 LEGAL CONDITIONS TO MERGER.
Each of Webster and Eagle shall use their reasonable best efforts (a) to
take, or cause to be taken, all actions reasonably necessary, proper or
advisable to comply promptly with all legal requirements which may be imposed on
such party with respect to the Merger and, subject to the conditions set
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forth in Article VII hereof, to consummate the transactions contemplated by this
Agreement and (b) to obtain (and to cooperate with the other party to obtain)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity and any other third party which is required to be obtained
by Eagle or Webster in connection with the Merger and the other transactions
contemplated by this Agreement.
6.5 STOCK EXCHANGE LISTING.
Webster shall cause the shares of Webster Common Stock to be issued in the
Merger and pursuant to options referred to herein to be approved for quotation
on the Nasdaq Stock Market National Market (or such other exchange on which the
Webster Common Stock has become listed, or approved for listing) prior to or at
the Effective Time.
6.6 EMPLOYEES.
(a) To the extent permissible under the applicable provisions of the
Code and ERISA, for purposes of crediting periods of service for eligibility to
participate and vesting, but not for benefit accrual purposes, under employee
pension benefit plans (within the meaning of ERISA Section 3(2)) maintained by
Webster or Webster Bank, as applicable, individuals who are employees of Eagle
or Eagle Bank at the Effective Time will be credited with periods of service
with Eagle or Eagle Bank before the Effective Time (including service with any
predecessor employer for which service credit was given under similar employee
benefit plans of Eagle or Eagle Bank) as if such service had been with Webster
or Webster Bank, as applicable. Similar credit shall also be given by Webster or
Webster Bank in calculating other retirement plan, vacation and similar benefits
for such employees of Eagle or Eagle Bank after the Merger. Webster will or will
cause Webster Bank to (i) give credit to employees of Eagle and Eagle Bank, with
respect to the satisfaction of the limitations as to pre-existing condition
exclusions and waiting periods for participation and coverage which are
applicable under the welfare benefit plans of Webster or Webster Bank, equal to
the credit that any such employee had received as of the Effective Time towards
the satisfaction of any such limitations and waiting periods under the
comparable welfare benefit plans of Eagle and Eagle Bank and (ii) provide each
employee of Eagle and Eagle Bank with credit for any co-payment and deductibles
paid prior to the Effective Time in satisfying any deductible or out-of-pocket
requirements.
(b) Webster shall, and shall cause Webster Bank to pay severance to
employees of Eagle and Eagle Bank (i) for a
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period of one year following the Effective Time, in accordance with the terms of
the severance policy set forth in Section 6.6(b) of the Eagle Disclosure
Schedule and (ii) thereafter in accordance with the terms of the severance plan
maintained by Webster or Webster Bank, as the case may be (as in effect from
time to time).
(c) Webster will cause Webster Bank to offer a position of at-will
employment to each of Eagle Bank's non-management branch office personnel in
good standing as of the Effective Time. Webster will use its reasonable best
efforts in connection with reviewing applicants for employment positions to give
Eagle and Eagle Bank employees who are not offered positions at the Effective
Time the same consideration as is afforded Webster or Webster Bank employees for
such positions in accordance with existing formal or informal policies. Webster
will provide outplacement assistance to each Eagle and Eagle Bank employee who
is not offered a position at the Effective Time.
6.7 INDEMNIFICATION.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative, in which
any person who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or officer or
employee of Eagle or any of its Subsidiaries (the "Indemnified Parties") is, or
is threatened to be, made a party based in whole or in part on, or arising in
whole or in part out of, or pertaining to (i) the fact that he is or was a
director, officer or employee of Eagle or any of its Subsidiaries or any of
their respective predecessors or (ii) this Agreement or the Option Agreement or
any of the transactions contemplated hereby or thereby, whether in any case
asserted or arising before or after the Effective Time,
the parties hereto agree to cooperate and use their best efforts to defend
against and respond thereto. It is understood and agreed that, after the
Effective Time, Webster shall indemnify and hold harmless, as and to the fullest
extent permitted by applicable law, each such Indemnified Party against any
losses, claims, damages, liabilities, costs, expenses (including reasonable
attorney's fees and expenses in advance of the final disposition of any claim,
suit, proceeding or investigation to each Indemnified Party to the fullest
extent permitted by law upon receipt of any undertaking required by applicable
law), judgments, fines and amounts paid in settlement in connection with any
such threatened or actual claim, action, suit, proceeding or investigation, and
in the event of any such threatened or actual claim, action, suit, proceeding or
investigation (whether asserted or arising before
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or after the Effective Time), the Indemnified Parties may retain counsel
reasonably satisfactory to Webster; provided, however, that (1) Webster shall
have the right to assume the defense thereof and upon such assumption Webster
shall not be liable to any Indemnified Party for any legal expenses of other
counsel or any other expenses subsequently incurred by any Indemnified Party in
connection with the defense thereof, except that if Webster elects not to assume
such defense or counsel for the Indemnified Parties reasonably advises the
Indemnified Parties that there are issues which raise conflicts of interest
between Webster and the Indemnified Parties, the Indemnified Parties may retain
counsel reasonably satisfactory to Webster, and Webster shall pay the reasonable
fees and expenses of such counsel for the Indemnified Parties, (2) Webster shall
be obligated pursuant to this paragraph to pay for only one firm of counsel for
each Indemnified Party, and (3) Webster shall not be liable for any settlement
effected without its prior written consent (which consent shall not be
unreasonably withheld or delayed). Any Indemnified Party wishing to claim
indemnification under this Section 6.7, upon learning of any such claim, action,
suit, proceeding or investigation, shall notify Webster thereof; provided,
however, that the failure to so notify shall not affect the obligations of
Webster under this Section 6.7 except to the extent such failure to notify
materially prejudices Webster. Webster's obligations under this Section 6.7
continue in full force and effect for a period of six years from the Effective
Time; provided, however, that all rights to indemnification in respect of any
claim asserted or made within such period shall continue until the final
disposition of such claim.
(b) Webster shall use commercially reasonable efforts to cause the
persons serving as officers and directors of Eagle immediately prior to the
Effective Time to be covered by a directors' and officers' liability insurance
policy ("Tail Insurance") of substantially the same coverage and amounts
containing terms and conditions which are generally not less advantageous than
Eagle's current policy with respect to acts or omissions occurring prior to the
Effective Time which were committed by such officers and directors in their
capacity as such for a period not less than one year.
(c) In the event Webster or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors
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and assigns of Webster assume the obligations set forth in this section.
(d) The provisions of this Section 6.7 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
6.8 SUBSEQUENT INTERIM AND ANNUAL FINANCIAL STATEMENTS.
As soon as reasonably available, but in no event more than 45 days after
the end of each fiscal quarter (other than the fourth fiscal quarter), Webster
will deliver to Eagle and Eagle will deliver to Webster their respective
Quarterly Reports on Form 10-Q, as filed with the SEC under the Exchange Act.
Each party shall deliver to the other any Current Reports on Form 8-K promptly
after filing such reports with the SEC.
6.9 ADDITIONAL AGREEMENTS.
In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, or to vest
the Surviving Corporation or the Surviving Bank with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, or the constituent banks to the Bank Merger, as the case
may be, the proper officers and directors of each party to this Agreement and
Webster's and Eagle's Subsidiaries shall take all such necessary action as may
be reasonably requested by Webster.
6.10 ADVICE OF CHANGES.
Webster and Eagle shall promptly advise the other party of any change or
event that, individually or in the aggregate, has had or would be reasonably
certain to have a Material Adverse Effect on it or to cause or constitute a
material breach of any of its representations, warranties or covenants contained
herein. From time to time prior to the Effective Time, each party will promptly
supplement or amend its disclosure schedule delivered in connection with the
execution of this Agreement to reflect any matter which, if existing, occurring
or known at the date of this Agreement, would have been required to be set forth
or described in such disclosure schedule or which is necessary to correct any
information in such disclosure schedule which has been rendered inaccurate
thereby. No supplement or amendment to such disclosure schedule shall have any
effect for the purpose of determining satisfaction of the conditions set forth
in Sections 7.2(a) or 7.3(a) hereof, as the case may be, or the compliance by
Eagle or Webster,
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as the case may be, with the respective covenants set forth in Sections 5.1 and
5.2 hereof.
6.11 CURRENT INFORMATION.
During the period from the date of this Agreement to the Effective Time,
Eagle will cause one or more of its designated representatives to confer on a
regular and frequent basis (not less than monthly) with representatives of
Webster and to report the general status of the ongoing operations of Eagle.
Eagle will promptly notify Webster of any material change in the normal course
of business or in the operation of the properties of Eagle and of any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the institution or the threat
of litigation involving Eagle, and will keep Webster fully informed of such
events.
6.12 EXECUTION AND AUTHORIZATION OF BANK MERGER AGREEMENT.
Prior to the Effective Time, (a) Webster and Eagle shall each approve the
Bank Merger Agreement as the sole stockholder of Webster Bank and Eagle Bank,
respectively, and (b) Eagle Bank shall execute and deliver the Bank Merger
Agreement.
6.13 CHANGE IN STRUCTURE.
Webster may elect to modify the structure of the transactions contemplated
by this Agreement as noted herein so long as (i) there are no adverse tax
consequences to the Eagle stockholders as a result of such modification, (ii)
the consideration to be paid to the Eagle stockholders under this Agreement is
not thereby changed or reduced in amount, and (iii) such modification will not
delay or jeopardize receipt of any required regulatory approvals. In the event
that the structure of the Merger is modified pursuant to this Section 6.13, the
parties agree to modify this Agreement and the various exhibits hereto to
reflect such revised structure. In such event, Webster shall prepare appropriate
amendments to this Agreement and the exhibits hereto for execution by the
parties hereto. Eagle agrees to cooperate fully with Webster to effect such
amendments.
6.14 TRANSACTION EXPENSES OF EAGLE.
As promptly as practicable after the execution of this Agreement, Eagle
will provide to Webster an estimate of the expenses Eagle expects to incur in
connection with the
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Merger, and shall keep Webster reasonably informed of material changes in such
estimate.
6.15 AFFILIATE AGREEMENTS.
(a) Not later than the 15th day prior to the mailing of the Joint Proxy
Statement/Prospectus, (i) Webster shall deliver to Eagle a schedule of each
person that, to the best of its knowledge, is or is reasonably likely to be, as
of the date of the Webster stockholder meeting called pursuant to Section 6.3,
deemed to be an "affiliate" of it (each, a "Webster Affiliate") as that term is
used in SEC Accounting Series Releases 130 and 135; and (ii) Eagle shall deliver
to Webster a schedule of each person that, to the best of its knowledge, is or
is reasonably likely to be, as of the date of the Eagle stockholder meeting
called pursuant to Section 6.3, deemed to be an "affiliate of it (each, an
"Eagle Affiliate") as that term is used in Rule 145 under the Securities Act or
SEC Accounting Series Releases 130 and 135.
(b) Each of Eagle and Webster shall use its respective reasonable best
efforts to cause each person who may be deemed to be an Eagle Affiliate or a
Webster Affiliate, as the case may be, to execute and deliver to Eagle and
Webster on or before the date of mailing of the Joint Proxy Statement/Prospectus
an agreement in the form attached hereto as Exhibit D or Exhibit E,
respectively.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) STOCKHOLDER APPROVALS.
This Agreement and the Merger shall have been approved and adopted by
the requisite votes of the Eagle stockholders and the Webster stockholders.
(b) STOCK EXCHANGE LISTING.
The shares of Webster Common Stock which shall be issued in the Merger
(including the Webster Common Stock that may be issued upon exercise of the
options referred to in Section 1.6 hereof) upon consummation of the Merger shall
have
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been authorized for quotation on the Nasdaq Stock Market National Market (or
such other exchange on which the Webster Common Stock may become listed).
(c) OTHER APPROVALS.
All regulatory approvals required to consummate the transactions
contemplated hereby shall have been obtained and shall remain in full force and
effect and all statutory waiting periods in respect thereof shall have expired
(all such approvals and the expiration of all such waiting periods being
referred to herein as the "Requisite Regulatory Approvals").
(d) REGISTRATION STATEMENT.
The Registration Statement shall have become effective under the
Securities Act, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC.
(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY.
No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger or any of the other transactions
contemplated by this Agreement or the Certificate of Merger shall be in effect.
No statute, rule, regulation, order, injunction or decree shall have been
enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits, restricts or makes illegal consummation of the Merger. No proceeding
initiated by any Governmental Entity seeking an Injunction shall be pending.
(f) FEDERAL TAX OPINION.
Webster shall have received an opinion from Wachtell, Lipton, Rosen &
Katz, counsel to Webster, and Eagle shall have received an opinion from Skadden,
Arps, Slate, Meagher & Flom LLP, counsel to Eagle, in form and substance
reasonably satisfactory to Webster or Eagle, respectively, dated the date of the
Effective Time, in each case, substantially to the effect that on the basis of
facts, representations, and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the Merger
will be treated for federal income tax purposes as a reorganization
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within the meaning of Section 368(a) of the Code and each of Webster and Eagle
will be a party to the reorganization with the meaning of Section 368(b) of the
Code and that, accordingly, for federal income tax purposes, (i) no gain or loss
will be recognized by Webster or Eagle as a result of the Merger, (ii) no gain
or loss will be recognized by the stockholders of Eagle who exchange all of the
Eagle Common Stock solely for Webster Common Stock pursuant to the Merger
(except with respect to cash received in lieu of a fractional share interest in
Webster Common Stock), and (iii) the aggregate tax basis of the Webster Common
Stock received by stockholders who exchange all of their Eagle Common Stock
solely for Webster Common Stock pursuant to the Merger will be the same as the
aggregate tax basis of the Eagle Common Stock surrendered in exchange therefor
(reduced by any amount allocable to a fractional share interest for which cash
is received). In rendering such opinion, such counsel shall require and, to the
extent such counsel deems necessary or appropriate, may rely upon
representations and covenants, including those contained in certificates of
officers of Eagle, Webster, their respective affiliates and others.
7.2 CONDITIONS TO OBLIGATIONS OF WEBSTER.
The obligation of Webster to effect the Merger is also subject to the
satisfaction or waiver by Webster at or prior to the Effective Time of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Eagle set forth in this Agreement
shall be true and correct as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on and as of the Closing Date; provided,
however, that for purposes of this paragraph, such representations and
warranties shall be deemed to be true and correct, unless the failure or
failures of such representations and warranties to be so true and correct,
individually or in the aggregate, would have a Material Adverse Effect on Eagle.
Such determination of aggregate Material Adverse Effect shall be made as if
there were no materiality qualifications in such representations and warranties.
Webster shall have received a certificate signed on behalf of Eagle by each of
the President and Chief Executive Officer and the Chief Financial Officer of
Eagle to the foregoing effect.
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS OF EAGLE
Eagle shall have performed in all material respects all covenants and
agreements required to be performed by
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it under this Agreement at or prior to the Closing Date. Webster shall have
received a certificate signed on behalf of Eagle by each of the President and
Chief Executive Officer and the Chief Financial Officer of Eagle to such effect.
(c) POOLING OF INTERESTS.
Webster shall have received as of the Effective Time, a written opinion
of KPMG Peat Marwick LLP to the effect that the Merger will be accounted for as
a pooling-of-interests.
7.3 CONDITIONS TO OBLIGATIONS OF EAGLE.
The obligation of Eagle to effect the Merger is also subject to the
satisfaction or waiver by Eagle at or prior to the Effective Time of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Webster set forth in this
Agreement shall be true and correct as of the date of this Agreement and (except
to the extent such representations and warranties speak as of an earlier date)
as of the Closing Date as though made on and as of the Closing Date; provided,
however, that for purposes of this paragraph, such representations and
warranties shall be deemed to be true and correct, unless the failure or
failures of such representations and warranties to be so true and correct,
individually or in the aggregate, would have a Material Adverse Effect on
Webster. Such determination of aggregate Material Adverse Effect shall be made
as if there were no materiality qualifications in such representations and
warranties. Eagle shall have received a certificate signed on behalf of Webster
by each of the President and Chief Executive Officer and the Chief Financial
Officer of Webster to the foregoing effect.
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS OF WEBSTER.
Webster shall have performed in all material respects all covenants and
agreements required to be performed by it under this Agreement at or prior to
the Closing Date. Eagle shall have received a certificate signed on behalf of
Webster by each of the President and Chief Executive Officer and the Chief
Financial Officer of Webster to such effect.
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(c) POOLING OF INTERESTS.
Webster shall have received as of the Effective Time, a written opinion
of KPMG Peat Marwick LLP to the effect that the Merger will be accounted for as
a pooling-of-interests.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION.
This Agreement may be terminated at any time prior to the Effective Time,
whether before or after approval of this Agreement by the stockholders of Eagle
or Webster:
(a) by mutual consent of Webster and Eagle in a written instrument, if
the Board of Directors of each so determines by a vote of a majority of the
members of its entire Board;
(b) by either Webster or Eagle upon written notice to the other party
(i) 30 days after the date on which any request or application for a Requisite
Regulatory Approval shall have been denied or withdrawn at the request or
recommendation of the Governmental Entity which must grant such Requisite
Regulatory Approval, unless within the 30-day period following such denial or
withdrawal the parties agree to file, and have filed with the applicable
Governmental Entity, a petition for rehearing or an amended application,
provided, however, that no party shall have the right to terminate this
Agreement, if such denial or request or recommendation for withdrawal shall be
due to the failure of the party seeking to terminate this Agreement to perform
or observe the covenants and agreements of such party set forth herein;
(c) by either Webster or Eagle if the Merger shall not have been
consummated on or before September 30, 1998, unless the failure of the Closing
to occur by such date shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and agreements of
such party set forth herein;
(d) by either Webster or Eagle (provided that the terminating party is
not in breach of its obligations under Section 6.3 hereof) if the approval of
the stockholders of Eagle or Webster required for the consummation of the Merger
shall not have been obtained by reason of the failure to obtain the required
vote at the respective duly held meetings of stockholders or at any adjournment
or postponement thereof;
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(e) by either Webster or Eagle (provided that the terminating party is
not then in breach of any representation, warranty, covenant or other agreement
contained herein that, individually or in the aggregate, would give the other
party the right to terminate this Agreement) if there shall have been a breach
of any of the representations or warranties set forth in this Agreement on the
part of the other party, if such breach, individually or in the aggregate, has
had or would be reasonably certain to have a Material Adverse Effect on the
breaching party, and such breach shall not have been cured within 30 days
following receipt by the breaching party of written notice of such breach from
the other party hereto or such breach, by its nature, cannot be cured prior to
the Closing;
(f) by either Webster or Eagle (provided that the terminating party is
not then in breach of any representation, warranty, covenant or other agreement
contained herein that, individually or in the aggregate, would give the other
party the right to terminate this Agreement) if there shall have been a material
breach of any of the covenants or agreements set forth in this Agreement on the
part of the other party, and such breach shall not have been cured within 30
days following receipt by the breaching party of written notice of such breach
from the other party hereto or such breach, by its nature, cannot be cured prior
to the Closing;
(g) by either the Board of Directors of Webster or the Board of
Directors of Eagle, if the Board of Directors of the other party shall have
withdrawn, modified or changed in a manner adverse to the terminating party its
approval or recommendation of this Agreement and the transactions contemplated
thereby; and
(h) by the Board of Directors of Eagle, upon written notice to Webster
at any time during the ten-day period commencing two days after the
Determination Date (as defined below), if both of the following conditions are
satisfied:
(i) the Average Closing Price shall be less than the product of 0.80 and
the Starting Price; and
(ii) (A) the quotient obtained by dividing the Average Closing Price by the
Starting Price (such number being referred to herein as the "Webster
Ratio") shall be less than (B) the quotient obtained by dividing the
Average Index Price by the Index Price on the Starting Date and
subtracting 0.15 from the quotient in this clause
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(ii)(B) (such number being referred to herein as the "Index Ratio");
subject, however, to the following provisions. If Eagle elects to exercise its
termination right pursuant to the immediately preceding sentence, it shall give
prompt written notice to Webster; provided, however, that such notice of
election to termination may be withdrawn at any time within the aforementioned
ten-day period. During the five-day period commencing with its receipt of such
notice, Webster shall have the option to elect to increase the Exchange Ratio to
equal the lesser of (i) the quotient obtained by dividing (A) the product of
0.80, the Starting Price and the Exchange Ratio (as then in effect) by (B) the
Average Closing Price, and (ii) the quotient obtained by dividing (A) the
product of the Index Ratio and the Exchange Ratio (as then in effect) by (B) the
Webster Ratio. If Webster makes such an election within such five-day period, it
shall give prompt written notice to Eagle of such election and of the revised
Exchange Ratio, whereupon no termination shall have occurred pursuant to this
Section 8.1(h) and this Agreement shall remain in effect in accordance with its
terms (except as the Exchange Ratio shall have been so modified), and any
references in this Agreement to "Exchange Ratio" shall thereafter be deemed to
refer to the Exchange Ratio as adjusted pursuant to this Section 8.1(h) (and
corresponding a corresponding modification shall be made to the Maximum Share
Amount).
For purposes of this Section 8.1(h), the following terms shall have the
meanings indicated:
"Average Closing Price" means the average of the daily last sale prices of
Webster Common Stock as reported on Nasdaq (as reported in The Wall Street
Journal or, if not reported therein, in another mutually agreed upon
authoritative source) for the ten consecutive full trading days in which such
shares are traded on Nasdaq ending at the close of trading on the Determination
Date.
"Average Index Price" means the average of the Index Prices for the ten
consecutive full trading days ending at the close of trading on the
Determination Date.
"Determination Date" means the date on which the approval of the OTS
required for consummation of the Merger shall be received.
"Index Group" means the 16 savings and loan holding companies listed below,
the common stocks of all of which shall be publicly traded and as to which there
shall not have been, since the Starting Date and before the Determination Date,
an
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announcement of a proposal for such company to be acquired or for such company
to acquire another company or companies in transactions with a value exceeding
25% of the acquiror's market capitalization as of the Starting Date. In the
event that the common stock of any such company ceases to be publicly traded or
any such announcement is made with respect to any such company, such company
shall be removed from the Index Group, and the weights (which have been
determined based on the number of outstanding shares of common stock)
redistributed proportionately for purposes of determining the Index Price. The
16 savings and loan holding companies and the weights attributed to them are as
follows:
Holding Company Weighting (%)
--------------- ------------
Washington Federal...................................12.39
Bank United Corp......................................8.25
Peoples Heritage Financial Group......................7.17
Astoria Financial Corp................................5.48
Commercial Federal Corp...............................5.63
Roslyn Bancorp Inc...................................11.39
St. Paul Bancorp Inc..................................8.91
Downey Financial Corp.................................6.98
TR Financial Corp.....................................4.57
Queens County Bancorp Inc.............................3.94
Westcorp..............................................6.84
ALBANK Financial Corp.................................3.36
MAF Bancorp Inc.......................................4.02
CFX Corp..............................................6.26
CitFed Bancorp Inc....................................2.25
JSB Financial Inc.....................................2.57
"Index Price" on a given date means the weighted average (weighted in
accordance with the factors listed above) of the closing prices on such date of
the companies comprising the Index Group.
"Starting Date" means the last full day on which Nasdaq was open for
trading prior to the execution of this Agreement.
"Starting Price" shall mean the last sale price per share of Webster Common
Stock on the Starting Date, as reported on Nasdaq (as reported in The Wall
Street Journal or, if not reported therein, in another mutually agreed upon
authoritative source).
If Webster or any company belonging to the Index Group declares or effects
a stock dividend, reclassification,
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recapitalization, slit-up, combination, exchange of shares or similar
transaction between the Starting Date and the Determination Date, the prices for
the common stock of such company shall be appropriately adjusted for the
purposes of applying this Section 8.1(h).
8.2 EFFECT OF TERMINATION.
In the event of termination of this Agreement by either Webster or Eagle as
provided in Section 8.1 hereof, this Agreement shall forthwith become void and
have no effect except (i) the last sentences of Sections 6.2(a) and 6.2(b) and
Sections 8.2, 9.2 and 9.3 hereof shall survive any termination of this
Agreement, and (ii) notwithstanding anything to the contrary contained in this
Agreement, no party shall be relieved or released from any liabilities or
damages arising out of its willful or intentional breach of any provision of
this Agreement.
8.3 AMENDMENT.
Subject to compliance with applicable law, this Agreement may be amended by
the parties hereto, by action taken or authorized by their respective Board of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Eagle; provided, however, that
after any approval of the transactions contemplated by this Agreement by Eagle's
stockholders, there may not be, without further approval of such stockholders,
any amendment of this Agreement which reduces the amount or changes the form of
the consideration to be delivered to Eagle stockholders hereunder other than as
contemplated by this Agreement. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
8.4 EXTENSION; WAIVER.
At any time prior to the Effective Time, the parties hereto, by action
taken or authorized by their respective Boards of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party, but such extension or waiver
or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not
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operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 CLOSING.
Subject to the terms and conditions of this Agreement, the closing of the
Merger (the "Closing") will take place at 10:00 a.m. at the main offices of
Webster on (i) the fifteenth day after the last Requisite Regulatory Approval is
received and all applicable waiting periods have expired, or (ii) such other
date, place and time as the parties may agree (the "Closing Date").
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement (other than
pursuant to the Option Agreement, which shall terminate in accordance with its
terms) shall survive the Effective Time, except for those covenants and
agreements contained herein and therein which by their terms apply in whole or
in part after the Effective Time.
9.3 EXPENSES.
All costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense, except that all filing and other fees paid to the SEC in connection
with this Agreement and printing fees in connection with the Joint Proxy
Statement/Prospectus shall be borne equally by Webster and Eagle.
Notwithstanding the foregoing and without limitation of any party's rights under
clause (ii) of Section 8.2, in the event that this Agreement is terminated by
either Webster or Eagle by reason of a material breach pursuant to Sections
8.1(e) or (f) hereof, the other party shall pay all documented, reasonable costs
and expenses up to $1,500,000 incurred by the terminating party in connection
with this Agreement and the transactions contemplated hereby.
9.4 NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, mailed by registered or certified
mail (return receipt
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requested) or delivered by an express courier (with confirmation) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Webster, to:
Webster Financial Corporation
Webster Plaza
145 Bank Street
Waterbury, Connecticut 06702
Attn.: James C. Smith
Chairman and Chief
Executive Officer
WITH A COPY TO:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attn.: Craig M. Wasserman, Esq.
and
(b) if to Eagle, to:
Eagle Financial Corp.
222 Main Street
Bristol, CT 06010
Attn.: Robert J. Britton
President and Chief
Executive Officer
WITH A COPY TO:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue, 5th Floor
New York, New York 10022
Attn.: William S. Rubenstein, Esq.
9.5 INTERPRETATION.
When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of or an Exhibit or Schedule to
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". No provision of this
Agreement shall be construed to require Webster, Eagle or any of
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their respective Subsidiaries or affiliates to take any action that would
violate any applicable law, rule or regulation.
9.6 COUNTERPARTS.
This Agreement may be executed in counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
9.7 ENTIRE AGREEMENT.
This Agreement (including the disclosure schedules, documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the
Confidentiality Agreement, the Bank Merger Agreement, the Certificate of Merger
and the Option Agreement.
9.8 GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the laws
of the State of Delaware, without regard to any applicable conflicts of law
rules.
9.9 ENFORCEMENT OF AGREEMENT.
The parties hereto agree that irreparable damage would occur in the event
that the provisions of this Agreement were not performed in accordance with its
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions thereof in
any court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
9.10 SEVERABILITY.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any
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provision of this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable.
9.11 PUBLICITY.
Except as otherwise required by law or the rules of the Nasdaq Stock Market
National Market (or such other exchange on which the Webster Common Stock may
become listed), so long as this Agreement is in effect, neither Webster nor
Eagle shall, or shall permit any of Webster's or Eagle's Subsidiaries to, issue
or cause the publication of any press release or other public announcement with
respect to, or otherwise make any public statement concerning, the transactions
contemplated by this Agreement, the Bank Merger Agreement or the Option
Agreement without the consent of the other party, which consent shall not be
unreasonably withheld.
9.12 ASSIGNMENT; LIMITATION OF BENEFITS.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns. Except as otherwise specifically provided in Section 6.7 hereof,
this Agreement (including the documents and instruments referred to herein) is
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder, and the covenants, undertakings and agreements set out
herein shall be solely for the benefit of, and shall be enforceable only by, the
parties hereto and their permitted assigns.
9.13 ADDITIONAL DEFINITIONS.
In addition to any other definitions contained in this Agreement, the
following words, terms and phrases shall have the following meanings when used
in this Agreement.
"Affiliated Person": any director, officer or 5% or greater stockholder,
spouse or other person living in the same household of such director, officer or
stockholder, or any company, partnership or trust in which any of the foregoing
persons is an officer, 10% or greater stockholder, general partner or 10% or
greater trust beneficiary.
"Laws": any and all statutes, laws, ordinances, rules, regulations, orders,
permits, judgments, injunctions,
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decrees, case law and other rules of law enacted, promulgated or issued by any
Governmental Entity.
"Material Adverse Effect": with respect to Webster or Eagle, as the case
may be, means a condition, event, change or occurrence that has had or is
reasonably certain to have a material adverse effect upon (A) the financial
condition, results of operations or business of such party and its Subsidiaries,
taken as a whole, or (B) the ability of Webster or Eagle to timely perform its
obligations under, and to consummate the transactions contemplated by, this
Agreement and the Option Agreement; provided, however, that in determining
whether a Material Adverse Effect has occurred there shall be excluded any
effect on the referenced party the cause of which is (i) any change in banking
or similar laws, rules or regulations of general applicability or
interpretations thereto by courts or governmental authorities, (ii) any change
in generally accepted accounting principles or regulatory accounting
requirements applicable to banks, thrifts or their holding companies generally,
(iii) any action or omission of Eagle or Webster or any Subsidiary of either of
them taken with the prior written consent of Webster or Eagle, as applicable, in
contemplation of the Merger, (iv) any expenses reasonably incurred by such party
in connection with this Agreement or the transactions contemplated hereby and
(v) any changes in general economic conditions affecting banks, thrifts or their
holding companies generally.
"Subsidiary": with respect to any party means any corporation, partnership
or other organization, whether incorporated or unincorporated, which is
consolidated with such party for financial reporting purposes.
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IN WITNESS WHEREOF, Webster and Eagle have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
WEBSTER FINANCIAL CORPORATION
By: /s/ James C. Smith
--------------------------
Name: James C. Smith
Title: Chairman and Chief
Executive Officer
EAGLE FINANCIAL CORP.
By: /s/ Robert J. Britton
--------------------------
Name: Robert J. Britton
Title: President and Chief
Executive Officer
[Merger Agreement]
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated October 26, 1997, between Eagle Financial
Corp., a Delaware corporation ("Issuer"), and Webster Financial Corporation, a
Delaware corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which agreement has been
executed by the parties hereto immediately prior to this Stock Option Agreement
(the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement and
in consideration therefor, Issuer has agreed to grant Grantee the Option (as
hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable option
(the "Option") to purchase, subject to the terms hereof, up to 1,256,991 fully
paid and nonassessable shares of Issuer's Common Stock, par value $0.01 per
share ("Common Stock"), at a price of $41.25 per share (the "Option Price");
provided, however, that in no event shall the number of shares of Common Stock
for which this Option is exercisable exceed 19.9% of the Issuer's issued and
outstanding shares of Common Stock without giving effect to any shares subject
to or issued pursuant to the Option. The number of shares of Common Stock that
may be received upon the exercise of the Option and the Option Price are subject
to adjustment as herein set forth.
(b) Notwithstanding anything in this Agreement or the Merger Agreement to
the contrary, (i) Grantee acknowledges that, as of the date of this Agreement,
Issuer does not have a sufficient number of authorized but unreserved shares of
Common Stock available to fulfill its obligations under this Agreement with
respect to the issuance of the full number of shares covered by the Option, (ii)
Issuer shall use its best efforts to take any corporate action necessary to cure
such insufficiency (including, without limitation, using its best efforts to
obtain any required vote of Issuer's stockholders) at such time as is
appropriate to preserve Issuer's rights hereunder (but in
<PAGE>
any event as promptly as practicable after the occurrence of an Initial
Triggering Event); and (iii) Grantee agrees that there shall not be any breach
or default under, or any liability of Issuer in respect of, any representation,
warranty, covenant or agreement of Issuer in this Agreement or the Merger
Agreement based solely on the inability of Issuer to issue such full number of
shares, or the fact of such inability, provided that Issuer has complied with
its obligations set forth in clause (ii) of this Section 1(b).
(c) In the event that any additional shares of Common Stock are either (i)
issued or otherwise become outstanding after the date of this Agreement (other
than pursuant to this Agreement) or (ii) redeemed, repurchased, retired or
otherwise cease to be outstanding after the date of the Agreement, the number of
shares of Common Stock subject to the Option shall be increased or decreased, as
appropriate, so that, after such issuance, such number equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section 1(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer or Grantee to breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), provided that the Holder shall have
sent the written notice of such exercise (as provided in subsection (e) of this
Section 2) within 90 days following such Subsequent Triggering Event. Each of
the following shall be an "Exercise Termination Event": (i) the Effective Time
(as defined in the Merger Agreement) of the Merger; (ii) termination of the
Merger Agreement in accordance with the provisions thereof if such termination
occurs prior to the occurrence of an Initial Triggering Event except a
termination by Grantee pursuant to Section 8.1(e) or Section 8.1(f) of the
Merger Agreement (in each case, unless the breach by Issuer giving rise to such
right of termination is non-volitional); or (iii) the passage of 12 months after
termination of the Merger Agreement if such termination follows the occurrence
of an Initial Triggering Event or is a termination by Grantee pursuant to
Section 8.1(e) or Section 8.1(f) of the Merger Agreement (in each case, unless
the breach by Issuer giving rise to such right of termination is
non-volitional). The term "Holder" shall mean the holder or holders of the
Option.
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(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
1. Issuer or any of its Subsidiaries (each an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction (as hereinafter
defined) with any person (the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules
and regulations thereunder) other than Grantee or any of its Subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of Issuer shall
have recommended that the stockholders of Issuer approve or accept any
Acquisition Transaction. For purposes of this Agreement, "Acquisition
Transaction" shall mean (w) a merger or consolidation, or any similar
transaction, involving Issuer or any Significant Subsidiary (as defined in
Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) of Issuer, (x) a purchase, lease or other
acquisition or assumption of all or a substantial portion of the assets or
deposits of Issuer or any Significant Subsidiary of Issuer, (y) a purchase
or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 10% or more of the voting
power of Issuer, or (z) any substantially similar transaction; provided,
however, that in no event shall any (i) merger, consolidation, purchase or
similar transaction involving only the Issuer and one or more of its
Subsidiaries or involving only any two or more of such Subsidiaries or (ii)
merger or consolidation as to which the common stockholders of the Issuer
immediately prior thereto own in the aggregate at least 60% of the common
stock of the surviving corporation or its publicly held parent corporation
immediately following consummation thereof be deemed to be an Acquisition
Transaction, provided that any such transaction is not entered into in
violation of the terms of the Merger Agreement;
2. Issuer or any Issuer Subsidiary, without having received Grantee's
prior written consent, shall have authorized, recommended, proposed or
publicly announced its intention to authorize, recommend or propose, to
engage in an Acquisition Transaction with any person other than Grantee or
a Grantee Subsidiary, or the Board of Directors of Issuer shall have
publicly
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<PAGE>
withdrawn or modified, or publicly announced its intention to withdraw or
modify, in any manner adverse to Grantee, its recommendation that the
stockholders of Issuer approve the transactions contemplated by the Merger
Agreement in anticipation of engaging in an Acquisition Transaction;
3. Any person other than Grantee, any Grantee Subsidiary or any Issuer
Subsidiary acting in a fiduciary capacity in the ordinary course of its
business shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the outstanding shares of Common
Stock (the term "beneficial ownership" for purposes of this Agreement
having the meaning assigned thereto in Section 13(d) of the 1934 Act, and
the rules and regulations thereunder);
4. Any person other than Grantee or any Grantee Subsidiary shall have
made a bona fide proposal to Issuer or its stockholders by public
announcement or written communication that is or becomes the subject of
public disclosure to engage in an Acquisition Transaction;
5. After an overture is made by a third party to Issuer or its
stockholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Merger Agreement and
such breach (x) would entitle Grantee to terminate the Merger Agreement and
(y) shall not have been cured prior to the Notice Date (as defined below);
or
6. Any person other than Grantee or any Grantee Subsidiary, other than
in connection with a transaction to which Grantee has given its prior
written consent, shall have filed an application or notice with the Office
of Thrift Supervision (the "OTS"), or other federal or state bank or thrift
regulatory authority, which application or notice has been accepted for
processing, for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
1. The acquisition by any person of beneficial ownership of 25% or
more of the then outstanding Common Stock; or
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<PAGE>
2. The occurrence of the Initial Triggering Event described in
paragraph (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (y) shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event of which it has
notice (together, a "Triggering Event"), it being understood that the giving of
such notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the Notice Date
for the closing of such purchase (the "Closing Date"); provided that if prior
notification to or approval of the OTS or of any other regulatory agency or of
Issuer's stockholders is required in connection with such purchase, the Holder
shall promptly file the required notice or application for approval and shall
expeditiously process the same or use best efforts to promptly obtain such
stockholder approval, as the case may be, and the period of time that otherwise
would run pursuant to this sentence shall run instead from the date on which any
required notification periods have expired or been terminated or such approvals
have been obtained and any requisite waiting period or periods shall have
passed. Any exercise of the Option shall be deemed to occur on the Notice Date
relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall pay to Issuer the aggregate purchase price for the shares of Common
Stock purchased pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated by Issuer, provided that
failure or refusal of Issuer to designate such a bank account shall not preclude
the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and the Holder
shall deliver to Issuer a copy of this Agreement and a letter
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<PAGE>
agreeing that the Holder will not offer to sell or otherwise dispose of such
shares in violation of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
The transfer of the shares represented by this certificate is subject to
certain provisions of an agreement between the registered holder hereof and
Issuer and to resale restrictions arising under the Securities Act of 1933,
as amended. A copy of such agreement is on file at the principal office of
Issuer and will be provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference; and (iii) the legend shall be removed
in its entirety if both conditions in the preceding clauses (i) and (ii) are
satisfied. In addition, such certificates shall bear any other legend as may be
required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this
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<PAGE>
Section 2 in the name of the Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. ss. 18a and regulations promulgated
thereunder and (y) in the event, under the Home Owners' Loan Act of 1933, as
amended, (the "HOLA") or any other federal or state banking or thrift law or
regulations thereunder, prior approval of or notice to the OTS or to any other
federal or any state regulatory authority is necessary before the Option may be
exercised, cooperating fully with the Holder in preparing such applications or
notices and providing such information to the OTS or other federal or any such
state regulatory authority as they may require) in order to permit the Holder to
exercise the Option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable, without
expense, at the option of the Holder, upon presentation and surrender of this
Agreement at the principal office of Issuer, for other Agreements providing for
Options of different denominations entitling the holder thereof to purchase, on
the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and
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<PAGE>
delivered shall constitute an additional contractual obligation on the part of
Issuer, whether or not the Agreement so lost, stolen, destroyed or mutilated
shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5. In the event of any change in, or distributions
in respect of, the Common Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations, subdivisions, conversions, exchanges
of shares, distributions on or in respect of the Common Stock that would be
prohibited under the terms of the Merger Agreement, or the like, the type and
number of shares of Common Stock purchasable upon exercise hereof and the Option
Price shall be appropriately adjusted in such manner as shall fully preserve the
economic benefits provided hereunder and proper provision shall be made in any
agreement governing any such transaction for such proper adjustment and the full
satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within 90 days of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option (or part thereof) or
any of the shares of Common Stock issued pursuant hereto), promptly prepare,
file and keep current a shelf registration statement under the 1933 Act covering
this Option and any shares issued and issuable pursuant to this Option and shall
use its reasonable best efforts to cause such registration statement to become
effective and remain current in order to permit the sale or other disposition of
this Option and any shares of Common Stock issued upon total or partial exercise
of this Option ("Option Shares") in accordance with any plan of disposition
requested by Grantee. Issuer will use its reasonable best efforts to cause such
registration statement first to become effective and then to remain effective
for such period not in excess of 180 days from the day such registration
statement first becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. Grantee shall have the
right to demand two such registrations. The foregoing notwithstanding, if, at
the time of any request by Grantee for registration of the Option or Option
Shares as provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and if in
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<PAGE>
the good faith judgment of the managing underwriter or managing underwriters,
or, if none, the sole underwriter or underwriters, of such offering the
inclusion of the Holder's Option or Option Shares would interfere with the
successful marketing of the shares of Common Stock offered by Issuer, the number
of Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; provided, however, that after any such
required reduction the number of Option Shares to be included in such offering
for the account of the Holder shall constitute at least 25% of the total number
of shares to be sold by the Holder and Issuer in the aggregate; and provided
further, however, that if such reduction occurs, then the Issuer shall file a
registration statement for the balance as promptly as practicable and no
reduction shall thereafter occur. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement relating
to the sale of such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other agreements
customarily included in secondary offering underwriting agreements for the
Issuer. Upon receiving any request under this Section 6 from any Holder, Issuer
agrees to send a copy thereof to any other person known to Issuer to be entitled
to registration rights under this Section 6, in each case by promptly mailing
the same, postage prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary contained herein,
in no event shall Issuer be obligated to effect more than two registrations
pursuant to this Section 6 by reason of the fact that there shall be more than
one Grantee as a result of any assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase Event (as
defined below), (i) following a request of the Holder, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall repurchase
the Option from the Holder at a price (the "Option Repurchase Price") equal to
the amount by which (A) the Market/Offer Price (as defined below) exceeds (B)
the Option Price, multiplied by the number of shares for which this Option may
then be exercised (without reference to any limitation set forth in Section 1(b)
hereof) and (ii) at the request of the owner of Option Shares from time to time
(the "Owner"), delivered within 90 days of such occurrence (or such later period
as provided in Section 10), Issuer shall repurchase such number of the Option
Shares from the Owner as the Owner shall designate at a price (the "Option Share
Repurchase Price") equal to the Market/Offer Price multiplied by the number of
Option
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Shares so designated. The term "Market/Offer Price" shall mean the highest of
(i) the price per share of Common Stock at which a tender offer or exchange
offer therefor has been made, (ii) the price per share of Common Stock to be
paid by any third party pursuant to an agreement with Issuer, (iii) the highest
closing price for shares of Common Stock within the six-month period immediately
preceding the date the Holder gives notice of the required repurchase of this
Option or the Owner gives notice of the required repurchase of Option Shares, as
the case may be, or (iv) in the event of a sale of all or a substantial portion
of Issuer's assets, the sum of the price paid in such sale for such assets and
the current market value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the Issuer, divided by
the number of shares of Common Stock of Issuer outstanding at the time of such
sale. In determining the Market/Offer Price, the value of consideration other
than cash shall be determined by a nationally recognized investment banking firm
selected by the Holder or Owner, as the case may be, and reasonably acceptable
to the Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office, a
copy of this Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that the Holder or the Owner,
as the case may be, elects to require Issuer to repurchase this Option and/or
the Option Shares in accordance with the provisions of this Section 7. Within
the latter to occur of (x) five business days after the surrender of the Option
and/or certificates representing Option Shares and the receipt of such notice or
notices relating thereto and (y) the time that is immediately prior to the
occurrence of a Repurchase Event, Issuer shall deliver or cause to be delivered
to the Holder the Option Repurchase Price and/or to the Owner the Option Share
Repurchase Price therefor or the portion thereof, if any, that Issuer is not
then prohibited under applicable law and regulation from so delivering (or with
respect to which Issuer is not required to give notice to, or to obtain the
prior approval of, any regulatory authority in order to cause its
federally-chartered savings bank subsidiary to pay dividends sufficient to allow
it to so deliver) or with respect to which Issuer does not require the approval
(or has obtained such approval) of its stockholders pursuant to Article Thirteen
of Issuer's Restated Certificate of Incorporation.
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(c) To the extent that Issuer is prohibited under applicable law or
regulation from repurchasing (or would be required to give prior notice to, or
to obtain the prior approval of, any regulatory authority in order to cause its
federally-chartered savings bank subsidiary to pay dividends sufficient to allow
Issuer to repurchase), or requires any approval of its stockholders to
repurchase, the Option and/or the Option Shares in full, Issuer shall
immediately so notify the Holder and/or the Owner and thereafter deliver or
cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from delivering
(or with respect to which Issuer has received any required funds from its
federally-chartered savings bank subsidiary), within five business days after
the date on which Issuer is no longer so prohibited; provided, however, that if
Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or regulation
from delivering (or would be required to give prior notice to, or to obtain the
prior approval of, any regulatory authority in order to cause its
federally-chartered savings bank subsidiary to pay dividends sufficient to allow
Issuer to repurchase), or requires any approval of its stockholders to deliver,
to the Holder and/or the Owner, as appropriate, the Option Repurchase Price and
the Option Share Repurchase Price, respectively, in full (and Issuer hereby
undertakes to use its best efforts to obtain such approval of its stockholders
and all required regulatory and legal approvals and to file any required
notices, in each case as promptly as practicable in order to accomplish such
repurchase), the Holder or Owner may revoke its notice of repurchase of the
Option or the Option Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, Issuer shall promptly (i) deliver to the Holder
and/or the Owner, as appropriate, that portion of the Option Repurchase Price or
the Option Share Repurchase Price that Issuer is not prohibited from delivering
(or with respect to which Issuer has received any required funds from its
federally-chartered savings bank subsidiary); and (ii) deliver, as appropriate,
either (A) to the Holder, a new Stock Option Agreement evidencing the right of
the Holder to purchase that number of shares of Common Stock obtained by
multiplying the number of shares of Common Stock for which the surrendered Stock
Option Agreement was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Option Repurchase Price
less the portion thereof theretofore delivered to the Holder and the denominator
of which is the Option Repurchase Price, or (B) to the Owner, a certificate for
the Option Shares it is then so prohibited from repurchasing.
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(d) For purposes of this Section 7, a Repurchase Event shall be deemed to
have occurred (i) upon the consummation of any merger, consolidation or similar
transaction involving Issuer or any purchase, lease or other acquisition of all
or a substantial portion of the assets of Issuer, other than any such
transaction which would not constitute an Acquisition Transaction pursuant to
the provisos to Section 2(b)(i) hereof or (ii) upon the acquisition by any
person of beneficial ownership of 50% or more of the then outstanding shares of
Common Stock, provided that no such event shall constitute a Repurchase Event
unless a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event. The parties hereto agree that Issuer's obligations to
repurchase the Option or Option Shares under this Section 7 shall not terminate
upon the occurrence of an Exercise Termination Event unless no Subsequent
Triggering Event shall have occurred prior to the occurrence of an Exercise
Termination Event.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or one of its Subsidiaries, and shall not be the continuing
or surviving corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its Subsidiaries, to merge into Issuer and
Issuer shall be the continuing or surviving corporation, but, in connection with
such merger, the then outstanding shares of Common Stock shall be changed into
or exchanged for stock or other securities of any other person or cash or any
other property or the then outstanding shares of Common Stock shall after such
merger represent less than 50% of the outstanding voting shares and voting share
equivalents of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or one of its
Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
a. "Acquiring Corporation" shall mean (i) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
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surviving person, and (iii) the transferee of all or substantially all of
Issuer's assets.
b. "Substitute Common Stock" shall mean the common stock issued by the
issuer of the Substitute Option upon exercise of the Substitute Option.
(3) "Assigned Value" shall mean the Market/Offer Price, as defined in
Section 7.
(4) "Average Price" shall mean the average closing price of a share of
the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is the issuer
of the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by the person merging into Issuer or by
any company which controls or is controlled by such person, as the Holder
may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided, that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement, which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option is then exercisable
(without reference to any limitation set forth in Section 1(b) hereof), divided
by the Average Price. The exercise price of the Substitute Option per share of
Substitute Common Stock shall then be equal to the Option Price multiplied by a
fraction, the numerator of which shall be the number of shares of Common Stock
for which the Option is then exercisable (without reference to any limitation
set forth in Section 1(b) hereof) and the denominator of which shall be the
number of shares of Substitute Common Stock for which the Substitute Option is
exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for
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more than 19.9% of the shares of Substitute Common Stock outstanding prior to
exercise of the Substitute Option. In the event that the Substitute Option would
be exercisable for more than 19.9% of the shares of Substitute Common Stock
outstanding prior to exercise but for this clause (e), the issuer of the
Substitute Option (the "Substitute Option Issuer") shall make a cash payment to
Holder equal to the excess of (i) the value of the Substitute Option without
giving effect to the limitation in this clause (e) over (ii) the value of the
Substitute Option after giving effect to the limitation in this clause (e). This
difference in value shall be determined by a nationally recognized investment
banking firm selected by the Holder or the Owner, as the case may be, and
reasonably acceptable to the Acquiring Corporation.
(f) Issuer shall not enter into any transaction described in subsection (a)
of this Section 8 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to (x) the amount by which (i) the Highest
Closing Price (as hereinafter defined) exceeds (ii) the exercise price of the
Substitute Option, multiplied by the number of shares of Substitute Common Stock
for which the Substitute Option may then be exercised plus (y) Grantee's
reasonable out-of-pocket expenses (to the extent not previously reimbursed), and
at the request of the owner (the "Substitute Share Owner") of shares of
Substitute Common Stock (the "Substitute Shares"), the Substitute Option Issuer
shall repurchase the Substitute Shares at a price (the "Substitute Share
Repurchase Price") equal to (x) the Highest Closing Price multiplied by the
number of Substitute Shares so designated plus (y) Grantee's reasonable
out-of-pocket expenses (to the extent not previously reimbursed). The term
"Highest Closing Price" shall mean the highest closing price for shares of
Substitute Common Stock within the six-month period immediately preceding the
date the Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective right to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares
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pursuant to this Section 9 by surrendering for such purpose to the Substitute
Option Issuer, at its principal office, the agreement for such Substitute Option
(or, in the absence of such an agreement, a copy of this Agreement) and
certificates for Substitute Shares accompanied by a written notice or notices
stating that the Substitute Option Holder or the Substitute Share Owner, as the
case may be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the provisions
of this Section 9. As promptly as practicable, and in any event within five
business days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or, in either case, the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation, or under any
express provision of its certificate of incorporation or similar charter
document requiring prior stockholder approval, from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation from repurchasing, or requires any approval of its
stockholders to repurchase, the Substitute Option and/or the Substitute Shares
in part or in full, the Substitute Option Issuer following a request for
repurchase pursuant to this Section 9 shall immediately so notify the Substitute
Option Holder and/or the Substitute Share Owner and thereafter deliver or cause
to be delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute Share
Repurchase Price, respectively, which it is no longer prohibited from
delivering, within five business days after the date on which the Substitute
Option Issuer is no longer so prohibited; provided, however, that if the
Substitute Option Issuer is at any time after delivery of a notice of repurchase
pursuant to subsection (b) of this Section 9 prohibited under applicable law or
regulation from delivering, or requires the any approval of its stockholders to
deliver, to the Substitute Option Holder and/or the Substitute Share Owner, as
appropriate, the Substitute Option Repurchase Price and the Substitute Share
Repurchase Price, respectively, in full (and the Substitute Option Issuer shall
use its best efforts to obtain any such required stockholder approval and all
required regulatory and legal approvals, in each case as promptly as
practicable, in order to accomplish such repurchase), the Substitute Option
Holder or Substitute Share Owner may revoke its notice of repurchase of the
Substitute Option or the Substitute Shares
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either in whole or to the extent of the prohibition, whereupon, in the latter
case, the Substitute Option Issuer shall promptly (i) deliver to the Substitute
Option Holder or Substitute Share Owner, as appropriate, that portion of the
Substitute Option Repurchase Price or the Substitute Share Repurchase Price that
the Substitute Option Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, or (B) to the Substitute Share Owner, a certificate for the
Substitute Common Shares it is then so prohibited from repurchasing.
10. The 90-day period for exercise of certain rights under Sections 2, 6, 7
and 14 shall be extended: (i) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights, for the expiration of all statutory
waiting periods, and to the extent required to obtain any required stockholder
approval or until such stockholder approval is no longer required; and (ii) to
the extent necessary to avoid liability under Section 16(b) of the 1934 Act by
reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on the part of
Issuer (other than the shareholder approval referred to in Sections 2(e), 7(b)
and 9(c) hereof) are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that
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number of shares of Common Stock equal to the maximum number of shares of Common
Stock at any time and from time to time issuable hereunder, and all such shares,
upon issuance pursuant hereto, will be duly authorized, validly issued, fully
paid, nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter into
this Agreement and, subject to any approvals or consents referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Grantee.
This Agreement has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act.
13. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof
and applicable restrictions under law, may assign in whole or in part its rights
and obligations hereunder within 90 days following such Subsequent Triggering
Event (or such later period as provided in Section 10).
14. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation making application to have approved
for quotation the shares of Common Stock issuable hereunder on the NASDAQ Stock
Market National Market upon official notice of issuance and applying to the OTS
under the HOLA for approval to acquire the shares issuable hereunder, but
Grantee shall not be obligated to apply to state banking authorities for
approval to acquire the shares
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of Common Stock issuable hereunder until such time, if ever, as it deems
appropriate to do so.
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
16. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5
hereof), it is the express intention of Issuer to allow the Holder to acquire or
to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
18. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to any conflicts of laws
rules.
19. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
20. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
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21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
EAGLE FINANCIAL CORP.
By: /s/ Robert J. Britton
------------------------------
Name: Robert J. Britton
Title: President and Chief
Executive Officer
WEBSTER FINANCIAL CORPORATION
By: /s/ James C. Smith
-----------------------------
Name: James C. Smith
Title: Chairman and Chief
Executive Office
[Stock Option Agreement]
