Exhibit 2
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
XXXXXXX FINANCIAL CORPORATION
AND
MECH FINANCIAL, INC.
DATED AS OF
DECEMBER 1, 1999
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER...................................................... 1
1.1 The Merger...................................................... 1
1.2 Effective Time.................................................. 1
1.3 Effects of the Merger........................................... 2
1.4 Conversion of MECH Common Stock................................. 2
1.5 Options......................................................... 3
1.6 Certificate of Incorporation.................................... 4
1.7 Bylaws.......................................................... 4
1.8 Directors and Officers.......................................... 4
1.9 Tax Consequences................................................ 4
1.10 Accounting Treatment............................................ 4
ARTICLE II EXCHANGE OF SHARES............................................. 5
2.1 Webster to Make Shares Available................................ 5
2.2 Exchange of Shares.............................................. 5
2.3 Disclosure Schedule............................................. 6
2.4 Standards....................................................... 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF MECH........................ 7
3.1 Corporate Organization.......................................... 7
3.2 Capitalization.................................................. 7
3.3 Authority; No Violation......................................... 8
3.4 Consents and Approvals.......................................... 9
3.5 Loan Portfolio; Reports......................................... 10
3.6 Financial Statements; Exchange Act Filings; Books and Records... 10
3.7 Broker's Fees................................................... 11
3.8 Absence of Certain Changes or Events............................ 11
3.9 Legal Proceedings............................................... 11
3.10 Taxes and Tax Returns........................................... 11
3.11 Employee Plans.................................................. 13
3.12 Certain Contracts............................................... 14
3.13 Agreements with Governmental Agencies........................... 14
3.14 State Takeover Laws; Certificate of Incorporation............... 15
3.15 Environmental Matters........................................... 15
3.16 Reserves for Losses............................................. 16
3.17 Properties and Assets........................................... 16
3.18 Insurance....................................................... 17
3.19 Mechanics Investment Services, Inc.............................. 17
3.20 Compliance with Applicable Laws................................. 17
3.21 Loans........................................................... 17
3.22 Affiliates...................................................... 18
3.23 Ownership of Webster Common Stock............................... 19
3.24 Year 2000 Compliance............................................ 19
3.25 Intellectual Property........................................... 19
3.26 MECH Information................................................ 19
3.27 Fairness Opinion................................................ 20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF WEBSTER...................... 20
4.1 Corporate Organization.......................................... 20
4.2 Capitalization.................................................. 20
4.3 Authority; No Violation......................................... 21
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4.4 Regulatory Approvals............................................ 22
4.5 Financial Statements; Exchange Act Filings; Books and Records... 22
4.6 Agreements with Governmental Agencies........................... 23
4.7 Legal Proceedings............................................... 23
4.8 Webster Information............................................. 23
4.9 Absence of Certain Changes or Events............................ 23
4.10 Compliance with Applicable Laws................................. 24
4.11 Tax and Accounting Treatment of Merger.......................... 24
4.12 Year 2000....................................................... 24
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS....................... 24
5.1 Covenants of MECH............................................... 24
5.2 Covenants of Webster............................................ 27
5.3 Merger Covenants................................................ 28
5.4 Compliance with Antitrust Laws.................................. 28
5.5 Qualified Plans................................................. 28
ARTICLE VI ADDITIONAL AGREEMENTS.......................................... 28
6.1 Regulatory Matters.............................................. 28
6.2 Access to Information........................................... 30
6.3 Shareholder Meetings............................................ 31
6.4 Legal Conditions to Merger...................................... 31
6.5 Stock Exchange Listing.......................................... 31
6.6 Employees....................................................... 31
6.7 Indemnification................................................. 32
6.8 Subsequent Interim and Annual Financial Statements.............. 34
6.9 Additional Agreements........................................... 34
6.10 Advice of Changes............................................... 34
6.11 Current Information............................................. 34
6.12 Execution and Authorization of Bank Merger Agreement............ 34
6.13 Change in Structure............................................. 34
6.14 Transaction Expenses of MECH.................................... 35
6.15 Further Actions of MECH......................................... 35
6.16 Publication of Earnings......................................... 35
ARTICLE VII CONDITIONS PRECEDENT.......................................... 36
7.1 Conditions to Each Party's Obligation To Effect the Merger...... 36
7.2 Conditions to Obligations of Webster............................ 37
7.3 Conditions to Obligations of MECH............................... 38
ARTICLE VIII TERMINATION AND AMENDMENT.................................... 39
8.1 Termination..................................................... 39
8.2 Effect of Termination........................................... 41
8.3 Amendment....................................................... 42
8.4 Extension; Waiver............................................... 42
ARTICLE IX GENERAL PROVISIONS............................................. 42
9.1 Closing......................................................... 42
9.2 Nonsurvival of Representations, Warranties and Agreements....... 42
9.3 Expenses; Breakup Fee........................................... 42
9.4 Notices......................................................... 43
9.5 Interpretation.................................................. 44
9.6 Counterparts.................................................... 44
9.7 Entire Agreement................................................ 44
9.8 Governing Law................................................... 44
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9.9 Enforcement of Agreement........................................ 45
9.10 Severability.................................................... 45
9.11 Publicity....................................................... 45
9.12 Assignment; Limitation of Benefits.............................. 45
9.13 Additional Definitions.......................................... 45
EXHIBITS
A Articles of Combination and Bank Merger Agreement
B Option Agreement
C Certificate of Merger
D MECH Stockholder Agreement
E MECH Counsel's Legal Opinions
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of December 1, 1999 (this
"Agreement"), is entered into by and between Xxxxxxx Financial Corporation, a
Delaware corporation ("Webster") and MECH Financial, Inc., a Connecticut
corporation ("MECH").
WHEREAS, the Boards of Directors of Webster and MECH have determined that
it is advisable and in the best interests of their respective companies and
shareholders to consummate the business combination transaction provided for
herein in which MECH will, subject to the terms and conditions set forth herein,
merge with and into Webster, with Webster being the Surviving Corporation (as
hereinafter defined) (the "Merger");
WHEREAS, prior to the consummation of the Merger, Webster and MECH will
respectively cause Xxxxxxx Bank ("Xxxxxxx Bank"), a federally chartered savings
bank and wholly owned subsidiary of Webster, and Mechanics Savings Bank, a
Connecticut-chartered savings bank and wholly-owned subsidiary of MECH ("MS
Bank"), to enter into a merger agreement, in the form attached hereto as Exhibit
A (the "Bank Merger Agreement"), providing for the merger (the "Bank Merger") of
MS Bank with and into Xxxxxxx Bank, with Xxxxxxx Bank being the "Surviving Bank"
of the Bank Merger, and the Bank Merger to be consummated immediately after
consummation of the Merger;
WHEREAS, as an inducement to Webster to enter into this Agreement, MECH
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 MECH will xxxxx Xxxxxxx an option to purchase,
under certain circumstances, an aggregate of 994,150 newly issued shares of
common stock, par value $.01 per share, of MECH ("MECH Common Stock") upon the
terms and conditions therein contained; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger.
Subject to the terms and conditions of this Agreement, in accordance with
the Delaware General Corporation Law (the "DGCL") and the State of Connecticut
Business Corporations Act, as amended (the "Connecticut Corporation Law"), at
the Effective Time (as defined in Section 1.2 hereof), MECH shall merge 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 MECH 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 date and at the time set forth in
the certificate of merger (the "Certificate of Merger"), substantially in the
form attached as Exhibit C hereto, which shall be filed with the Secretaries of
State of the States of Connecticut and Delaware on or before
the Closing Date. The term "Effective Time" shall be the date and time when the
Merger becomes effective, 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 and Sections 33-820 and 33-821 of the
Connecticut Corporation Law.
1.4 Conversion of MECH 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 MECH Common Stock issued and outstanding prior
to the Effective Time shall, by virtue of this Agreement and without any action
on the part of the holder thereof, be converted into and exchangeable for 1.52
shares of Webster common stock, par value $.01 per share ("Webster Common
Stock"). The number of shares of Webster Common Stock to be exchanged for each
share of MECH Common Stock issued and outstanding is hereinafter referred to as
the "Exchange Ratio."
(b) All of the shares of MECH 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 MECH 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 MECH Common Stock represented by such Certificate have been
converted pursuant to Section 1.4(a) and Section 1.4(d) hereof. Certificates
previously representing shares of MECH Common Stock shall be exchanged for
certificates representing whole shares of Webster Common Stock and cash in lieu
of fractional shares issued in consideration therefor upon the surrender of such
Certificates in accordance with Section 2.2 hereof, without any interest
thereon. If, prior to the Effective Time, Webster should split or combine the
Webster Common Stock, or pay a dividend or other distribution in such common
stock, then the Exchange Ratio shall be appropriately adjusted to reflect such
split, combination, dividend or distribution.
(c) At the Effective Time, all shares of MECH Common Stock that are
owned by MECH as treasury stock and all shares of MECH Common Stock that are
owned directly or indirectly by Webster or MECH or any of their respective
Subsidiaries (other than shares of MECH 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 MECH, as the case may be, being
referred to herein as "Trust Account Shares") and other than any shares of MECH
Common Stock held by Webster or MECH or any of their respective Subsidiaries in
respect of a debt previously contracted (any such shares of MECH Common Stock,
and shares of Webster Common Stock which are similarly held, whether held
directly or indirectly by Webster or MECH, 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 MECH or MS Bank (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 MECH 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 actual 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 fifteen consecutive trading
days on which shares of Webster Common Stock are actually traded (as reported on
the Xxxxxx Xxxxx
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Xxxxxx Xxxxxxxx Xxxxxx System) ending on the third trading day preceding the
Closing Date. Following consummation of the Merger, no holder of MECH Common
Stock shall be entitled to dividends or any other rights in respect of any such
fraction.
(e) Notwithstanding anything in this Agreement to the contrary and
unless otherwise provided by applicable law, shares of MECH Common Stock that
are issued and outstanding immediately prior to the Effective Time and that are
owned by shareholders who have properly objected within the meaning of Sections
33-855 through 33-872 of the Connecticut Corporation Law (the "Objecting
Shares"), shall not be converted into the right to receive shares of Webster
Common Stock, unless and until such shareholders shall have failed to perfect or
shall have effectively withdrawn or lost their right of payment under applicable
law. If any such shareholder shall have failed to perfect or shall have
effectively withdrawn or lost such right of payment, each share of MECH Common
Stock held by such shareholder shall thereupon be deemed to have been converted
into the right to receive and become exchangeable for, at the Effective Time,
shares of Webster Common Stock pursuant to Section 1.4(a) hereof.
(f) MECH shall give Webster (i) prompt notice of any objections filed
pursuant to Section 33-861 of the Connecticut Corporation Law received by MECH,
withdrawals of such objections and any other instruments served in connection
with such objections pursuant to the Connecticut Corporation Law and received by
MECH and (ii) the opportunity to direct all negotiations and proceedings with
respect to objections under the Connecticut Corporation Law consistent with the
obligations of MECH thereunder. MECH shall not, except with the prior written
consent of Webster, (x) make any payment with respect to any such objection, (y)
offer to settle or settle any such objections or (z) waive any failure to timely
deliver a written objection in accordance with the Connecticut Corporation Law,
subject to MECH's legal duties and obligations thereunder.
(g) For purposes of this Agreement, references to Webster Common
Stock shall be deemed to include, where appropriate, references to the right to
receive shares of Xxxxxxx'x Series C Participating Preferred Stock pursuant to
the Rights Agreement, dated as of February 5, 1996, as amended, between Webster
and American Stock Transfer & Trust Company.
1.5 Options.
At the Effective Time, each option granted by MECH to purchase shares of
MECH 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 Employee Stock Ownership Plan, the
1996 Mechanics Savings Bank Officer Stock Option Plan and the 1996 Mechanics
Savings Bank Director Stock Option Plan (the "MECH Stock Plans");
(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 of MECH 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 whole 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 MECH Common Stock under the option
immediately before the Effective Time divided by the Exchange Ratio,
provided that such exercise price shall be rounded up to the nearest
cent.
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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 MECH or MS Bank in the MECH Stock Plans (and the corresponding
references in the option agreement documenting such option) shall be deemed to
be references to Webster or Xxxxxxx Bank, as applicable. Nothing herein shall
be construed as preventing option holders from exercising the same before the
Effective Time in accordance with the terms thereof.
1.6 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.
1.7 Bylaws.
At the Effective Time, the Bylaws of Webster, as in effect immediately
prior to the Effective Time, shall be the Bylaws of the Surviving Corporation.
1.8 Directors and Officers.
At the Effective Time, the directors and officers of Webster immediately
prior to the Effective Time shall be the directors and officers of the Surviving
Corporation. As of the Effective Time, Webster shall cause Xxxxxxx Bank to
amend its bylaws to increase the size of its Board of Directors by one member,
and thereupon Webster shall invite Xxxxx X. Xxxxxx to serve as an additional
member (the "New Member") of the Board of Directors of Xxxxxxx Bank for a period
to terminate no earlier than the annual meeting of Webster stockholders next
following the third anniversary of the Effective Time; provided, however, that
Xxxxxxx Bank shall have no obligation to invite Xx. Xxxxxx to serve on Xxxxxxx
Bank's Board of Directors if Xx. Xxxxxx is not both President of MECH and a
member in good standing of MECH's Board of Directors immediately prior to the
Effective Time. Additionally, as of the Effective Time, Webster shall, if
necessary, amend its bylaws to increase the size of its Board of Directors by
one member. Webster shall appoint Xx. Xxxxxx to the Board of Directors of the
Surviving Corporation to serve as a director for a period to terminate no
earlier than at the annual meeting next following the first anniversary of the
Effective Time; provided, however, that Webster shall have no obligation to
invite Xx. Xxxxxx to serve on Xxxxxxx'x Board of Directors if Xx. Xxxxxx is not
both President of MECH and a member in good standing of MECH's Board of
Directors immediately prior to the Effective Time.
1.9 Tax Consequences.
It is intended that the Merger shall constitute a reorganization within the
meaning of Section 368(a) of the Code, and that this Agreement shall constitute
a "plan of reorganization" for the purposes of the Code.
1.10 Accounting Treatment.
It is intended that the Merger shall be accounted for as a "pooling of
interests" under generally accepted accounting principles ("GAAP").
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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 Xxxxxxx'x 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 (collectively, sometimes referred to
herein as the "Shares") in exchange for outstanding shares of MECH 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 MECH Common Stock represented by such Certificate or
Certificates shall have been converted pursuant to this Agreement. MECH 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 promptly in exchange therefor (x) a certificate representing that number
of whole shares of Webster Common Stock to which such holder of MECH 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 Article I, 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 MECH Common Stock shall have been converted.
(c) If any certificate representing shares of Webster Common Stock is
to be issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed (or accompanied
by an appropriate instrument of transfer) and otherwise in proper form for
transfer, and that the person requesting such exchange shall pay to the Exchange
Agent in advance any transfer or other taxes required by reason of the issuance
of a certificate representing shares of Webster Common Stock in any name other
than that of the registered
5
holder of the Certificate surrendered, or shall establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not payable.
(d) As of the close of business on the day immediately prior to the
Effective Time, there shall be no transfers on the stock transfer books of MECH
of the shares of MECH Common Stock which were issued and outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates
representing such shares are presented for transfer to the Exchange Agent, they
shall be canceled and exchanged for certificates representing shares of Webster
Common Stock as provided in this Article II.
(e) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of MECH for six months after the Effective Time may be returned to
Webster. After such funds have been returned to Webster, any shareholders of
MECH 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 MECH Common Stock such
shareholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon. Notwithstanding the foregoing, none of Webster,
MECH, the Exchange Agent or any other person shall be liable to any former
holder of shares of MECH Common Stock for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(f) 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.
2.3 Disclosure Schedule.
Prior to the execution and delivery hereof, MECH has delivered to Webster a
schedule (the "MECH Disclosure Schedule"), and Webster has delivered to MECH a
schedule (the "Webster Disclosure Schedule"), in each case setting forth, among
other things, items the disclosure of which is necessary or appropriate either
in response to an express disclosure requirement contained in a provision hereof
or as an exception to one or more of such party's representations or warranties
contained in Articles III or IV, as applicable, or to one or more of its
covenants contained in Article V; provided, however, that 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.
2.4 Standards.
No representation or warranty of MECH 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 MECH, or
Article IV, in the case of Webster, has had or would be reasonably certain to
have a Material Adverse Effect with respect to MECH or Webster, respectively.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MECH
MECH hereby makes the following representations and warranties to Xxxxxxx
as set forth in this Article III, each of which is being relied upon by Xxxxxxx
as a material inducement to enter into and perform this Agreement. All of the
disclosure schedules of MECH referenced below and thereby required of MECH
pursuant to this Agreement, which disclosure schedules shall be cross-referenced
to the specific sections and subsections of this Agreement and delivered
herewith, are referred to herein as the "MECH Disclosure Schedule."
3.1 Corporate Organization.
(a) MECH is a corporation duly organized, validly existing and in
good standing under the laws of the State of Connecticut. MECH 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 its
business conducted by it or the character or location of any properties or
assets owned or leased by it makes such licensing or qualification necessary.
MECH is duly registered as a bank holding company with the Board of Governors of
the Federal Reserve System ("FRB") under the Banking Holding Company Act of
1956, as amended ("BHCA"). The Certificate of Incorporation and Bylaws of MECH,
copies of which are included in Section 3.1(a) of the MECH Disclosure Schedule,
are true, correct and complete copies of such documents as in effect as of the
date of this Agreement.
(b) MS Bank is a Connecticut-chartered savings bank duly organized
and validly existing and in good standing under the laws of the state of
Connecticut. The deposit accounts of MS Bank are insured by the Federal Deposit
Insurance Corporation (the "FDIC") through the Bank Insurance Fund (the "BIF")
to the fullest extent permitted by law, and all premiums and assessments
required in connection therewith have been paid by MS Bank. MS Bank, Mechanics
Investment Services, Inc. ("MIS") and Mechanics Mortgage Company ("MMC") are the
only Subsidiaries of MECH that qualify as a "Significant Subsidiary" as such
term is defined in Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC"). MS Bank has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it is now
being conducted and is duly licensed or qualified to do business in each
jurisdiction in which the nature of its business conducted by it or the
character or the location of any properties or assets owned or leased by it
makes such licensing or qualification necessary. The Certificate of
Incorporation and Bylaws of each of MS Bank, MIS and MMC, copies of which have
previously been delivered to Xxxxxxx, 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 MECH consists of 15,000,000
shares of MECH Common Stock and 1,000,000 shares of serial preferred stock, par
value $.01 per share (the "MECH Preferred Stock"). As of the date hereof, there
are (x) 4,995,731 shares of MECH Common Stock issued and outstanding and 251,500
shares of MECH Common Stock are held in MECH's treasury, (y) 460,702 shares of
MECH Common Stock reserved for issuance upon exercise of outstanding stock
options under the MECH Stock Plans and (z) 994,150 shares of MECH Common Stock
reserved for issuance upon exercise of the option to be issued to Xxxxxxx
pursuant to the Option Agreement. As of the date hereof, no shares of MECH
Preferred Stock are outstanding. All of the issued and outstanding shares of
MECH 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
outstanding options under the MECH Stock Plans, MECH does not have and is not
bound by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any
7
character calling for the purchase or issuance of any shares of MECH Common
Stock or MECH Preferred Stock or any other equity security of MECH or any
securities representing the right to purchase or otherwise receive any shares of
MECH Common Stock or any other equity security of MECH. The names of the
optionees, the date of each option to purchase MECH Common Stock granted, the
number of shares subject to each such option, the expiration date of each such
option, and the price at which each such option may be exercised under the MECH
Stock Plans are set forth in Section 3.2(a) of the MECH Disclosure Schedule.
Except as set forth at Section 3.2(a) of the MECH Disclosure Schedule, since
December 31, 1998 MECH 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 under the MECH Stock Plans.
(b) Section 3.2(b) of the MECH Disclosure Schedule sets forth a true,
correct and complete list of all direct or indirect Subsidiaries of MECH as of
the date of this Agreement. Except as set forth at Section 3.2(b) of the MECH
Disclosure Schedule, MECH 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 MECH Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of capital
stock or any other equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Subsidiary.
3.3 Authority; No Violation.
(a) MECH 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 MECH The Board of Directors of MECH has directed that this
Agreement and the transactions contemplated hereby be submitted to MECH's
shareholders for approval at a meeting of such shareholders and, except for the
adoption of this Agreement by the requisite vote of MECH's shareholders, no
other corporate proceedings on the part of MECH (except for matters related to
setting the date, time, place and record date for the 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 MECH and (assuming
due authorization, execution and delivery by Xxxxxxx of this Agreement and by
Xxxxxxx of the Option Agreement) will constitute valid and binding obligations
of MECH, enforceable against MECH in accordance with their terms, except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally.
(b) MS Bank has full corporate power and authority to execute and
deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby have been duly and
validly approved by the Board of Directors of MS Bank and by MECH as the sole
shareholder of MS Bank. No other corporate proceedings on the part of MS Bank
will be necessary to consummate the transactions contemplated thereby. The Bank
Merger Agreement, upon execution and delivery by MS Bank, will be duly and
validly executed and delivered by MS Bank and will (assuming due authorization,
execution and delivery by Xxxxxxx Bank) constitute a valid and binding
obligation of MS Bank, enforceable against MS Bank in accordance with its terms,
except as enforcement may be limited by general principles of
8
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 and the
Option Agreement by MECH or the Bank Merger Agreement by MS Bank, nor the
consummation by MECH or MS Bank, as the case may be, of the transactions
contemplated hereby or thereby, nor compliance by MECH or MS Bank with any of
the terms or provisions hereof or thereof, will (i) violate any provision of the
Certificate of Incorporation or Bylaws of MECH or the Certificate of
Incorporation or Bylaws of MS 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 MECH or MS 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 MECH or MS 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 MECH or MS 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 with the FRB under the BHCA and with the Office of
Thrift Supervision ("OTS") under the Home Owners' Loan Act of 1933 ("HOLA") and
the Bank Merger Act, as to the Bank Merger with the OTS, (ii) the filing of
applications and notices with the Banking Commissioner of the State of
Connecticut (the "Connecticut Commissioner"), as well as any other applications
and notices to state officials related to the Merger and the Bank Merger (the
"State Banking Approvals"), (iii) the filing with the Connecticut Commissioner
of an acquisition statement pursuant to Section 36a-184 of the Banking Law of
the State of Connecticut prior to the acquisition of more than 10% of MECH
Common Stock pursuant to the Option Agreement, if not exempt, (iv) the filing of
any required applications or notices with the FDIC and OTS as to any subsidiary
activities of MS Bank which becomes a service corporation or operating
subsidiary of Xxxxxxx Bank and approval of such applications and notices, (v)
the filing with the SEC of a registration statement on Form S-4 to register the
shares of Xxxxxxx Common Stock to be issued in connection with the Merger
(including the shares of Xxxxxxx Common Stock that may be issued upon the
exercise of the options referred to in Section 1.5 hereof), which will include
the proxy statement/prospectus to be used in soliciting the approval of MECH's
shareholders at a meeting to be held in connection with this Agreement and the
transactions contemplated hereby (the "Proxy Statement/Prospectus"), (vi) the
filing of the Certificate of Merger with the Secretary of State of Connecticut
pursuant to the Connecticut Corporation Law; (vii) the filing of the Certificate
of Merger with the Secretary of State of Delaware pursuant to the DGCL, (viii)
the filing of the Bank Merger Agreement with the OTS and the Secretary of State
of Connecticut, (ix) such filings and approval as may be 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), (x) the filing of the
required application and notices to National Association of Securities Dealers,
Inc. ("NASD") regarding the change of control of MIS and (x) such filings,
authorizations or approvals as may be set forth in Section 3.4(a) of the MECH
Disclosure Schedule, no consents or approvals of or filings or registrations
with any court, administrative agency or commission or other governmental
authority or instrumentality (each a "Governmental Entity"), or with any third
party are necessary in connection with (1) the execution and delivery by MECH of
this Agreement and the Option Agreement, (2) the consummation by MECH of the
Merger and the other transactions contemplated hereby, (3) the execution and
delivery by MS Bank of the Bank Merger Agreement, (4) the consummation by MECH
of the Option Agreement; and (5) the consummation by MS Bank of the Bank Merger
and the transactions contemplated thereby, except, in each case, for such
consents, approvals or filings,
9
the failure of which to obtain will not have a material adverse effect on the
ability of Xxxxxxx to consummate the transactions contemplated hereby.
(b) MECH hereby represents to Xxxxxxx that it has no knowledge of any
reason why approval or effectiveness of any of the applications, notices or
filings referred to in Section 3.4(a) cannot be obtained or granted on a timely
basis.
3.5 Loan Portfolio; Reports.
(a) Except as set forth at Section 3.5 of the MECH Disclosure
Schedule, as of December 31, 1998 and thereafter through and including the date
of this Agreement, MECH, MS Bank nor any of their Subsidiaries is a party to any
written or oral loan agreement, note or borrowing arrangement (including,
without limitation, leases, credit enhancements, commitments, guarantees and
interest-bearing assets) (collectively, "Loans"), with any director, officer or
five percent or greater shareholder of MECH or MS Bank, or any Affiliated Person
(as defined in Section 9.13) of the foregoing.
(b) MECH, MS Bank and each of their Subsidiaries 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 with (i) the
FRB, (ii) the FDIC, (iii) the Connecticut Commissioner and any other state
banking commissions or any other state regulatory authority (each a "State
Regulator"), (iv) the SEC and (v) any other self-regulatory organization
("SRO"). Except for normal examinations conducted by a regulatory agency in the
regular course of the business of MECH and any Subsidiary, no Governmental
Entity is conducting, or has conducted at any time subsequent to December 31,
1997, any proceeding or investigation into the business or operations of MECH or
any Subsidiary.
3.6 Financial Statements; Exchange Act Filings; Books and Records.
MECH has previously delivered to Xxxxxxx true, correct and complete copies
of the consolidated statements of position of MECH and its Subsidiaries as of
December 31 for the fiscal years 1996, 1997 and 1998 and the related
consolidated statements of earnings, shareholders' equity and cash flows for the
fiscal years 1996, 1997 and 1998, inclusive, as reported in MECH's Annual Report
on Form 10-K for the fiscal year ended December 31, 1998 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 MECH's independent public
accountants, and the interim financial statements of MECH as of and for the nine
months ended September 30, 1999, as included in the quarterly report on Form 10-
Q for the period ended September 30, 1999 as filed with the SEC. 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
statements, to recurring audit adjustments normal in nature and amount), the
results of the consolidated operations and consolidated financial condition of
MECH 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 generally accepted accounting principles
consistently applied during the periods involved ("GAAP"), 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. MECH's Annual Report on Form
10-K for the fiscal year ended December 31, 1998 and all reports filed under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act since January 1, 1998
comply in all material respects with the appropriate requirements for such
reports under the Exchange Act, and MECH has previously delivered or made
available to Xxxxxxx true, correct and complete copies of such
10
reports. The books and records of MECH and each of its Subsidiaries 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 MECH, MS Bank, any of their Subsidiaries 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 MECH has engaged, and will pay a
financial advisor's fee to Xxxxx, Xxxxxxxx & Xxxxx, Inc.. ("KBW") in accordance
with the terms of a letter agreement between KBW and MECH, dated July 6, 1999 a
true, complete and correct copy of which is attached at Section 3.7 of the MECH
Disclosure Schedule. Such fee to KBW is the only fee, commission or other
expense to be incurred by or on behalf of MECH, MS Bank or any Subsidiary with
respect to any financial advisor, broker or finder in connection with the Merger
and the transactions contemplated thereby.
3.8 Absence of Certain Changes or Events.
(a) Except as set forth at Section 3.8(a) of the MECH Disclosure
Schedule, or as disclosed in MECH's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998, since December 31, 1998 (i) neither MECH nor any
Subsidiary has incurred any material liability, except as contemplated by the
Agreement or in the ordinary course of their business consistent with their past
practices, and (ii) no event has occurred which has had, or is likely to have,
individually or in the aggregate, a Material Adverse Effect (as defined in
Section 9.13) on MECH.
(b) Since December 31, 1998 MECH and each of its Subsidiaries have
carried on their respective businesses in the ordinary and usual course
consistent with their past practices.
3.9 Legal Proceedings.
(a) Except as set forth at Section 3.9(a) of the MECH Disclosure
Schedule, neither MECH, MS Bank nor any of their Subsidiaries is a party to any,
and there are no pending or to the knowledge of MECH, threatened, legal,
administrative, arbitration or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against MECH, MS Bank or
any Subsidiary in which, to the knowledge of MECH or any Subsidiary, there is a
reasonable probability of any material recovery against or other material effect
upon MECH or any Subsidiary or which challenge the validity or propriety of the
transactions contemplated by this Agreement, the Bank Merger Agreement or the
Option Agreement and as to which there is a reasonable probability of success.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon MECH, MS Bank or any of their Subsidiaries, or the
assets of MECH, MS Bank or any of their Subsidiaries.
3.10 Taxes and Tax Returns.
(a) Each of MECH, MS Bank and their Subsidiaries have duly filed all
Tax Returns, as hereinafter defined, 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 provision (or will make provision) on the
financial statements referred to in Sections 3.6 and 6.8 hereof in accordance
with GAAP for the payment of all material Taxes, as hereinafter
11
defined, which have been incurred or are due or claimed to be due from it by
Taxing Authorities, as hereinafter defined, on or prior to the date hereof other
than Taxes (a) which (x) are not yet delinquent or (y) are being contested in
good faith and set forth in Section 3.10(a) of the MECH Disclosure Schedule and
(b) which have not been finally determined. All liability with respect to the
Tax Returns of MECH and any Subsidiary has been satisfied for all years to and
including 1998. The Internal Revenue Service ("IRS") has not notified MECH of,
or otherwise asserted, that there are any material deficiencies with respect to
the federal income Tax Returns of MECH subsequent to 1993. There are no material
disputes pending, or claims asserted for, Taxes or assessments upon MECH or any
Subsidiary, nor has MECH or any Subsidiary been requested to give any currently
effective waivers extending the statutory period of limitation applicable to any
federal or state income Tax Return for any period. In addition, Tax Returns
which are accurate and complete in all material respects have been filed by MECH
and each Subsidiary for all periods for which returns were due with respect to
income tax withholding, Social Security and unemployment taxes and the amounts
shown on such Tax Returns to be due and payable have been paid in full or
adequate provision therefor in accordance with GAAP has been (or will be)
included by MECH in the financial statements referred to in Sections 3.6 and 6.8
hereto. All MECH Tax Returns have been examined by the relevant Taxing
Authorities, or closed without audit by applicable statutes of limitations, and
all deficiencies proposed as a result of such examinations have been paid or
settled, for all periods before and including the taxable year ended 1993.
Neither MECH nor any Subsidiary has consented to any waiver or extension of any
statute of limitations with respect to any Tax. Neither MECH nor any Subsidiary
has made an election under Section 341(f) of the IRC. MECH has provided or made
available to Xxxxxxx complete and correct copies of its and its Subsidiaries'
Tax Returns and all material correspondence and documents, if any, relating
directly or indirectly to taxes for each taxable year or other relevant period
as to which the applicable statute of limitations has not run on the date
hereof. For this purpose, "correspondence and documents" include, without
limitation, amended Tax Returns, claims for refunds, notices from Taxing
Authorities of proposed changes or adjustments to Taxes or Tax Returns, consents
to assessment or collection of Taxes, acceptances of proposed adjustments,
closing agreements, rulings and determination letters and requests therefor, and
all other written communications to or from Taxing Authorities relating to any
material Tax liability of MECH or MS Bank. MECH will not be a "foreign person"
as that term is used in (S) 1.1445-2 of the Treasury Regulations promulgated
under the IRC. MS Bank is not a "United States real property holding
corporation" within the meaning of (S) 897 of the IRC and was not a "United
States real property holding corporation" on any "determination date" (as
defined in (S) 1.897-2(c) of such Regulations) that occurred during any relevant
period.
(b) For purposes of this Agreement:
"Tax" means any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Taxing Authority or payable pursuant to any tax-sharing agreement or any
other contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"Tax Return" means any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Taxing Authority in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any law, regulation or other legal
requirement relating to any Tax.
"Taxing Authority" means any:
12
(i) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(ii) federal, state, local, municipal, foreign, or other
government;
(iii) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(iv) multi-national organization or body; or
(v) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
3.11 Employee Plans.
(a) Section 3.11(a) of the MECH 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 MECH or any Subsidiary or any other entity
which together with MECH would be deemed a "single employer" within the meaning
of Section 4001 of ERISA or Code Sections 414(b), (c) or (m) or under which MECH
or any Subsidiary has any liability (collectively, the "Plans").
(b) MECH has heretofore delivered or made available to Xxxxxxx true,
correct and complete copies of each of the Plans and all related documents,
including but not limited to (i) the actuarial report for such Plan (if
applicable) for each of the last five years, (ii) the most recent determination
letter from the IRS (if applicable) for such Plan, (iii) the current summary
plan description and any summaries of material modification, (iv) all annual
reports (Form 5500 series) for each Plan filed for the preceding five plan
years, (v) all agreements with fiduciaries and service providers relating to the
Plan, and (vi) all substantive correspondence relating to any such Plan
addressed to or received from the Internal Revenue Service, the Department of
Labor, the Pension Benefit Guaranty Corporation or any other governmental
agency.
(c) Except as set forth at Section 3.11 (c) of the MECH 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) no such Plan is
subject to Title IV of ERISA, (iv) no Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured), with respect to
current or former employees of MECH or any Subsidiary beyond their retirement or
other termination of service, other than (w) coverage mandated by applicable
Law, (x) benefits under a Plan that is a "qualified plan," for purposes of
Section 401(a) of the Code, (y) deferred compensation benefits under a Plan that
are accrued as liabilities on the books of MECH or any Subsidiary, or (z)
benefits the full cost of which is borne by the current or former employee (or
his beneficiary), (v) no liability under Title IV of ERISA has been incurred by
MECH or any Subsidiary that has not been satisfied in full, and no condition
exists that presents a material risk of MECH or any Subsidiary incurring a
material liability thereunder, (vi) no Plan is a "multiemployer pension plan,"
as such term is defined in Section 3(37) of ERISA, (vii) all contributions or
other amounts payable by MECH or any 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, (viii) neither MECH nor any Subsidiary has engaged in a
transaction in connection with which MECH or any Subsidiary could be subject to
either a civil penalty assessed pursuant to Section
13
409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976 of the
Code, (ix) to the knowledge of MECH, there are no pending, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against any of the Plans or any trusts related thereto, and (x) all Plans could
be terminated as of the Effective Time without any liability materially in
excess of the amounts accrued with respect to such Plans on the financial
statements referenced in Section 3.2 hereof and, for the purposes of Section
7.2(a) hereof, on the financial statements referred to in Section 6.8 hereof,
(xi) no Plan, program, agreement or other arrangement, either individually or
collectively, provides for any payment by MECH or any 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, (xii)
no Plan is subject to the minimum funding requirements of Section 302 of ERISA
or Section 412 of the Code.
3.12 Certain Contracts.
(a) Except as set forth at Section 3.12 of the MECH Disclosure
Schedule, neither MECH nor any Subsidiary 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
Xxxxxxx, MECH, MS Bank, Xxxxxxx Bank or any of their respective Subsidiaries to
any director, officer or employee of MECH or any Subsidiary, (iii) which
materially restricts the conduct of any line of business by MECH or any
Subsidiary, (iv) with or to a labor union or guild (including any collective
bargaining agreement) or (v) 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 (including as to this clause (v), any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan). Except
as set forth at Section 3.12 of the MECH Disclosure Schedule, there are no
employment, consulting and deferred compensation agreements to which MECH or any
of its Subsidiaries is a party. Section 3.12 of the MECH Disclosure Schedule
sets forth a list of all material contracts (as defined in Item 601(b)(10) of
Regulation S-K) of MECH and each of its Subsidiaries. Each contract,
arrangement or commitment of the type described in this Section 3.12(a), whether
or not set forth in Section 3.12 of the MECH Disclosure Schedule, is referred to
herein as a "MECH Contract," and neither MECH nor any Subsidiary has received
notice of, any violation of any MECH Contract by MECH.
(b) (i) Each MECH Contract is valid and binding and in full force
and effect, (ii) MECH and its Subsidiaries has in all material respects
performed all obligations required to be performed by it to date under each MECH
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 MECH or any Subsidiary under any such MECH Contract.
3.13 Agreements with Governmental Agencies.
Neither of MECH nor any Subsidiary is subject to any cease-and-desist or
other order issued by, or is a party to any written agreement, consent agreement
or memorandum of understanding with, or has adopted any board resolutions at the
request of (each, whether or not set forth on Section 3.13 of the MECH
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
MECH or any Subsidiary been advised by any Governmental Entity that it is
considering issuing or requesting any Regulatory Agreement.
14
3.14 State Takeover Laws; Certificate of Incorporation.
The Board of Directors of MECH has approved the offer of Xxxxxxx to enter
into this Agreement, the Bank Merger Agreement and the Option Agreement, and has
approved MECH entering into this Agreement, the Bank Merger Agreement and the
Option Agreement, and the transactions contemplated thereby, such that under
applicable law and MECH's Certificate of Incorporation the only vote of MECH
shareholders necessary to consummate the transactions contemplated hereby
(including the Bank Merger and issuance under the Option Agreement) is the
approval of a majority of all votes entitled to be cast by the holders of the
outstanding shares of MECH Common Stock.
3.15 Environmental Matters.
(a) Each of MECH and each of its Subsidiaries is in compliance in all
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, except for such matters as would
not individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect on MECH or any of its Subsidiaries or materially impair their
ability to consummate the transactions contemplated by this Agreement.
(b) There is no suit, claim, action, proceeding, investigation or
notice pending, or to the knowledge of MECH or any of its Subsidiaries,
threatened, in which MECH or any of its Subsidiaries has been or, with respect
to threatened suits, claims, actions, proceedings, investigations or notices, is
threatened to be, named as a defendant or, to the knowledge of MECH or any of
its Subsidiaries, threatened with respect to past or present actions or events
that could form the basis of any such suit, claim, action, proceeding,
investigation or notice (x) for alleged noncompliance (including by any
predecessor), with any environmental law, rule or regulation or (y) relating to
any release or threatened release into the environment of any Hazardous
Material, whether or not occurring at or on a site owned, leased or operated by
MECH or any Subsidiary, except for such matters as would not individually or in
the aggregate, be reasonably expected to have a Material Adverse Effect on MECH
or any Subsidiary or materially impair their ability to consummate the
transactions contemplated by this Agreement;
(c) To the knowledge of MECH or any Subsidiary, during the period of
MECH's or any Subsidiary's ownership or operation of any of its properties,
there has not been any release of Hazardous Material in, on, under or affecting
any such property.
(d) To the knowledge of MECH and any of its Subsidiaries, neither
MECH nor any of its Subsidiaries 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 noncompliance as
to any property securing such loan with any environmental law, rule or
regulation, or (ii) the release or the threatened release into the environment
of any Hazardous Material at a site owned, leased or operated by such person on
any property securing such loan.
(e) For purposes of this Section 3.15, the term "Hazardous Material"
means any hazardous waste, petroleum product, polychlorinated biphenyl,
chemical, pollutant, contaminant, pesticide, radioactive substance, or other
toxic material, or other material or substance (in each such case, other than
small quantities of such substances in retail containers) regulated under any
applicable environmental or public health statute, law, ordinance, rule or
regulation.
15
(f) Except as set forth at Section 3.15 of the MECH Disclosure
Schedule, no real property owned or leased by MECH or any of its Subsidiaries as
other real estate owned ("OREO") or otherwise, or owned or controlled by MECH or
any Subsidiary as a trustee or fiduciary meets the statutory criteria of an
"Establishment" as that term is defined pursuant to Section 22a-134(3) of the
General Statutes of Connecticut.
3.16 Reserves for Losses.
All reserves or other allowances for possible losses reflected in MECH's
most recent financial statements referred to in Section 3.6 complied with all
Laws and are adequate under GAAP. Neither of MECH or MS Bank has been notified
by the FRB, the FDIC, the Connecticut Commissioner or MECH's independent
auditor, in writing or otherwise, that such reserves are inadequate or that the
practices and policies of MECH or MS 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 FRB, the FDIC, the
Connecticut Commissioner or MECH's independent auditor believes such reserves to
be inadequate or inconsistent with the historical loss experience of MECH or MS
Bank. MECH has previously furnished Xxxxxxx with a complete list of all
extensions of credit and OREO that have been classified by any bank or trust
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. MECH agrees to update such
list no less frequently than monthly after the date of this Agreement until the
earlier of the Closing Date or the date that this Agreement is terminated in
accordance with Section 8.1. All OREO held by MECH or MS 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 MECH Disclosure Schedule lists as of the date of this
Agreement (i) all real property owned by MECH and any Subsidiary; (ii) each real
property lease, sublease or installment purchase arrangement to which MECH or
any Subsidiary is a party; (iii) a description of each contract for the
purchase, sale, or development of real estate to which MECH or any Subsidiary is
a party; and (iv) all items of MECH's or any 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 MECH's
consolidated financial statements as of December 31, 1998 referred to in Section
3.6 hereof, (b) exceptions to title that do not interfere materially with MECH's
or any Subsidiary's use and enjoyment of owned or leased real property (other
than OREO), (c) liens for current real estate taxes not yet delinquent, or being
contested in good faith, properly reserved against (and reflected on the
financial statements referred to in Section 3.6 above), (d) properties and
assets sold or transferred in the ordinary course of business consistent with
past practices since December 31, 1998, and (e) items listed in Section 3.17 of
the MECH Disclosure Schedule, MECH and its Subsidiaries have good and, as to
owned real property, marketable and insurable, title to all their properties and
assets, free and clear of all liens, claims, charges and other encumbrances.
MECH and its Subsidiaries, as lessees, have the right under valid and subsisting
leases to occupy, use and possess all property leased by them, and neither MECH
nor any Subsidiary has experienced any material uninsured damage or destruction
with respect to such properties since December 31, 1998. All properties and
assets used by MECH and any of its Subsidiaries are in good operating condition
and repair suitable for the purposes for which they are currently utilized and
comply in all material respects with all Laws relating thereto now in effect or
scheduled to come into effect. MECH and its Subsidiaries 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 MECH or its Subsidiaries are a
party are valid and binding obligations in accordance with the terms thereof.
Neither MECH nor any Subsidiary is in default with respect to any such lease,
and there has occurred no default by MECH or any Subsidiary 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
16
impediments which interfere with the intended use by MECH or any Subsidiary of
any of the property owned, leased, or occupied by them.
3.18 Insurance.
Section 3.18 of the MECH Disclosure Schedule contains a true, correct and
complete list of all insurance policies and bonds maintained by MECH and its
Subsidiaries, including the name of the insurer, the policy number, the type of
policy and any applicable deductibles, and all such insurance policies and bonds
(or other insurance policies and bonds that have, from time to time, in respect
of the nature of the risks insured against and amount of coverage provided, been
substantially similar in kind and amount to that customarily carried by parties
similarly situated who own properties and engage in businesses substantially
similar to that of MECH and its Subsidiaries, as the case may be) are in full
force and effect and have been in full force and effect. As of the date hereof,
neither MECH nor any Subsidiary has received any notice of cancellation or
amendment of any such policy or bond or is in default under any such policy or
bond, no coverage thereunder is being disputed and all material claims
thereunder have been filed in a timely fashion. The existing insurance carried
by MECH and it 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 MECH and its Subsidiaries, as the case may be, and is sufficient for
compliance by MECH and its Subsidiaries with all requirements of Law and
agreements to which MECH or its Subsidiaries is subject or is party. True,
correct and complete copies of all such policies and bonds reflected at Section
3.18 of the MECH Disclosure Schedule, as in effect on the date hereof, have been
delivered to Xxxxxxx.
3.19 Mechanics Investment Services, Inc.
MIS is a wholly owned subsidiary of MS Bank, and is a corporation duly
organized and validly existing under the laws of the State of Connecticut. MIS
has the full corporate power and authority to own and operate its properties and
assets, and to carry on its business as currently conducted and is duly licensed
or qualified to do business in each jurisdiction in which the nature of its
business conducted by it or the character or location of any properties or
assets owned or leased by it makes such licensing or qualification necessary.
MIS is a licensed broker/dealer with the NASD and in all states where the nature
of its operations requires it to be so licensed, and is registered with the SEC
as an investment advisor under the Investment Advisors Act of 1940, as amended.
MIS has complied in all material respects with all applicable federal, state,
local, self-regulatory and foreign laws, statutes, ordinances, rules and
regulations, and is not in violation in any material respect of, and has not
received any notices of violation with respect to, its respective certificate or
articles of incorporation or bylaws or other charter or organizational
documents, or any federal, state, local, self-regulatory or foreign statute,
law, ordinance, rule or regulation applicable to the conduct of its business or
the ownership or operation of its business.
3.20 Compliance with Applicable Laws.
Each of MECH, MS Bank and their Subsidiaries has complied with all laws
applicable to it or to the operation of its business. Neither MECH nor any
Subsidiary has received any notice of any material alleged or threatened claim,
violation, or liability under any such Laws that has not heretofore been cured
and for which there is no remaining liability.
3.21 Loans.
As of the date hereof:
17
(a) All loans owned by MECH, MS Bank or MMC, or in which MECH, MS
Bank or MMC has an interest, comply 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 MECH, MS Bank or MMC , or in which MECH, MS
Bank or MMC has an interest, have been made or acquired in accordance with board
of director-approved loan policies and all of such loans are collectible, except
to the extent reserves have been made against such loans in MECH's consolidated
financial statements at September 30, 1999 referred to in Section 3.6 hereof.
Each of MECH, MS Bank and MMC 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 MECH, MS Bank and MMC are with full recourse to the borrowers
(except as set forth at Section 3.21 of the MECH Disclosure Schedule), and each
of MECH, MS Bank and MMC 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. 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 3.21 of the MECH Disclosure Schedule,
all loans purchased or originated by MECH, MS Bank or MMC and subsequently sold
by MECH, MS Bank or MMC have been sold without recourse to MECH, MS Bank or MMC
and without any liability under any yield maintenance or similar obligation.
True, correct and complete copies of loan delinquency reports as of each of
October 31 and November 30, 1999 prepared by MECH, MS Bank and MMC which reports
include all loans delinquent or otherwise in default, have been furnished to
Xxxxxxx. True, correct and complete copies of the currently effective lending
policies and practices of MECH, MS Bank and MMC also have been furnished to
Xxxxxxx.
(c) Except as set forth at Section 3.21(c) of the MECH Disclosure
Schedule each outstanding loan participation sold by MECH, MS Bank or MMC was
sold with the risk of non-payment of all or any portion of that underlying loan
to be shared by each participant (including MECH, MS Bank or MMC)
proportionately to the share of such loan represented by such participation
without any recourse of such other lender or participant to MECH, MS Bank or MMC
for payment or repurchase of the amount of such loan represented by the
participation or liability under any yield maintenance or similar obligation.
MECH, MS Bank and MMC 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) MECH, MS Bank and MMC 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.
(e) Section 3.21(e) of the MECH Disclosure Schedule sets forth a list
of all loans or other extensions of credit to all directors, officers and
employees, or any other person covered by Regulation O of the FRB.
3.22 Affiliates.
Each director, executive officer and other person who is an "affiliate"
(for purposes of Rule 145 under the Securities Act of 1933, as amended (the
"Securities Act"), and for purposes of
18
qualifying the Merger for "pooling-of-interests" accounting treatment) of MECH
is listed at Section 3.22 of the MECH Disclosure Schedule, and each such person
has delivered to Xxxxxxx, concurrently with the execution of this Agreement, a
stockholder agreement in the form of Exhibit D hereto (the "MECH Stockholder
Agreement"). The MECH Stockholder Agreement has been duly and validly executed
and delivered by each person that is a party thereto and, assuming due
authorization, execution and delivery by Xxxxxxx, constitutes the valid and
binding obligation of such person, enforceable against such person in accordance
with their terms, except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
3.23 Ownership of Xxxxxxx Common Stock.
Except as set forth at Section 3.23 of the MECH Disclosure Schedule,
neither MECH nor any of its directors, officers, 5% or greater shareholders or
affiliates (as used above in Section 3.22) (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 Xxxxxxx (other than those agreements,
arrangements or understandings specifically contemplated hereby).
3.24 Year 2000 Compliance.
MECH, MS Bank and MIS have taken all reasonable steps necessary to address
the software, accounting and record keeping issues raised in order to be
substantially Year 2000 compliant on or before the end of 1999, and MECH does
not expect the future cost of addressing such issues to be material. None of
MECH, MS Bank or MIS has received a rating of less than satisfactory from any
bank regulatory agency with respect to Year 2000 compliance. MECH, MS Bank and
MIS are in compliance with all guidelines provided by the FDIC and the Federal
Financial Institution's Examination Council regarding Year 2000 issues, except
for such noncompliance as would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect on MECH, MS Bank or MIS,
or materially impair their ability to consummate the transactions contemplated
by this Agreement.
3.25 Intellectual Property.
Neither MECH nor any Subsidiary has any material undisclosed liability with
respect to (i) patents, trademarks, trade names, service marks, copyrights and
any applications therefor, net lists, schematics, technology, know-how, trade
secrets, inventory, ideas, algorithms, processes, computer software programs and
applications (in both source code and object code form), and tangible or
intangible proprietary information or material that are used in the business of
MECH or any Subsidiary or (ii) licenses, sublicenses and other agreements as to
which MECH or any Subsidiary is a party and pursuant to which MECH or any
Subsidiary is authorized to use any third party patents, trademarks or
copyrights, including software which are incorporated in, or form a part of any
MECH or any Subsidiary product.
3.26 MECH Information.
The information relating to MECH and its Subsidiaries to be provided by
MECH to be contained in the Proxy Statement/Prospectus (defined below) and the
Registration Statement (defined below) 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 Proxy Statement/Prospectus (except for the portions thereof
relating solely to Xxxxxxx or any of its Subsidiaries, as to which MECH makes no
representation or warranty) will comply in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
19
3.27 Fairness Opinion.
MECH has received an oral opinion from KBW to be confirmed in writing to
the effect that, in its opinion, the consideration to be paid by Xxxxxxx to
stockholders of MECH pursuant to this Agreement is fair to such holders of MECH
Common Stock from a financial point of view ("Fairness Opinion") and KBW has
consented to the inclusion of the written Fairness Opinion in the Registration
Statement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXXXX
Xxxxxxx hereby makes the following representations and warranties to MECH
as set forth in this Article IV, each of which is being relied upon by MECH as a
material inducement to enter into and perform this Agreement.
4.1 Corporate Organization.
(a) Xxxxxxx is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Xxxxxxx 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 or
assets owned or leased by it makes such licensing or qualification necessary.
Xxxxxxx is duly registered as a savings and loan holding company with the OTS
under the HOLA. The Certificate of Incorporation and Bylaws of Xxxxxxx, copies
of which have previously been made available to MECH, are true, correct and
complete copies of such documents as in effect as of the date of this Agreement.
(b) Xxxxxxx 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.
Xxxxxxx Bank has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties or assets owned or leased by it makes such licensing or qualification
necessary. The Charter and Bylaws of Xxxxxxx Bank, copies of which have
previously been made available to MECH, 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 Xxxxxxx consists of 200 million
shares of Xxxxxxx Common Stock, of which 37,944,859 shares were issued (net of
408,565 shares held in the treasury) at November 30, 1999 and 3,000,000 shares
of serial preferred stock, par value $.01 per share ("Xxxxxxx Preferred Stock"),
14,000 of which are designated as Series C Preferred Stock, none of which were
outstanding at November 30, 1999. At such date, there were options outstanding
to purchase 2,222,909 shares of Xxxxxxx Common Stock. All of the issued and
outstanding shares of Xxxxxxx 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, and upon issuance in
accordance with the terms hereof, the Shares will be duly authorized and validly
issued, and fully paid, nonassessable and free of preemptive rights. As of the
date of this Agreement, except as set forth above, Xxxxxxx 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 Xxxxxxx Common Stock or Xxxxxxx Preferred Stock or any other
equity of Xxxxxxx or any securities representing the right to
20
purchase or otherwise receive any shares of Xxxxxxx Common Stock or Xxxxxxx
Preferred Stock, other than pursuant to the Xxxxxxx Rights Agreement.
(b) All of the outstanding shares of Xxxxxxx Bank Common Stock are
owned by Xxxxxxx 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) Xxxxxxx has full corporate power and corporate 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 Xxxxxxx. No other corporate proceedings on the part of Xxxxxxx
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 Xxxxxxx
and (assuming due authorization, execution and delivery by MECH) will constitute
valid and binding obligations of Xxxxxxx, enforceable against Xxxxxxx in
accordance with their terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar law affecting creditors' rights and
remedies generally.
(b) Xxxxxxx Bank has full corporate power and corporate authority to
execute and deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby have been duly and
validly approved by the Board of Directors of Xxxxxxx Bank and by Xxxxxxx as the
sole shareholder of Xxxxxxx Bank. All corporate proceedings on the part of
Xxxxxxx 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 Xxxxxxx Bank, will be duly and validly executed and
delivered by Xxxxxxx Bank and (assuming due authorization, execution and
delivery by MS Bank) will constitute a valid and binding obligation of Xxxxxxx
Bank, enforceable against Xxxxxxx 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 Xxxxxxx or the Bank Merger Agreement by Xxxxxxx Bank, nor
the consummation by Xxxxxxx or Xxxxxxx Bank, as the case may be, of the
transactions contemplated hereby or thereby, nor compliance by Xxxxxxx or
Xxxxxxx Bank with any of the terms or provisions hereof or thereof, will (i)
violate any provision of the Certificate of Incorporation or Bylaws of Xxxxxxx
or the Charter or Bylaws of Xxxxxxx Bank, as the case may be, or (ii) assuming
that the consents and approvals referred to in Section 4.4(a) hereof are duly
obtained, (x) violate any Laws applicable to Webster, Webster Bank or any of
their respective properties or assets, or (y) violate, conflict with, result in
a breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the 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 Xxxxxxx or
Xxxxxxx 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 Xxxxxxx or Xxxxxxx Bank is a party, or by
which they or any of their respective properties or assets may be bound or
affected, except in the case of clause (ii) for such matters as would not,
individually or in the
21
aggregate, be reasonably expected to have a Material Adverse Effect on Xxxxxxx
or Xxxxxxx Bank or materially impair their ability to consummate the
transactions contemplated by the Agreement.
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 FRB and the OTS and
approval of such applications and notices, (ii) the filing of any required
applications or notices with the FDIC and the OTS as to any subsidiary
activities of MS Bank which becomes a service corporation or operating
subsidiary of Xxxxxxx Bank and approval of such applications and notices, (iii)
the State Banking Approvals, (iv) the filing with the Connecticut Commissioner
of an acquisition statement pursuant to Section 36a-184 of the Connecticut
Banking Law prior to the acquisition of more than 10% of the MECH Common Stock
pursuant to the Option Agreement, if not exempt, (v) the filing with the SEC of
a registration statement on Form S-4 to register the shares of Xxxxxxx Common
Stock to be issued in connection with the Merger (including the shares of
Xxxxxxx Common Stock that may be issued upon the exercise of the options
referred to in Section 1.5 hereof), which will include the Proxy
Statement/Prospectus, (vi) the filing of the Certificate of Merger with the
Secretary of State of Connecticut pursuant to the Connecticut Corporation Law,
(vii) the filing of the Certificate of Merger with the Secretary of State of
Delaware pursuant to the DGCL, (viii) the filing of the Bank Merger Agreement
with the OTS and the Secretary of State of Connecticut, and (ix) the filings of
the required applications and notices to the NASD, Inc. regarding the change of
control of MIS, (x) 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 Xxxxxxx Common Stock pursuant to this Agreement, or
(xi) any necessary filing, authorization, approvals or consents of third
parties, no consents or approvals of or filings or registrations with any
Governmental Entity or with any third party are necessary in connection with (1)
the execution and delivery by Xxxxxxx of this Agreement and the Option
Agreement, (2) the consummation by Xxxxxxx of the Merger and the other
transactions contemplated hereby, (3) the execution and delivery by Xxxxxxx Bank
of the Bank Merger Agreement, and (4) the consummation by Xxxxxxx 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 MECH to consummate the transactions
contemplated thereby.
(b) Xxxxxxx hereby represents to MECH that it has no knowledge of any
reason why approval or effectiveness of any of the applications, notices or
filings referred to in Section 4.4(a) cannot be obtained or granted on a timely
basis.
4.5 Financial Statements; Exchange Act Filings; Books and Records.
Xxxxxxx has previously delivered to MECH true, correct and complete copies
of the consolidated balance sheets of Xxxxxxx and its Subsidiaries as of
December 31 for the fiscal years 1997 and 1998 and the related consolidated
statements of income, changes in shareholders' equity and cash flows for the
fiscal years 1996 through 1998, inclusive, as reported in Xxxxxxx'x Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 filed with the
SEC under the Exchange Act, in each case accompanied by the audit report of KPMG
LLP, independent public accountants with respect to Xxxxxxx, and the interim
financial statements of Xxxxxxx as of and for the three months ended September
30, 1998 and 1999, as included in Xxxxxxx'x quarterly report on Form 10-Q for
the period ended September 30, 1999, as filed with the SEC. The financial
statements referred to in this Section 4.5 (including the related notes, where
applicable) fairly present, and the financial statements referred to in Section
6.8 hereof will fairly present (subject, in the case of the unaudited
statements, to recurring audit adjustments normal in nature and amount), the
results of the consolidated operations and consolidated financial condition of
Xxxxxxx 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
22
applicable) comply, and the financial statements referred to in Section 6.8
hereof will comply, in all material respects, 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-X. Xxxxxxx'x Annual Report on Form
10-K for the fiscal year ended December 31, 1998 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 Xxxxxxx has previously delivered or made available to MECH
true, correct and complete copies of such reports. The books and records of
Xxxxxxx and Xxxxxxx 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 Agreements with Governmental Agencies.
Neither Xxxxxxx nor any of its affiliates is subject to any cease-and-
desist or other order issued by, or is a party to any written agreement, consent
agreement or memorandum of understanding with, or has adopted any board
resolutions at the request of any Governmental Entity that restricts the conduct
of its business or that in any manner relates to its capital adequacy, its
credit policies, its management or its business, nor has Xxxxxxx, nor Xxxxxxx
Bank been advised by any Governmental Entity that it is considering issuing or
requesting any Regulatory Agreement.
4.7 Legal Proceedings.
(a) Neither Xxxxxxx nor any of its Subsidiaries is a party to any, and
there are no pending or, to Xxxxxxx'x knowledge, threatened, legal,
administrative, arbitration or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against Xxxxxxx or any
of its Subsidiaries in which, to Xxxxxxx'x knowledge, there is a reasonable
probability of any material recovery against or other material effect upon
Xxxxxxx 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, decree, or regulatory
restriction imposed upon Xxxxxxx, any of its Subsidiaries or the assets of
Xxxxxxx or any of its Subsidiaries.
4.8 Xxxxxxx Information.
The information relating to Xxxxxxx and its Subsidiaries to be provided by
Xxxxxxx to be contained in the 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 Proxy
Statement/Prospectus (except for the portions thereof relating solely to MECH or
any Subsidiary of MECH, as to which Xxxxxxx makes no representation or warranty)
will comply in all material respects with the provisions of the Securities Act,
Exchange Act and the rules and regulations thereunder.
4.9 Absence of Certain Changes or Events.
(a) Except as disclosed in Xxxxxxx'x Annual Report on Form 10-K for
the fiscal year ended December 31, 1998 and all reports subsequently filed by
Xxxxxxx under Sections 13(a), 13(e), 14 or 15(d) of the Exchange Act, true,
correct and complete copies of which have
23
previously been delivered or made available to MECH, since December 31, 1998, no
event has occurred which has had, individually or in the aggregate, a Material
Adverse Effect on Xxxxxxx.
(b) Since December 31, 1998, Xxxxxxx and its Subsidiaries have
carried on their respective businesses in the ordinary and usual course
consistent with their past practices.
4.10 Compliance with Applicable Laws.
Xxxxxxx and each Xxxxxxx Subsidiary has complied in all material respects
with all Laws applicable to it or to the operation of its business. Neither
Xxxxxxx nor any Xxxxxxx Subsidiary has received any notice of any alleged or
threatened claim, violation of or liability or potential responsibility under
any such Laws that has not heretofore been cured and for which there is no
remaining liability.
4.11 Tax and Accounting Treatment of Merger.
As of the date of this Agreement, Xxxxxxx is not aware of any fact or state
of affairs that could cause the Merger not to be treated as a "reorganization"
under Section 368(a) of the Code or to qualify for "pooling-of-interests"
accounting treatment.
4.12 Year 2000.
None of Xxxxxxx or any Xxxxxxx Subsidiary has received, or reasonably
expects to receive, a "Year 2000 Deficiency Notification Letter." Xxxxxxx has
made available to MECH a complete and accurate copy of Xxxxxxx'x plan, including
an estimate of the anticipated associated costs, for addressing Year 2000
Issues. Between the date of this Agreement and the Effective Time, Xxxxxxx
shall use reasonably best efforts to implement such plan. Xxxxxxx and its
Subsidiaries have complied in all material respects with the "Interagency
Guidelines Establishing Year 2000 Standards for Safety and Soundness" issued
pursuant to section 39 of the Federal Deposit Insurance Act and effective
October 15, 1998.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of MECH
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 Xxxxxxx, MECH and MS Bank shall carry on their respective
businesses in the ordinary course consistent with past practices and consistent
with prudent banking practices. MECH will use its reasonable efforts to (x)
preserve its business organization and that of its Subsidiary intact, (y) keep
available to itself and Xxxxxxx the present services of the employees of MECH
and its Subsidiary and (z) preserve for itself and Xxxxxxx the goodwill of the
customers of MECH and its Subsidiary and others with whom business relationships
exist. Without limiting the generality of the foregoing, and except as set
forth in the MECH Disclosure Schedule or as otherwise contemplated by this
Agreement or consented to by Xxxxxxx in writing, MECH shall not, and shall not
permit its 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 MECH not to exceed $.20 per share on the MECH Common
Stock with declaration, record and payment dates corresponding to the quarterly
dividends paid by MECH during its fiscal year ended December 31, 1998 and except
that its Subsidiary may declare and pay dividends and distributions to MECH);
provided, however, that under no circumstances shall MECH declare, set
24
aside or pay any dividends if it would result in the holders of MECH Common
Stock receiving more than four cash dividend payments in fiscal 1999 and 2000,
when considered with anticipated Xxxxxxx dividends based on past practice, nor
shall MECH be prohibited from declaring, setting aside or paying dividends
consistent herewith if the Closing Date is such that holders of MECH Common
Stock would receive fewer than four cash dividends in fiscal 1999 and 2000, when
considered with anticipated Xxxxxxx dividends based on past practice it being
understood that the parties hereto intend for MECH to pay its regular quarterly
cash dividends to shareholders as to any completed fiscal quarter prior to the
Effective Time; and provided that MECH is permitted to increase its regular
quarterly cash dividend proportionate to any increase by Xxxxxxx in its regular
quarterly cash dividend payment;
(b) (i) split, combine or reclassify any shares of its capital stock
or issue, authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock except upon
the exercise or fulfillment of rights or options issued or existing pursuant to
the MECH Stock Plans in accordance with their present terms, all to the extent
outstanding and in existence on the date of this Agreement, and except pursuant
to the Option Agreement, or (ii) repurchase, redeem or otherwise acquire (except
for the acquisition of Trust Account Shares and DPC Shares, as such terms are
defined in Section 1.4(c) hereof), any shares of the capital stock of MECH or
its Subsidiary, or any securities convertible into or exercisable for any shares
of the capital stock of MECH or its 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 MECH Common Stock pursuant to stock
options or similar rights to acquire MECH Common Stock granted pursuant to the
MECH 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 Certificate of Incorporation, Bylaws or other similar
governing documents;
(e) authorize or permit any of its officers, directors, employees or
agents to, directly or indirectly, (i) solicit, initiate or encourage any
inquiries relating to, or the making of any proposal from, (ii) engage in
substantive discussions or negotiations with or (iii) provide any information
to, any person, entity or group (other than Xxxxxxx) concerning any Acquisition
Transaction (as defined below). Notwithstanding the foregoing, MECH may provide
information in connection with a possible Acquisition Transaction if the Board
of Directors of MECH, following receipt of advice of counsel, determined that
not to provide such information or participate in such negotiations and
discussions could cause the members of such Board to breach their fiduciary
duties under applicable laws. MECH shall promptly communicate to Xxxxxxx the
material terms of any proposal, whether written or oral, which it may receive in
respect of any such Acquisition Transaction and whether it is providing
information in connection with, or which may lead to, an Acquisition Transaction
with a third party. MECH will promptly cease and cause to be terminated any
existing activities, discussions or negotiations previously conducted with any
parties other than Xxxxxxx 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, (II)
merger, consolidation or other business combination involving MECH or any
Subsidiary, or (III) the acquisition in any manner of a substantial equity
interest in, or a substantial portion of the assets and/or liabilities, out of
the ordinary course of business, of, MECH or MS 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;
25
(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, the Bank Merger Agreement or the Option Agreement, except, in every
case, as may be required by applicable law;
(j) change its methods of accounting in effect at December 31, 1998
except as required by changes in GAAP or regulatory accounting principles as
concurred to by Xxxxxxx'x independent auditors;
(k) (i) except as required by applicable law or Section 5.5 of this
Agreement or to maintain qualification pursuant to the Code, adopt, amend, renew
or terminate any Plan or any other agreement, arrangement, plan or policy
between MECH or its Subsidiaries and one or more of its current or former
directors, officers, employees or independent contractors; (ii) other than merit
or promotional increases (x) in the ordinary course of business consistent with
past practices, (y) not to exceed 4% of base pay for individuals who are senior
vice presidents or higher and (z) not to exceed 4% of the aggregate MECH payroll
as of the date hereof, 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 any
contract, agreement, commitment or arrangement providing for the payment to any
director, officer or employee of compensation or benefits, (iv) hire any new
employee at an annual compensation in excess of $35,000, (vi) pay expenses of
any employees or directors for attending conventions or similar meetings which
conventions or meetings are held after the date hereof, (vi) promote to a rank
of vice president or more senior any employee, or (vii) pay any retention
payments to any employees except for retention payments bonuses totaling in the
aggregate no more than $150,000; or (viii) make any nondeductible contribution
to any Plan. Bonus, commission and other incentive payments may continue to be
made in the ordinary course in accordance with past practices to the extent such
payments do not jeopardize the pooling-of-interest accounting treatment for the
Merger;
(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, except for Federal Home
Loan Bank borrowings in the ordinary course consistent with past practices or to
provide for cash needed which results from a Year 2000 extraordinary event;
(m) 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;
(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;
26
(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 MECH or its Subsidiary;
(p) make any investment, or incur deposit liabilities, other than in
the ordinary course of business consistent with past practices, including
deposit pricing, and which would not change the risk profile of MS Bank based on
its existing deposit and lending policies or make any equity investments;
(q) purchase any loans, except in the ordinary course in accordance
with past practices, 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
lending policies of MS Bank, (ii) residential non-conforming mortgage loans in
excess of $400,000, (iii) unsecured consumer loans in excess of $25,000, (iv)
commercial business loans in excess of $1,000,000 as to any loan or $1,500,000
in the aggregate as to related loans, or loans to related persons, (v)
commercial real estate first mortgage loans in excess of $1,000,000 as to any
loan or $1,500,000 in the aggregate as to related loans, or loans to related
persons, or (vi) 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 loans for which written
applications have been received by MS Bank as of the date hereof, as set forth
at Section 5.1 of the MECH Disclosure Schedule;
(s) make any investments in any equity or derivative securities, or
any debt securities issued or guaranteed by any municipality or otherwise exempt
to any extent from federal, state or local taxation, 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
(u) agree or commit to do any of the actions set forth in (a) - (t)
above.
The consent of Xxxxxxx to any action by MECH or its Subsidiary that is not
permitted by any of the preceding paragraphs shall be evidenced by a writing
signed by the Chairman or any Executive Vice President of Xxxxxxx.
5.2 Covenants of Xxxxxxx.
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 MECH's prior written consent, Xxxxxxx shall not, and shall not permit
Xxxxxxx Bank to:
(a) take any action that will result in any of Xxxxxxx'x
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 violation of any provision of this 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 Xxxxxxx to obtain the Requisite Regulatory
Approvals or otherwise materially adversely affect Xxxxxxx'x and Xxxxxxx Bank's
ability to consummate the transactions contemplated by this Agreement.
27
5.3 Merger Covenants.
Notwithstanding that MECH believes that it has established all reserves and
taken all provisions for possible loan losses required by GAAP and applicable
laws, rules and regulations, MECH recognizes that Xxxxxxx 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, MECH and
Xxxxxxx 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, based upon such consultation, MECH's loan, accrual and reserve
policies to those policies of Xxxxxxx to the extent appropriate and consistent
with the fiduciary duties of MECH's Board of Directors.
5.4 Compliance with Antitrust Laws.
Each of Xxxxxxx and MECH shall use commercially reasonable efforts to
resolve objections, if any, which may be asserted with respect to the Merger
under antitrust laws. In the event a suit is threatened or instituted
challenging the Merger as violative of antitrust laws, each of Xxxxxxx and MECH
shall use commercially reasonable best efforts to avoid the filing of, or resist
or resolve such suit. Xxxxxxx and MECH shall use commercially reasonable
efforts to take such action as may be required: (a) by the OTS, the Connecticut
Commissioner, and the Antitrust Division of the Department of Justice or the
Federal Trade Commission in order to resolve such objections as any of them may
have to the Merger under antitrust laws, or (b) by any federal or state court of
the United States, in any suit brought by a private party or Governmental Entity
challenging the Merger as violative of antitrust laws, in order to avoid the
entry of, or to effect the dissolution of, any injunction, temporary restraining
order, or other order which has the effect of preventing the consummation of the
Merger. Commercially reasonable efforts shall not include, among other things
and only to the extent Xxxxxxx so desires, the willingness of Xxxxxxx to accept
an order agreeing to the divestiture, or the holding separate, of any assets of
Xxxxxxx or MECH.
5.5 Qualified Plans.
MECH and its Subsidiary may terminate any of their respective plans that
are intended to be "qualified" under Code section 401 to the extent that such
termination would not jeopardize the pooling-of-interest accounting treatment in
connection with the Merger or the "qualified" status of the applicable plan. If
any of the plans are not terminated, prorata proportional accruals may be made
to the account of each participant in such plan at the Effective Time, in
accordance with the provisions of the plan and in accordance with past practice
and in the same proportion as the percentage of a year that has passed as of the
Effective Time bears to the full year. For example, if the Effective Time is
July 1, 2000, 183 days will have passed, including the day of the Effective Time
as a day that has passed, representing 50% of the days in the year 2000.
Accordingly, an accrual of 50% of the aggregate annual accrual for the
applicable plan may be made at the Effective Time. Nevertheless, no such
accruals shall be made to the extent any such accrual jeopardizes the pooling-
of-interest accounting treatment of the Merger or the qualified status of the
applicable plan.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters.
(a) Upon the execution and delivery of this Agreement and availability
of Xxxxxxx financial statements in form required for use on Form S-4, Xxxxxxx
and MECH (as to information to be included therein pertaining to MECH) shall
promptly cause to be prepared and
28
filed with the SEC a registration statement of Xxxxxxx on Form S-4, including
the Proxy Statement/Prospectus (the "Registration Statement") for the purpose of
registering the Xxxxxxx Common Stock to be issued in the Merger, and for
soliciting the approval of this Agreement and the Merger by the shareholders of
MECH. Xxxxxxx and MECH shall use their reasonable best efforts to have the
Registration Statement declared effective by the SEC as soon as possible after
the filing. 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 MECH is
discovered by MECH which should be set forth in an amendment of, or a supplement
to, the Registration Statement, including the Prospectus/Proxy Statement, MECH
shall promptly inform Xxxxxxx, and shall furnish Xxxxxxx with all necessary
information relating to such event whereupon Xxxxxxx shall promptly cause an
appropriate amendment to the Registration Statement to be filed with the SEC.
Upon the effectiveness of such amendment, each of Xxxxxxx and MECH (if prior to
the meeting of shareholders pursuant to Section 6.3 hereof) will take all
necessary action as promptly as practicable to permit an appropriate amendment
or supplement to be transmitted to its shareholders entitled to vote at such
meeting. If at any time after the Registration Statement is filed with the SEC,
and prior to the Closing Date, any event relating to Xxxxxxx is discovered by
Xxxxxxx which should be set forth in an amendment of, or a supplement to, the
Registration Statement, including the Prospectus/Proxy Statement, Xxxxxxx shall
promptly inform MECH, and Xxxxxxx shall promptly cause an appropriate amendment
to the Registration Statement to be filed with the SEC. Upon the effectiveness
of such amendment, each of Xxxxxxx and MECH (if prior to the meeting of
shareholders pursuant to Section 6.3 hereof) will take all necessary action as
promptly as practicable to permit an appropriate amendment or supplement to be
transmitted to its shareholders entitled to vote at such meeting. Xxxxxxx 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 MECH shall
furnish all information concerning MECH and the holders of MECH 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). MECH and Xxxxxxx 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 MECH and MS Bank or Xxxxxxx or Xxxxxxx Bank, 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
contemplation of the transactions contemplated herein.
(c) MECH shall, upon request, furnish Xxxxxxx with all information
concerning MECH, MS Bank and their directors, officers and shareholders and such
other matters as may be reasonably necessary or advisable in connection with the
Registration Statement or any other statement, filing, notice or application
made by or on behalf of Xxxxxxx to
29
any Governmental Entity in connection with the Merger, the Bank Merger or the
other transactions contemplated by this Agreement.
(d) Xxxxxxx and MECH 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 (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, MECH shall accord to the officers, employees,
accountants, counsel and other representatives of Xxxxxxx, access, during normal
business hours during the period prior to the Effective Time, to all its, and MS
Bank's properties, books, contracts, commitments and records and, during such
period, MECH shall make available to Xxxxxxx (i) a copy of each report,
schedule, registration statement and other document filed or received by it
(including MS 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 MS Bank) business, properties and personnel as Xxxxxxx
may reasonably request. Xxxxxxx shall receive notice of the meetings of the
MECH and MS Bank Board of Directors and any committees thereof, and of any
management committees (in all cases, at least as timely as MECH and MS Bank, as
the case may be, representatives to such meetings are required to be provided
notice). Up to two representatives of Xxxxxxx 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 an Acquisition Transaction or such other matters
deemed confidential ("Confidential Matters") of MECH or MS Bank, as the case may
be) and one representative of Xxxxxxx may attend such meetings of committees of
the Board of Directors and management of MECH and MS Bank which Xxxxxxx desires.
Xxxxxxx will hold all such information in confidence to the extent required by,
and in accordance with, the provisions of the confidentiality agreement which
Xxxxxxx entered into with MECH dated November 5, 1999 (the "Confidentiality
Agreement").
(b) Upon reasonable notice and subject to applicable Laws relating to
the exchange of information, Xxxxxxx shall afford to the officers, employees,
accountants, counsel and other representatives of MECH, access, during normal
business hours during the period prior to the Effective Time, to such
information regarding Xxxxxxx as shall be reasonably necessary for MECH to
fulfill its obligations pursuant to this Agreement or which may be reasonably
necessary for MECH to confirm that the representations and warranties of Xxxxxxx
contained herein are true and correct and that the covenants of Xxxxxxx
contained herein have been performed in all material respects. MECH 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) MECH shall provide Xxxxxxx with true, correct and complete copies
of all financial and other information provided to directors of MECH and MS Bank
in connection with meetings of their Boards of Directors or committees thereof.
(e) MECH acknowledges that Xxxxxxx is in or may be in the process of
acquiring other businesses, banks and financial institutions and that in
connection with such acquisitions, information concerning MECH may be required
to be included in the registration statements, if any, for the sale of
securities of Xxxxxxx or in SEC reports in connection with such acquisitions.
MECH agrees to provide Xxxxxxx with any information, certificates, documents or
30
other materials about MECH as are reasonably necessary to be included in such
other SEC reports or registration statements, including registration statements
which may be filed by Xxxxxxx prior to the Effective Time. MECH shall use its
reasonable best efforts to cause its attorneys and accountants to provide
Xxxxxxx and any underwriters for Xxxxxxx with any consents, comfort letters,
opinion letters, reports or information which are necessary to complete the
registration statements and applications for any such acquisition or issuance of
securities. Xxxxxxx shall reimburse MECH for reasonable expenses thus incurred
by MECH should the transactions contemplated by this Agreement be terminated for
any reason.
6.3 Shareholder Meetings.
(a) MECH shall take all steps necessary to duly call, give notice of,
convene and hold a meeting of its shareholders within 40 days after the
Registration Statement becomes effective for the purpose of voting upon the
approval of this Agreement and the Merger (the "Meeting"). Management and the
Board of Directors of MECH shall recommend to MECH's shareholders approval of
this Agreement, including the Merger, and the transactions contemplated hereby,
together with any matters incident thereto, and shall oppose any third party
proposal or other action that is inconsistent with this Agreement or the
consummation of the transactions contemplated hereby, unless the Board of
Directors of MECH reasonably determines, based upon the written advice of MECH's
legal counsel, that such recommendation or opposition, as the case may be, would
constitute a breach of the exercise of its fiduciary duty. MECH and Xxxxxxx
shall coordinate and cooperate with respect to the foregoing matters.
6.4 Legal Conditions to Merger.
Each of Xxxxxxx and MECH shall use their reasonable best efforts (a) to
take, or cause to be taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements which may be imposed on such party with
respect to the Merger and, subject to the conditions set forth in Article VII
hereof, to consummate the transactions contemplated by this Agreement and (b) to
obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity and any other third party which is required to be obtained by MECH or
Xxxxxxx in connection with the Merger and the other transactions contemplated by
this Agreement.
6.5 Stock Exchange Listing.
Xxxxxxx shall cause the shares of Xxxxxxx 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 System (or such other exchange on
which the Xxxxxxx 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 under the 401(k) Plan maintained by Xxxxxxx or Xxxxxxx
Bank, as applicable and for purposes of eligibility to participate (but not for
purposes of benefit accrual) under the defined benefit pension plan maintained
by Xxxxxxx or Xxxxxxx Bank, as applicable, individuals who are employees of MECH
or MS Bank at the Effective Time will be credited with periods of service with
MECH or MS Bank before the Effective Time as if such service had been with
Xxxxxxx or Xxxxxxx Bank, as applicable; provided, however, that if, after the
Effective Time, Xxxxxxx or Xxxxxxx Bank continues in effect the money purchase
pension plan previously maintained by MECH or MS Bank, Xxxxxxx and Xxxxxxx Bank
shall not be required to cause employees who are covered by such money purchase
pension plan to accrue benefits under such defined benefit pension plan with
respect to any period for which Xxxxxxx or Xxxxxxx Bank makes contributions to
such
31
money purchase pension plan, and nothing in this Section 6.6 shall be construed
to require any duplication of benefits. Similar service credit shall also be
given by Xxxxxxx or Xxxxxxx Bank in determining eligibility to participate in
vacation and welfare plans provided to such employees of MECH or MS Bank after
the Merger. Employees of MECH and MS Bank as of the Effective Time will be
immediately eligible to participate in the comprehensive health and welfare
plans maintained by Xxxxxxx or Xxxxxxx Bank on the same basis that they were
eligible to participate in the corresponding plans at MECH or MS Bank
immediately before the Effective Time and restrictions under such plans relating
to preexisting conditions will be waived for such employees and their covered
dependents.
(b) Following the Effective Time and until such time as Xxxxxxx in its
reasonable discretion and in accordance with applicable law determines that the
employees of MECH as of the Effective Time (the "MECH Employees") shall
participate in the employee benefits plans and programs provided to similarly
situated employees of Xxxxxxx Bank, the benefits to be provided to the MECH
Employees shall be the benefit plans and programs that were provided by MECH to
such employees immediately before the Effective Time.
(c) Following the Merger, Xxxxxxx agrees that it shall honor the
existing written deferred compensation, employment, change of control and
severance contracts or plans with directors and employees of MECH and its
Subsidiaries that are specifically listed at Section 6.6 of the MECH Disclosure
Schedule; provided, however, that in making the foregoing agreement, except as
otherwise required by law, Xxxxxxx will honor such contracts only to the extent
that none of such deferred compensation, employment, change of control and
severance contracts, nor any other Plan, program, agreement or other
arrangement, either individually or collectively, provides for any payment by
MECH or its 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 that is not disclosed in response to Section
3.11 hereof. Xxxxxxx will cause Xxxxxxx Bank to offer employment, with
reasonably comparable positions and compensation, to all non-managerial branch
personnel of MS Bank. Xxxxxxx will post at MS Bank job openings at Xxxxxxx or
Xxxxxxx Bank immediately following the execution of this Agreement and will
"lease" MECH and MS Bank employees where possible prior to the Effective Time.
Xxxxxxx will cause Xxxxxxx Bank to offer to employees of MECH and MS Bank who
are not retained after the Effective Time opportunities for employment with
Xxxxxxx Bank as vacancies occur, subject to the employees' qualifications for
positions that may become available. Xxxxxxx recognizes that MS Bank's senior
officers have valuable knowledge, experience and familiarity with MS Bank's
operations. In order to take advantage of such value, Xxxxxxx will attempt, by
December 17, 1999, in good faith to enter into agreements (which may provide for
a period of noncompetition, consulting or employment following the Effective
Time, in Xxxxxxx'x sole discretion) with the eight senior officers of MECH who
currently have change of control agreements. Employees of MECH or MS Bank as of
the Effective Time who are not retained by Xxxxxxx or Xxxxxxx Bank for a period
of one year after the Effective Time, and who are not otherwise covered by
employment or change in control agreements, will be eligible to receive
severance benefits provided by MECH, MS Bank, Xxxxxxx or Xxxxxxx Bank before the
date hereof whichever provides greater benefits to the employee. A copy of the
MSB Severance Plan is attached hereto as Schedule 6.6(c).
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 MECH (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
MECH or any of their respective predecessors or (ii) this Agreement or any of
the transactions contemplated hereby, whether in
32
any case asserted or arising before or after the Effective Time, the parties
hereto agree to cooperate and defend against and respond thereto to the extent
permitted by applicable law and the Certificate of Incorporation and Bylaws of
MECH. It is understood and agreed that after the Effective Time, Xxxxxxx shall
indemnify and hold harmless, as and to the fullest extent permitted by
applicable law and the Certificate of Incorporation and Bylaws of Xxxxxxx as in
effect on the date hereof (subject to change as required by 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 ("Damages") in connection with any such threatened or actual claim,
action, suit, proceeding or investigation, and in the event of any such
threatened or actual claim, action, suit, proceeding or investigation (whether
asserted or arising before or after the Effective Time), the Indemnified Parties
may retain counsel reasonably satisfactory to Xxxxxxx; provided, however, that
(1) Xxxxxxx shall have the right to assume the defense thereof and upon such
assumption Xxxxxxx 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 Xxxxxxx
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 Xxxxxxx and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to Xxxxxxx, and
Xxxxxxx shall pay the reasonable fees and expenses of such counsel for the
Indemnified Parties, (2) Xxxxxxx shall be obligated pursuant to this paragraph
to pay for only one firm of counsel for each Indemnified Party, (3) Xxxxxxx
shall not be liable for any settlement effected without its prior written
consent (which consent shall not be unreasonably withheld or delayed), and (4)
Xxxxxxx shall not be obligated pursuant to this paragraph to the extent that a
final judgment determines that any Damages are as a result of the gross
negligence or willful misconduct or result from a decision made by the
Indemnified Party when the Indemnified Party had no good faith belief that he or
she was acting in the best interests of MECH. Xxxxxxx shall have no obligation
to advance expenses incurred in connection with a threatened or pending action,
suit or preceding in advance of final disposition of such action, suit or
proceeding, unless (i) Xxxxxxx would be permitted to advance such expenses
pursuant to the DGCL and Xxxxxxx'x Certificate of Incorporation or Bylaws, and
(ii) Xxxxxxx receives an undertaking by the Indemnified Party to repay such
amount if it is determined that such party is not entitled to be indemnified by
Xxxxxxx pursuant to the DGCL and Xxxxxxx'x Certificate of Incorporation or
Bylaws. 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 Xxxxxxx thereof; provided, however, that the failure
to so notify shall not affect the obligations of Xxxxxxx under this Section 6.7
except to the extent such failure to notify materially prejudices Xxxxxxx.
Xxxxxxx'x 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) Xxxxxxx shall purchase for the benefit of the persons serving as
executive officers and directors of MECH immediately prior to the Effective
Time, directors' and officers' liability insurance coverage for three years
after the Effective Time, under either MECH's policy in existence on the date
hereof, or under a policy of similar coverage and amounts containing terms and
conditions which are generally not less advantageous than Xxxxxxx'x current
policy, and in either case, with respect to acts or omissions occurring prior to
the Effective Time which were committed by such executive officers and directors
in their capacity as such ("Tail Insurance"), provided, however, that Xxxxxxx
shall not be required to expend more than 200% of the current amount expended by
MECH to maintain or procure insurance coverage pursuant hereto.
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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, as to
which the time period shall be 90 days), Xxxxxxx will deliver to MECH and MECH
will deliver to Xxxxxxx their respective Quarterly Reports on Form 10-Q and
Annual Reports on Form 10-K, 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
Xxxxxxx'x and MECH's Subsidiaries shall take all such necessary action as may be
reasonably requested by Xxxxxxx.
6.10 Advice of Changes.
Xxxxxxx and MECH shall promptly advise the other party of any change or
event that, individually or in the aggregate, has or would be reasonably likely
to have a Material Adverse Effect on it or to cause or constitute a material
breach of any of its representations, warranties or covenants contained herein.
From time to time prior to the Effective Time, each party will promptly
supplement or amend 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
MECH with the covenants set forth in Section 5.1 hereof.
6.11 Current Information.
During the period from the date of this Agreement to the Effective Time,
MECH will cause one or more of its designated representatives to confer on a
regular and frequent basis (not less than monthly) with representatives of
Xxxxxxx and to report the general status of the ongoing operations of MECH.
MECH will promptly notify Xxxxxxx of any material change in the normal course of
business or in the operation of the properties of MECH 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 MECH, and will keep Xxxxxxx fully informed of such events.
6.12 Execution and Authorization of Bank Merger Agreement.
Prior to the Effective Time, (a) Xxxxxxx and MECH each shall execute and
deliver the Certificate of Merger substantially in the form at Exhibit C, and
(b) Xxxxxxx and MECH each shall cause Xxxxxxx Bank and MS Bank, respectively, to
execute and deliver the Bank Merger Agreement, in substantially the form at
Exhibit A.
6.13 Change in Structure.
Xxxxxxx may elect to modify the structure of the transactions contemplated
by this Agreement as noted herein so long as (i) there are no material adverse
federal income tax
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consequences to the MECH shareholders as a result of such modification, (ii) the
consideration to be paid to the MECH shareholders under this Agreement is not
thereby changed or reduced in kind or amount, and (iii) such modification will
not be reasonably likely to delay materially or jeopardize receipt of any
required regulatory approvals. In the event that Xxxxxxx elects to change the
structure of the Merger, the Bank Merger or any other transactions contemplated
hereby, the parties agree to modify this Agreement and the various exhibits
hereto, or enter into any other agreements, to reflect such revised structure.
In such event, Xxxxxxx shall prepare appropriate amendments to this Agreement
and the exhibits hereto, or other documents, for execution by the parties
hereto. Xxxxxxx and MECH agree to cooperate fully with each other to effect such
amendments or other documents.
6.14 Transaction Expenses of MECH.
(a) For planning purposes, MECH shall, within 15 days from the date
hereof, provide Xxxxxxx with its estimated budget of transaction-related
expenses reasonably anticipated to be payable by MECH in connection with this
transaction, including the fees and expenses of counsel, accountants, investment
bankers and other professionals. MECH shall promptly notify Xxxxxxx if or when
it determines that it will expect to exceed its budget.
(b) Promptly after the execution of this Agreement, MECH shall ask
all of its attorneys and other professionals to render current and correct
invoices for all unbilled time and disbursements. MECH shall accrue and/or pay
all of such amounts which are actually due and owing as soon as possible.
(c) MECH shall advise Xxxxxxx monthly of all out-of-pocket expenses
which MECH has incurred in connection with this transaction.
(d) Xxxxxxx, in reasonable consultation with MECH, shall make all
arrangements with respect to the printing and mailing of the Proxy
Statement/Prospectus. MECH shall, if Xxxxxxx reasonably deems necessary, also
engage a proxy solicitation firm to assist in the solicitation of proxies for
the meeting. MECH agrees to cooperate as to such matters.
6.15 Further Actions of MECH.
Upon the written request of Xxxxxxx, MECH shall, within 5 business days of
the date of such written request, demand payment of, or cause MS Bank to demand
payment of, any and all loans (to the extent identified by Xxxxxxx) of MECH or
MS Bank, as the case may be, which loans are (or should have been) set forth at
Sections 3.5(a) or 3.21(e) of the MECH Disclosure Schedule, and which loans are
secured or collateralized in any way by MECH Common Stock.
6.16 Publication of Earnings
Xxxxxxx shall use its best efforts to publish as promptly as reasonably
practicable, but in no event later than 45 days after the end of the first month
after the Effective Time in which there are at least 30 days of post-Merger
combined operations (which month may be the month in which the Effective Time
occurs), combined sales and net income figures as completed by and in accordance
with the terms of SEC Accounting Series Release No. 135.
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ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger.
The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Shareholder Approvals.
(i) This Agreement, including the Certificate of Merger, and the
Merger shall have been approved and adopted by the affirmative vote of the
holders of at least majority of the outstanding shares of MECH Common Stock
entitled to vote thereon.
(b) Stock Exchange Listing.
The shares of Xxxxxxx Common Stock which shall be issued in the Merger
(including the Xxxxxxx Common Stock that may be issued upon exercise of the
options referred to in Section 1.5 hereof) upon consummation of the Merger shall
have been authorized for quotation on the Nasdaq Stock Market National Market
System (or such other exchange on which the Xxxxxxx Common Stock may become
listed).
(c) Other Approvals.
All regulatory approvals from Governmental Entities 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"). No Requisite Regulatory Approval shall contain a non-customary
condition that Xxxxxxx reasonably determines to be burdensome or otherwise alter
the benefits for which it bargained in this Agreement.
(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 preventing the
consummation of the Merger or any of the other transactions (an "Injunction")
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.
(f) Federal Tax Opinion.
Xxxxxxx and MECH shall have received from Xxxxx & Xxxxxxx L.L.P.,
Xxxxxxx'x special counsel, an opinion in form and substance reasonably
satisfactory to Xxxxxxx and MECH, 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 time of such opinion, the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code. In rendering such opinion,
such counsel may require and, to the
36
extent such counsel deems necessary or appropriate, may rely upon
representations made in certificates of officers of MECH, Xxxxxxx, their
respective affiliates and others. The parties hereby agree that this condition
shall not be subject to waiver following receipt of MECH shareholder approval of
this Agreement.
(g) Pooling of Interests.
Xxxxxxx shall have received (i) advice of KPMG LLP, independent
accountants, within two weeks of the date hereof, to the effect that the Merger
will be accounted for as a pooling of interests, and (ii) as of the Effective
Time, a written opinion of each of KPMG LLP to the effect that the Merger will
be accounted for as a pooling-of-interests. Xxxxxxx will inform MECH in writing
within three weeks hereof if KPMG LLP has not provided the advice or indicated
such advice is not favorable for the availability of pooling-of-interests in
connection with the Merger.
7.2 Conditions to Obligations of Xxxxxxx.
The obligation of Xxxxxxx to effect the Merger is also subject to the
satisfaction or waiver by Xxxxxxx at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties.
The representations and warranties of MECH set forth in this Agreement
shall be true and correct in all material respects 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. Such determination shall be made as if there were no materiality
qualifications in such representations and warranties. Xxxxxxx shall have
received a certificate signed on behalf of MECH by each of the President and
Chief Executive Officer and the Chief Financial Officer of MECH to the foregoing
effect.
(b) Performance of Covenants and Agreements of MECH.
MECH 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. Xxxxxxx shall have received a certificate signed on behalf of
MECH by each of the President and Chief Executive Officer and the Chief
Financial Officer of MECH to such effect.
(c) Consents under Agreements.
(i) The consent, approval or waiver of each person (other than the
Governmental Entities referred to in Section 7.1(c) hereof) whose consent or
approval shall be required in order to permit the succession by the Surviving
Corporation pursuant to the Merger to any obligation, right or interest of MECH
under any loan or credit agreement, note, mortgage, indenture, lease, license or
other agreement or instrument shall have been obtained, except for those, the
failure of which to obtain, will not result in a Material Adverse Effect on the
Surviving Corporation.
(ii) The consent, approval or waiver of each person (other than the
Governmental Entities referred to in Section 7.1(c) hereof) whose consent or
approval shall be required in order to permit the succession by the Surviving
Bank pursuant to the Bank Merger to any obligation, right or interest of MS Bank
under any loan or credit agreement, note, mortgage, indenture, lease, license or
other agreement or instrument shall have been obtained except for those, the
failure of which to obtain, will not result in a Material Adverse Effect on the
Surviving Bank.
37
(d) No Pending Governmental Actions.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
(e) No Material Adverse Change.
There shall have been no changes, other than changes contemplated by
this Agreement, in the business, operations, condition (financial or otherwise),
assets or liabilities of MECH or its Subsidiary (regardless of whether or not
such events or changes are inconsistent with the representations and warranties
given herein) that individually or in the aggregate has had or would have a
Material Adverse Effect on MECH
(f) Legal Opinion.
Xxxxxxx shall have received the opinion of Tyler, Xxxxxx and Xxxxxx,
counsel to MECH, dated the Closing Date, as to matters set forth at Exhibit E.
As to any matter in such opinion which involves matters of fact, such counsel
may rely upon the certificates of officers and directors of MECH and of public
officials, reasonably acceptable to Xxxxxxx.
7.3 Conditions to Obligations of MECH.
The obligation of MECH to effect the Merger is also subject to the
satisfaction or waiver by MECH at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties.
The representations and warranties of Xxxxxxx set forth in this
Agreement shall be true and correct in all material respects 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. Such determination shall be made as if there were no
materiality qualifications in such representations and warranties. MECH shall
have received a certificate signed on behalf of Webster by each of the President
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. MECH shall have received a certificate signed on behalf of
Webster by each of the President and the Chief Financial Officer of Webster to
such effect.
(c) Consents under Agreements.
The consent or approval or waiver of each person (other than the
Governmental Entities referred to in Section 7.1(c)) whose consent or approval
shall be required in connection with the transactions contemplated hereby under
any loan or credit agreement, note, mortgage, indenture, lease, license or other
agreement or instrument to which Webster is a party or is otherwise bound shall
have been obtained.
(d) No Pending Governmental Actions.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
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(e) Legal Opinion.
MECH shall have received the opinion of Xxxxx & Xxxxxxx L.L.P.,
special counsel to Webster, dated the Closing Date, as to the authorization,
validity and non-assessibility of the Webster Common Stock to be issued pursuant
to this Agreement. As to any matter in such opinion which involves matters of
fact, such counsel may rely upon the certificates of officers and directors of
Webster and of public officials and opinions of local counsel, reasonably
acceptable to MECH.
(f) No Material Adverse Change.
There shall have been no changes, other than changes contemplated by
this Agreement, in the business, operations, condition (financial or otherwise),
assets or liabilities of Webster or any Webster Subsidiary (regardless of
whether or not such events or changes are inconsistent with the representations
and warranties given herein) that individually or in the aggregate has had or
would have a Material Adverse Effect on Webster.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination.
This Agreement may be terminated at any time prior to the Effective Time,
whether before or after approval of the matters presented in connection with the
Merger by the shareholders of MECH or Webster, if applicable:
(a) by mutual consent of Webster and MECH 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 MECH upon written notice to the other party
(i) 30 days after the date on which any request or application for a Regulatory
Approval shall have been denied or withdrawn at the request or recommendation of
the Governmental Entity which must grant such 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 pursuant to this Section 8.1(b), if such denial or
request or recommendation for withdrawal shall be due to the failure of the
party seeking to terminate this Agreement to perform or observe the covenants
and agreements of such party set forth herein;
(c) by either Webster or MECH if the Merger shall not have been
consummated on or before August 31, 2000, 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 MECH (provided that the terminating party is
not in breach of its obligations under Section 6.3 hereof) if the approval of
the shareholders of MECH hereto required for the consummation of the Merger
shall not have been obtained by reason of the failure to obtain the required
vote at a duly held meeting of shareholders or at any adjournment or
postponement thereof;
(e) by either Webster or MECH (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)
39
if there shall have been a breach of any of the representations or warranties
set forth in this Agreement on the part of the other party, if such breach,
individually or in the aggregate, has had or is likely to have a Material
Adverse Effect on the 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 MECH (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 Webster, if the management of MECH or its Board of Directors,
for any reason, (i) fails to call and hold within 40 days of the effectiveness
of the Registration Statement a meeting of MECH's shareholders to consider and
approve this Agreement and the transactions contemplated hereby, (ii) fails to
recommend to shareholders the approval of this Agreement and the transactions
contemplated hereby, (iii) fails to oppose any third party proposal that is
inconsistent with the transactions contemplated by this Agreement or (iv)
violates Section 5.1(e) of this Agreement;
(h) by the Board of Directors of MECH, 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 (ii)(B) (such number being referred to herein
as the "Index Ratio");
subject, however, to the following provisions. If MECH 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 New England 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:
40
"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 twenty 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
twenty 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 bank and savings and loan holding companies to
be mutually agreed upon, the common stocks of all of which shall be publicly
traded and as to which there shall not have been, since the Starting Date and
before the Determination Date, an announcement of a proposal for such company to
be acquired or for such company to acquire another company or companies in
transactions with a value exceeding 25% of the acquiror's 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.
"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, recapitalization, split-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).
(i) by Webster if MECH has complied with Section 5.1(e) above, and
has given written notice to Webster that MECH has agreed to enter into an
Acquisition Transaction other than as contemplated hereby; provided, however,
that such termination under this Section 8.1(i) shall not be effective unless
and until MECH shall have complied with the expense and breakup fee provisions
of Section 9.3 below, and shall have acknowledged in the written notice to be
provided in accordance herewith that the Option granted pursuant to the Option
Agreement shall then be exercisable in accordance with terms thereof.
8.2 Effect of Termination.
In the event of termination of this Agreement by either Webster or MECH 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
41
Agreement, no party shall be relieved or released from any liabilities or
damages arising out of its willful or intentional breach of any provision of
this Agreement.
8.3 Amendment.
Subject to compliance with applicable law, this Agreement may be amended by
the parties hereto, by action taken or authorized by their respective Board of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the shareholders of MECH; provided, however, that
after any approval of the transactions contemplated by this Agreement by MECH's
shareholders, there may not be, without further approval of such shareholders,
any amendment of this Agreement which reduces the amount or changes the form of
the consideration to be delivered to MECH shareholders 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 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 fifth day after the last Requisite Regulatory Approval and
shareholder approvals are 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; Breakup Fee.
All costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense, except that all filing and other fees paid to the SEC, the Connecticut
Commissioner and the OTS in connection with this Agreement shall be borne by
Webster. Except as set forth in the next sentence, in the event that this
Agreement is terminated by either Webster or MECH by reason of a material breach
pursuant
42
to Sections 8.1(e) or (f) hereof or by Webster or MECH pursuant to Section
8.1(g) 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. In the event that this
Agreement is terminated by Webster under Section 8.1(d) by reason of MECH
shareholders not having given any required approval and there shall have been
prior to the meeting of MECH stockholders a "Third Party Public Event" (as
defined below), MECH shall pay all documented, reasonable costs and expenses up
to $1,500,000 incurred by Webster in connection with this Agreement and the
transactions contemplated hereby, plus a breakup fee of $3,000,000. For purposes
of this Section 9.3, a "Third Party Public Event" shall refer to any of the
following events: (i) any person (as defined at Sections 3(a)(9) and 13(d)(3) of
the Exchange Act and the rules and regulations thereunder), other than Webster
or any Webster Subsidiary, shall have made a bona fide proposal to MECH or, by a
public announcement or written communication that is or becomes the subject of
public disclosure, to MECH's stockholders to engage in an Acquisition
Transaction (including, without limitation, any situation in which any person
other than Webster or any Webster Subsidiary shall have commenced (as such term
is defined in Rule 14d-2 under the Exchange Act), or shall have filed a
registration statement under the Securities Act, with respect to a tender offer
or exchange offer to purchase any shares of MECH Common Stock such that, upon
consummation of such offer, such person would have beneficial ownership of 10.0%
or more of the then outstanding shares of MECH Common Stock); or (ii) any
director, officer, 5% or greater stockholder or affiliate of MECH shall have, by
any means which becomes the subject of public disclosure, communicated
opposition to this Agreement, the Merger or other transactions contemplated
hereby, or otherwise takes action to influence the vote of MECH stockholders
against this Agreement, the Merger and the transactions contemplated hereby. In
the event this Agreement is terminated by Webster by reason of a willful
material breach pursuant to Sections 8.1(e) or (f) hereof, MECH shall pay all
documented, reasonable costs and expenses up to $1,500,000 incurred by Webster
in connection with this Agreement and the transactions contemplated hereby, plus
a breakup fee of $3.0 million. In the event that this Agreement is terminated by
Webster under Section 8.1(i) by reason of MECH having agreed to enter into an
Acquisition Transaction other than as contemplated hereby, MECH shall pay all
documented, reasonable costs and expenses up to $1,500,000 incurred by Webster
in connection with this Agreement and the transactions contemplated hereby, plus
a breakup fee of $3.0 million.
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 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:
Xxxxxxx Financial Corporation
Webster Plaza
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attn.: Chief Executive Officer
with copies (which shall not constitute notice) to:
Xxxxx & Xxxxxxx L.L.P.
Columbia Square
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000-0000
Attn.: Xxxxxx X. Xxxxx, Esq.
43
and
Xxxxxxx Financial Corporation
Webster Plaza
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attn.: General Counsel
and
(b) if to MECH, to:
MECH Financial, Inc.
000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn.: Chief Executive Officer
with a copy (which shall not constitute notice) to:
Xxxxx Xxxxxx & Xxxxxx, LLP
City Place, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxx, III, 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".
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 Certificate of Merger, the Option Agreement and
the MECH Stockholder Agreement.
9.8 Governing Law.
This Agreement shall be governed and construed in accordance with the laws
of the State of Delaware, without regard to any applicable conflicts of law
rules.
44
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 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 System (or such other exchange on which the Webster Common Stock
may become listed), so long as this Agreement is in effect, neither Webster nor
MECH shall, or shall permit any of Xxxxxxx'x or MECH'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 Certificate of Merger, the Option Agreement
or the MECH Stockholder 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 shareholder,
-----------------
spouse or other person living in the same household of such director, officer or
shareholder, or any company, partnership or trust in which any of the foregoing
persons is an officer, 5% or greater shareholder, general partner or 5% or
greater trust beneficiary.
"Knowledge" or "knowledge": with respect to any entity, refers to the
--------- ---------
knowledge of such entity's directors and officers in the ordinary course of
their duties in such positions.
45
"Laws": any and all statutes, laws, ordinances, rules, regulations,
----
orders, permits, judgments, injunctions, decrees, case law and other rules of
law enacted, promulgated or issued by any Governmental Entity.
"Material Adverse Effect": with respect to Webster or MECH, as the case
-----------------------
may be, means a condition, event, change or occurrence that is reasonably likely
to have a material adverse effect upon (A) the financial condition, results of
operations, business or properties of Webster or MECH (other than as a result of
(i) changes in laws or regulations or accounting rules of general applicability
or interpretations thereof, or (ii) decreases in capital under Financial
Accounting Standards No. 115 attributable to general changes in interest rates),
or (B) the ability of Webster or MECH to perform its obligations under, and to
consummate the transactions contemplated by, this Agreement, the Certificate of
Merger and, in the case of MECH, the Option Agreement.
"Subsidiary" or "Subsidiaries," as applicable: with respect to any party
--------------------------------------------
means any corporation, partnership or other organization, whether incorporated
or unincorporated, which is either directly or indirectly majority owned by such
party, or consolidated with such party for financial reporting purposes.
[SIGNATURES PAGE FOLLOWS]
46
IN WITNESS WHEREOF, Webster and MECH have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
XXXXXXX FINANCIAL CORPORATION
ATTEST:
By: /s/ Xxxxxxx Xxxxxxx Xxxxx By: /s/ Xxxxx X. Xxxxx
--------------------------------- -------------------------------
Name: Xxxxxxx Xxxxxxx Xxxxx Name: Xxxxx X. Xxxxx
Title: Senior Vice President, Title: Chairman and Chief
General Counsel and Executive Officer
Secretary
MECH FINANCIAL, INC.
ATTEST:
By: /s/ Xxxxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxx
--------------------------------- -------------------------------
Name: Xxxxxx X. Xxxx Name: Xxxxx X. Xxxxxx
Title: Executive Vice President Title: Chairman, President and
Chief Executive Officer
Exhibit A
---------
ARTICLES OF COMBINATION
and
BANK MERGER AGREEMENT
These Articles of Combination and Bank Merger Agreement (this "Bank
Merger Agreement") are made and entered into this __ day of _______, 2000 by and
between Xxxxxxx Bank, a federally chartered savings bank ("Xxxxxxx Bank"), and
Mechanics Savings Bank, a Connecticut chartered savings bank and a wholly owned
subsidiary of MECH Financial, Inc., a Connecticut corporation ("MECH") (the
"Subsidiary Bank").
WITNESSETH
WHEREAS, Xxxxxxx Financial Corporation, a Delaware corporation
("Webster") and MECH, have entered into an Agreement and Plan of Merger, dated
as of December 1, 1999 (the "Agreement");
WHEREAS, pursuant to the Agreement, Webster will acquire MECH through
a merger of MECH with and into Webster, and thereafter the Subsidiary Bank will
merge with and into Xxxxxxx Bank, with Xxxxxxx Bank the surviving bank;
WHEREAS, Xxxxxxx Bank has issued and has outstanding 1,000 shares of
common stock, par value $.01 per share ("Xxxxxxx Bank Common Stock"), and
Subsidiary Bank has issued and outstanding ______ shares of capital stock, par
value $____ per share (the "Subsidiary Bank Capital Stock"); and
WHEREAS, all of the issued and outstanding shares of Xxxxxxx Bank
Common Stock and all of the issued and outstanding shares of the Subsidiary Bank
Capital Stock, have been voted in favor of the respective merger of the
Subsidiary Bank with and into Xxxxxxx Bank.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Agreement, the parties
hereto do mutually agree, intending to be legally bound, as follows:
ARTICLE 1
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
1.1 "Bank Merger" shall refer to the merger of the Subsidiary Bank with
and into Xxxxxxx Bank as provided in Section 2.1 of this Bank Merger Agreement.
1.2 "Effective Time" shall mean the date and time at which the Bank Merger
contemplated by this Bank Merger Agreement becomes effective as provided in
Section 2.2 hereof.
1.3 "Merging Banks" shall collectively refer to the Subsidiary Bank and
Xxxxxxx Bank.
1.4 "OTS" shall mean the Office of Thrift Supervision.
1.5 "Surviving Bank" shall refer to Xxxxxxx Bank as the surviving bank in
the Bank Merger. The location of the home office and other offices of the
Surviving Bank shall be as set forth at Annex 1 hereto.
-------
ARTICLE 2
TERMS OF THE BANK MERGER
2.1 The Bank Merger
(a) Subject to the terms and conditions set forth in the Agreement at
the Effective Time, the Subsidiary Bank shall be merged with and into Xxxxxxx
Bank pursuant to 12 U.S.C. (S)(S) 1467a(s), 1815(d)(3) and 1828(c), Section
552.13 of the rules and regulations of the OTS promulgated thereunder, and
pursuant to Section 36a-126(b) of the Banking Law of Connecticut. Xxxxxxx Bank
shall be the Surviving Bank in the Bank Merger and shall continue to be
regulated by the OTS.
(b) As a result of the Bank Merger, (i) each share of Subsidiary Bank
Capital Stock issued and outstanding immediately prior to the Effective Time
shall be canceled and (ii) each share of Xxxxxxx Bank Common Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding and shall constitute the only shares of capital stock of the
Surviving Bank issued and outstanding immediately after the Effective Time.
(c) The Bank Merger shall have the effects set forth at 12 C.F.R. (S)
552.13(l) and Section 36a-126(b) of the Banking Law of Connecticut.
2.2 Effective Time
The Bank Merger shall become effective as of the date specified in the
endorsement of this Bank Merger Agreement, as the Articles of Combination, by
the Corporate Secretary of the OTS. The Bank Merger shall not be effective
unless and until approved by the OTS and all other "Governmental Entities" as
contemplated by the Agreement, including the "Connecticut Commissioner."
2.3 Name of the Surviving Bank
The name of the Surviving Bank shall be "Xxxxxxx Bank."
2.4 Charter
On and after the Effective Time, the federal stock charter, as
amended, of Xxxxxxx Bank in effect immediately prior to the Effective Time shall
be the federal stock charter of the Surviving Bank, until further amended in
accordance with applicable law.
2.5 By-Laws
On and after the Effective Time, the by-laws, as amended, of Xxxxxxx
Bank in effect immediately prior to the Effective Time shall be the by-laws of
the Surviving Bank, until further amended in accordance with applicable law.
2.6 Directors and Officers
On and after the Effective Time, until changed in accordance with the
federal stock charter and by-laws of the Surviving Bank, the directors and
officers of the Surviving Bank shall be the directors and officers of Xxxxxxx
Bank immediately prior to the Effective Time
plus one additional director, ______________, previously a director of the
Subsidiary Bank. The directors and officers of the Surviving Bank shall hold
office in accordance with the federal stock charter and by-laws of the Surviving
Bank. The number, names and residence addresses, and terms of directors of the
Surviving Bank are as set forth at Annex 2 hereto.
-------
2.7 Savings Accounts
The savings accounts of the Surviving Bank issued after the Effective
Time shall be issued on the same basis as savings accounts had been issued by
Xxxxxxx Bank prior to the Bank Merger.
ARTICLE 3
MISCELLANEOUS
3.1 Amendments
To the extent permitted by law, this Bank Merger Agreement may be
amended by a subsequent writing signed by the parties hereto upon the approval
of the board of directors of each of the parties hereto.
3.2 Successors
This Bank Merger Agreement shall be binding on the successors of
Xxxxxxx Bank and the Subsidiary Bank.
3.3 Counterparts
This Bank Merger Agreement may be executed in counterparts, each of
which shall be considered one and the same agreement and each of which shall be
deemed to be an original, and shall become effective when counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart.
[Signatures on following pages]
In accordance with the procedures set forth in the rules and
regulations of the OTS and other applicable law, Xxxxxxx Bank and the Subsidiary
Bank have caused this Bank Merger Agreement to be executed by their duly
authorized representatives on the date indicated.
XXXXXXX BANK
ATTEST:
By:_________________________________ By:______________________________________
Xxxxxxx Xxxxxxx Xxxxx Xxxxx X. Xxxxx
Senior Vice President, Counsel Chairman, Chief Executive Officer and
and Secretary
MECHANICS SAVINGS BANK
ATTEST:
By:_________________________________ By:_________________________________
Name:____________________________ Name:____________________________
Title:___________________________ Title:___________________________
The Board of Directors of Mechanics Savings Bank:
____________________________________ ____________________________________
Name:_______________________________ Name:_______________________________
____________________________________ ____________________________________
Name: Name:
____________________________________ ____________________________________
Name: Name:
____________________________________ ____________________________________
Name: Name:
____________________________________ ____________________________________
Name: Name:
____________________________________ ____________________________________
Name: Name:
The foregoing Articles of Combination have been filed with the
Corporate Secretary of the Office of Thrift Supervision, and endorsed pursuant
to Section 552.13(j) of the Rules and Regulations for Federal Stock Associations
(12 C.F.R. (S) 552.13(j)), to be effective at 4:30 p.m. on _______ __, 2000.
OFFICE OF THRIFT SUPERVISION
Department of the Treasury
By:________________________________
Xxxxxx X. Xxxxxxxxxx
Corporate Secretary
Exhibit B
OPTION AGREEMENT
THE TRANSFER OF THE OPTION GRANTED
BY THIS AGREEMENT IS SUBJECT TO RESALE RESTRICTIONS.
This OPTION AGREEMENT, dated as of December 1, 1999 (this "Agreement"), is
entered into between MECH FINANCIAL, INC., a Connecticut corporation ("Issuer"),
and XXXXXXX FINANCIAL CORPORATION, a Delaware corporation ("Grantee").
WITNESSETH:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger, dated as of December 1, 1999 (the "Plan"), which was executed by the
parties thereto prior to the execution of this Agreement; and
WHEREAS, as a condition and inducement to Grantee's entering into the
Plan and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Plan, the parties hereto
agree as follows:
SECTION 1. Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to 994,150
fully paid and nonassessable shares common stock, par value $.01 per share of
Issuer ("Issuer Common Stock") (which number of shares is equal to 19.99% of the
total number of outstanding shares of Issuer Common Stock on the date hereof),
at a price per share equal to $34.50 (the "Initial Price"); provided, however,
that in the event Issuer issues or agrees to issue any additional shares of
Issuer Common Stock (other than shares issued upon the exercise of options
outstanding as of the date of the Plan in accordance with their terms pursuant
to existing stock option plans), or grants one or more options to purchase
additional shares of Issuer Common Stock at a price less than the Initial Price,
as adjusted pursuant to Section 5(b) hereof, such price shall be equal to such
lesser price (such price, as adjusted, is hereinafter referred to as the "Option
Price"). The number of shares of Issuer Common Stock that may be received upon
the exercise of the Option and the Option Price are subject to adjustment as
herein set forth.
SECTION 2. (a) Grantee may exercise the Option, in whole or part, at any
time and from time to time following the occurrence of a Purchase Event (as
defined below); provided, however, that the Option shall terminate and be of no
further force and effect upon the earliest to occur of the following events
(which are collectively referred to as an "Exercise Termination Event"):
(i) The time immediately prior to the Effective Time;
(ii) 12 months after the first occurrence of a Purchase Event;
(iii) 12 months after the termination of the Plan following the
occurrence of a Preliminary Purchase Event (as defined below), unless
clause (vii) of this Section 2(a) is applicable;
(iv) upon the termination of the Plan, prior to the occurrence of a
Purchase Event or Preliminary Purchase Event, by Issuer pursuant to
Sections 8.1(e) or (f) of the Plan, both parties pursuant to Section 8.1(a)
of the Plan, or by either party pursuant to Section 8.1(b), (c) or (h) of
the Plan;
(v) 18 months after the termination of the Plan, by either party
pursuant to Section 8.1(d) of the Plan based on the required vote of
Issuer's shareholders not being received;
(vi) 18 months after the termination of the Plan, by Grantee
pursuant to Section 8.1(e) or (f) thereof as a result of a breach by
Issuer, unless such breach was willful or intentional; or
(vii) 24 months after the termination of the Plan, by Grantee
pursuant to Section 8.1(e) or (f) thereof as a result of a willful or
intentional breach by Issuer, or by Grantee pursuant to Section 8.1(g) or
(i) of the Plan.
(b) The term "Preliminary Purchase Event" shall mean any of the
following events or transactions occurring on or after the date hereof and prior
to an Exercise Termination Event:
(i) Issuer or any of its subsidiaries without having
received Grantee's prior written consent, shall have entered into any
letter of intent or definitive agreement to engage in an Acquisition
Transaction (as defined below) with any person (as defined below) other
than Grantee or any of its subsidiaries (each a "Grantee Subsidiary") or
the Board of Directors of Issuer shall have recommended that the
shareholders of Issuer approve or accept any Acquisition Transaction with
any Person (as the term "person" is defined in Section 3(a)9 and 13(d)(3)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and
the rules and regulations thereunder) other than Grantee or any Grantee
Subsidiary. For purposes of this Agreement "Acquisition Transaction" shall
mean (x) a merger, acquisition, consolidation or other business combination
involving Issuer or any subsidiary of Issuer, (y) a purchase, lease or
other acquisition of all or substantially all of the assets of Issuer or
any subsidiary of Issuer, (z) a purchase or other acquisition (including by
way of merger, consolidation, share exchange or otherwise) of Beneficial
Ownership (as the term "beneficial ownership" is defined in Regulation 13d-
3(a) of the Exchange Act) of securities representing 10.0% or more of the
voting power of Issuer; provided, however, that "Acquisition Transaction"
shall not include a transaction entered into after the termination of the
Plan in which the Issuer is the surviving entity, if in connection with
such transaction, no person acquires Beneficial Ownership of 10.0% or more
of the total voting power of the Issuer to be outstanding after giving
effect to such transaction and in which the aggregate voting power of
Issuer acquired by all persons is less than 15% of the total voting power
of Issuer;
(ii) Any Person (other than Grantee, any Grantee Subsidiary
or any current affiliate of Issuer) shall have acquired Beneficial
Ownership of 10.0% or more of the outstanding shares of Issuer Common
Stock;
(iii) (a) Any Person (other than Grantee or any Grantee
Subsidiary) shall have made a bona fide proposal to Issuer or, by a public
announcement or written communication that is or becomes the subject of
public disclosure, to Issuer's shareholders to engage in an Acquisition
Transaction (including, without limitation, any situation in which any
Person other than Grantee or any Grantee Subsidiary shall have commenced
(as such term is defined in Rule 14d-2 under the Exchange Act), or shall
have filled a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to a tender offer or exchange
offer to purchase any shares
-2-
of Issuer Common Stock such that, upon consummation of such offer, such
person would have Beneficial Ownership of 10.0% or more of the then
outstanding shares of Issuer Common Stock (such an offer being referred to
herein as a "Tender Offer" or an "Exchange Offer", respectively)), and (b)
the shareholders of Issuer do not approve the Merger, as defined in the
Plan, at the Special Meeting, as defined in the Plan;
(iv) There shall exist a willful or intentional breach under the
Plan by Issuer and such breach would entitle Grantee to terminate the Plan;
(v) The special meeting of Issuers' shareholders held for the
purpose of voting on the Plan shall not have been held pursuant to the Plan
or shall have been canceled prior to termination of the Plan, or for any
reason whatsoever Issuer's Board of Directors shall have failed to
recommend, or shall have withdrawn or modified in a manner adverse to
Grantee the recommendation of Issuer's Board of Directors, that Issuer's
shareholders approve the Plan, or if Issuer or Issuer's Board of Directors
fails to oppose any proposal by any Person (other than Grantee or any
Grantee Subsidiary); or
(vi) Any Person (other than Grantee or any Grantee Subsidiary)
shall have filed an application or notice with the Board of Governors of
the Federal Reserve System (the "FRB"), the Federal Deposit Insurance
Corporation (the "FDIC"), the Connecticut Banking Commissioner (the
"Connecticut Commissioner") or other regulatory or administrative agency or
commission (each, a "Governmental Authority") for approval to engage in an
Acquisition Transaction.
(c) The term "Purchase Event" shall mean any of the following events
or transactions occurring on or after the date hereof and prior to an Exercise
Termination Event:
(i) The acquisition by any Person (other than Grantee or any
Grantee Subsidiary) of Beneficial Ownership (other than on behalf of the
Issuer) of 25% or more of the then outstanding Issuer Common Stock;
(ii) The occurrence of a Preliminary Purchase Event described in
Section 2(b)(i) except that the percentage referred to in clause (z)
thereof shall be 25%; or
(iii) The termination of the Plan by Grantee pursuant to Section
8.1(e) or (f) thereof as a result of a willful or intentional breach by
Issuer, or by Grantee pursuant to Section 8.1(g) or (i) of the Plan.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Preliminary Purchase Event or Purchase Event known to Issuer; provided,
however, that the giving of such notice by Issuer shall not be a condition to
the right of Grantee to exercise the Option.
(e) In the event that Grantee is entitled to and wishes to exercise
the Option, it shall send to Issuer a written notice (the "Option Notice," the
date of which being hereinafter referred to as the "Notice Date") specifying (i)
the total number of shares of Issuer Common Stock it will purchase pursuant to
such exercise and (ii) the time (which shall be on a business day that is not
less than three nor more than 10 business days from the Notice Date) on which
the closing of such purchase shall take place (the "Closing Date"); such closing
to take place at the principal office of the Issuer; provided, however, that, if
prior notification to or approval of the OTS, the FDIC, the FRB, the Connecticut
Commissioner or any other Governmental Authority is required in connection with
such purchase (each, a "Notification" or an "Approval," as the case may be), (a)
Grantee shall promptly file the required notice or application for approval
("Notice/Application"), (b) Grantee shall expeditiously process the
Notice/Application and (c) for the purpose of determining the Closing Date
pursuant to clause (ii) of this sentence,
-3-
the period of time that otherwise would run from the Notice Date shall instead
run from the later of (x) in connection with any Notification, the date on which
any required notification periods have expired or been terminated and (y) in
connection with any Approval, the date on which such approval has been obtained
and any requisite waiting period or periods shall have expired. For purposes of
Section 2(a) hereof, any exercise of the Option shall be deemed to occur on the
Notice Date relating thereto. On or prior to the Closing Date, Grantee shall
have the right to revoke its exercise of the Option by written notice to the
Issuer given not less than three business days prior to the Closing Date.
(f) At the closing referred to in Section 2(e) hereof, Grantee shall
pay to Issuer the aggregate purchase price for the number of shares of Issuer
Common Stock specified in the Option Notice in immediately available funds by
wire transfer to a bank account designated by Issuer; provided, however, that
failure or refusal of Issuer to designate such a bank account shall not preclude
Grantee from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in Section 2(f) hereof, Issuer shall deliver to
Grantee a certificate or certificates representing the number of shares of
Issuer Common Stock specified in the Option Notice and, if the Option should be
exercised in part only, a new Option evidencing the rights of Grantee thereof to
purchase the balance of the shares of Issuer Common Stock purchasable hereunder.
(h) Certificates for Issuer Common Stock delivered at a closing
hereunder shall be endorsed with a restrictive legend substantially as follows:
The transfer of the shares represented by this certificate is
subject to resale restrictions arising under the Securities Act of 1933, as
amended, and applicable state securities laws and to certain provisions of
an agreement between Xxxxxxx Financial Corporation and MECH Financial,
Inc., dated as of December 1, 1999. A copy of such agreement is on file at
the principal office of Xxxxxxx Financial Corporation, and will be provided
to the holder hereof without charge upon receipt by Xxxxxxx Financial
Corporation of a written request therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the Securities and Exchange
Commission (the "SEC") or Governmental Authority responsible for administering
any applicable state securities laws or an opinion of counsel, in form and
substance satisfactory to Issuer's counsel, to the effect that such legend is
not required for purposes of the Securities Act or applicable state securities
laws; (ii) the reference to the provisions of this Agreement in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the shares have been sold or transferred in compliance with the provisions of
this Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In addition
such certificates shall bear any other legend as may be required by law.
(i) Upon the giving by Grantee to Issuer of an Option Notice and the
tender of the applicable purchase price in immediately available funds on the
Closing Date, unless prohibited by applicable law, Grantee shall be deemed to be
the holder of record of the number of shares of Issuer Common Stock specified in
the Option Notice, notwithstanding that the stock transfer books of Issuer shall
then be closed or that certificates representing such shares of Issuer Common
Stock shall not then actually be delivered to Grantee. Issuer shall pay all
expenses and other charges that may be payable in connection with the
preparation, issuance and delivery of stock certificates under this Section 2 in
the name of Grantee.
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SECTION 3. Issuer agrees: (i) that it shall at all times until the
termination of this Agreement have reserved for issuance upon the exercise of
the Option that number of authorized and reserved shares of Issuer Common Stock
equal to the maximum number of shares of Issuer Common Stock at any time and
from time to time issuable hereunder, all of which shares will, upon issuance
pursuant hereto, be duly authorized, validly issued, fully paid, non-assessable,
and delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights; (ii) that it will not, by
amendment of its certificate of incorporation or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) that it will seek any necessary shareholder approval that is
necessary to exercise the Option; (iv) promptly to take all reasonable action as
may from time to time be requested by the Grantee, at Grantee's expense
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. (S) 18a and regulations promulgated
thereunder and (y) in the event prior approval of or notice to the OTS, the
FDIC, the FRB, the Connecticut Commissioner or any other Governmental Authority,
under the Change in Bank Control Act of 1978, as amended, the Bank Holding
Company Act, as amended, or any other applicable federal or state banking law,
is necessary before the Option may be exercised, cooperating with Grantee in
preparing such applications or notices and providing such information to each
such Governmental Authority as it may require in order to permit Grantee to
exercise the Option and Issuer duly and effectively to issue shares of Issuer
Common Stock pursuant hereto; and (v) to take all action provided herein to
protect the rights of Grantee against dilution.
SECTION 4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of Grantee, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Issuer Common Stock purchasable
hereunder. The terms "Agreement" and "Option" as used herein include any
agreements and related options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date.
SECTION 5. The number of shares of Issuer Common Stock purchasable upon the
exercise of the Option shall be subject to adjustment from time to time as
follows:
(a) In the event of any change in the type or number of shares of
Issuer Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or other issuances of additional shares (other than pursuant to the exercise of
the Option), the type and number of shares of Issuer Common Stock purchasable
upon exercise hereof shall be appropriately adjusted and proper provision shall
be made so that, in the event that any additional shares of Issuer Common Stock
are to be issued or otherwise become outstanding as a result of any such change
(other than pursuant to an exercise of the Option), the number of shares of
Issuer Common Stock that remain subject to the Option shall be increased or
decreased (as applicable) so that, after such issuance and together with the
shares of Issuer Common Stock previously issued pursuant to the exercise of the
Option (as adjusted on account of any of the foregoing changes in the Issuer
Common Stock), the Option shall equal the sum of 19.9% of the total of the
number of shares of Issuer Common Stock then issued and outstanding.
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(b) Whenever the number of shares of Issuer Common Stock purchasable
upon exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Issuer Common Stock
purchasable prior to the adjustment and the denominator of which shall be equal
to the number of shares of Issuer Common Stock purchasable after the adjustment.
SECTION 6. (a) Upon the occurrence of a Purchase Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
(whether on its own behalf or on behalf of any subsequent holder of the Option
(or part thereof) or of any of the shares of Issuer Common Stock issued pursuant
hereto), promptly prepare, file and keep current a shelf registration statement
with the SEC, under the Securities Act covering any shares issued and issuable
pursuant to the Option and shall use its reasonable best efforts to cause such
registration statement to become effective, and to remain current and effective
for a period not in excess of one year from the day such registration statement
first becomes effective, in order to permit the sale or other disposition of any
shares of Issuer Common Stock issued upon total or partial exercise of the
Option ("Option Shares") in accordance with any plan of disposition requested by
Grantee. Grantee shall have the right to demand four such registrations which
right shall be transferable. Grantee shall provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. In connection with any such registration statement, Issuer and
Grantee shall provide each other with representations, warranties, indemnities
and other agreements customarily given in connection with such registration. If
requested by Grantee in connection with such registration, Issuer and Grantee
shall become a party to any underwriting agreement relating to the sale of such
shares, but only to the extent of obligating themselves in respect of
representations, warranties, indemnities and other agreements customarily
included in such underwriting agreements. Notwithstanding the foregoing, if
Grantee revokes any exercise notice or fails to exercise any Option with respect
to any exercise notice pursuant to Section 2(e) hereof, Issuer shall not be
obligated to continue any registration process with respect to the sale of
Option Shares issuable upon the exercise of such Option and Grantee shall not be
deemed to have demanded registration of Option Shares.
(b) In the event that Grantee requests Issuer to file a registration
statement following the failure to obtain any approval required to exercise the
Option as described in Section 9 hereof, the closing of the sale or other
disposition of the Issuer Common Stock or other securities pursuant to such
registration statement shall occur substantially simultaneously with the
exercise of the Option.
(c) Concurrently with the preparation and filing of a registration
statement under Section 6(a) hereof, Issuer shall also make all filings required
to comply with state securities laws in such number of states as Grantee may
reasonably request.
SECTION 7. (a) Upon the occurrence of a Purchase Event that occurs prior
to an Exercise Termination Event, (i) at the request (the date of such request
being the "Option Repurchase Request Date") of Grantee, Issuer shall repurchase,
subject to compliance with applicable law and out of funds legally available
therefor, the Option from Grantee at a price (the "Option Repurchase Price")
equal to the amount by which (A) the market/offer price (as defined below)
exceeds (B) the Option Price, multiplied by the number of shares for which the
Option may then be exercised and (ii) at the request (the date of such request
being the "Option Share Repurchase Request Date") of the owner of Option Shares
from time to time (the "Owner"), Issuer shall repurchase such number of the
Option Shares from the Owner as the Owner shall designate at a price (the
"Option Share Repurchase Price") equal to the market/offer price multiplied by
the number of Option Shares so designated. The term "market/offer price" shall
mean the highest of (i) the price per share of Issuer Common Stock at which a
tender offer or exchange offer therefor has been made after the date hereof and
on or
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prior to the Option Repurchase Request Date or the Option Share Repurchase
Request Date, as the case may be, (ii) the price per share of Issuer Common
Stock paid or to be paid by any third party pursuant to an agreement with Issuer
(whether by way of a merger, consolidation or otherwise), (iii) the average of
the 20 highest last sale prices for shares of Issuer Common Stock as reported
within the 90-day period ending on the Option Repurchase Request Date or the
Option Share Repurchase Request Date, as the case may be, and (iv) in the event
of a sale of all or substantially all of Issuer's assets, the sum of the price
paid in such sale for such assets and the current market value of the remaining
assets of Issuer as determined by an investment banking firm selected by Grantee
or the Owner, as the case may be, and reasonably acceptable to Issuer, divided
by the number of shares of Issuer Common Stock outstanding at the time of such
sale. In determining the market/offer price, the value of consideration other
than cash shall be the value determined by an investment banking firm selected
by Grantee or the Owner, as the case may be, and reasonably acceptable to
Issuer. The investment banking firm's determination shall be conclusive and
binding on all parties.
(b) Grantee or the Owner, as the case may be, may exercise its right
to require Issuer to repurchase the Option and/or any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that Grantee or
the Owner, as the case may be, elects to require Issuer to repurchase the Option
and/or the Option Shares in accordance with the provisions of this Section 7.
As promptly as practicable, and in any event within 30 business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto, Issuer shall deliver or
cause to be delivered to Grantee the Option Repurchase Price or to the Owner the
Option Share Repurchase Price.
(c) Issuer hereby undertakes to use its reasonable best efforts to
obtain all required regulatory, shareholder and legal approvals and to file any
required notices as promptly as practicable in order to accomplish any
repurchase contemplated by this Section 7. Nonetheless, to the extent that
Issuer is prohibited under applicable law or regulation from repurchasing any
Option and/or any Option Shares in full, Issuer shall promptly so notify Grantee
and/or the Owner and thereafter deliver or cause to be delivered, from time to
time, to Grantee and/or the Owner, as appropriate, the portion of the Option
Repurchase Price and the Option Share Repurchase Price, respectively, that it is
no longer prohibited from delivering, within five business days after the date
on which Issuer is no longer so prohibited; provided, however, that if Issuer at
any time after delivery of a notice of repurchase pursuant to Section 7(b)
hereof is prohibited as referred to above, from delivering to Grantee and/or the
Owner, as appropriate, the Option Repurchase Price or the Option Share
Repurchase Price, respectively, in full, Grantee or the Owner, as appropriate,
may revoke its notice of repurchase of the Option or the Option Shares either in
whole or in part whereupon, in the case of a revocation in part, Issuer shall
promptly (i) deliver to Grantee and/or the Owner, as appropriate, that portion
of the Option Purchase Price or the Option Share Repurchase Price that Issuer is
not prohibited from delivering after taking into account any such revocation and
(ii) deliver, as appropriate, either (A) to Grantee, a new Agreement evidencing
the right of Grantee to purchase that number of shares of Issuer Common Stock
equal to the number of shares of Issuer Common Stock purchasable immediately
prior to the delivery of the notice of repurchase less the number of shares of
Issuer Common Stock covered by the portion of the Option repurchased or, (B) to
the Owner, a certificate for the number of Option Shares covered by the
revocation.
(d) Issuer shall not enter into any agreement with any Person (other
than Grantee or a Grantee Subsidiary) for an Acquisition Transaction unless the
other Person assumes all the obligations of Issuer pursuant to this Section 7 in
the event that Grantee or the Owner elects, in its sole discretion, to require
such other Person to perform such obligations.
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SECTION 8. (a) In the event that prior to an Exercise Termination Event,
Issuer shall enter into a letter of intent or definitive agreement (i) to
consolidate or merge with any Person (other than Grantee or a Grantee
Subsidiary), and Issuer shall not be the continuing or surviving corporation of
such consolidation or merger, (ii) to permit any Person (other than Grantee or a
Grantee Subsidiary) to merge into Issuer, and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Issuer Common Stock shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other property or the then
outstanding shares of Issuer Common Stock shall after such merger represent less
than 50% of the outstanding shares and share equivalents of the merged company,
or (iii) to sell or otherwise transfer all or substantially all of its assets to
any Person (other than Grantee or a Grantee Subsidiary) then, and in each such
case, such letter of intent or definitive agreement governing such transaction
shall make proper provision so that the Option shall, upon the consummation of
such transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option (the "Substitute Option"), at the
election of Grantee, of either (x) the Acquiring Corporation (as defined below)
or (y) any person that controls the Acquiring Corporation (the Acquiring
Corporation and any such controlling person being hereinafter referred to as the
"Substitute Option Issuer").
(b) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock (as is hereinafter defined) as is equal to the
market/offer price (as defined in Section 7 hereof) multiplied by the number of
shares of Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The exercise price of the
Substitute Option per share of the Substitute Common Stock (the "Substitute
Purchase Price") shall then be equal to the Option Price multiplied by a
fraction in which the numerator is the number of shares of Issuer Common Stock
for which the Option was theretofore exercisable and the denominator is the
number of shares for which the Substitute Option is exercisable.
(c) The Substitute Option shall otherwise have the same terms as the
Option, provided, that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to Grantee, provided, further that the terms
of the Substitute Option shall include (by way of example and not limitation)
provisions for the repurchase of the Substitute Option and Substitute Common
Stock by the Substitute Option Issuer on the same terms and conditions as
provided in Section 7 hereof.
(d) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving corporation, and (iii) the transferee of all or any substantial
part of Issuer's assets.
(ii) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the Substitute
Option.
(iii) "Average Price" shall mean the average closing price of a
share of Substitute Common Stock for the one-year period immediately
preceding the consolidation, merger or sale in question, but in no event
higher than the closing price of the shares of Substitute Common Stock on
the day preceding such consolidation, merger or sale; provided, that if
Issuer is the issuer of the Substitute Option, the Average Price shall be
computed with respect to a share of Issuer Common Stock issued by Issuer,
the corporation merging into Issuer or by any company which controls or is
controlled by such merging corporation, as Grantee may elect.
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(e) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.99% of the shares of
Substitute Common Stock outstanding immediately prior to the issuance of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than such number of shares of Substitute Common Stock but for this
clause (e), the Substitute Option Issuer shall make a cash payment to Grantee
equal to the excess of (i) the value of the Substitute Option without giving
effect to the limitation in this clause (e) over (ii) the value of the
Substitute Option after giving effect to the limitation in this clause (e). This
difference in value shall be determined by a nationally recognized investment
banking firm selected by Grantee and the Substitute Option Issuer. In addition,
the provisions of Section 5(a) hereof shall not apply to the issuance of any
Substitute Option and for purposes of applying Section 5(a) hereof thereafter to
any Substitute Option, the percentage referred to in Section 5(a) hereof shall
thereafter equal the percentage that the percentage of the shares of Substitute
Common Stock subject to the Substitute Option bears to the number of shares of
Substitute Common Stock outstanding.
SECTION 9. Notwithstanding Sections 2, 6 and 7 hereof, if Grantee has
given the notice referred to in one or more of such Sections, the exercise of
the rights specified in any such Section shall be extended (a) if the exercise
of such rights requires obtaining regulatory approvals (including any required
waiting periods) to the extent necessary to obtain all regulatory approvals for
the exercise of such rights, and (b) to the extent necessary to avoid liability
under Section 16(b) of the Exchange Act by reason of such exercise; provided,
that in no event shall any closing date occur more than 12 months after the
related notice date, and, if the closing date shall not have occurred within
such period due to the failure to obtain any required approval by the OTS, the
FDIC, the FRB, the Connecticut Commissioner or any other Governmental Authority
despite the best efforts of Issuer or the Substitute Option Issuer, as the case
may be, to obtain such approvals, the exercise of the rights shall be deemed to
have been rescinded as of the related notice date. In the event (a) Grantee
receives official notice that an approval of the OTS, the FDIC, the FRB, the
Connecticut Commissioner or any other Governmental Authority required for the
purchase and sale of the Option Shares will not be issued or granted or (b) a
closing date has not occurred within 12 months after the related notice date due
to the failure to obtain any such required approval, Grantee shall be entitled
to exercise the Option in connection with the concurrent resale of the Option
Shares pursuant to a registration statement as provided in Section 6 hereof.
Nothing contained in this Agreement shall restrict Grantee from specifying
alternative means of exercising rights pursuant to Sections 2, 6 or 7 hereof in
the event that the exercising of any such rights shall not have occurred due to
the failure to obtain any required approval referred to in this Section 9.
SECTION 10. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly approved by the Board of
Directors of Issuer and no other corporate proceedings on the part of Issuer are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly executed and delivered by, and
constitutes a valid and binding obligation of, Issuer, enforceable against
Issuer in accordance with its terms, subject to any required Governmental
Approval, and except as enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this
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Agreement in accordance with its terms will have reserved for issuance upon the
exercise of the Option, that number of shares of Issuer Common Stock equal to
the maximum number of shares of Issuer Common Stock at any time and from time to
time issuable hereunder, and all such shares, upon issuance pursuant hereto,
will be duly authorized, validly issued, fully paid, non-assessable, and will be
delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights.
SECTION 11. (a) Neither of the parties hereto may assign any of its
rights or delegate any of its obligations under this Agreement or the Option
created hereunder to any other Person without the express written consent of the
other party, except that Grantee may assign this Agreement to a wholly owned
subsidiary of Grantee and Grantee may assign its rights hereunder in whole or in
part after the occurrence of a Preliminary Purchase Event. The term "Grantee" as
used in this Agreement shall also be deemed to refer to Grantee's permitted
assigns.
(b) Any assignment of rights of Grantee to any permitted assignee
of Grantee hereunder shall bear the restrictive legend at the beginning thereof
substantially as follows:
The transfer of the option represented by this assignment and
the related option agreement is subject to resale restrictions arising
under the Securities Act of 1933, as amended, and applicable state
securities laws and to certain provisions of an agreement between Xxxxxxx
Financial Corporation and MECH Financial, Inc., dated as of December 1,
1999. A copy of such agreement is on file at the principal office of
Xxxxxxx Financial Corporation, and will be provided to any permitted
assignee of the Option without charge upon receipt of a written request
therefor.
SECTION 12. Each of Grantee and Issuer will use its reasonable efforts to
make all filings with, and to obtain consents of, all third parties and
Governmental Authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
OTS, the FDIC, the FRB, the Connecticut Commissioner and any other Governmental
Authority for approval to acquire the shares issuable hereunder.
SECTION 13. parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
SECTION 14. If any term, provision, covenant or restriction contained in
this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that Grantee is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7 hereof, the full number of shares of Issuer
Common Stock provided in Section 1 hereof (as adjusted pursuant hereto), it is
the express intention of Issuer to allow Grantee to acquire or to require Issuer
to repurchase such lesser number of shares as may be permissible without any
amendment or modification hereof.
SECTION 15. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in the manner
and at the respective addresses of the parties set forth in the Plan.
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SECTION 16. This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto shall be governed by and
construed in accordance with the laws of the State of Delaware (but not
including the choice of law rules thereof).
SECTION 17. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which shall constitute one and the
same agreement and shall be effective at the time of execution and delivery.
SECTION 18. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder.
SECTION 19. Except as otherwise expressly provided herein or in the Plan,
this Agreement contains the entire agreement between the parties with respect to
the transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereof, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors except as assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
SECTION 20. Capitalized terms used in this Agreement and not defined herein
but defined in the Plan shall have the meanings assigned thereto in the Plan.
SECTION 21. Nothing contained in this Agreement shall be deemed to
authorize or require Issuer or Grantee to breach any provision of the Plan or
any provision of law applicable to the Grantee or Issuer.
SECTION 22. In the event that any selection or determination is to be made
by Grantee or the Owner hereunder and at the time of such selection or
determination there is more than one Grantee or Owner, such selection shall be
made by a majority in interest of such Grantees or Owners .
SECTION 23. In the event of any exercise of the option by Grantee, Issuer
and such Grantee shall execute and deliver all other documents and instruments
and take all other action that may be reasonably necessary in order to
consummate the transactions provided for by such exercise.
SECTION 24. Except to the extent Grantee exercises the Option, Grantee
shall have no rights to vote or receive dividends or have any other rights as a
shareholder with respect to shares of Issuer Common Stock covered hereby.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the parties has caused this Option
Agreement to be executed and delivered on its behalf by their respective
officers thereunto duly authorized, all as of the date first above written.
Xxxxxxx Financial Corporation
By: _____________________________
Name:
Title:
MECH Financial, Inc.
By: _____________________________
Name:
Title:
Exhibit C
CERTIFICATE OF MERGER
MECH Financial, Inc.
into
Xxxxxxx Financial Corporation
Pursuant to Title 33, Section 821 of the Connecticut Business
Corporation Act and pursuant to Title 8, Section 252 of the General Corporation
Law of the State of Delaware, Xxxxxxx Financial Corporation, a corporation
organized and existing under the law of the State of Delaware ("Webster"), and
MECH Financial, Inc., a corporation organized and existing under the law of the
State of Connecticut ("MECH"), do hereby certify to the following facts relating
to the merger (the "Merger") of MECH with and into Xxxxxxx:
FIRST: The name and state of incorporation of each constituent
corporation that is a party to the merger is as follows:
Name State of Incorporation
---- ----------------------
Xxxxxxx Financial Corporation Delaware
MECH Financial, Inc. Connecticut
SECOND: An Agreement and Plan of Merger, dated as of December 1,
1999, by and between Webster and MECH (the "Agreement and Plan of Merger"), has
been approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with the requirements of Section 252 of
the General Corporation Law of the State of Delaware.
THIRD: Pursuant to the Agreement and Plan of Merger, the surviving
corporation in the merger is Xxxxxxx Financial Corporation, a Delaware
corporation (the "Surviving Corporation"), and the name of the Surviving
Corporation shall continue to be "Xxxxxxx Financial Corporation." The Surviving
Corporation shall continue its existence under its present name pursuant to the
provisions of the General Corporation Law of the State of Delaware.
FOURTH: The Certificate of Incorporation, as amended, of the
Surviving Corporation shall be its certificate of incorporation.
FIFTH: Pursuant to Title 33, Section 817(g) of the Connecticut
Business Corporation Act and pursuant to Title 8, Section 252(e) of the General
Corporation Law of the State of Delaware, action by the shareholders of the
Surviving Corporation on the Agreement and Plan of Merger and the Merger is not
required.
SIXTH: As of _____________, MECH had issued and outstanding
________________ shares of MECH Common Stock, each of which such shares is
entitled to one vote on the Agreement and Plan of Merger and the Merger.
SEVENTH: _______ of the issued and outstanding shares of MECH's
Common Stock, which is a majority of the issued and outstanding shares of MECH's
Common Stock and which is sufficient for approval by the MECH's Common Stock
voting as a group, have been voted in favor of the Agreement and Plan of Merger
and the Merger.
EIGHTH: The executed Agreement and Plan of Merger is on file at the
office of the Surviving Corporation at the following address:
Xxxxxxx Financial Corporation
Webster Plaza
Waterbury, Connecticut 06702
NINTH: A copy of the Agreement and Plan of Merger will be furnished
by the Surviving Corporation, on request and without cost, to any stockholder of
any constituent corporation.
IN WITNESS WHEREOF, Xxxxxxx Financial Corporation has caused this
Certificate of Merger to be duly executed as of this ___ day of ______, 2000, to
be effective at ______ ___ on __________ ___, 2000.
ATTEST XXXXXXX FINANCIAL CORPORATION
By:_________________________________ By:_________________________________
Xxxxxxx Xxxxxxx Xxxxx Xxxxx X. Xxxxx
Senior Vice President, Counsel Chairman and Chief Executive
and Corporate Secretary Officer
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Xxxxxxx Xxxxxxx Xxxxx Xxxxx X. Xxxxx
Senior Vice President, Counsel and Chairman and Chief Executive Officer
Corporate Secretary
-3-
Exhibit D
MECH Financial, Inc.
MECH STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT, dated as of December 1, 1999, is entered
into by and among Xxxxxxx Financial Corporation, a Delaware corporation
("Webster"), and the stockholders of MECH Financial, Inc., a Connecticut
corporation ("MECH"), identified on Schedule I hereto (collectively, the
"Stockholders"), who are directors, executive officers or other affiliates of
MECH (for purposes of Rule 145 under the Securities Act of 1933, as amended, and
for purposes of qualifying the Merger (defined below) for "pooling-of-interests"
accounting treatment).
WHEREAS, Webster and MECH have entered into an Agreement and Plan of
Merger, dated as of December 1, 1999 (the "Agreement"), which is conditioned
upon the execution of this Stockholder Agreement and which provides for, among
other things, the merger of MECH with and into Webster, in a stock-for-stock
transaction (the "Merger"); and
WHEREAS, in order to induce Webster to enter into and consummate the
Agreement, each of the Stockholders agrees to, among other things, vote in favor
of the Agreement, the Merger and the other transactions contemplated by the
Agreement in his or her capacity as a stockholder of MECH.
NOW, THEREFORE in consideration of the premises, the mutual covenants
and agreements set forth herein and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Ownership of MECH Common Stock. Each Stockholder represents and
warrants that the number of shares of MECH common stock, par value $.01 per
share ("MECH Common Stock"), set forth opposite such Stockholder's name on
Schedule I hereto is the total number of shares of MECH Common Stock over which
such person has "beneficial ownership" within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934, as amended, except that the provisions of
Rule 13d-3(d)(1)(i) shall be considered without any limit as to time.
2. Agreements of the Stockholders. Each Stockholder covenants and agrees
that:
(a) Such Stockholder shall, at any meeting of the holders of any or
all classes or series of MECH Common Stock called for the purpose (or in
connection with any action taken by written consent), vote or cause to be voted
all shares of MECH Common Stock with respect to which such Stockholder has
voting power (including the power to vote or to direct the voting of) whether
owned as of the date hereof or hereafter acquired in favor of the Agreement, the
Merger and the other transactions contemplated by the Agreement.
(b) Such Stockholder shall not sell, pledge, transfer or otherwise
dispose of his or her shares of MECH Common Stock unless advised by KPMG that
such sale, pledge, transfer or other disposition will not jeopardize the
pooling-of-interest accounting treatment in the Merger.
(c) Such Stockholder shall not in his or her capacity as a
stockholder of MECH directly or indirectly encourage or solicit, initiate or
hold discussions or negotiations with, or provide any information to, any
person, entity or group (other than Webster or an affiliate thereof) concerning
any merger, sale of all or substantially all of the assets or liabilities
not in the ordinary course of business, sale of shares of capital stock or
similar transaction involving MECH or otherwise inconsistent with the Agreement
or the transactions contemplated thereby. Nothing herein shall impair such
Stockholder's fiduciary obligations as a director of MECH.
(d) Such Stockholder acting as a Stockholder and not as a director
shall use his or her best efforts to take or cause to be taken all action, and
to do or cause to be done all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the Merger
contemplated by the Agreement.
(e) Such Stockholder shall not, prior to the public release by
Webster of an earnings report to its stockholders covering at least 30 days of
operations after consummation of the Merger (the "Restricted Period"), sell,
pledge (other than the replacement of a pledge existing on the date hereof of
MECH Common Stock), transfer or otherwise dispose of the shares of Webster
common stock, par value $.01 per share (the "Webster Common Stock"), to be
received by him or her for his or her shares of MECH Common Stock upon
consummation of the Merger.
(f) Such Stockholder shall comply with all applicable federal and
state securities laws in connection with any sale of Webster Common Stock
received in exchange for MECH Common Stock in the Merger, including the trading
and volume limitations as to sales by affiliates contained in Rule 145 under the
Securities Act of 1933, as amended. Such Stockholder acknowledges and agrees
that any shares of Webster Common Stock received in the Merger or otherwise will
include appropriate legends as to the restrictions set forth in this Agreement
and under applicable federal securities laws.
3. Termination. The parties agree and intend that this Stockholder
Agreement be a valid and binding agreement enforceable against the parties
hereto and that damages and other remedies at law for the breach of this
Stockholder Agreement are inadequate. This Stockholder Agreement may be
terminated at any time prior to the consummation of the Merger by the written
consent of the parties hereto and shall be automatically terminated in the event
that the Agreement is terminated in accordance with its terms.
4. Notices. Notices may be provided to Webster and the Stockholders in
the manner specified in the Agreement, with all notices to the Stockholders
being provided to them at the addresses set forth at Schedule I.
5. Governing Law. This Stockholder Agreement shall be governed by the
laws of the State of Delaware, without giving effect to the principles of
conflicts of laws thereof.
6. Counterparts. This Stockholder Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same and each of
which shall be deemed an original.
7. Headings. The Section headings contained herein are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Stockholder Agreement.
8. Regulatory Approval. If any provision of this Stockholder Agreement
requires the approval of any regulatory authority in order to be enforceable,
then such provision shall not be effective until such approval is obtained;
provided, however, that the foregoing shall not affect the enforceability of any
other provision of this Stockholder Agreement.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, Webster, by a duly authorized officer, and each of
the Stockholders have caused this Stockholder Agreement to be executed and
delivered as of the day and year first above written.
XXXXXXX FINANCIAL CORPORATION
By: ______________________________________
Xxxxx X. Xxxxx
Chairman and Chief Executive Officer
STOCKHOLDERS:
___________________________________ ___________________________________
___________________________________ ___________________________________
___________________________________ ___________________________________
___________________________________ ___________________________________
___________________________________ ___________________________________
___________________________________ ___________________________________
SCHEDULE I
Number of Shares of MECH Common
Name and Address of Stockholder Stock Beneficially Owned
------------------------------- -------------------------------
Exhibit E
FORM OF LEGAL OPINION OF COUNSEL
FOR MECH FINANCIAL, INC.
(a) MECH Financial, Inc. ("MECH") was incorporated, and is validly
existing as a Connecticut corporation as of the date of the certificate
specified in Paragraph __ above, under the laws of the State of Connecticut.
MECH has the corporate power and corporate authority under its Certificate of
Incorporation and the Connecticut Business Corporations Act (the "Connecticut
Corporation Law") to own, lease and operate its current properties and to
transact the business in which it is currently engaged as described in the Proxy
Statement/Prospectus. Mechanics Savings Bank ("MS Bank") was incorporated and
is validly existing and in good standing as a Connecticut chartered savings
bank, as of the date of certificate specified in Paragraph __ above, under laws
of the State of Connecticut. MS Bank has the corporate power and corporate
authority under its Certificate of Incorporation and the Banking Law of
Connecticut to own, lease and operate its current properties and to transact the
business in which it is currently engaged as described in the Proxy
Statement/Prospectus.
(b) MECH has the corporate power and corporate authority under its
Certificate of Incorporation and the Connecticut Corporation Law to execute and
deliver the Agreement and Plan of Merger (the "Agreement") and to perform its
obligations thereunder. The execution, delivery and performance as of the date
hereof by MECH of the Agreement has been duly authorized by all necessary
corporate action of MECH. MS Bank has the corporate power and corporate
authority under its Certificate of Incorporation and the Banking Law of
Connecticut to execute and deliver the Articles of Combination and Bank Merger
Agreement ("Bank Merger Agreement") and to perform its obligations thereunder.
The execution, delivery and performance as of the date hereof by MS Bank of the
Bank Merger Agreement has been authorized by all necessary corporate action of
MS Bank.
(c) The Agreement has been duly executed and delivered on behalf of
MECH. The Bank Merger Agreement has been duly executed and delivered on behalf
of MS Bank.
(d) The execution, delivery and performance as of the date hereof by
MECH of the Agreement do not (i) require any approval of its shareholders that
has not been obtained; (ii) violate the Banking Law of Connecticut, the
Connecticut Corporation Law or the Certificate of Incorporation or Bylaws of
MECH; (iii) violate any applicable law, rule, regulation or, to our knowledge,
any order, judgment or decree of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), the State of Connecticut Department of
Banking (the "Department") or the Federal Deposit Insurance Corporation (the
"FDIC"); (iv) to our knowledge, breach or constitute a default under any
material contract of MECH as such term is defined in Regulation S-K (17 C.F.R.
(S)229.610(b)10)); or (v) to our knowledge, result in the creation of any lien
upon any of the properties of MECH pursuant to any such contracts. The
execution, delivery and performance as of the date hereof by MS Bank of the Bank
Merger Agreement do not (i) require any approval of its shareholders that has
not been obtained; (ii) violate the Banking Law of Connecticut, the Connecticut
Corporation Law or the Certificate of Incorporation or Bylaws of MS Bank; (iii)
violate any applicable law, rule, regulation or, to our knowledge, any order,
judgment or decree of the Federal Reserve Board, the Department or the FDIC;
(iv) to our knowledge, breach or constitute a default under any material
contract of MS Bank as such term is defined in Regulation S-K (17 C.F.R.
(S)229.610(b)10)); or (v) to our knowledge, result in the creation of any lien
upon any of the properties of MS Bank pursuant to any such contracts.
(e) The authorized, issued and outstanding capital stock of MECH, as
of _____________, 2000, is ___________. This is a change of ___________ shares
from that disclosed in the Proxy Statement/Prospectus under the caption
"__________." The shares of common stock shown as issued and outstanding under
said caption are duly authorized and are validly issued, fully paid and
nonassessable. To our knowledge, there are no other shares of capital stock of
MECH outstanding at that date. No holder of outstanding shares of common stock
of MECH has any statutory preemptive right under applicable law or, to our
knowledge, any contractual right to subscribe for any of such shares, except
pursuant to the Option Agreement between MECH and Xxxxxxx Financial Corporation
("Webster"), the Mechanics Savings Bank 1996 Director Stock Option Plan and the
Mechanics Savings Bank 1996 Officer Stock Option Plan, described in the Proxy
Statement/Prospectus. To our knowledge, MECH has not issued any outstanding
securities convertible into or exchangeable for, or outstanding options,
warrants or other rights to purchase or to subscribe for, any shares of stock or
other securities of MECH, except as described in the Proxy Statement/Prospectus.
(f) No approval or consent of, or registration or filing with, the
Federal Reserve Board, the Department or the FDIC or any third party is required
to be obtained or made by MECH or MS Bank in connection with the execution,
delivery and performance as of the date hereof of the Agreement by MECH or the
Bank Merger Agreement by MS Bank (other than those approvals, consents,
registrations or filings that have been obtained or made). [In rendering the
foregoing opinion, we note that there are certain post-closing filings that must
be made with the Department and the FDIC with respect to the merger contemplated
by the Agreement.]
(g) During the course of the preparation of the Proxy
Statement/Prospectus, we participated in conferences with officers, employees,
and other representatives of MECH, with representatives of the independent
public accountants of MECH, and with Xxxxxxx and its representatives, at which
conferences the contents of the Proxy Statement/Prospectus and related matters
were discussed. While we have not undertaken to determine independently, and we
do not assume any responsibility for, the accuracy, completeness or fairness of
the statements in the Proxy Statement/Prospectus, we may state on the basis of
these conferences and our activities as counsel to MECH in connection with the
Proxy Statement/Prospectus, that no facts have come to our attention which cause
us to believe that the Proxy Statement/Prospectus (other than the financial
statements and financial and statistical data included therein, as to which no
opinion is rendered), as of its date and as of _______, 2000 [the date of the
MECH shareholder vote], contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, not misleading, or that the Proxy
Statement/Prospectus, as of the date hereof, contains an untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(h) There are no actions, suits or proceedings pending or, to our
knowledge, threatened against MECH or MS Bank, or in which MECH or MS Bank is a
party, before any court or governmental department, commission, board, bureau,
agency or instrumentality that question the validity of the Agreement or any
action taken or to be taken pursuant thereto, or that seek to enjoin or
otherwise prevent the consummation of the transactions contemplated by the
Agreement or to recover in damages or obtain other relief as a result thereof.
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