EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER
AMONG
XXXXXXX FINANCIAL CORPORATION
WEBSTER ACQUISITION CORP.,
AND DS BANCOR, INC.
October 7, 1996
TABLE OF CONTENTS
Page
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ARTICLE I
THE MERGER .................................. 1
1.1 The Merger ............................................. 1
1.2 Effective Time ......................................... 2
1.3 Effects of the Merger .................................. 2
1.4 Conversion of DS Bancor Common Stock ................... 2
1.5 Conversion of Merger Sub Common Stock .................. 3
1.6 Options ................................................ 3
1.7 Certificate of Incorporation ........................... 4
1.8 By-Laws ................................................ 4
1.9 Directors and Officers ................................. 4
1.10 Tax Consequences ....................................... 5
ARTICLE II
EXCHANGE OF SHARES........................... 5
2.1 Webster to Make Shares Available ....................... 5
2.2 Exchange of Shares ..................................... 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DS BANCOR.. 7
3.1 Corporate Organization ................................. 7
3.2 Capitalization ......................................... 8
3.3 Authority; No Violation ................................ 9
3.4 Consents and Approvals.................................. 10
3.5 Loan Portfolio; Reports ................................ 11
3.7 Broker's Fees .......................................... 13
3.8 Absence of Certain Changes or Events ................... 13
3.9 Legal Proceedings ...................................... 13
3.10 Taxes and Tax Returns .................................. 14
3.11 Employee Plans ......................................... 14
3.12 Certain Contracts ...................................... 16
3.13 Agreements with Regulatory Agencies .................... 16
3.14 State Takeover Laws .................................... 17
3.15 Environmental Matters .................................. 17
3.16 Reserves for Losses .................................... 18
3.17 Properties and Assets .................................. 18
3.18 Insurance .............................................. 19
3.19 Liquidation Account .................................... 20
3.20 Compliance with Applicable Laws......................... 20
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3.21 Loans .................................................. 20
3.22 Affiliates; Certain Executive Officers ................. 21
3.23 Ownership of Webster Common Stock ...................... 22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF WEBSTER............... 22
4.1 Corporate Organization 22............................... 22
4.2 Capitalization 23
4.3 Authority; No Violation ................................ 23
4.4 Regulatory Approvals ................................... 25
4.5 Financial Statements; Exchange Act Filings; Books
and Records ............................................ 26
4.6 Absence of Certain Changes or Events ................... 27
4.7 Compliance with Applicable Law ......................... 27
4.8 Ownership of DS Bancor Common Stock; Affiliates and
Associates ............................................. 27
4.9 Employee Benefit Plans.................................. 28
4.10 Agreements with Regulatory Agencies .................... 28
4.11 Reserves for Losses .................................... 28
4.12 Legal Proceedings ...................................... 29
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS............... 29
5.1 Covenants of DS Bancor.................................. 29
5.2 Covenants of Webster ................................... 33
ARTICLE VI
ADDITIONAL AGREEMENTS......................... 34
6.1 Regulatory Matters ..................................... 34
6.2 Access to Information .................................. 35
6.3 Shareholder Meetings ................................... 36
6.4 Legal Conditions to Merger ............................. 37
6.5 Publication of Combined Financial Results .............. 37
6.6 Stock Exchange Listing.................................. 37
6.7 Employee Plans.......................................... 37
6.8 Indemnification; Directors' and Officers' Insurance .... 38
6.9 Subsequent Interim and Annual Financial Statements ..... 40
6.10 Additional Agreements .................................. 40
6.11 Advice of Changes ...................................... 40
6.12 Current Information .................................... 41
6.13 Execution and Authorization of Bank Merger Agreement ... 41
................................................................. 41
6.14 Change in Structure .................................... 41
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ARTICLE VII
CONDITIONS PRECEDENT............................ 42
7.1 Conditions to Each Party's Obligation To Effect the
Merger ............................................... 42
7.2 Conditions to Obligations of Webster and Merger Sub .... 43
7.3 Conditions to Obligations of DS Bancor ................. 45
ARTICLE VIII
TERMINATION AND AMENDMENT....................... 46
8.1 Termination ............................................ 46
8.2 Effect of Termination .................................. 48
8.3 Amendment .............................................. 48
8.4 Extension; Waiver ...................................... 48
ARTICLE IX
GENERAL PROVISIONS.............................. 49
9.1 Closing ................................................ 49
9.2 Nonsurvival of Representations, Warranties and
Agreements ........................................... 49
9.3 Expenses; Breakup Fee .................................. 49
9.4 Notices ................................................ 49
9.5 Interpretation.......................................... 50
9.6 Counterparts ........................................... 51
9.7 Entire Agreement ....................................... 51
9.8 Governing Law .......................................... 51
9.9 Enforcement of Agreement ............................... 51
9.10 Severability ........................................... 51
9.11 Publicity .............................................. 52
9.12 Assignment; Limitation of Benefits ..................... 52
9.13 Additional Definitions.................................. 52
EXHIBITS:
A - Articles of Merger - Bank Merger Agreement
B - Option Agreement
C - Stockholders Agreement
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 7, 1996, by and among
Xxxxxxx Financial Corporation, a Delaware corporation ("Webster"), Webster
Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of Webster
("Merger Sub"), and DS Bancor, Inc., a Delaware corporation ("DS Bancor"). (DS
Bancor and Merger Sub are herein sometimes collectively referred to herein as
the "Constituent Corporations".)
WHEREAS, the Boards of Directors of Webster and DS Bancor have
determined that it is in the best interests of their respective companies and
their shareholders to consummate the business combination transaction provided
for herein in which Merger Sub will, subject to the terms and conditions set
forth herein, merge (the "Merger") with and into DS Bancor, with DS Bancor being
the Surviving Corporation (as defined) and becoming a wholly-owned subsidiary of
Webster and immediately following said Merger, Webster intends that the
Surviving Corporation will merge with and into Webster (the "Subsidiary
Merger"); and
WHEREAS, prior to the consummation of the Merger, Webster and DS Bancor
will respectively cause Xxxxxxx Bank, a federal savings bank and wholly-owned
subsidiary of Webster, and Derby Savings Bank ("Derby"), a Connecticut chartered
state savings bank and wholly-owned subsidiary of DS Bancor, 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 Derby with and into
Xxxxxxx Bank, and it is intended that the Bank Merger be consummated immediately
after consummation of the Merger and the Subsidiary Merger; and
WHEREAS, as an inducement to Webster to enter into this Agreement, DS
Bancor 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 DS Bancor will xxxxx Xxxxxxx
options to purchase, under certain circumstances, an aggregate of 564,296 newly
issued shares of common stock, par value $1.00 per share, of DS Bancor upon the
terms and conditions therein contained; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger.
Subject to the terms and conditions of this Agreement, in accordance
with the Delaware General Corporation Law (the "DGCL"), at the Effective Time
(as defined in Section 1.2
hereof), Merger Sub shall merge into DS Bancor, with DS Bancor being the
surviving corporation (hereinafter sometimes called the "Surviving Corporation")
in the Merger and becoming a wholly-owned subsidiary of Webster. Upon
consummation of the Merger, the separate corporate existence of Merger Sub shall
terminate.
1.2 Effective Time.
The Merger shall become effective on the Closing Date (as defined in
Section 9.1 hereof), as set forth in the certificate of merger (the "Certificate
of Merger") which shall be filed with the Secretary of State of Delaware (the
"Secretary of State") on the Closing Date . The term "Effective Time" shall be
the date and time when the Merger becomes effective on the Closing Date, as set
forth in the Certificate of Merger.
1.3 Effects of the Merger.
At and after the Effective Time, the Merger shall have the effects set
forth in Section 259 and 261 of the DGCL.
1.4 Conversion of DS Bancor Common Stock.
(a) At the Effective Time, subject to Sections 2.2(e), 1.4(b)
and 8.1(h) hereof, each share of the common stock, par value $1.00 per share, of
DS Bancor (the "DS Bancor 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 that number
of shares of Webster Common Stock, par value $.01 per share, determined by
dividing $43.00 by the Base Period Trading Price (as defined below), as may be
adjusted as provided below, computed to five decimal places (the "Exchange
Ratio"); provided, however, if the Base Period Trading Price shall be greater
than $38.50, the Exchange Ratio shall be 1.11688; provided, further, however,
that if the Base Period Trading Price shall be less than $31.50, the Exchange
Ratio shall be 1.36508. The number of shares of Webster Common Stock issuable
with respect to each share of DS Bancor Common Stock, as determined as set forth
herein, is called the "Merger Consideration." For purposes of this Agreement,
the term "Base Period Trading Price" shall mean the average of the daily closing
prices per share for Webster Common Stock for the 15 consecutive trading days
which shares of Webster Common Stock are actually traded (as reported on the
Nasdaq Stock Market National Market System) ending on the day preceding the
receipt of the last required federal bank regulatory approval (such period
herein called the "Base Period"). All of the shares of DS Bancor 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 DS Bancor Common Stock shall thereafter represent the right to receive (i)
the number of whole shares of Webster Common Stock and (ii) cash in
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lieu of fractional shares into which the shares of DS Bancor Common Stock
represented by such Certificate have been converted pursuant to this Section
1.4(a) and Section 2.2(e) hereof. Certificates previously representing shares of
DS Bancor Common Stock shall be exchanged for certificates representing whole
shares of Webster Common Stock and cash in lieu of fractional shares issued in
consideration therefor upon the surrender of such Certificates in accordance
with Section 2.2 hereof, without any interest thereon. If prior to the Effective
Time Webster should split or combine its common stock, or pay a dividend or
other distribution in such common stock, then the Exchange Ratio shall be
appropriately adjusted to reflect such split, combination, dividend or
distribution.
(b) At the Effective Time, all shares of DS Bancor Common
Stock that are owned by DS Bancor as treasury stock and all shares of DS Bancor
Common Stock that are owned directly or indirectly by Webster or DS Bancor or
any of their respective Subsidiaries (other than shares of DS Bancor 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 DS Bancor, as
the case may be, being referred to herein as "Trust Account Shares") and other
than any shares of DS Bancor Common Stock held by Webster or DS Bancor or any of
their respective Subsidiaries in respect of a debt previously contracted (any
such shares of DS Bancor Common Stock, and shares of Webster Common Stock which
are similarly held, whether held directly or indirectly by Webster or DS Bancor,
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 DS
Bancor or any of its Subsidiaries (other than Trust Account Shares and DPC
Shares) shall become treasury stock of Webster.
1.5 Conversion of Merger Sub Common Stock.
Each of the shares of the common stock, par value $.01 per share, of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
become shares of the Surviving Corporation after the Merger and shall thereafter
constitute all of the issued and outstanding shares of the Surviving
Corporation.
1.6 Options.
At the Effective Time, each option granted by DS Bancor to purchase
shares of DS Bancor 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 Derby
Savings Bank Stock Option Plan, as amended (the "1985 Option Plan") or the DS
Bancor, Inc. 1994 Stock Option Plan (the "1994 Option Plan") (the 1985 Option
Plan and the 1994 Option Plan, collectively, "DS Bancor Stock Plans");
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(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 DS Bancor
Common Stock subject to the option immediately before the
effective time, multiplied by the Exchange Ratio, provided
that any fractional shares of Webster Common Stock resulting
from such multiplication shall be rounded down to the nearest
share;
(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 DS Bancor Common Stock
under the option immediately before the Effective Time divided
by the Exchange Ratio, provided that such exercise price shall
be rounded to the nearest cent; and
(3) For purposes of the DS Bancor Stock Plans, service as an
advisory director of Xxxxxxx Bank shall be deemed to be
service.
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 DS Bancor in the 1994 Plan and all references to Derby Savings
Bank in the 1985 Plan (and the corresponding references in the option agreement
documenting such option) shall be deemed to be references to Webster.
1.7 Certificate of Incorporation.
At the Effective Time, the Certificate of Incorporation of DS Bancor,
as in effect at the Effective Time, shall be the Certificate of Incorporation of
the Surviving Corporation.
1.8 By-Laws.
At the Effective Time, the By-Laws of DS Bancor, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation.
1.9 Directors and Officers.
At the Effective Time, the directors and officers of Merger Sub
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation. Two directors of DS Bancor, to be selected by the
Board of Directors of Webster, shall be invited to serve as additional members
of the Board of Directors of Webster, one of whom shall serve until Xxxxxxx'x
1998 annual meeting, one of whom shall serve until Xxxxxxx'x 1999 annual meeting
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and one of whom shall be renominated when his or her term expires. Xxxxxxx
Bank's Board of Directors will be expanded after the Bank Merger to add such two
additional directors. In addition, the directors of DS Bancor serving
immediately prior to the Effective Time, including the two directors who will
serve on the Board of Directors of Webster, will be invited to serve on an
advisory board to Xxxxxxx Bank after the Bank Merger for a period of 24 months.
Such advisory directors will each be paid for such service up to $50,000 based
on a quarterly retainer of $4,750 and quarterly meeting attendance fees of
$1,500 for each meeting attended, provided, however, that while any such
advisory director also serves as a director of Webster such director shall not
receive any compensation as an advisory director pursuant hereto.
1.10 Tax Consequences.
It is intended that the Merger, either alone or in conjunction with the
Subsidiary 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.
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 or trust company as Webster may select (the
"Exchange Agent"), for the benefit of the holders of Certificates, for exchange
in accordance with this Article II, certificates representing the shares of
Webster Common Stock and the cash in lieu of fractional shares (such cash and
certificates for shares of Webster Common Stock, being hereinafter referred to
as the "Exchange Fund") to be issued pursuant to Section 1.4 and paid pursuant
to Section 2.2(a) in exchange for outstanding shares of DS Bancor Common Stock.
2.2 Exchange of Shares.
(a) As soon as practicable after the Effective Time, and in no
event later than three business days thereafter, the Exchange Agent shall mail
to each holder of record of a Certificate or Certificates a form letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing the
shares of Webster Common Stock and the cash in lieu of fractional shares into
which the shares of DS Bancor Common Stock represented by such Certificate or
Certificates shall have been converted pursuant to this Agreement. DS Bancor
shall have the right to review both the letter of transmittal and the
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instructions. Upon surrender of a Certificate for exchange and cancellation to
the Exchange Agent, together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor (x)
a certificate representing that number of whole shares of Webster Common Stock
to which such holder of DS Bancor Common Stock shall have become entitled
pursuant to the provisions of Article I hereof and (y) a check representing the
amount of cash in lieu of fractional shares, if any, which such holder has the
right to receive in respect of the Certificate surrendered pursuant to the
provisions of this Article II, and the Certificate so surrendered shall
forthwith be canceled. No interest will be paid or accrued on the cash in lieu
of fractional shares and unpaid dividends and distributions, if any, payable to
holders of Certificates.
(b) No dividends or other distributions declared after the
Effective Time with respect to Webster Common Stock and payable to the holders
of record thereof shall be paid to the holder of any unsurrendered Certificate
until the holder thereof shall surrender such Certificate in accordance with
this Article II. After the surrender of a Certificate in accordance with this
Article II, the record holder thereof shall be entitled to receive any such
dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to shares of Webster Common Stock
represented by such Certificate. No holder of an unsurrendered Certificate shall
be entitled, until the surrender of such Certificate, to vote the shares of
Webster Common Stock into which his DS Bancor Common Stock shall have been
converted.
(c) If any certificate representing shares of Webster Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the Certificate so surrendered shall be properly endorsed
(or accompanied by an appropriate instrument of transfer) and otherwise in
proper form for transfer, and that the person requesting such exchange shall pay
to the Exchange Agent in advance any transfer or other taxes required by reason
of the issuance of a certificate representing shares of Webster Common Stock in
any name other than that of the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on
the stock transfer books of DS Bancor of the shares of DS Bancor Common Stock
which were issued and outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates representing such shares are presented
for transfer to the Exchange Agent, they shall be canceled and exchanged for
certificates representing shares of Webster Common Stock as provided in this
Article II.
(e) Notwithstanding anything to the contrary contained herein,
no certificates or scrip representing fractional shares of Webster Common Stock
shall be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Webster Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a shareholder
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of Webster. In lieu of the issuance of any such fractional share, Webster shall
pay to each former shareholder of DS Bancor who otherwise would be entitled to
receive a fractional share of Webster Common Stock an amount in cash determined
by multiplying (i) the average, without respect to the number of shares traded,
of the high and low sales prices of Webster Common Stock as reported on the
Nasdaq National Market (or any other securities exchange on which Webster Common
Stock is then traded) for the five trading days immediately preceding the fifth
trading day before the Closing Date by (ii) the fraction of a share of Webster
Common Stock to which such holder would otherwise be entitled to receive
pursuant to Section 1.4 hereof.
(f) Any portion of the Exchange Fund that remains unclaimed by
the shareholders of DS Bancor for twelve months after the Effective Time shall
be returned to Webster. Any shareholders of DS Bancor 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 DS Bancor Common Stock such shareholder holds as
determined pursuant to this Agreement, in each case, without any interest
thereon. Notwithstanding the foregoing, none of Xxxxxxx, XX Bancor, the Exchange
Agent or any other person shall be liable to any former holder of shares of DS
Bancor Common Stock for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Webster, the posting by such person of a bond in such amount as Webster may
reasonably direct as indemnity against claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Certificate the shares of Webster Common Stock and
cash in lieu of fractional shares deliverable in respect thereof pursuant to
this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DS BANCOR
Except as set forth in a disclosure schedule which is being delivered
to Webster concurrently herewith (the "DS Bancor Disclosure Schedule"), DS
Bancor hereby represents and warrants to Webster and Merger Sub as follows:
3.1 Corporate Organization.
(a) DS Bancor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. DS Bancor
has the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in which the nature of
any material business conducted by it or the character or location of any
material
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properties or assets owned or leased by it makes such licensing or qualification
necessary. DS Bancor 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
By-Laws of DS Bancor, copies of which have previously been delivered to Webster,
are true, correct and complete copies of such documents as in effect as of the
date of this Agreement.
(b) Derby is a state chartered savings bank duly organized,
validly existing and in good standing under the laws of the State of
Connecticut. The deposit accounts of Derby 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 Derby. Derby is the only
subsidiary of DS Bancor that is a "Significant Subsidiary" as such term is
defined in Regulation S-X promulgated by the Securities and Exchange Commission
(the "SEC"). Derby has the corporate power and authority to own or lease all of
its properties and assets and to carry on its business as it is now being
conducted and is duly licensed or qualified to do business in each jurisdiction
in which the nature of any material business conducted by it or the character or
the location of any material properties or assets owned or leased by it makes
such licensing or qualification necessary. The Certificate of Incorporation and
By-Laws of Derby, 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 DS Bancor consists of
6,000,000 shares of DS Bancor Common Stock and 2,000,000 shares of serial
preferred stock, no par value (the "DS Bancor Preferred Stock"). As of the date
hereof, there are (x) 3,031,527 shares of DS Bancor Common Stock issued and
outstanding and an additional 339,500 shares of DS Bancor Common Stock held in
DS Bancor's treasury, (y) no shares of DS Bancor Common Stock reserved for
issuance upon exercise of outstanding stock options or otherwise, except for
453,080 shares of DS Bancor Common Stock reserved for issuance pursuant to the
DS Bancor Stock Plans (of which options for 398,058 shares are currently
outstanding) and (ii) 564,296 shares of DS Bancor Common Stock reserved for
issuance upon exercise of the option to be issued to Webster pursuant to the
Option Agreement, and (z) no shares of DS Bancor Preferred Stock issued or
outstanding, held in DS Bancor's treasury or reserved for issuance upon exercise
of outstanding stock options or otherwise. All of the issued and outstanding
shares of DS Bancor 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, DS Bancor 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 DS Bancor Common
Stock or DS Bancor Preferred Stock or any other equity security of DS Bancor or
any securities representing the right to purchase or otherwise receive any
shares of DS Bancor Common Stock or any other
8
equity security of DS Bancor. The names of the optionees, the date of each
option to purchase DS Bancor 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 DS Bancor Stock Plan are set
forth in Section 3.2(a) of the DS Bancor Disclosure Schedule. Since December 31,
1995 DS Bancor has not issued any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock, other than
pursuant to the exercise of director or employee stock options granted prior to
June 30, 1996, under the DS Bancor Stock Plans.
(b) Section 3.2(b) of the DS Bancor Disclosure Schedule sets
forth a true, correct and complete list of all Subsidiaries of DS Bancor as of
the date of this Agreement. DS Bancor 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 DS Bancor 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) DS Bancor 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 DS Bancor. The Board of Directors of DS Bancor has directed that
this Agreement and the transactions contemplated hereby be submitted to DS
Bancor's shareholders for approval at a special meeting of such shareholders
and, except for the adoption of this Agreement by the requisite vote of DS
Bancor's shareholders, no other corporate proceedings on the part of DS Bancor
(except for matters related to setting the date, time, place and record date for
the special meeting) are necessary to approve this Agreement or the Option
Agreement or to consummate the transactions contemplated hereby or thereby. This
Agreement has been, and the Option Agreement will be, duly and validly executed
and delivered by DS Bancor and (assuming due authorization, execution and
delivery by Webster and Merger Sub of this Agreement and by Webster of the
Option Agreement) will constitute valid and binding obligations of DS Bancor,
enforceable against DS Bancor 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.
9
(b) Derby 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 Derby and by DS Bancor as the sole
shareholder of Derby. No other corporate proceedings on the part of Derby will
be necessary to consummate the transactions contemplated thereby. The Bank
Merger Agreement, upon execution and delivery by Derby, will be duly and validly
executed and delivered by Derby and will (assuming due authorization, execution
and delivery by Xxxxxxx Bank) constitute a valid and binding obligation of
Derby, enforceable against Derby 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 and
the Option Agreement by DS Bancor or the Bank Merger Agreement by Derby, nor the
consummation by DS Bancor or Derby, as the case may be, of the transactions
contemplated hereby or thereby, nor compliance by DS Bancor or Derby with any of
the terms or provisions hereof or thereof, will (i) violate any provision of the
Certificate of Incorporation or By-Laws of DS Bancor or the Certificate of
Incorporation or By-Laws of Derby, 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 DS Bancor or Derby, 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 DS Bancor or
Derby 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 DS Bancor or Derby is a party, or by which
they or any of their respective properties or assets may be bound or affected.
3.4 Consents and Approvals.
(a) Except for (i) the filing of applications and notices, as
applicable, as to the Merger and the Bank Merger with the FRB under the BHCA and
the Office of Thrift Supervision ("OTS") under the Home Owners Loan Act of 1933
("HOLA") and the Bank Merger Act and approval of such applications and notices,
(ii) the filing of any required applications or notices with the FDIC and OTS as
to the subsidiary activities of Derby which become service corporation or
operating subsidiaries of Xxxxxxx Bank and approval of such applications and
notices, (iii) the filing of applications and notices with the Banking
Commissioner of the State of Connecticut (the "Connecticut Commissioner") and
approval of such applications and notices as to the Merger and the Bank Merger
(the "State Banking Approvals"), (iv) the filing with the Connecticut
Commissioner of an acquisition statement
10
pursuant to Section 36a-184 of the Banking Law of the State of Connecticut prior
to the acquisition of more than 10% of the DS Bancor 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 1.6 hereof), which will include the joint proxy
statement/prospectus to be used in soliciting the approval of DS Bancor's
shareholders at a special meeting to be held in connection with this Agreement
and the transactions contemplated hereby (the "Proxy Statement/Prospectus"),
(vi) the approval of this Agreement by the requisite vote of the shareholders of
DS Bancor, (vii) the approval for the issuance of Webster Common Stock hereunder
by a majority of shares of Webster Common Stock voted at a meeting of Xxxxxxx
shareholders at which a quorum is present, (viii) the filing of the Certificate
of Merger with the Secretary of State pursuant to the DGCL, (ix) the filings
required by the Bank Merger Agreement, (x) the filings required for the
Subsidiary Merger, and (xi) such filings, authorizations or approvals as may be
set forth in Section 3.4 of the DS Bancor 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 DS Bancor of this Agreement and the Option
Agreement, (2) the consummation by DS Bancor of the Merger and the other
transactions contemplated hereby, (3) the execution and delivery by Derby of the
Bank Merger Agreement, (4) the consummation by DS Bancor of the Option
Agreement; and (5) the consummation by Derby of the Bank Merger and the
transactions contemplated thereby, except, in each case, for such consents,
approvals or filings, the failure of which to obtain will not have a material
adverse effect on the ability of Webster to consummate the transactions
contemplated hereby.
(b) DS Bancor hereby represents to Webster that it has no
knowledge of any reason why approval or effectiveness of any of the
applications, notices or filings referred to in Section 3.4(a) cannot be
obtained or granted on a timely basis.
3.5 Loan Portfolio; Reports.
(a) As of September 30, 1996 and thereafter through and
including the date of this Agreement, neither DS Bancor nor Derby 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 DS Bancor or any of its Subsidiaries, or
any Affiliated Person (as defined in Section 9.13) of the foregoing.
(b) DS Bancor and Derby have timely filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that they were required to file since September 30, 1996
with (i) the FRB, (ii) the FDIC, (iii) the Connecticut Commissioner and any
other state banking commissions or any other state regulatory
11
authority (each a "State Regulator"), (iv) the SEC and (v) any other
self-regulatory organization ("SRO") (collectively "Regulatory Agencies").
Except for normal examinations conducted by a Regulatory Agency in the regular
course of the business of DS Bancor and its Subsidiaries, no Governmental Entity
is conducting, or has conducted, any proceeding or investigation into the
business or operations of DS Bancor or Derby since September 30, 1993.
3.6 Financial Statements; Exchange Act Filings; Books and Records.
DS Bancor has previously delivered to Webster true, correct and
complete copies of (a) the consolidated statements of position of DS Bancor and
its Subsidiaries as of December 31 for the fiscal years 1993 and 1994, and 1995
and the related consolidated statements of earnings, stockholders' equity and
cash flows for the fiscal years 1992 through 1995, inclusive, as reported in DS
Bancor's Annual Report on Form 10-K for the fiscal year ended December 31, 1995
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 Friedberg,
Xxxxx & Co., P.C., independent public accountants with respect to DS Bancor, and
(b) the unaudited consolidated statements of position of DS Bancor and its
Subsidiaries as of June 30, 1996 and the related comparative unaudited
consolidated statements of earnings, cash flows and changes in stockholders'
equity for the six month periods ended June 30, 1996 and 1995 as reported in DS
Bancor's Quarterly Report on Form 10-Q filed with the SEC under the Exchange
Act. The financial statements referred to in this Section 3.6 (including the
related notes, where applicable) fairly present, and the financial statements
referred to in Section 6.9 hereof will fairly present (subject, in the case of
the unaudited statements, to recurring audit adjustments normal in nature and
amount), the results of the consolidated operations and consolidated financial
condition of DS Bancor and its Subsidiaries for the respective fiscal periods or
as of the respective dates therein set forth; each of such statements (including
the related notes, where applicable) comply, and the financial statements
referred to in Section 6.9 hereof will comply, with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto and each of such statements (including the related notes, where
applicable) has been, and the financial statements referred to in Section 6.9
hereof will be prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied during the periods involved, except in
each case as indicated in such statements or in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q. DS Bancor's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995 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 DS Bancor has previously delivered
to Webster true, correct and complete copies of such reports. The books and
records of DS Bancor and Derby have been, and are being, maintained in all
material respects in accordance with GAAP and any other applicable legal and
accounting requirements.
12
3.7 Broker's Fees.
Neither DS Bancor nor any DS Bancor Subsidiary nor any of their
respective officers or directors has employed any broker or finder or incurred
any liability for any broker's fees, commissions or finder's fees in connection
with any of the transactions contemplated by this Agreement, the Bank Merger
Agreement or the Option Agreement, except that DS Bancor has engaged, and will
pay a fee or commission to Alex. Xxxxx & Sons Incorporated in accordance with
the terms of a letter agreement, as amended, between Alex. Xxxxx & Sons
Incorporated and DS Bancor, a true, complete and correct copy of which has been
previously delivered by DS Bancor to Webster.
3.8 Absence of Certain Changes or Events.
(a) Except as disclosed in DS Bancor's Annual Report on Form
10-K for the fiscal year ended December 31, 1995, or in any Current or Quarterly
Report of DS Bancor on Form 8-K or Form 10-Q filed prior to the date of this
Agreement, since December 31, 1995 (i) neither DS Bancor nor any of its
Subsidiaries 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 Section
9.13) on DS Bancor.
(b) Since December 31, 1995 DS Bancor and its Subsidiaries
have carried on their respective businesses in the ordinary and usual course
consistent with their past practices.
3.9 Legal Proceedings.
(a) Neither DS Bancor nor any of its Subsidiaries is a party
to any, and there are no pending or threatened, legal, administrative,
arbitration or other proceedings, claims, actions or governmental or regulatory
investigations of any nature against DS Bancor or any of its Subsidiaries in
which there is a reasonable probability of any material recovery against or
other material effect upon DS Bancor 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 DS Bancor, any of its Subsidiaries or the
assets of DS Bancor or any of its Subsidiaries.
13
3.10 Taxes and Tax Returns.
Each of DS Bancor and its Subsidiaries has duly filed all Federal and
state tax returns required to be filed by it on or prior to the date hereof (all
such returns being accurate and complete in all material respects) and has duly
paid or made provisions for the payment of all material taxes and other
governmental charges which have been incurred or are due or claimed to be due
from it by Federal and state taxing authorities on or prior to the date hereof
other than taxes or other charges (a) which (x) are not yet delinquent or (y)
are being contested in good faith and set forth in Section 3.10 of the DS Bancor
Disclosure Schedule and (b) which have not been finally determined. All
liability with respect to the income tax returns of DS Bancor and its
Subsidiaries has been satisfied for all years to and including 1995. The
Internal Revenue Service ("IRS") has not notified DS Bancor of, or otherwise
asserted, that there are any material deficiencies with respect to the income
tax returns of DS Bancor subsequent to 1993. There are no material disputes
pending, or claims asserted for, Taxes or assessments upon DS Bancor or any of
its Subsidiaries, nor has DS Bancor or any of its Subsidiaries been requested to
give any currently effective waivers extending the statutory period of
limitation applicable to any Federal or state income tax return for any period.
In addition, Federal and state returns which are accurate and complete in all
material respects have been filed by DS Bancor and its Subsidiaries for all
periods for which returns were due with respect to income tax withholding,
Social Security and unemployment taxes and the amounts shown on such Federal and
state returns to be due and payable have been paid in full or adequate provision
therefor has been included by DS Bancor in its consolidated financial statements
as of December 31, 1995.
3.11 Employee Plans.
(a) Section 3.11 of the DS Bancor Disclosure Schedule sets
forth a true and complete list of each employee benefit plan (within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), arrangement or agreement that is maintained as of the date
of this Agreement (the "Plans") by DS Bancor or any of its Subsidiaries, all of
which together with DS Bancor would be deemed a "single employer" within the
meaning of Section 4001 of ERISA or Code Sections 414(b), (c) or (m)).
(b) DS Bancor has heretofore delivered to Webster true,
correct and complete copies of each of the Plans and all related documents,
including but not limited to (i) the actuarial report for such Plan (if
applicable) for each of the last five years, (ii) the most recent determination
letter from the Internal Revenue Service (if applicable) for such Plan, (iii)
the current summary plan description and any summaries of material modification,
(iv) all annual reports (Form 5500 series) for each Plan filed for the preceding
five plan years, (v) all agreements with fiduciaries and service providers
relating to the Plan, and (vi) all substantive correspondence relating to any
such Plan addressed to or received from the Internal Revenue
14
Service, the Department of Labor, the Pension Benefit Guaranty Corporation or
any other governmental agency.
(c) (i) Each of the Plans has been operated and in all
material respects administered in compliance with applicable Laws, including but
not limited to ERISA and the Code, (ii) each of the Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code is so qualified,
(iii) with respect to each Plan which is subject to Title IV of ERISA, the
present value of accrued benefits under such Plan, based upon the actuarial
assumptions used for funding purposes in the most recent actuarial report
prepared by such Plan's actuary with respect to such Plan, did not, as of its
latest valuation date, exceed the then current value of the assets of such Plan
allocable to such accrued benefits, (iv) no Plan provides benefits, including
without limitation death or medical benefits (whether or not insured), with
respect to current or former employees of DS Bancor or any DS Bancor Subsidiary
beyond their retirement or other termination of service, other than (w) coverage
mandated by applicable Law, (x) death benefits or retirement benefits under any
"employee pension plan," as that term is defined in Section 3(2) of ERISA, (y)
deferred compensation benefits accrued as liabilities on the books of DS Bancor
or any DS Bancor Subsidiary, or (z) benefits the full cost of which is borne by
the current or former employee (or his beneficiary), (v) no liability under the
Title IV of ERISA has been incurred by DS Bancor or any DS Bancor Subsidiary
that has not been satisfied in full, and no condition exists that presents a
material risk to DS Bancor or any DS Bancor Subsidiary incurring a material
liability thereunder, (vi) no Plan is a "multi employer pension plan," as such
term is defined in Section 3(37) of ERISA, (vii) all contributions or other
amounts payable by DS Bancor or any DS Bancor Subsidiary as of the Effective
Time with respect to each Plan in respect of current or prior plan years have
been paid or accrued in accordance with generally accepted accounting practices
and Section 412 of the Code, (viii) neither DS Bancor nor any DS Bancor
Subsidiary has engaged in a transaction in connection with which DS Bancor or
any DS Bancor Subsidiary could be subject to either a civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section
4975 or 4976 of the Code, (ix) to the knowledge of DS Bancor, 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 (other than Plans providing for the payment of
benefits from the general assets of DS Bancor or any DS Bancor Subsidiary) could
be terminated as of the Effective Time without material liability; (xi) no Plan,
program, agreement or other arrangement, either individually or collectively,
provides for any payment by DS Bancor or any DS Bancor Subsidiary that would not
be deductible under Code Sections 162(a)(1) or 404 or that would constitute a
"parachute payment" within the meaning of Code Section 280G; (xii) no
"accumulated funding deficiency" as defined in Section 302(a)(2) of ERISA or
Section 412 of the Code, whether or not waived, and no "unfunded current
liability" as determined under Section 412(l) of the Code exists with respect to
any Plan; and (xiii) no Plan has experienced a "reportable event" (as such term
is defined in Section 4043(b) of ERISA) that is not subject to an administrative
or statutory waiver from the reporting requirement.
15
3.12 Certain Contracts.
(a) Neither DS Bancor nor any of its Subsidiaries is a party
to or bound by any contract, arrangement or commitment (i) with respect to the
employment of any directors, officers, employees or consultants, (ii) which,
upon the consummation of the transactions contemplated by this Agreement or the
Bank Merger Agreement will (either alone or upon the occurrence of any
additional acts or events) result in any payment (whether of severance pay or
otherwise) becoming due from Xxxxxxx, XX Bancor, Derby, the Surviving
Corporation, Xxxxxxx Bank or any of their respective Subsidiaries to any
director, officer or employee thereof, (iii) which materially restricts the
conduct of any line of business by DS Bancor or Derby, (iv) with or to a labor
union or guild (including any collective bargaining agreement) or (v) (including
any stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan) any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the Bank Merger Agreement,
or the value of any of the benefits of which will be calculated on the basis of
any of the transactions contemplated by this Agreement or the Bank Merger
Agreement. DS Bancor has previously delivered to Webster true, correct and
complete copies of all employment, consulting and deferred compensation
agreements to which DS Bancor or any of its Subsidiaries is a party. Section
3.12(a) of the DS Bancor Disclosure Schedule sets forth a list of all material
contracts (as defined in Item 601(b)(10) of Regulation S-K) of DS Bancor. Each
contract, arrangement or commitment of the type described in this Section
3.12(a), whether or not set forth in Section 3.12(a) of the DS Bancor Disclosure
Schedule, is referred to herein as a "DS Bancor Contract," and neither DS Bancor
nor any of its Subsidiaries has received notice of, nor do any executive
officers of such entities know of, any violation of any DS Bancor Contract.
(b) (i) Each DS Bancor Contract is valid and binding and in
full force and effect, (ii) DS Bancor and each of its Subsidiaries has in all
material respects performed all obligations required to be performed by it to
date under each DS Bancor 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 DS Bancor or any of its Subsidiaries under any
such DS Bancor Contract.
3.13 Agreements with Regulatory Agencies.
Neither DS Bancor nor Derby 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 DS Bancor
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
DS Bancor or Derby been advised by any Governmental Entity that it is
considering issuing or requesting any Regulatory Agreement.
16
3.14 State Takeover Laws.
The Board of Directors of DS Bancor has approved the offer of Webster
to enter into this Agreement, this Agreement, the Bank Merger Agreement and the
Option Agreement such that the provisions of Section 203 of the DGCL Article 10
Subsection 4 and Article 12 Subsection 1 of DS Bancor's Certificate of
Incorporation will not, assuming the accuracy of the representations contained
in Section 4.8 hereof, apply to the offer to enter into this Agreement, this
Agreement, the Bank Merger Agreement or the Option Agreement or any of the
transactions contemplated hereby or thereby.
3.15 Environmental Matters.
(a) Each of DS Bancor and the DS Bancor Subsidiaries is in
compliance in all material respects with all applicable federal and state laws
and regulations relating to pollution or protection of the environment
(including without limitation, laws and regulations relating to emissions,
discharges, releases and threatened releases of Hazardous Material (as
hereinafter defined), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials;
(b) There is no suit, claim, action, proceeding, investigation
or notice pending or to the knowledge of DS Bancor and Derby Savings Bank's
executive officers or of such other officers who such executive officers deem
appropriate as set forth on the DS Bancor Disclosure Schedule threatened (or
past or present actions or events that could form the basis of any such suit,
claim, action, proceeding, investigation or notice), in which DS Bancor or any
DS Bancor Subsidiary has been or, with respect to threatened suits, claims,
actions, proceedings, investigations or notices may be, named as a defendant (x)
for alleged material noncompliance (including by any predecessor), with any
environmental law, rule or regulation or (y) relating to any material release or
threatened release into the environment of any Hazardous Material, whether or
not occurring at or on a site owned, leased or operated by DS Bancor or any DS
Bancor Subsidiary;
(c) To the knowledge of DS Bancor and Derby Savings Bank's
executive officers or of such other officers who such executive officers deem
appropriate as set forth on the DS Bancor Disclosure Schedule, during the period
of DS Bancor's or any DS Bancor Subsidiary's ownership or operation of any of
its properties, there has not been any material release of Hazardous Materials
in, on, under or affecting any such property.
(d) To the knowledge of DS Bancor and Derby Savings Bank's
executive officers or of such other officers who such executive officers deem
appropriate as set forth on the DS Bancor Disclosure Schedule, neither DS Bancor
nor any DS Bancor Subsidiary has made or participated in any loan to any person
who is subject to any suit, claim, action, proceeding, investigation or notice,
pending or threatened, with respect to (i) any alleged material
17
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.
3.16 Reserves for Losses.
All reserves or other allowances for possible losses reflected in DS
Bancor's most recent financial statements referred to in Section 3.6 complied
with all Laws and are adequate under GAAP. Neither DS Bancor nor Derby has been
notified by the OTS, the FDIC, the Connecticut Commissioner or DS Bancor's
independent auditor, in writing or otherwise, that such reserves are inadequate
or that the practices and policies of DS Bancor or Derby in establishing such
reserves and in accounting for delinquent and classified assets generally fail
to comply with applicable accounting or regulatory requirements, or that the
OTS, the FDIC, the Connecticut Commissioner or DS Bancor's independent auditor
believes such reserves to be inadequate or inconsistent with the historical loss
experience of DS Bancor or Derby. DS Bancor has previously furnished Webster
with a complete list of all extensions of credit and other real estate owned
("OREO") that have been classified by any bank examiner (regulatory or internal)
as other loans specially mentioned, special mention, substandard, doubtful,
loss, classified or criticized, credit risk assets, concerned loans or words of
similar import. DS Bancor 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 DS Bancor or Derby 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 DS Bancor Disclosure Schedule lists (i) all real
property owned by DS Bancor and each DS Bancor Subsidiary; (ii) each real
property lease, sublease or installment purchase arrangement to which DS Bancor
or any DS Bancor Subsidiary is a party; (iii) a description of each contract for
the purchase, sale, or development of real estate to which DS Bancor or any DS
Bancor Subsidiary is a party; and (iv) all items of DS Bancor's or any DS Bancor
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 DS Bancor's consolidated financial statements as of
December 31, 1995 referred to in Section 3.6 hereof, (b) exceptions to title
that do not interfere materially with DS Bancor's or any DS
18
Bancor 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, 1995, and (e) items listed in Section 3.17 of
the DS Bancor Disclosure Schedule, DS Bancor and each DS Bancor Subsidiary have
good and, as to owned real property, marketable and insurable title to all their
properties and assets, reflected in its consolidated financial statements of DS
Bancor as of December 31, 1995, free and clear of all liens, claims, charges and
other encumbrances. DS Bancor and each DS Bancor Subsidiary, as lessees, have
the right under valid and subsisting leases to occupy, use and possess all
property leased by them, and there has not occurred under any such lease any
material breach, violation or default by DS Bancor or Derby, and neither DS
Bancor nor any DS Bancor Subsidiary has experienced any material uninsured
damage or destruction with respect to such properties since December 31, 1995.
All properties and assets used by DS Bancor and each DS Bancor Subsidiary 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. DS Bancor and each DS
Bancor Subsidiary enjoy peaceful and undisturbed possession under all leases for
the use of all property under which they are the lessees, and all leases to
which DS Bancor or any DS Bancor Subsidiary is a party are valid and binding
obligations in accordance with the terms thereof. Neither DS Bancor nor any DS
Bancor Subsidiary is in material default with respect to any such lease, and
there has occurred no default by DS Bancor or Derby or event which with the
lapse of time or the giving of notice, or both, would constitute a material
default under any such lease. There are no Laws, conditions of record, or other
impediments which interfere with the intended use by DS Bancor or any DS Bancor
Subsidiary of any of the property owned, leased, or occupied by them.
3.18 Insurance.
Section 3.18 of the DS Banco Disclosure Schedule contains a true,
correct and complete a list of all insurance policies and bonds maintained by DS
Bancor and any DS Bancor Subsidiary, including the name of the insurer, the
policy number, the type of policy and any applicable deductibles, and all such
insurance policies and bonds (or other insurance policies and bonds that have,
from time to time, in respect of the nature of the risks insured against and
amount of coverage provided, been substantially similar in kind and amount to
that customarily carried by parties similarly situated who own properties and
engage in businesses substantially similar to that of DS Bancor and any DS
Bancor Subsidiary) are in full force and effect and have been in full force and
effect. As of the date hereof, neither DS Bancor nor any DS Bancor 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 DS Bancor and DS Bancor 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
19
and amount to that customarily carried by parties similarly situated who own
properties and engage in businesses substantially similar to that of DS Bancor
and the DS Bancor Subsidiaries, and is sufficient for compliance by DS Bancor
and the DS Bancor Subsidiaries with all requirements of Law and agreements to
which DS Bancor or any of the DS Bancor Subsidiaries is subject or is party.
True, correct and complete copies of all such policies and bonds reflected at
Section 3.18 of the DS Bancor Disclosure Statement, as in effect on the date
hereof, have been delivered to Webster.
3.19 Liquidation Account.
The liquidation account established by Derby in connection with its
conversion from the mutual to stock form has been eliminated as provided under
Connecticut law.
3.20 Compliance with Applicable Laws.
Each of DS Bancor and any DS Bancor Subsidiary has complied in all
material respects with all Laws applicable to it or to the operation of its
business. Neither DS Bancor nor any DS Bancor Subsidiary has received any notice
of any material alleged or threatened claim, violation, or liability under any
such Laws that has not heretofore been cured and for which there is no remaining
liability.
3.21 Loans.
As of the date hereof:
(a) All loans owned by DS Bancor or any DS Bancor Subsidiary,
or in which DS Bancor or any DS Bancor Subsidiary has an interest, comply in all
material respects with all Laws, including, but not limited to, applicable usury
statutes, underwriting and recordkeeping requirements and the Truth in Lending
Act, the Equal Credit Opportunity Act, and the Real Estate Procedures Act, and
other applicable consumer protection statutes and the regulations thereunder.
(b) All loans owned by DS Bancor or any DS Bancor Subsidiary,
or in which DS Bancor or any DS Bancor Subsidiary has an interest, have been
made or acquired by DS Bancor 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 DS Bancor's consolidated financial
statements at June 30, 1996 referred to in Section 3.6 hereof. Each of DS Bancor
and each DS Bancor Subsidiary holds mortgages contained in its loan portfolio
for its own benefit to the extent of its interest shown therein; such mortgages
evidence liens having the priority indicated by their terms, subject, as of the
date of recordation or filing of applicable security instruments, only to such
exceptions as are discussed in attorneys' opinions regarding title or in title
insurance policies in the mortgage files relating to the loans secured by real
20
property or are not material as to the collectability of such loans; and all
loans owned by DS Bancor and each DS Bancor Subsidiary are with full recourse to
the borrowers, and each of DS Bancor and any DS Bancor Subsidiary has taken no
action which would result in a waiver or negation of any rights or remedies
available against the borrower or guarantor, if any, on any loan. All applicable
remedies against all borrowers and guarantors are enforceable except as may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
creditors' rights and except as may be limited by the exercise of judicial
discretion in applying principles of equity. All loans purchased or originated
by DS Bancor or any DS Bancor Subsidiary and subsequently sold by DS Bancor or
any DS Bancor Subsidiary have been sold without recourse to DS Bancor or any DS
Bancor Subsidiary and without any liability under any yield maintenance or
similar obligation. True, correct and complete copies of loan delinquency
reports as of August 31, 1996 prepared by DS Bancor and each DS Bancor
Subsidiary, which reports include all loans delinquent or otherwise in default,
have been furnished to Webster. True, correct and complete copies of the
currently effective lending policies and practices of DS Bancor and each DS
Bancor Subsidiary also have been furnished to Webster.
(c) Each outstanding loan participation sold by DS Bancor or
any DS Bancor Subsidiary was sold with the risk of non-payment of all or any
portion of that underlying loan to be shared by each participant (including DS
Bancor or any DS Bancor Subsidiary) proportionately to the share of such loan
represented by such participation without any recourse of such other lender or
participant to DS Bancor or any DS Bancor Subsidiary for payment or repurchase
of the amount of such loan represented by the participation or liability under
any yield maintenance or similar obligation. DS Bancor and any DS Bancor
Subsidiary have properly fulfilled in all material respects its contractual
responsibilities and duties in any loan in which it acts as the lead lender or
servicer and has complied in all material respects with its duties as required
under applicable regulatory requirements.
(d) DS Bancor and each DS Bancor Subsidiary have properly
perfected or caused to be properly perfected all security interests, liens, or
other interests in any collateral securing any loans made by it.
3.22 Affiliates; Certain Executive Officers.
Each director and 5% or greater shareholder and any other person who is
an "affiliate" (for purposes of Rule 145 under the Securities Act and for
purposes of qualifying the Merger for "pooling-of-interests" accounting
treatment) of DS Bancor has delivered to Webster, concurrently with the
execution of this Agreement, a shareholders agreement in the form of Exhibit C
hereto (the "Stockholders Agreement"). The Stockholders Agreement has been duly
and validly executed and delivered by each person that is a party thereto
(assuming due authorization, execution and delivery by Webster and/or DS Bancor,
as applicable) and 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
21
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 Webster Common Stock.
Neither DS Bancor nor any of its direct or indirect subsidiaries (i)
beneficially own, directly or indirectly, or (ii) is a party to any agreement,
arrangement or understanding for the purpose of acquiring, holding or voting,
any shares of outstanding capital stock of Webster.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXXXX
Xxxxxxx hereby represents and warrants to DS Bancor as follows:
4.1 Corporate Organization.
(a) Webster is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. 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 and
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 HOLA. The Certificate of Incorporation and By-Laws of Webster, copies of
which have previously been made available to DS Bancor, are true, correct and
complete copies of such documents as in effect as of the date of this Agreement.
(b) Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(c) 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 business as is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary. The Charter and By-Laws of Xxxxxxx Bank, copies of
which have previously been made available to DS Bancor, are true, correct and
complete copies of such documents as in effect as of the date of this Agreement.
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4.2 Capitalization.
(a) The authorized capital stock of Xxxxxxx consists of
14,000,000 shares of Xxxxxxx Common Stock, of which 8,108,472 shares were
outstanding (net of 394,424 treasury shares) at September 30, 1996 and 3,000,000
shares of serial preferred stock, par value $.01 per share ("Xxxxxxx Preferred
Stock"), of which 150,869 shares of Series B Cumulative Convertible Preferred
Stock (the "Series B Stock") were outstanding at September 30, 1996. At such
date, there were options outstanding to purchase 596,940 shares of Xxxxxxx
Common Stock. All of the issued and outstanding shares of Xxxxxxx Common Stock
and Series B Stock have been duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. As of the date of this Agreement, except as
set forth above, 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 securities of Xxxxxxx or
any securities presenting the right to purchase or otherwise receive any shares
of Xxxxxxx Common Stock or Webster Preferred Stock, other than a warrant to
purchase 300,000 shares of Webster Common Stock issued to Fleet Financial Group
and a contingent payment arrangement with Fleet Financial Group as described in
the Form 8-K filed by Webster with the Securities and Exchange Commission for
such event. The shares of Xxxxxxx Common Stock to be issued pursuant to the
Merger are authorized and, at the Effective Time, all such shares will be
validly issued, fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof.
(b) The authorized capital stock of Merger Sub consists of
1,000 shares of common stock, par value $.01 per share, all of which are issued
and outstanding and owned by 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.
(c) The authorized capital stock of Xxxxxxx Bank consists of
1,000 shares of common stock, par value $.01 per share, all of which are issued
and outstanding. The outstanding shares of common stock of Xxxxxxx Bank are
owned by Webster free and clear of all liens, charges, encumbrances and security
interests whatsoever, and all of such shares are duly authorized and validly
issued and fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to ownership thereof.
4.3 Authority; No Violation.
(a) Xxxxxxx has full corporate power and authority to execute
and deliver this Agreement and the Option Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby have been duly and validly approved by
23
the Board of Directors of Xxxxxxx. No other corporate proceedings on the part of
Xxxxxxx are necessary to consummate the transactions contemplated hereby, except
for the approval of this Agreement by a majority of shares of Xxxxxxx Common
Stock voted at a meeting of Xxxxxxx'x shareholders at which a quorum is present.
This Agreement has been, and the Option Agreement will be, duly and validly
executed and delivered by Webster and (assuming due authorization, execution and
delivery by DS Bancor) will constitute valid and binding obligations of Webster,
enforceable against Webster 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) Merger Sub has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
approved by the Board of Directors of Merger Sub and by Xxxxxxx as the sole
shareholder of Merger Sub. No other corporate proceedings on the part of Merger
Sub will be necessary to consummate the transactions contemplated hereby. This
Agreement, upon execution and delivery by Merger Sub, will be duly and validly
executed and delivered by Merger Sub and will (assuming due authorization,
execution and delivery by DS Bancor) constitute a valid and binding obligation
of Merger Sub, enforceable against Merger Sub in accordance with its terms,
except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
(c) Xxxxxxx Bank has full corporate power and authority to
execute and deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby will be duly and
validly approved by the Board of Directors of Xxxxxxx Bank and by Webster as the
sole shareholder of Xxxxxxx Bank prior to the Effective Time. 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 will (assuming due
authorization, execution and delivery by Derby) 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.
(d) Except as set forth in Section 4.3(d) of the disclosure
schedule which is being delivered by Webster to DS Bancor concurrently herewith
(the "Webster Disclosure Schedule"), neither the execution and delivery of this
Agreement by Webster or Merger Sub, the Option Agreement by Webster or the Bank
Merger Agreement by Xxxxxxx Bank, nor the consummation by Webster, Merger Sub or
Xxxxxxx Bank, as the case may be, of the transactions contemplated hereby or
thereby, nor compliance by Webster, Merger Sub or
24
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 Webster,
the Certificate of Incorporation or By-Laws of Merger Sub or the Charter or
By-Laws of Xxxxxxx Bank, as the case may be, or (ii) assuming that the consents
and approvals referred to in Section 4.4 are duly obtained, (x) violate any Laws
applicable to Webster, Merger Sub, Xxxxxxx 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 Webster, Webster Bank or Merger Sub under any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation to
which Webster, Webster Bank or Merger Sub is a party, or by which they or any of
their respective properties or assets may be bound or affected.
4.4 Regulatory Approvals.
(a) Except for (i) the filing of applications and notices, as
applicable, as to the Merger and the Bank Merger with the FRB under the BHCA and
the OTS under HOLA and the Bank Merger Act and approval of such applications and
notices, (ii) the filing of any required applications or notices with the FDIC
and OTS as to the subsidiary activities of Derby which become service
corporation or operating subsidiaries 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 Banking Law of the State of Connecticut prior to the
acquisition of more than 10% of the DS Bancor 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
1.6 hereof), which will include the Proxy Statement/Prospectus, (vi) the
approval of this Agreement by the requisite vote of the shareholders of DS
Bancor, (vii) the approval for the issuance of Webster Common Stock hereunder by
a majority of shares of Webster Common Stock voted at a meeting of Xxxxxxx'x
shareholders at which a quorum is present, (viii) the filing of the Certificate
of Merger with the Secretary of State pursuant to the DGCL, (ix) the filings
required by the Bank Merger Agreement, (x) the filings required for the
Subsidiary Merger, and (xi) 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, no
consents or approvals of or filings or registrations with any Governmental
Entity are necessary in connection with (1) the execution and delivery by
Xxxxxxx and Merger Sub of this Agreement and the Option Agreement, (2) the
consummation by Webster and Merger Sub of the Merger and the other transactions
contemplated hereby, (3) the execution and delivery by Xxxxxxx Bank
25
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 DS Bancor, Inc. to consummate the transactions
contemplated thereby.
(b) Webster hereby represents to DS Bancor 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.
(c) Webster and Xxxxxxx Bank have filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that they were required to file since June 30, 1995, with
(i) OTS, (ii) the Connecticut Commissioner and any other state banking
commissions or any other state regulatory authority (each a "State Regulator"),
(iii) the SEC and (iv) any other self-regulatory organization ("SRO")
(collectively "Regulatory Agencies"). Except for normal examinations conducted
by a Regulatory Agency in the regular course of the business of Xxxxxxx and its
Subsidiaries, no Governmental Entity is conducting, or has conducted, any
proceeding or investigation into the business or operations of Webster since
September 30, 1993.
4.5 Financial Statements; Exchange Act Filings; Books and Records.
Webster has previously delivered to DS Bancor true, correct and
complete copies of (a) the consolidated balance sheets of Webster and its
Subsidiaries as of December 31 for the fiscal years 1994 and 1995 and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for the fiscal years 1993 through 1995, inclusive, as reported in
Xxxxxxx'x Annual Report on Form 10-K for the fiscal year ended December 31, 1995
filed with the SEC under the Exchange Act, in each case accompanied by the audit
report of KPMG Peat Marwick LLP, independent public accountants with respect to
Xxxxxxx, and (b) the unaudited consolidated balance sheet of Xxxxxxx and its
Subsidiaries as of June 30, 1996 and the related comparative unaudited
consolidated statements of income, changes in shareholders' equity and cash
flows for the three month periods then ended June 30, 1996 and 1995. 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 6.9 hereof will fairly present (subject, in the case of the
unaudited statements, to recurring audit adjustments normal in nature and
amount), the results of the consolidated operations and consolidated financial
condition of Webster and its Subsidiaries for the respective fiscal periods or
as of the respective dates therein set forth; each of such statements (including
the related notes, where applicable) comply, and the financial statements
referred to in Section 6.9 hereof will comply, with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto; and each of such statements (including the related notes, where
applicable) has been, and the financial statements referred to in Section 6.9
hereof will be, prepared in accordance with GAAP consistently applied during the
periods involved, except as indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-X. Xxxxxxx'x Annual Report on Form
10-K for the fiscal
26
year ended December 31, 1995 and all subsequently filed reports under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act comply in all material respects
with the appropriate requirements for such reports under the Exchange Act, and
Webster has previously delivered to DS Bancor true, correct and complete copies
of such reports. The books and records of Webster and First Federal have been,
and are being, maintained in all material respects in accordance with GAAP and
any other applicable legal and accounting requirements and reflect only actual
transactions.
4.6 Absence of Certain Changes or Events.
Except as may be set forth in Section 4.6 of the Xxxxxxx Disclosure
Schedule, or as disclosed in Xxxxxxx'x Annual Report on Form 10-K for the fiscal
year ended December 31, 1995, true, correct and complete copies of which have
previously been delivered to DS Bancor, since December 31, 1995, no event has
occurred which has had, individually or in the aggregate, a Material Adverse
Effect on Xxxxxxx.
4.7 Compliance with Applicable Law.
Except as set forth in Section 4.7 of the Xxxxxxx Disclosure Schedule,
Xxxxxxx and each Xxxxxxx Subsidiary has complied in all material respects with
all Laws applicable to it or to the operation of its business. Except as set
forth in Section 4.7 of the Xxxxxxx Disclosure Schedule, 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.
4.8 Ownership of DS Bancor Common Stock; Affiliates and
Associates.
(a) Neither Webster nor any of its affiliates or associates
(as such terms are defined under the Exchange Act), (i) beneficially own,
directly or indirectly, or (ii) is a party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of, in
each case, more than five percent of the outstanding capital stock of DS Bancor,
excluding the shares of DS Bancor Common Stock issuable pursuant to the Option
Agreement to be executed subsequent to the execution of the Agreement.
(b) Neither Xxxxxxx nor any of its Subsidiaries is an
"affiliate" (as such term is defined in DGCL ss.203(c) (1)) or an "associate"
(as such term is defined in DGCL ss.203(c) (2)) of DS Bancor.
27
4.9 Employee Benefit Plans.
Except as set forth in Section 4.9 of the Webster Disclosure Schedule,
Xxxxxxx'x proxy statement for its 1996 Annual Meeting of Shareholders sets forth
a true and complete description of each employee benefit plan arrangement or
agreement that is maintained as of the date of this Agreement (the "Xxxxxxx
Plans") by Xxxxxxx or any of its Subsidiaries, all of which together with
Xxxxxxx would be deemed a "single employer" within the meaning of Section 4001
of ERISA. Webster has heretofore made available for inspection, or delivered (if
requested) to DS Bancor true, correct and complete copies of each of the Webster
Plans. No "accumulated funding deficiency" as defined in Section 302(a)(2) of
ERISA or Section 412 of the Code, whether or not waived, and no "unfunded
current liability" as determined under Section 412(l) of the Code exists with
respect to any Xxxxxxx Plan. The Xxxxxxx Plans are in compliance in all material
respects with the applicable requirements of ERISA and the Code.
4.10 Agreements with Regulatory Agencies.
Except as set forth in Section 4.10 of the Xxxxxxx Disclosure Schedule,
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.
4.11 Reserves for Losses.
All reserves or other allowances for possible losses reflected in
Xxxxxxx'x most recent financial statements referred to in Section 4.5 complied
with all Laws, and Xxxxxxx has not been notified by the OTS or Xxxxxxx'x
independent auditor, in writing or otherwise, that such reserves are inadequate
or that the practices and policies of Xxxxxxx in establishing such reserves and
in accounting for delinquent and classified assets generally fail to comply with
applicable accounting or regulatory requirements, or that the OTS or Xxxxxxx'x
independent auditor believes such reserves to be inadequate or inconsistent with
the historical loss experience of Xxxxxxx.
28
4.12 Legal Proceedings.
Except as set forth in Section 4.12 of the Xxxxxxx Disclosure Schedule,
neither Xxxxxxx nor any of its Subsidiaries is a party to any, and there are no
pending or threatened, legal, administrative proceedings, claims, actions or
governmental or regulatory investigations against Xxxxxxx or any of its
Subsidiaries which challenge the validity or propriety of the transactions
contemplated by this Agreement, the Bank Merger Agreement or the Option
Agreement as to which there is a reasonable probability of success.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of DS Bancor.
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, XX Bancor and each DS Bancor Subsidiary shall carry
on their respective businesses in the ordinary course consistent with past
practices and consistent with prudent banking practices. DS Bancor will use its
reasonable efforts to (x) preserve its business organization and that of each DS
Bancor Subsidiary intact, (y) keep available to itself and Webster the present
services of the employees of DS Bancor and each DS Bancor Subsidiary and (z)
preserve for itself and Webster the goodwill of the customers of DS Bancor and
each DS Bancor Subsidiary and others with whom business relationships exist.
Without limiting the generality of the foregoing, and except as set forth in the
DS Bancor Disclosure Schedule or as otherwise contemplated by this Agreement or
consented to by Webster in writing, DS Bancor shall not, and shall not permit
any DS Bancor 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 DS Bancor of $.06 per share on the DS Bancor
Common Stock with declaration, record and payment dates corresponding to the
quarterly dividends paid by DS Bancor during its fiscal year ended December 31,
1995 and except that any DS Bancor Subsidiary may declare and pay dividends and
distributions to DS Bancor);
(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 DS Bancor Stock Plan in accordance with their present terms, all
to the extent outstanding and in existence on the date of this Agreement, and
except pursuant to the Option Agreement, or (ii) repurchase, redeem or otherwise
acquire (except for the acquisition of Trust Account Shares and DPC Shares, as
such terms are defined in Section 1.4(c) hereof), any shares of the capital
stock of DS Bancor or any DS Bancor Subsidiary, or
29
any securities convertible into or exercisable for any shares of the capital
stock of DS Bancor or any DS Bancor 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 DS Bancor Common Stock pursuant to
stock options or similar rights to acquire DS Bancor Common Stock granted
pursuant to the DS Bancor Stock Plan and outstanding prior to the date of this
Agreement, in each case in accordance with their present terms and (ii) pursuant
to the Option Agreement;
(d) amend its Certificate of Incorporation, By-Laws or other
similar governing documents;
(e) authorize or permit any of its officers, directors,
employees or agents to, directly or indirectly, solicit, initiate or encourage
any inquiries relating to, or the making of any proposal from, hold substantive
discussions or negotiations with or provide any information to, any person,
entity or group (other than Webster) concerning any Acquisition Transaction (as
defined below) (an "Acquisition Transaction"). Notwithstanding the foregoing, DS
Bancor may enter into discussions or negotiations or provide information in
connection with a possible Acquisition Transaction if the Board of Directors of
DS Bancor, following receipt of written advice of counsel, reasonably determines
in the exercise of its fiduciary duty that such discussions or negotiations
should be commenced or such information must be furnished. DS Bancor shall
promptly communicate to Webster the material terms of any proposal, whether
written or oral, which it may receive in respect of any such Acquisition
Transaction and the fact that it is having discussions or negotiations with a
third party about an Acquisition Transaction. DS Bancor 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 DS
Bancor or any DS Bancor Subsidiary, or (iii) the acquisition in any manner of a
substantial equity interest in, or a substantial portion of the assets, out of
the ordinary course of business, of, DS Bancor or Derby other than the
transactions contemplated or permitted by this Agreement, the Bank Merger
Agreement and the Option Agreement:
(f) make capital expenditures aggregating in excess of
$100,000, except for capital expenditures specified in DS Bancor's budget for
the fiscal year ending December 31, 1996 (the "DS Bancor 1996 Budget"), a true,
complete and correct copy of which has been provided to Webster prior to the
date hereof;
(g) enter into any new line of business;
30
(h) acquire or agree to acquire, by merging or consolidating
with, or by purchasing an equity interest in or the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire any assets, other
than in connection with foreclosures, settlements in lieu of foreclosure or
troubled loan or debt restructurings, or in the ordinary course of business
consistent with prudent banking practices;
(i) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue or in any of the conditions to the
Merger set forth in Article VII not being satisfied, or in a violation of any
provision of this Agreement or the Bank Merger Agreement, except, in every case,
as may be required by applicable law;
(j) change its methods of accounting in effect at December 31,
1995 except as required by changes in GAAP or regulatory accounting principles
as concurred to by DS Bancor's independent auditors;
(k) (i) except as required by applicable law or to maintain
qualification pursuant to the Code, adopt, amend, renew or terminate any Plan or
any agreement, arrangement, plan or policy between DS Bancor or any DS Bancor
Subsidiary and one or more of its current or former directors or officers or
(ii) except for annual increases in the compensation of employees in the
ordinary course of business consistent with past practices (or in the case of
Messrs. DiAdamo, Xxxxxxx and Xxxxx annual increases consistent with past
practices and not to exceed 6%) or except as required by applicable law, (A)
increase in any manner the compensation of any employee or director or pay any
benefit not required by any plan or agreement as in effect as of the date hereof
(including, without limitation, the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units or performance
units or shares), (B) except for arrangements related to legal services provided
by Xxxxx & Xxxxxxxxxx, 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, (C) hire any new employee at an annual
compensation in excess of $50,000, (D) pay expenses of any non-employee
directors for attending conventions or similar meetings which conventions or
meetings are held after the date hereof, or (E) pay any retention or other
bonuses to any employees other than (i) the nineteen persons identified on the
DS Bancor Disclosure Schedule, in the aggregate and not to exceed $516,000,
which retention bonuses shall be conditioned on such persons continuing
employment with Xxxxxxx Bank for a period of 120 days following the Effective
Time or (ii) as otherwise mutually agreed upon by Xxxxxxx;
(l) except for short-term borrowings with a maturity of one year or
less by Derby in the ordinary course of business consistent with past practices,
incur any indebtedness for borrowed money, assume, guarantee, endorse or
otherwise as an accommodation become responsible for the obligations of any
other individual, corporation or other entity;
31
(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;
(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 DS Bancor or any DS Bancor 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 Derby based on
its existing deposit and primarily 1-4 family residential lending policies or
make any equity investments;
(q) purchase any loans or sell, purchase or lease any real property,
except for the sale of real estate that is the subject of a casualty loss or
condemnation or the sale of OREO on a basis consistent with past practices;
(r) originate (i) any loans except in accordance with existing Derby
lending policies, (ii) unsecured consumer loans in excess of $10,000, (iii)
commercial real estate first mortgage loans in excess of $250,000 as to any loan
or $500,000 in the aggregate as to related loans, or loans to related persons,
or (iv) land acquisition loans to borrowers who intend to construct a residence
on such land in excess of the lesser of 75% of the appraised value of such land
or $100,000, except in each case for loans for which written applications have
been received by Derby.;
(s) make any investments in derivative securities or engage in any
forward commitment, futures transaction, financial options transaction, hedging
or arbitrage transaction or covered asset trading activities;
(t) sell or purchase any mortgage loan servicing rights; or
(u) agree or commit to do any of the actions set forth in (a) - (t)
above.
The consent of Webster to any action by DS Bancor or any DS Bancor Subsidiary
that is not permitted by any of the preceding paragraphs shall be evidenced by a
writing signed by the President or any Executive Vice President of Xxxxxxx.
32
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 DS Bancor's prior written consent, Webster, and Xxxxxxx Bank
shall carry on their respective businesses in the ordinary course and use all
reasonable efforts to preserve intact their present business organizations and
relationships. Without limiting the generality of the foregoing and except as
set forth on Section 5.2 of the Webster Disclosure Schedule or as otherwise
contemplated by this Agreement or consented to in writing by DS Bancor, Webster
shall not, and shall not permit Xxxxxxx Bank to:
(a) declare or pay any extraordinary or special dividends on
or make any other extraordinary or special distributions in respect of any of
its capital stock (except that Xxxxxxx Bank may declare and pay extraordinary or
special dividends and distributions to Xxxxxxx and except that Xxxxxxx may
increase the quarterly cash dividend rate on the Xxxxxxx Common Stock);
(b) take any action that will result in (i) any of Xxxxxxx'x
representations and warranties set forth in this Agreement being or becoming
untrue, unless the failure of such representations or warranties to be true
would not, individually or in the aggregate, have a Material Adverse Effect on
Xxxxxxx, or (ii) any of the conditions to the Merger set forth in Article VII
not being satisfied or in a violation of any provision of this Agreement or the
Bank Merger Agreement, except, in every case, as may be required by applicable
law;
(c) change its methods of accounting in effect at December
31,1995, except in accordance with changes in GAAP or regulatory accounting
principles as concurred to by Xxxxxxx'x independent auditors;
(d) 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;
(e) purchase or acquire, directly or indirectly, a number of
shares of DS Bancor equal to or greater than 5% of the issued and outstanding
number of such shares of DS Bancor Common Stock; or
(f) agree or commit to do any of the actions set forth in (a)
- (e) above.
33
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters.
(a) Upon the execution and delivery of this Agreement, Webster
and DS Bancor (as to information to be included therein pertaining to DS Bancor)
shall promptly cause to be prepared and filed with the SEC a registration
statement of Webster on Form S-4, including the Proxy Statement/Prospectus (the
"Registration Statement") for the purpose of registering the Xxxxxxx Common
Stock to be issued in the Merger (including the Xxxxxxx Common Stock that may be
issued upon exercise of the options referred to in Section 1.6 hereof), and for
soliciting the approval of this Agreement and the Merger by the shareholders of
DS Bancor and for soliciting the approval by the shareholders of Webster for the
issuance of the Webster Common Stock to DS Bancor's shareholders as part of the
Merger. Webster and DS Bancor shall use their best efforts to have the
Registration Statement declared effective by the SEC as soon as possible after
the filing. DS Bancor shall cooperate with Webster in responding to and
considering any questions or comments from the SEC staff regarding the
information contained in the Registration Statement concerning DS Bancor. If at
any time after the Registration Statement is filed with the SEC, and prior to
the Closing Date, any event relating to DS Bancor is discovered by DS Bancor,
which should be set forth in an amendment of, or a supplement to, the
Registration Statement, including the Prospectus/Proxy Statement, DS Bancor
shall promptly so inform Webster, and shall furnish Webster with all necessary
information relating to such event. 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 cause an appropriate
amendment to the Registration Statement to be filed with the SEC. Xxxxxxx shall
thereupon cause an appropriate amendment to the Registration Statement to be
filed with the SEC. Upon the effectiveness of the amendment to the Registration
Statement with the SEC, DS Bancor (if prior to the meeting of DS Bancor's
shareholders pursuant to Section 6.3 hereof) will take all necessary action as
promptly as practicable to permit an appropriate amendment or supplement to be
transmitted to DS Bancor's shareholders entitled to vote at such meeting.
Webster shall also use all reasonable efforts to obtain all necessary state
securities law or "Blue Sky" permits and approvals required to carry out the
transactions contemplated by this Agreement and the Bank Merger Agreement and DS
Bancor shall furnish all information concerning DS Bancor and the holders of DS
Bancor 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). DS Bancor and Webster shall have the
right to
34
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 DS Bancor or Webster, as the case may be, which
appear in any filing made with, or written materials submitted to, any third
party or any Governmental Entity in connection with the transactions
contemplated by this Agreement; provided, however, that nothing contained herein
shall be deemed to provide either party with a right to review any information
provided to any Governmental Entity on a confidential basis in connection with
the transactions contemplated hereby. In exercising the foregoing right, each of
the parties hereto shall act reasonably and as promptly as practicable. The
parties hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to contemplation of the transactions
contemplated herein.
(c) DS Bancor shall, upon request, furnish Webster with all
information concerning DS Bancor and its Subsidiaries, directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with the Registration Statement or any other statement, filing,
notice or application made by or on behalf of Xxxxxxx or Xxxxxxx Bank to any
Governmental Entity in connection with the Merger, the Bank Merger or the other
transactions contemplated by this Agreement.
(d) Webster and DS Bancor shall promptly advise each other
upon receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement which causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval will not be obtained or that
the receipt of any such approval will be materially delayed.
6.2 Access to Information.
(a) Upon reasonable notice and subject to applicable Laws
relating to the exchange of information, DS Bancor shall, and shall cause each
DS Bancor Subsidiary to, afford to the officers, employees, accountants, counsel
and other representatives of Webster, access, during normal business hours
during the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, DS Bancor shall, and
shall cause each DS Bancor Subsidiary to, make available to Webster (i) a copy
of each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of Federal
securities laws or Federal or state banking laws and (ii) all other information
concerning its business, properties and personnel as Xxxxxxx may reasonably
request. Two designated representatives of Xxxxxxx shall be invited to attend
all meetings of the boards of directors (except for the portion of such meetings
which relate to the Merger or an Acquisition Transaction or such other matters
deemed confidential by the Boards of Directors of DS Bancor or Derby) and such
meetings of committees of the boards of directors and management of DS Bancor
and each DS Bancor Subsidiary which pertains to ALCO and
35
loan approvals. Webster will hold all such information in confidence to the
extent required by, and in accordance with, the provisions of the
confidentiality agreement which Webster entered into with DS Bancor.
(b) Upon reasonable notice and subject to applicable Laws
relating to the exchange of information, Webster shall, and shall cause Xxxxxxx
Bank to, afford to the officers, employees, accountants, counsel and other
representatives of DS Bancor, access, during normal business hours during the
period prior to the Effective Time, to such information regarding Webster and
Xxxxxxx Bank as shall be reasonably necessary for DS Bancor to fulfill its
obligations pursuant to this Agreement or which may be reasonably necessary for
DS Bancor to confirm that the representations and warranties of Webster
contained herein are true and correct and that the covenants of Xxxxxxx
contained herein have been performed in all material respects. During the period
from the date of this Agreement to the Effective Time, Webster will cause one or
more of its designated representatives to confer monthly with representatives of
DS Bancor and to report the general status of the ongoing operations of Webster,
Webster Bank, and DS Bancor. DS Bancor will hold all such information in
confidence to the extent required by, and in accordance with, the provisions of
the confidentially agreement which DS Bancor entered into with Webster.
(c) No investigation by either of the parties or their
respective representatives shall affect the representations and warranties of
the other set forth herein.
(d) DS Bancor shall provide Webster with true, correct and
complete copies of all financial and other information provided to directors of
DS Bancor in connection with meetings of its Board of Directors or committees
thereof, which information shall be provided to Webster concurrently with its
provision to directors of DS Bancor.
6.3 Shareholder Meetings.
DS Bancor shall take all steps necessary to duly call, give notice of,
convene and hold a meeting of its shareholders within 35 days after the
Registration Statement becomes effective for the purpose of voting upon the
approval of this Agreement and the Merger (the "Special Meeting"). Management
and the Board of Directors of DS Bancor shall recommend to DS Bancor's
shareholders approval of this Agreement and the transactions contemplated
hereby, together with any matters incident thereto, and shall oppose any third
party proposal or other action that is inconsistent with this Agreement or the
consummation of the transactions contemplated hereby, unless the Board of
Directors of DS Bancor, following receipt of written advice of DS Bancor's legal
counsel, reasonably determines that such recommendation or opposition, as the
case may be, would constitute a breach of the exercise of its fiduciary duty.
Xxxxxxx shall take all steps necessary to duly call, give notice of, convene and
hold a meeting of its shareholders within 35 days after the Registration
Statement becomes effective for the purpose of voting to approve the issuance of
the Xxxxxxx Common Stock pursuant to this Agreement and, through its Board of
Directors, shall recommend to its shareholders approval
36
of such issuance. DS Bancor and Webster shall coordinate and cooperate with
respect to the foregoing matters.
6.4 Legal Conditions to Merger.
Each of Webster and DS Bancor shall use their reasonable best efforts
(a) to take, or cause to be taken, all actions necessary, proper or advisable to
comply promptly with all legal requirements which may be imposed on such party
with respect to the Merger or the Bank Merger and, subject to the conditions set
forth in Article VII hereof, to consummate the transactions contemplated by this
Agreement and (b) to obtain (and to cooperate with the other party to obtain)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity and any other third party which is required to be obtained
by DS Bancor or Webster in connection with the Merger and the Bank Merger and
the other transactions contemplated by this Agreement.
6.5 Publication of Combined Financial Results.
Webster shall use its best efforts to publish as soon as possible but
no later than 30 business days after the end of the first month after the
Effective Time in which there are at least 30 days of post-Merger combined
operations (which month may be the month in which the Effective Time occurs),
combined sales and net income figures as contemplated by and in accordance with
the terms of SEC Accounting Series Release No. 135.
6.6 Stock Exchange Listing.
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 National Market (or such other exchange on the which the
Xxxxxxx Common Stock has become listed, or approved for listing) prior to or at
the Effective Time.
6.7 Employee Plans.
(a) To the extent permissible under the applicable provisions
of the Code and ERISA, for purposes of crediting periods of service for
eligibility to participate and vesting, but not for benefit accrual purposes,
under employee pension benefit plans (within the meaning of ERISA Section 3(2))
maintained by Webster or Xxxxxxx Bank, as applicable, (other than Xxxxxxx'x
employee stock ownership plan), individuals who are employees of DS Bancor or
Derby at the Effective Time will be credited with periods of service with DS
Bancor or Derby before the Effective Time as if such service had been with
Webster or Xxxxxxx Bank, as applicable. Similar credit shall also be given by
Webster or Xxxxxxx Bank in calculating other
37
retirement plan, vacation and similar benefits for such employees of DS Bancor
or Derby after the Merger.
(b) Webster and Xxxxxxx Bank will follow the DS Bancor and
Derby severance policy as to employees of DS Bancor or Derby whose employment is
terminated in connection with the Merger either because an employee's position
is eliminated or an employee is not offered comparable employment (i.e., not
offered employment for a position of generally similar job description or
responsibilities) within six months of the Effective Time of the Merger (except
for such employees who have existing employment or severance agreements or whose
employment is terminated for non-performance, cause or like reason). Payments
under such policy will be based on one week of base salary (or one week of
average weekly hourly wages, calculated on a weekly average basis for the
quarter ended June 30, 1996 in the case of hourly employees) for each full year
of employment with DS Bancor or Derby with a minimum of four weeks, up to an
aggregate of 39 weeks for employees with the rank of vice president or above,
and up to an aggregate of 26 weeks for all other employees, with payments to be
made upon employment termination.
(c) It is the intent of Webster and Xxxxxxx Bank in connection
with reviewing applicants for employment positions to give DS Bancor, Inc. or
Derby Saving Bank employees who are not offered positions at the Effective Time
the same consideration as is afforded Webster or Xxxxxxx Bank employees for such
position in accordance with existing formal or informal policies.
6.8 Indemnification; Directors' and Officers' Insurance.
(a) In the event of any threatened or actual claim, action,
suit, proceeding or investigation, whether civil, criminal or administrative, in
which any person who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or officer or
employee of DS Bancor or any of its Subsidiaries (the "Indemnified Parties") is,
or is threatened to be, made a party based in whole or in part on, or arising in
whole or in part out of, or pertaining to (i) the fact that he is or was a
director, officer or employee of DS Bancor, any of the DS Bancor Subsidiaries or
any of their respective predecessors or (ii) this Agreement or any of the
transactions contemplated hereby, whether in any case asserted or arising before
or after the Effective Time, the parties hereto agree to cooperate and use their
best efforts to defend against and respond thereto to the extent permitted by
the DGCL and the Certificate of Incorporation and By-Laws of DS Bancor. It is
understood and agreed that after the Effective Time, Webster shall indemnify and
hold harmless, as and to the fullest extent permitted by the DGCL and the
Certificate of Incorporation and By-Laws of Xxxxxxx, each such Indemnified Party
against any losses, claims, damages, liabilities, costs, expenses (including
reasonable attorney's fees and expenses in advance of the final disposition of
any claim, suit, proceeding or investigation to each Indemnified Party to the
fullest permitted by law upon receipt of any undertaking required by applicable
law), judgments, fines and amounts paid in settlement in connection with any
such threatened or actual claim, action, suit, proceeding or investigation, and
in the event of any such threatened or actual claim, action, suit,
38
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, and (3) Xxxxxxx shall not be liable for any settlement
effected without its prior written consent (which consent shall not be
unreasonably withheld or delayed). 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 By-Laws, 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 By-Laws. Any
Indemnified Party wishing to claim Indemnification under this Section 6.8, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify Xxxxxxx thereof, provided that the failure to so notify shall not affect
the obligations of Xxxxxxx under this Section 6.8 except to the extent such
failure to notify materially prejudices Xxxxxxx. Xxxxxxx'x obligations under
this Section 6.8 continue in full force and effect for a period of twelve years
from the Effective Time; provided, however, that all rights to indemnification
in respect of any claim (a "Claim") asserted or made within such period shall
continue until the final disposition of such Claim.
(b) Webster shall use best efforts to cause the persons
serving as officers and directors of DS Bancor immediately prior to the
Effective Time to be covered by the directors' and officers' liability insurance
policy ("DS Bancor Tail Insurance") maintained by DS Bancor (provided that
Webster may substitute therefor policies of substantially the same coverage and
amounts containing terms and conditions which are generally not less
advantageous than such policy) with respect to acts or omissions occurring prior
to the Effective Time which were committed by such officers and directors in
their capacity as such for an aggregate premium cost for the DS Bancor Tail
Insurance of $200,000 and for a period not greater than four years but in no
event (even if the premium cost exceeds $200,000) less than two years.
(c) In the event Xxxxxxx or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Xxxxxxx
assume the obligations set forth in this section.
39
(d) The provisions of this Section 6.8 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives after the Effective Time.
6.9 Subsequent Interim and Annual Financial Statements.
As soon as reasonably available, but in no event more than 45 days
after the end of each fiscal quarter (other than the fourth fiscal quarter),
Webster will deliver to DS Bancor and DS Bancor will deliver to Webster their
respective Quarterly Reports on Form 10-Q, as filed with the SEC under the
Exchange Act. Each party shall deliver to the other any Current Reports on Form
8-K promptly after filing such reports with the SEC. As soon as reasonably
available, but in no event later than March 31, 1997 (if this Agreement is still
in effect and the Merger has not been consummated by that date), DS Bancor will
deliver to Webster and Webster will deliver to DS Bancor its Annual Report on
Form 10-K for the fiscal year ending December 31, 1996, as filed with the SEC
under the Exchange Act.
6.10 Additional Agreements.
In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, or the Bank
Merger Agreement, or to vest the Surviving Corporation or Xxxxxxx Bank with full
title to all properties, assets, rights, approvals, immunities and franchises of
any of the parties to the Merger or the Bank Merger, the proper officers and
directors or each party to this Agreement and their respective Subsidiaries
shall take all such necessary action as may be reasonably requested by, and at
the sole expense of, Webster.
6.11 Advice of Changes.
Webster and DS Bancor shall promptly advise the other party of any
change or event that, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect on it or to cause or
constitute a material breach of any of its representations, warranties or
covenants contained herein. From time to time prior to the Effective Time, each
party will promptly supplement or amend the Disclosure Schedules delivered in
connection with the execution of this Agreement to reflect any matter which, if
existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in such Disclosure Schedules or which is
necessary to correct any information in such Disclosure Schedules which has been
rendered inaccurate thereby. No supplement or amendment to such Disclosure
Schedules shall have any effect for the purpose of determining satisfaction of
the conditions set forth in Sections 7.2(a) or 7.3(a) hereof, as the case may
be, or the compliance by DS Bancor or Webster, as the case may be, with the
respective covenants set forth in Sections 5.1 and 5.2 hereof.
40
6.12 Current Information.
During the period from the date of this Agreement to the Effective
Time, DS Bancor will cause one or more of its designated representatives to
confer on a regular and frequent basis (not less than monthly) with
representatives of Webster and to report the general status of the ongoing
operations of DS Bancor and each DS Bancor Subsidiary. DS Bancor will promptly
notify Webster of any material change in the normal course of business or in the
operation of the properties of DS Bancor or any DS Bancor Subsidiary and of any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the institution or the threat
of significant litigation involving DS Bancor or any DS Bancor Subsidiary, and
will keep Webster fully informed of such events.
6.13 Execution and Authorization of Bank Merger Agreement.
Prior to the Effective Time, (a) Webster shall (i) cause the Board of
Directors of Xxxxxxx Bank to approve the Bank Merger Agreement, and (ii) cause
Xxxxxxx Bank to execute and deliver the Bank Merger Agreement, and (iii) approve
the Bank Merger Agreement as the sole stockholder of Xxxxxxx Bank, and (b) DS
Bancor shall (i) cause the Board of Directors of Derby to approve the Bank
Merger Agreement, (ii) cause Derby to execute and deliver the Bank Merger
Agreement, and (iii) approve the Bank Merger Agreement as the sole shareholder
of Derby.
6.14 Change in Structure.
In the event that Webster elects to change the structure of the Bank
Merger, the parties agree to modify this Agreement and the various exhibits
hereto to reflect such revised structure. Such revised structure may include but
is not limited to providing (i) for Derby or Xxxxxxx Bank to convert its
charter, or (ii) for Derby or Webster to change insurance funds covering its
deposits from or to BIF or SAIF, or (iii) for Derby to merge into Xxxxxxx Bank
with either as the surviving bank. Xxxxxxx may also change the corporate name of
Xxxxxxx Bank to such other name as the Board of Directors of Webster may select.
Webster 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 consequences to the DS Bancor shareholders as a result of
such modification, (ii) the consideration to be paid to the DS Bancor
shareholders under this Agreement is not thereby changed or reduced in amount,
and (iii) such modification will not be reasonably likely to delay materially or
jeopardize receipt of any required regulatory approvals. In such events, Webster
shall prepare appropriate amendments to this Agreement and the exhibits hereto
for execution by the parties hereto. Webster and DS Bancor agree to cooperate
fully with each other to effect such amendments.
41
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger.
The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Shareholder Approvals.
This Agreement and the Merger shall have been approved and
adopted by the affirmative vote of the holders of at least two-thirds of the
outstanding shares of DS Bancor Common Stock entitled to vote thereon. The
issuance of the Webster Common Stock in the Merger shall have been approved by
the affirmative vote of a majority of shares of Xxxxxxx Common Stock voted at a
meeting where a quorum is present.
(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 1.6 hereof) upon consummation of the
Merger shall have been authorized for quotation on the Nasdaq National Market
(or such other exchange on which the Xxxxxxx Common Stock may become listed).
(c) Other Approvals.
All regulatory approvals required to consummate the
transactions contemplated hereby (including the Merger and the Bank Merger)
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 is reasonably determined
by the parties hereto to be burdensome.
(d) Registration Statement.
The Registration Statement shall have become effective under
the Securities Act, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality.
No order, injunction or decree issued by any court or agency
of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger, the Bank Merger or any
of the other transactions contemplated by this Agreement
42
or the Bank Merger Agreement shall be in effect. No statute, rule, regulation,
order, injunction or decree shall have been enacted, entered, promulgated or
enforced by any Governmental Entity which prohibits, restricts or makes illegal
consummation of the Merger or the Bank Merger.
(f) Federal Tax Opinion.
Webster and DS Bancor shall have received from Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C. and from Fried, Frank, Harris, Xxxxxxx &
Xxxxxxxx (a partnership including professional corporations), DS Bancor's
special tax counsel, respectively, an opinion, in form and substance reasonably
satisfactory to Webster and DS Bancor, respectively, dated as of the Effective
Time, substantially to the effect that on the basis of facts, representations,
and assumptions set forth in such opinions which are consistent with the state
of facts existing at the Effective Time, the Merger (either above or in
conjunction with the Subsidiary Merger) and the Bank Merger will be treated for
Federal income tax purposes as reorganizations within the meaning of Section 368
of the Code. In rendering such opinion, such counsel may require and, to the
extent such counsel deems necessary or appropriate, may rely upon
representations made in certificates of officers of DS Bancor, Webster, Merger
Sub, their respective affiliates and others.
7.2 Conditions to Obligations of Webster and Merger Sub.
The obligation of Xxxxxxx and Merger Sub 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 DS Bancor set forth in
this Agreement shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date;
provided, however, that, for purposes of this paragraph, such representations
and warranties shall be deemed to be true and correct, unless the failure or
failures of such representations and warranties to be so true and correct,
individually or in the aggregate, would have a Material Adverse Effect on DS
Bancor. Such determination of aggregate Material Adverse Effect shall be made as
if there were no materiality qualifications in such representations and
warranties. Webster shall have received a certificate signed on behalf of DS
Bancor by the Chief Executive Officer and the Chief Financial Officer of DS
Bancor to the foregoing effect.
(b) Performance of Covenants and Agreements of DS Bancor.
DS Bancor 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.
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Webster shall have received a certificate signed on behalf of DS Bancor by the
Chief Executive Officer and the Chief Financial Officer of DS Bancor to such
effect.
(c) Consents Under Agreements.
The consent, approval or waiver of each person (other than the
Governmental Entities referred to in Section 7.1(c)) whose consent or approval
shall be required in order to permit the succession by the Surviving Corporation
or Xxxxxxx Bank pursuant to the Merger or the Bank Merger, as the case may be,
to any obligation, right or interest of DS Bancor or any Subsidiary of DS Bancor
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.
(d) No Pending Governmental Actions.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
(e) Legal Opinion.
Webster shall have received the opinions of Xxxxx & Xxxxxxx
L.L.P. (as to federal banking and securities laws, and Delaware corporate law),
and Xxxxx & Xxxxxxxxxx (as to Connecticut law), counsel to DS Bancor, dated the
Closing Date, as to such matters as Webster may reasonably request. As to any
matter in such opinion which involves matters of fact, such counsel may rely
upon the certificates of officers and directors of DS Bancor, and of public
officials reasonably acceptable to Webster.
(f) Accountant's Comfort Letter.
DS Bancor shall have caused to be delivered on the respective
dates thereof to Webster "comfort letters" from DS Bancor's independent public
accountants dated the date on which the Registration Statement or last amendment
thereto shall become effective, and dated the date of the Closing, and addressed
to Webster and DS Bancor, with respect to DS Bancor's financial data presented
in the Proxy Statement/Prospectus, which letters shall be based upon Statements
on Auditing Standards Nos. 72 and 76.
(g) Pooling of Interests.
Xxxxxxx shall have promptly received opinions of KPMG Peat
Marwick LLP, independent accountants, dated (i) within two weeks of the date
hereof and (ii) not less than 20 days nor more than 40 days prior to the
Effective Time to the effect that the Merger will be accounted for as a pooling
of interests and such opinion shall not have been withdrawn. The foregoing shall
not apply in the event that Webster prior to the effectiveness of the
Registration
44
Statement advises DS Bancor that as a result of actions taken or to be taken by
Webster subsequent to the date hereof the Merger is to be accounted for as a
purchase.
7.3 Conditions to Obligations of DS Bancor.
The obligation of DS Bancor to effect the Merger is also subject to the
satisfaction or waiver by DS Bancor 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 as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date;
provided, however, that for purposes of this paragraph, such representations and
warranties shall be deemed to be true and correct, unless the failure or
failures of such representations and warranties to be so true and correct,
individually or in the aggregate, would have a Material Adverse Effect on
Xxxxxxx. Such determination of aggregate Material Adverse Effect shall be made
as if there were no materiality qualifications in such representations and
warranties. DS Bancor shall have received a certificate signed on behalf of
Webster by the Chief Executive Officer and the Chief Financial Officer of
Webster to the foregoing effect.
(b) Performance of Obligations of Webster.
Webster and Merger Sub shall have each performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date. DS Bancor shall have received a
certificate signed on behalf of Webster by the Chief Executive Officer and the
Chief Financial Officer of Webster to such effect.
(c) Consents Under Agreements.
The consent or approval of each person (other than the
Governmental Entities referred to in Section 7.1(c)) whose consent or approval
shall be required in connection with the transactions contemplated hereby under
any loan or credit agreement, note, mortgage, indenture, lease, license or other
agreement or instrument to which Webster or Xxxxxxx Bank 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.
45
(e) Legal Opinion.
DS Bancor shall have received the opinion of Mintz, Levin,
Cohn, Ferris, Glovsky & Popeo, P.C., counsel to Webster, dated the Closing Date,
as to such matters as DS Bancor may reasonably request. As to any matter in such
opinion which involves matters of fact or matters relating to laws (other than
Federal banking and securities law and Delaware corporate law), such counsel may
rely upon the certificates of officers and directors of Webster and of public
officials and opinions of local counsel, reasonably acceptable to DS Bancor.
(f) Fairness Opinion.
DS Bancor shall have received an opinion from Alex. Xxxxx &
Sons Incorporated that the transactions contemplated by this Agreement and the
consideration to be received by holders of DS Bancor Common Stock are fair from
a financial point of view to the holders of DS Bancor Common Stock, which
opinion shall be dated as of the date of this Agreement and delivered
concurrently with its execution. In the event that Webster shall exercise its
option to treat the Merger as a purchase rather than pooling of interest for
accounting purposes, DS Bancor shall have received a fairness opinion from Alex.
Xxxxx & Sons Incorporated with respect to such purchase transaction not later
than the date of the proxy statement transmitted to DS Bancor stockholders which
includes such opinion.
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 DS Bancor or Webster, if applicable:
(a) by mutual consent of Webster and DS Bancor 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 DS Bancor upon written notice to the
other party (i) 30 days after the date on which any request or application for a
Requisite Regulatory Approval shall have been denied or withdrawn at the request
or recommendation of the Governmental Entity which must grant such Requisite
Regulatory Approval, unless within the 30-day period following such denial or
withdrawal the parties agree to file, and have filed with the applicable
Governmental Entity, a petition for rehearing or an amended application,
provided, however, that no party shall have the right to terminate this
Agreement pursuant to this Section 8.1(b), if such denial or request or
recommendation for withdrawal shall be due to the
46
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 DS Bancor if the Merger shall not
have been consummated on or before June 30, 1997, 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 DS Bancor (provided that the
terminating party is not in breach of its obligations under Section 6.3) if the
approval of the shareholders of DS Bancor or any approval of the shareholders of
Webster 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 DS Bancor (provided that the
terminating party is not then in breach of any representation, warranty,
covenant or other agreement contained herein that, individually or in the
aggregate, would give the other party the right to terminate this Agreement) if
there shall have been a breach of any of the representations or warranties set
forth in this Agreement on the part of the other party, if such breach,
individually or in the aggregate, has had or is likely to have a Material
Adverse Effect on the 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 DS Bancor (provided that the
terminating party is not then in breach of any representations, warranty,
covenant or other agreement contained herein that, individually or in the
aggregate, would give the other party the right to terminate this Agreement) if
there shall have been a material breach of any of the covenants or agreements
set forth in this Agreement on the part of the other party, and such breach
shall not have been cured within 30 days following receipt by the breaching
party of written notice of such breach from the other party hereto or such
breach, by its nature, cannot be cured prior to the Closing; and
(g) by Webster, if the management of DS Bancor or its Board of
Directors, for any reason, (i) fails to call and hold within 35 days of the
effectiveness of the Registration Statement a special meeting of DS Bancor'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, unless the Board of
Directors of DS Bancor, following receipt of written advice of DS Bancor's legal
counsel, reasonably determines that said recommendation would constitute a
breach of the exercise of its fiduciary duty, (iii) fails to oppose any third
party proposal that is inconsistent with the transactions contemplated by this
Agreement, unless the Board of Directors of DS Bancor, following receipt of
written advice of DS Bancor's legal counsel, reasonably determines that such
opposition would constitute a breach of the exercise of its fiduciary duty or
(iv) violates Section 5.1(e) of this Agreement or would have violated Section
5.1(e) but for the fiduciary duty exception.
47
(h) by DS Bancor, upon written notice delivered to Webster, if
the Base Period Trading Price shall be less than $28.00 unless Webster elects
(by written instrument delivered to DS Bancor within two (2) calendar days after
receipt of notice from DS Bancor that DS Bancor elects to terminate the
Agreement pursuant to this Subsection 8.1(h)) that the Exchange Ratio shall be
equal the number resulting from dividing $38.22 by the Base Trading Price.
8.2 Effect of Termination.
In the event of termination of this Agreement by either Webster or DS
Bancor as provided in Section 8.1, this Agreement shall forthwith become void
and have no effect except (i) the last sentences of Sections 6.2(a) and 6.2(b)
and Sections, 8.2, 8.3, 9.2 and 9.3 shall survive any termination of this
Agreement, and (ii) notwithstanding anything to the contrary contained in this
Agreement, no party shall be relieved or released from any liabilities or
damages arising out of its willful or intentional breach of any provision of
this Agreement.
8.3 Amendment.
Subject to compliance with applicable law, this Agreement may be
amended by the parties hereto, by action taken or authorized by their respective
Board of Directors, at any time before or after approval of the matters
presented in connection with the Merger by the shareholders of DS Bancor or
Webster (if required); provided, however, that after any approval of the
transactions contemplated by this Agreement by DS Bancor'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 DS Bancor 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 Board of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party, but such extension or waiver
or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
48
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing.
Subject to the terms and conditions of this Agreement and the Merger
Agreement, the closing of the Merger (the "Closing") will take place at 10:00
a.m. at the main offices of Webster on (i) the fifth day after the last
Requisite Regulatory Approval is received and all applicable waiting periods
have expired, (ii) if elected by Webster, the last business day of the month in
which the date specified in the immediately preceding clause occurs (provided
such Closing occurs not more than 15 days after the date specified in the
immediately preceding clause), or (iii) such other date, place and time as the
parties may agree (the "Closing Date").
9.2 Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties, covenants and agreements in
this Agreement or in any instrument delivered pursuant to this Agreement (other
than pursuant to the Option Agreement, which shall terminate in accordance with
its terms) shall survive the Effective Time, except for those covenants and
agreements contained herein and therein which by their terms apply in whole or
in part after the Effective Time.
9.3 Expenses; Breakup Fee.
All costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expense, except (i) as otherwise provided in this paragraph, (ii) the costs and
expenses of printing the Proxy Statement/Prospectus shall be shared equally by
the parties, and (iii) all filing and other fees paid to the SEC in connection
with this Agreement shall be borne by Webster. In the event that this Agreement
is terminated by either Webster or DS Bancor by reason of a material breach
pursuant to Section 8.1(e) or (f) hereof or by Webster pursuant to Section
8.1(g) hereof, the other party shall pay all documented, reasonable costs and
expenses up to $500,000 incurred by the terminating party in connection with
this Agreement and the transactions contemplated hereby plus a breakup fee of
$250,000. In the event that this Agreement is terminated by either Webster or DS
Bancor under Section 8.1(d) by reason of the other party's shareholders not
having given any required approval, such other party shall pay all documented,
reasonable costs and expenses up to $500,000 incurred by the terminating party
in connection with this Agreement and the transactions contemplated hereby.
9.4 Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, telecopied (with confirmation),
mailed by registered or certified
49
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:
Webster Plaza
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxx
Chairman, President and Chief Executive Officer
with a copy (which shall not constitute notice) to:
Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Stanford X. Xxxxxxx, Xx., Esq.
and
(b) if to DS Bancor, to:
DS Bancor
00 Xxxxxxxxx Xxxxxx
Xxxxx, XX 00000
Attn: Xxxxx X. XxXxxxx, Xx.
President, Treasurer, and Chief Executive Officer
with a copy (which shall not constitute notice) to:
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxx, Esq.
9.5 Interpretation.
When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of or Exhibit or Schedule to
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
50
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 dated August 7, 1996, entered into between DS Bancor
and Webster, the Bank Merger Agreement, the Option Agreement and the Stockholder
Agreement.
9.8 Governing Law.
This Agreement shall be governed and construed in accordance with the
laws of the State of Delaware, without regard to any applicable conflicts of
law.
9.9 Enforcement of Agreement.
The parties hereto agree that irreparable damage would occur in the
event that the provisions of this Agreement were not performed in accordance
with its specific terms or was otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
thereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
9.10 Severability.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
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9.11 Publicity.
Except as otherwise required by law or the rules of Nasdaq National
Market (or such other exchange on which the Webster Common Stock may become
listed), so long as this Agreement is in effect, neither Webster nor DS Bancor
shall, or shall permit any of its Subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to,
or otherwise make any public statement concerning, the transactions contemplated
by this Agreement, the Bank Merger Agreement, the Option Agreement or the
Stockholder Agreement without the consent of the other party, which consent
shall not be unreasonably withheld.
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 6.8 hereof,
this Agreement (including the documents and instruments referred to herein) is
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder, and the covenants, undertakings and agreements set out
herein shall be solely for the benefit of, and shall be enforceable only by, the
parties hereto and their permitted assigns.
9.13 Additional Definitions.
In addition to any other definitions contained in this Agreement, the
following words, terms and phrases shall have the following meanings when used
in this Agreement.
"Affiliated Person": any director, officer or 5% or greater
shareholder, spouse or other person living in the same household of such
director, officer or shareholder, or any company, partnership or trust in which
any of the foregoing persons is an officer, 5% or greater shareholder, general
partner or 5% or greater trust beneficiary.
"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 DS Bancor, 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 DS Bancor and its respective Subsidiaries,
taken as a whole (other than as a result of (i) changes in laws or regulations
or accounting rules of general applicability or interpretations thereof, or
52
(ii) decreases in capital under Financial Accounting Standards No. 115
attributable to general increases in interest rates), or (B) the ability of
Webster or DS Bancor to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement and, in the case of DS Bancor, the
Option Agreement.
"Subsidiary": with respect to any party means any corporation,
partnership or other organization, whether incorporated or unincorporated, which
is consolidated with such party for financial reporting purposes.
53
IN WITNESS WHEREOF, Webster, Merger Sub and DS Bancor 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/ Xxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxx
----------------- ------------------
Xxx X. Xxxxxx Xxxxx X. Xxxxx
Secretary Chairman, President and
Chief Executive Officer
WEBSTER ACQUISITION CORP.
ATTEST:
By: /s/ Xxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxx
----------------- ------------------
Xxx X. Xxxxxx Xxxxx X. Xxxxx
Secretary Chairman, President and
Chief Executive Officer
DS BANCOR
ATTEST:
By: /s/ Xxx Xxxxxx By: /s/ Xxxxx X. XxXxxxx, Xx.
--------------- -------------------------
Xxx Xxxxxx Xxxxx X. XxXxxxx, Xx.
Secretary President, Treasurer,
and Chief Executive Officer
54
EXHIBIT A
ARTICLES OF MERGER
BANK MERGER AGREEMENT
This Bank Merger Agreement is made and entered into this ____, day of
[October, 1996], between Xxxxxxx Bank, a federally-chartered savings bank
("Xxxxxxx Bank"), and Derby Savings Bank, a Connecticut - chartered savings bank
("Derby").
WITNESSETH:
WHEREAS, Xxxxxxx Financial Corporation, a Delaware corporation
("Webster"), Webster Acquisition Corp., a Delaware corporation ("Merger Sub"),
and DS Bancor, Inc., a Delaware corporation ("DS Bancor"), have entered into an
agreement and plan of merger, dated as of October ___, 1996, as amended (the
"Agreement");
WHEREAS, pursuant to the Agreement, Webster will first acquire DS
Bancor through (i) a merger of Merger Sub with and into DS Bancor, as the
surviving corporation and (ii) a subsequent merger of Derby with and into
Xxxxxxx Bank, as the surviving bank;
WHEREAS, Xxxxxxx Bank has 1000 shares of common stock outstanding, $.01
par value per share, and Derby has [_____] shares of common stock outstanding,
[$____] par value per share; and
WHEREAS, all of the issued and outstanding shares of common stock of
Xxxxxxx Bank, and all of the issued and outstanding shares of common stock of
Derby, have been voted in favor of the merger of Derby 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 Derby 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 merger
contemplated by this Bank Merger Agreement becomes effective as provided in
Section 2.2 hereof.
1.3. "Merging Banks" shall collectively refer to Derby 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, Derby shall be merged with and into Xxxxxxx
Bank pursuant to 12 U.S.C. xx.xx. 1467a(s), 1815(d)(3) and 1828(c), and pursuant
to Section 36a-126(b) of the Banking Law of the State of Connecticut. Xxxxxxx
Bank shall be the Surviving Bank in the Merger and shall continue to be
regulated by the OTS.
(b) As a result of the Bank Merger, (i) each share of common
stock, par value [$_____] per share, of Derby issued and outstanding immediately
prior to the Effective Time shall be canceled and (ii) each share of common
stock, par value $.01 per share, of Xxxxxxx Bank issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding and
shall constitute the only shares of capital stock of the Surviving Bank issued
and outstanding immediately after the Effective Time.
(c) Upon the Effective Time, all assets and property of the
Merging Banks shall immediately, without any further act, become the property of
the Surviving Bank to the same extent as they were the property of the Merging
Banks, and the Surviving Bank shall be a continuation of the entity that
absorbed the Merging Banks. All rights and obligations of the Merging Banks
shall remain unimpaired, and the Surviving Bank shall, upon the Effective Time,
succeed to all those rights and obligations.
(d) Without limiting the terms and provisions of Section
2.1(c) above, as a result of the Bank Merger, Xxxxxxx Bank shall assume and
succeed, in accordance with 12 C.F.R. Part 563b, to all of the rights and
obligations of Derby relating its liquidation account, which liquidation account
was established in connection with conversion of DS Bancor from mutual to stock
form of organization.
2.2. Effective Time. The Bank Merger shall become effective as of the
date specified in the endorsement of this Bank Merger Agreement, as the Articles
of Merger, by the Secretary of the OTS. The Bank Merger shall not be effective
unless and until approved by the OTS and
-2-
all other "Regulatory Authorities" as contemplated by the Agreement, including
the "Commissioner."
2.3. Name of the Surviving Bank. The name of the Surviving Bank shall
be "Xxxxxxx Bank."
2.4. Charter. On and after the Effective Time, the charter of Xxxxxxx
Bank shall be the charter of the Surviving Bank, until amended in accordance
with applicable law.
2.5. By-laws. On and after the Effective Time, the by-laws of Xxxxxxx
Bank shall be the by-laws of the Surviving Bank, provided however, that the
by-laws of the Surviving Bank be amended to provide that the number of directors
set in Article III, Section 2 thereof be increased from 11 to 13, 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 charter and by-laws of the Surviving Bank (i) the
directors of the Surviving Bank shall be the directors of Xxxxxxx Bank
immediately prior to the Effective Time plus two directors of DS Bancor as
selected pursuant to the Agreement; and (ii) the officers of the Surviving Bank
shall be the officers of Xxxxxxx Bank immediately prior to the Effective Time
plus certain officers of DS Bancor as determined by Webster in accordance with
the Agreement. The directors and officers of the Surviving Bank shall hold
office in accordance with the charter and by-laws of the Surviving Bank. The
number, names and residence addresses, and terms of directors of the Surviving
Bank are as set forth at Annex 2 hereto.
2.7. Savings Accounts. The savings accounts of the Surviving Bank
issued after the Effective Time shall be issued on the same basis as savings
accounts had been issued by Xxxxxxx Bank prior to the Bank Merger.
2.8 Benefit Agreements. Upon consummation of the Merger, Xxxxxxx Bank
shall assume the obligations of Derby in the Directors' Voluntary Deferral
Agreements for Derby Savings Bank as set forth therein.
ARTICLE 3.
MISCELLANEOUS
3.1. Amendments. To the extent permitted bylaw, 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 Derby.
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In accordance with the procedures set forth in the rules and
regulations of the OTS and other applicable law, Xxxxxxx Bank and Derby have
cause this Bank Merger Agreement to be executed by their duly authorized
representatives on the date indicated.
XXXXXXX BANK
ATTEST:
By: By:
------------------------------ -------------------------------
Xxx X. Xxxxxx, Secretary Xxxxx X. Xxxxx, Chairman,
President and Chief Executive
Officer
DERBY SAVINGS BANK
ATTEST:
By: By:
------------------------------ -------------------------------
Xxx Xxxxxx, Secretary Xxxxx X. XxXxxxx, Xx.,
President, Treasurer, Chief
Executive Officer and
Director
-4-
Exhibit B
OPTION AGREEMENT
THE TRANSFER OF THE OPTION GRANTED
BY THIS AGREEMENT IS SUBJECT TO RESALE RESTRICTIONS.
OPTION AGREEMENT, dated as of October 7, 1996 (this "Agreement"),
between DS BANCOR, INC., a Delaware 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 October 7, 1996 (the "Plan"), which was executed by the
parties hereto prior to the execution of this Agreement; and
WHEREAS, as a condition and inducement to Grantee's entering into the
Plan and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Plan, the parties hereto
agree as follows:
SECTION 1. Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 564,296 fully paid and non-assessable shares of Common Stock, par value $1.00
per share of Issuer ("Issuer Common Stock") (which number of shares is equal to
18.6% of the number of outstanding shares of Issuer Common Stock on the date
hereof), at a price per share equal to $36.50 (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 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) 18 months after the termination of the Plan
following the occurrence of a Preliminary Purchase Event (as defined
below), unless clause (vii) is applicable;
(iv) upon the termination of the Plan, prior to the
occurrence of a Purchase Event or Preliminary Purchase Event, by DS
Bancor pursuant to Section 8.1(h) of the Plan, both parties pursuant to
Section 8.1(a) of the Plan, by either party pursuant to Section 8.1(b)
or (c) of the Plan or Section 8.1(d) of the Plan based on any required
vote of Grantee's stockholders not being received, or by Issuer
pursuant to Section 8.1(e) or (f) of the Plan;
(v) 135 days after the termination of the Plan, by
either party pursuant to Section 8.1(d) of the Plan based on the
required vote of Issuer's stockholders not being received, if no
Purchase Event or Preliminary Purchase Event has occurred prior to the
meeting of stockholders (or any adjournment or postponement thereof)
held to vote on the Plan;
(vi) nine months after the termination of the Plan,
by Grantee pursuant to Section 8.1(e) or (f) thereof as a result of a
breach by Issuer, unless such breach was willful or intentional; or
(vii) 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) of the Plan.
(b) The term "Preliminary Purchase Event" shall mean any of
the following events or transactions occurring on or after the date hereof and
prior to an Exercise Termination Event:
(i) Issuer without having received Grantee's prior
written consent, shall have entered into any letter of intent or
definitive agreement to engage in an Acquisition Transaction (as
defined below) with any person (as defined below) other than Grantee or
any of its subsidiaries (each a "Grantee Subsidiary") or the Board of
Directors of Issuer shall have recommended that the shareholders of
Issuer approve or accept any Acquisition Transaction with any Person
(as the term "person" is defined in Section 3(a)9 and 13(d)(3) of the
Securities Exchange Act of 1934 (the "Exchange Act") and the rules and
regulations thereunder) other than Grantee or any Grantee
-2-
Subsidiary. For purposes of this Agreement "Acquisition Transaction"
shall mean (x) a merger, consolidation or other business combination
involving Issuer, (y) a purchase, lease or other acquisition of all or
substantially all of the assets of Issuer, (z) a purchase or other
acquisition (including by way of merger. consolidation, share exchange
or otherwise) of Beneficial Ownership (as the term "beneficial
ownership" is defined in Regulation 13d-3(a) of the Exchange Act) of
securities representing 15% 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 15 percent or more of the
total voting power of the Issuer to be outstanding after giving effect
to such transaction and in which the aggregate voting power of Issuer
acquired by all persons is less than 25 percent of the total voting
power of Issuer;
(ii) Any Person (other than Grantee, any Grantee
Subsidiary or any current affiliate of Issuer) shall have acquired
Beneficial Ownership of 15% 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
of Issuer Common Stock such that, upon consummation of such offer, such
person would have Beneficial Ownership of 15% 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))
(b) such bona fide proposal is not withdrawn or such public
announcement or written communication is not publicly withdrawn and (c)
stockholders 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 or
shall have been canceled prior to termination of the Plan, or Issuer's
Board of Directors shall have failed to recommend, or shall have
withdrawn or modified in a manner adverse to Grantee the recommendation
of Issuer's Board of Directors, that Issuer's shareholders approve the
Plan, or if Issuer or Issuer's Board of Directors fails to oppose any
proposal by any Person (other than Grantee or any Grantee Subsidiary);
or
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(vi) Any Person (other than Grantee or any Grantee
Subsidiary) shall have filed and have had accepted for processing (or
been deemed informationally complete) an application or notice with the
Office of Thrift Supervisor (the "OTS") the Federal Deposit Insurance
Corporation (the "FDIC"), the Connecticut Banking Commissioner (the
"Commissioner"), or other regulatory or administrative agency or
commission (each, a "Governmental Authority") for approval to engage in
an Acquisition Transaction.
(c) The term "Purchase Event" shall mean any of the following
events or transactions occurring on or after the date hereof and prior to an
Exercise Termination Event:
(i) The acquisition by any Person (other than Grantee
or any Grantee Subsidiary) of Beneficial Ownership (other than on
behalf of the Issuer) of 25% or more of the then outstanding Issuer
Common Stock; or
(ii) The occurrence of a Preliminary Purchase Event
described in Section 2(b)(i) except that the percentage referred to in
clause (z) thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event known to Issuer;
provided, however, that the giving of such notice by Issuer shall not be a
condition to the right of Grantee to exercise the Option.
(e) In the event that Grantee is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the "Option
Notice" and the date of which being hereinafter referred to as the "Notice
Date") specifying (i) the total number of shares of Issuer Common Stock it will
purchase pursuant to such exercise and (ii) the time (which shall be on a
business day that is not less than three nor more than ten business days from
the Notice Date) on which the closing of such purchase shall take place (the
"Closing Date"); such closing to take place at the principal office of the
Issuer; provided, that, if prior notification to or approval of the OTS, the
FDIC, the Commissioner or any other Governmental Authority is required in
connection with such purchase (each, a "Notification" or an "Approval," as the
case may be), (a) Grantee shall promptly file the required notice or application
for approval ("Notice/Application"), (b) Grantee shall expeditiously process the
Notice/Application and (c) for the purpose of determining the Closing Date
pursuant to clause (ii) of this sentence, the period of time that otherwise
would run from the Notice Date shall instead run from the later of (x) in
connection with any Notification, the date on which any required notification
periods have expired or been terminated and (y) in connection with any Approval,
the date on which such approval has been obtained and any requisite waiting
period or periods shall have expired. For purposes of Section 2(a) hereof, any
exercise of the Option shall be deemed to occur on the Notice Date relating
thereto. On or prior to the
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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 DS Bancor, Inc., and Xxxxxxx
Financial Corporation, dated as of October 7, 1996. A copy of such
agreement is on file at the principal office of DS Bancor, Inc., and
will be provided to the holder hereof without charge upon receipt by DS
Bancor, Inc., of a written request therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the Securities and Exchange
Commission (the "SEC") or Governmental Authority responsible for administering
any applicable state securities laws or an opinion of counsel, in form and
substance satisfactory to Issuer's counsel, to the effect that such legend is
not required for purposes of the 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
-5-
number of shares of Issuer Common Stock specified in the Option Notice,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Issuer Common Stock shall not then
actually be delivered to Grantee. Issuer shall pay all expenses and other
charges that may be payable in connection with the preparation, issuance and
delivery of stock certificates under this Section 2 in the name of Grantee.
SECTION 3. Issuer agrees: (i) that it shall at all times until
the termination of this Agreement have reserved for issuance upon the exercise
of the Option that number of authorized and reserved shares of Issuer Common
Stock equal to the maximum number of shares of Issuer Common Stock at any time
and from time to time issuable hereunder, all of which shares will, upon
issuance pursuant hereto, be duly authorized, validly issued, fully paid,
non-assessable, and delivered free and clear of all claims, liens, encumbrances
and security interests and not subject to any preemptive rights; (ii) that it
will not, by amendment of its certificate of incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all reasonable action as may from
time to time be requested by the Grantee, at Grantee's expense (including (x)
complying with all premerger notification, reporting and waiting period
requirements specified in 15 U.S.C. ss. 18a and regulations promulgated
thereunder and (y)in the event prior approval of or notice to the OTS, the FDIC,
the Commissioner or any other Governmental Authority, under the Home Owners Loan
Act of 1933, as amended, the Change in Bank Control Act of 1978, as amended,
Section 36a-181 or Section 36a- 184, as applicable, of the Connecticut Bank
Holding Company Act, or any other applicable federal or state banking law, is
necessary before the Option may be exercised, cooperating with Grantee in
preparing such applications or notices and providing such information to each
such Governmental Authority as it may require in order to permit Grantee to
exercise the Option and Issuer duly and effectively to issue shares of Issuer
Common Stock pursuant hereto; and (iv) to take all action provided herein to
protect the rights of Grantee against dilution.
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.
-6-
SECTION 5. The number of shares of Issuer Common Stock
purchasable upon the exercise of the Option shall be subject to adjustment from
time to time as follows:
(a) In the event of any change in the type or number
of shares of Issuer Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares or other issuances of additional
shares (other than pursuant to the exercise of the Option), the type
and number of shares of Issuer Common Stock purchasable upon exercise
hereof shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional shares of Issuer Common
Stock are to be issued or otherwise become outstanding as a result of
any such change (other than pursuant to an exercise of the Option), the
number of shares of Issuer Common Stock that remain subject to the
Option shall be increased or decreased (as applicable) so that, after
such issuance and together with shares of Issuer Common Stock
previously issued pursuant to the exercise of the Option (as adjusted
on account of any of the foregoing changes in the Issuer Common Stock),
the Option shall equal 18.6% of the number of shares of Issuer Common
Stock then issued and outstanding.
(b) Whenever the number of shares of Issuer Common
Stock purchasable upon exercise hereof is adjusted as provided in this
Section 5, the Option Price shall be adjusted by multiplying the Option
Price by a fraction, the numerator of which shall be equal to the
number of shares of Issuer Common Stock purchasable prior to the
adjustment and the denominator of which shall be equal to the number of
shares of Issuer Common Stock purchasable after the adjustment.
SECTION 6. (a) Upon the occurrence of a Purchase Event that
occurs prior to an Exercise Termination Event, Issuer shall, at the request of
Grantee (whether on its own behalf or on behalf of any subsequent holder of the
Option (or part thereof) or of any of the shares of Issuer Common Stock issued
pursuant hereto), promptly prepare, file and keep current a shelf registration
statement under the Securities Act covering any shares issued and issuable
pursuant to the Option and shall use its reasonable best efforts to cause such
registration statement to become effective, and to remain current and effective
for a period not in excess of 180 days from the day such registration statement
first becomes effective, in order to permit the sale or other disposition of any
shares of Issuer Common Stock issued upon total or partial exercise of the
Option ("Option Shares") in accordance with any plan of disposition requested by
Grantee. Grantee shall have the right to demand one such registration which
right shall not be transferable except to an affiliate of Grantee. Grantee shall
provide all information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. In connection with any such
registration, Issuer and Grantee shall provide each other with representations,
warranties, indemnities and other agreements customarily given in connection
with such registration. If requested by Grantee in connection with such
registration, Issuer and Grantee shall become a party to any underwriting
agreement relating to the sale of such shares, but only to the extent of
obligating themselves in respect of representations, warranties, indemnities and
other agreements customarily
-7-
included in such underwriting agreements. Notwithstanding the foregoing, if
Grantee revokes any exercise notice or fails to exercise any Option with respect
to any exercise notice pursuant to Section 2(e) hereof, Issuer shall not be
obligated to continue any registration process with respect to the sale of
Option Shares issuable upon the exercise of such Option and Grantee shall not be
deemed to have demanded registration of Option Shares.
(b) In the event that Grantee requests Issuer to file a
registration statement following the failure to obtain any approval required to
exercise the Option as described in Section 9 hereof, the closing of the sale or
other disposition of the Issuer Common Stock or other securities pursuant to
such registration statement shall occur substantially simultaneously with the
exercise of the Option.
(c) Concurrently with the filing of a registration statement
under Section 6(a) hereof, Issuer shall also make all filings required to comply
with state securities laws in such number of states as Grantee may reasonably
request.
SECTION 7. (a) Upon the occurrence of a Purchase Event that
occurs prior to an Exercise Termination Event, (i) at the request (the date of
such request being the "Option Repurchase Request Date") of Grantee, Issuer
shall repurchase, 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 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. For purposes of this Section 7,
Purchase Event shall
-8-
have the true meaning as set forth in Section 2(c) hereof except that in both
subclause (i) and (ii) the applicable percentage of stock shall be 50% rather
than 25%.
(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, or as a consequence of
the provision as to "well capitalized" in Section 7(a) hereof, 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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(e) Notwithstanding the foregoing provisions of this Section
7, Issuer shall not be required to deliver or cause to be delivered to Grantee
the Option Repurchase Price or to the Owner the Option Share Repurchase Price to
the extent that such delivery would prevent the Acquisition Transaction
described in Section 2(b)(1) from being accounted for as a "poolings of
interest," as determined by Issuer's independent accountants. Issuer shall
advise Grantee or the Owner within 15 business days after either Grantee or
Owner requests information from Issuer as to whether, and to the extent that,
Issuer intends to rely upon this Section 7(e) to preclude Grantee or Owner from
otherwise exercising their rights under this Section 7.
SECTION 8. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into a letter of intent or definitive
agreement (i) to consolidate or merge with any Person (other than Grantee or a
Grantee Subsidiary), and Issuer shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any Person (other
than Grantee or a Grantee Subsidiary) to merge into Issuer, and Issuer shall be
the continuing or surviving 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
-10-
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.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the aggregate
of the shares of Substitute Common Stock outstanding immediately prior to the
issuance of the Substitute Option. In the event that the Substitute Option would
be exercisable for more than 19.9% of the aggregate of the shares of Substitute
Common Stock but for this clause (e), the Substitute Option Issuer shall make a
cash payment to Grantee equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in this clause (e) over (ii) the
value of the Substitute Option after giving effect to the limitation in this
clause (e). This difference in value shall be determined by a nationally
recognized investment banking firm selected by Grantee and the Substitute Option
Issuer. In addition, the provisions of Section 5(a) hereof shall not apply to
the issuance of any Substitute Option and for purposes of applying Section 5(a)
hereof thereafter to any Substitute Option the percentage referred to in Section
5(a) hereof shall thereafter equal the percentage that the percentage of the
shares of Substitute Common Stock subject to the Substitute Option bears to the
number of shares of Substitute Common Stock outstanding.
SECTION 9. Notwithstanding Sections 2, 6 and 7 hereof, if
Grantee has given the notice referred to in one or more of such Sections, the
exercise of the rights specified in any such Section shall be extended (a) if
the exercise of such rights requires obtaining regulatory approvals (including
any required waiting periods) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights, and (b) to the extent necessary to
avoid liability under Section 16(b) of the Exchange Act by reason of such
-11-
exercise; provided that in no event shall any closing date occur more than 12
months after the related notice date, and, if the closing date shall not have
occurred within such period due to the failure to obtain any required approval
by the OTS, the FDIC, the Commissioner or any other Governmental Authority
despite the best efforts of Issuer or the Substitute Option Issuer, as the case
may be, to obtain such approvals, the exercise of the rights shall be deemed to
have been rescinded as of the related notice date. In the event (a) Grantee
receives official notice that an approval of the OTS, the FDIC. the Commissioner
or any other Governmental Authority required for the purchase and sale of the
Option Shares will not be issued or granted or (b) a closing date has not
occurred within 12 months after the related notice date due to the failure to
obtain any such required approval, Grantee shall be entitled to exercise the
Option in connection with the concurrent resale of the Option Shares pursuant to
a registration statement as provided in Section 6 hereof. Nothing contained in
this Agreement shall restrict Grantee from specifying alternative means of
exercising rights pursuant to Sections 2,6 or 7 hereof in the event that the
exercising of any such rights shall not have occurred due to the failure to
obtain any required approval referred to in this Section 9.
SECTION 10. Issuer hereby represents and warrants to Grantee
as follows:
(a) Issuer has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly approved by
the Board of Directors of Issuer and no other corporate proceedings on the part
of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly executed and
delivered by, and constitutes a valid and binding obligation of, Issuer,
enforceable against Issuer in accordance with its terms, subject to any required
Governmental Approval, and except as enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally and except that
the availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
shares of Issuer Common Stock equal to the maximum number of shares of Issuer
Common Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized, validly issued,
fully paid, non-assessable, and will be delivered free and clear of all claims,
liens, encumbrances and security interests and not subject to any preemptive
rights.
SECTION 11. (a) Neither of the parties hereto may assign any
of its rights or delegate any of its obligations under this Agreement or the
Option created hereunder to any
-12-
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 DS
Bancor, Inc., and Xxxxxxx Financial Corporation dated as of October 7,
1996. A copy of such agreement is on file at the principal office of DS
Bancor, Inc., and will be provided to any permitted assignee of the
Option without charge upon receipt of a written request therefor.
SECTION 12. Each of Grantee and Issuer will use its reasonable
efforts to make all filings with, and to obtain consents of, all third parties
and Governmental Authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
OTS, the FDIC, the Commissioner and any other Governmental Authority for
approval to acquire the shares issuable hereunder.
SECTION 13. The parties hereto acknowledge that damages would
be an inadequate remedy for a breach of this Agreement by either party hereto
and that the obligations of the parties hereto shall be enforceable by either
party hereto through injunctive or other equitable relief. Both parties further
agree to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such equitable relief and that this
provision is without prejudice to any other rights that the parties hereto may
have for any failure to perform this Agreement.
SECTION 14. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that Grantee is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7 hereof, the full number of shares
of Issuer Common Stock provided in Section 1(a) hereof (as adjusted pursuant
hereto), it is the express intention of Issuer to allow Grantee to acquire or to
require Issuer to repurchase such lesser number of shares as may be permissible
without any amendment or modification hereof.
-13-
SECTION 15. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable. telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Plan.
SECTION 16. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto shall be governed by
and construed in accordance with the laws of the State of Delaware (but not
including the choice of law rules thereof).
SECTION 17. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute one and the same agreement and shall be effective at the time of
execution and delivery.
SECTION 18. Except as otherwise expressly provided herein,
each of the parties hereto shall bear and pay all costs and expenses incurred by
it or on its behalf in connection with the transactions contemplated hereunder.
SECTION 19. Except as otherwise expressly provided herein or
in the Plan, this Agreement contains the entire agreement between the parties
with respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
SECTION 20. Capitalized terms used in this Agreement and not
defined herein but defined in the Plan shall have the meanings assigned thereto
in the Plan.
SECTION 21. Nothing contained in this Agreement shall be
deemed to authorize or require Issuer or Grantee to breach any provision of the
Plan or any provision of law applicable to the Grantee or Issuer.
SECTION 22. In the event that any selection or determination
is to be made by Grantee or the Owner hereunder and at the time of such
selection or determination there is more than one Grantee or Owner, such
selection shall be made by a majority in interest of such Grantees or Owners.
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
-14-
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.
-15-
IN WITNESS WHEREOF, each of the parties has caused this Option
Agreement to be executed and delivered on its behalf by their officers thereunto
duly authorized, all as of the date first above written.
DS BANCOR, INC.,
By:/s/ Xxxxx X. XxXxxxx, Xx.
-----------------------------
Xxxxx X. XxXxxxx, Xx.
President and Chief
Executive Officer
-16-
Exhibit C
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT, dated as of October 7, 1996, is
entered into by and among Xxxxxxx Financial Corporation ("Webster"), a Delaware
corporation, and the thirteen stockholders of DS Bancor, Inc. ("DS Bancor"), a
Delaware corporation, named on Schedule I hereto (collectively the
"Stockholders"), who are directors or executive officers of DS Bancor.
WHEREAS, Webster, Webster Acquisition Corp., a wholly-owned
subsidiary of Webster ("Merger Sub") and DS Bancor have entered into an
Agreement and Plan of Merger, dated as of October ___, 1996 ("Agreement"), which
is conditioned upon the concurrent execution of this Stockholder Agreement and
which provides for, among other things, the merger of Merger Sub with and into
DS Bancor, in a stock-for-stock transaction pursuant to which DS Bancor will
become a wholly-owned subsidiary of Webster (the "Merger");
WHEREAS in order to induce Webster to enter into or proceed
with the Agreement, each of the Stockholders agrees to, among other things, vote
in favor of the Agreement, the Merger and the other transactions contemplated by
the Agreement in his/her capacity as a stockholder of DS Bancor;
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 DS Bancor Common Stock. Each Stockholder represents and
warrants that he/she has or shares the right to vote and dispose of the number
of shares of common stock of DS Bancor, par value $1.00 per share ("DS Bancor
Stock"), set forth opposite such Stockholder's name on Schedule I hereto.
2. Agreements of the Stockholders. Each Stockholder covenants and
agrees that:
(a) Such Stockholder shall, at any meeting of DS Bancor
stockholders called for the purpose, vote or cause to be voted all
shares of DS Bancor Stock in which such Stockholder has the right to
vote (whether owned as of the date hereof or hereafter acquired) (i) in
favor of the Agreement, the Merger and the other transactions
contemplated by the Agreement and (ii) against any plan or proposal
pursuant to which DS Bancor is to be acquired by or merged with, or
pursuant to which DS Bancor proposes to sell
all or substantially all of its assets and liabilities to, any person,
entity or group (other than Webster or any affiliate thereof) unless
the Board of Directors, following receipt of written advice of DS
Bancor's legal counsel, reasonably determines, that voting against said
plan or proposal would constitute a breach of the exercise of its
fiduciary duty because such plan or proposal would be in the best
interest of DS Bancor stockholders.
(b) Except as otherwise expressly permitted hereby, such Stockholder
shall not, prior to the consummation of the Merger or the earlier termination of
this Stockholder Agreement in accordance with its terms, sell, pledge, transfer
or otherwise dispose of his/her shares of DS Bancor Stock; provided, however,
that, this Section 2(b) shall not apply (i) to a pledge existing as of the date
of this Agreement, (ii) to a sale, pledge, transfer or other disposition of
shares of DS Bancor Stock acquired subsequent to the date hereof upon the
exercise of options under the DS Bancor Stock Option Plan by a Stockholder who
is an executive officer of DS Bancor, if, in the case of (i), or (ii) such sale,
pledge, transfer or other disposition occurs no later than the 31st day
preceding the consummation of the Merger. To enable Stockholders to comply with
the foregoing provision, Xxxxxxx will notify the Stockholders at least 45 days
in advance of the date that Xxxxxxx anticipates that the Merger will be
consummated.
(c) Such Stockholder shall not in his/her capacity as a stockholder of
DS Bancor directly or indirectly encourage or solicit or hold discussions or
negotiations with, or provide any information to, any person, entity or group
(other than Xxxxxxx or an affiliate thereof) concerning any merger, sale of
substantial assets or liabilities not in the ordinary course of business, sale
of shares of capital stock or similar transaction involving DS Bancor. Nothing
herein shall impair such Stockholders' fiduciary obligations as a director of DS
Bancor.
(d) Such Stockholder shall use his/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 this Stockholder Agreement.
(e) Such Stockholder shall not, prior to the public release by Xxxxxxx
of an earnings report to its stockholders covering at least one month of
operations after consummation of the Merger (the "Restricted Period"), sell,
pledge (other than the replacement of an existing pledge of DS Bancor Stock),
transfer or otherwise dispose of the shares of Webster Stock to be received by
him/her for his/her shares of DS Bancor Stock upon consummation of the Merger;
it being agreed that Webster shall cause such earnings report to be publicly
released within 30 days
-2-
after the end of the first month of operations after consummation of the Merger.
(f) Such Stockholder shall comply with all applicable federal and state
securities laws in connection with any sale of Webster Stock received in
exchange for DS Bancor 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.
(g) Such Stockholder shall not sell or otherwise dispose of a number of
shares of his DS Bancor Common Stock or, during the Restricted Period shares of
Webster Common Stock which are exchanged for said shares (i) which is greater
than 10% of his total beneficial ownership of said shares as of the date of the
first such sale (ii) which in the aggregate with shares sold or otherwise
disposed of by all other Stockholders will be greater than 1% of the issued and
outstanding shares of DS Bancor as of the date of the first such sale. For
purposes of this computation, outstanding stock options that currently are
exercisable would be considered as outstanding or beneficially owned after such
options are converted to common stock equivalents using the treasury stock
method in accordance with generally accepted accounting principles.
3. Successors and Assigns. A Stockholder may sell, pledge, transfer or
otherwise dispose of his/her shares of DS Bancor Stock, provided that such
Stockholder obtains prior written consent of Webster and that any acquiror of
such DS Bancor Stock agree in writing to be bound by this Stockholder Agreement.
4. Termination. The parties agree and intend that this Stockholder
Agreement be a valid and binding agreement enforceable against the parties
hereto and that damages and other remedies at law for the breach of this
Stockholder Agreement are inadequate. This Stockholder Agreement may be
terminated at any time prior to the consummation of the Merger by mutual written
consent of the parties hereto and shall be automatically terminated in the event
that the Agreement is terminated in accordance with its terms; provided,
however, that if the DS Bancor stockholders fail to approve the Agreement or DS
Bancor fails to hold a stockholders meeting to vote on the Agreement, then (i)
Section 2(a) clause (ii) hereof shall continue in effect as to any plan or
proposal received by DS Bancor from any person, entity or group (other than
Webster or any affiliate thereof) prior to the termination of the Agreement or
within 135 days after such termination and (ii) Section 2(b) hereof shall
continue in effect to preclude a sale other than pursuant to normal brokers
transactions on the Nasdaq Stock Market, pledge other than to a bona fide
financial institution or recognized securities dealer, transfer, or other
disposition directly or indirectly to any such person, entity or group in
connection with
-3-
any such plan or proposal, except upon consummation of such plan or proposal.
5. Notices. Notices may be provided to Xxxxxxx and the Stockholders in
the manner specified in the Agreement, with all notices to the Stockholders
being provided to them at DS Bancor in the manner specified in such section.
6. Governing Law. This Stockholder Agreement shall be governed by the
laws of the State of Delaware, without giving effect to the principles of
conflicts of laws thereof.
7. Counterparts. This Stockholder Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same and each of
which shall be deemed an original.
8. Headings. 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.
9. Regulatory Approval. If any provision of this Agreement requires the
approval of any regulatory authority in order to be enforceable, then such
provision shall not be affective until such approval is obtained; provided,
however, that the foregoing shall not affect the enforceability of any other
provision of this Agreement.
10. Pooling of Interest. In the event that Xxxxxxx elects to have the
Merger accounted for as a purchase rather than a pooling of interest, this
Agreement shall be modified to the extent that restrictions contained herein are
based only on requirements for a pooling of interest.
-4-
IN WITNESS WHEREOF, Xxxxxxx, 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 DS BANCOR, INC.
By:/s/ Xxxxx X. Xxxxx /s/ Xxxxxxx X. Xxxxxxx, Xx.
--------------------------- ------------------------------------
Xxxxx X. Xxxxx Xxxxxxx X. Xxxxxxx, Xx.
Chairman, President and
Chief Executive Officer /s/ Xxxx X. Xxxxxxxx
------------------------------------
Xxxx X. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx, CPA
------------------------------------
Xxxxxxx X. Xxxxxxxx, CPA
/s/ Xxxxxx X. Xxxxxx, Xx.
------------------------------------
Xxxxxx X. Xxxxxx, Xx.
/s/ Xxxxx X. XxXxxxx, Xx.
------------------------------------
Xxxxx X. XxXxxxx, Xx.
/s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxxxx, Esq.
------------------------------------
Xxxxx X. Xxxxxxx, Esq.
/s/ Xxxxxxxxxxx X.X. Xxxxx
------------------------------------
Xxxxxxxxxxx X.X. Xxxxx
/s/ Xxxx X. Xxx
------------------------------------
Xxxx X. Xxx
/s/ Xxxx X. Xxxxxxxxxx, Esq.
------------------------------------
Xxxx X. Xxxxxxxxxx, Esq.
/s/ Xxxx X. Xxxxxxxx
------------------------------------
Xxxx X. Xxxxxxxx
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxxx
------------------------------------
Xxxxxx X. Xxxxx
-5-
SCHEDULE I
Number of Shares of DS
Bancor Stock
Name of Stockholder Beneficially Owned
------------------- ------------------
Xxxxxxx X. Xxxxxxx, Xx. ----------------------------------
Xxxx X. Xxxxxxxx ----------------------------------
Xxxxxxx X. Xxxxxxxx. CPA ----------------------------------
Xxxxxx X. Xxxxxx, Xx. ----------------------------------
Xxxxx X. XxXxxxx, Xx. ----------------------------------
Xxxxxx X. Xxxxxxxx ----------------------------------
Xxxxx X. Xxxxxxx, Esq. ----------------------------------
Xxxxxxxxxxx X.X. Xxxxx ----------------------------------
Xxxx X. Xxx ----------------------------------
Xxxx X. Xxxxxxxxxx, Esq. ----------------------------------
Xxxx X. Xxxxxxxx ----------------------------------
Xxxxxx X. Xxxxxxx ----------------------------------
Xxxxxx X. Xxxxx ----------------------------------
