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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
THE NEW HAVEN SAVINGS BANK
AND
CONNECTICUT BANCSHARES, INC.
AND
THE SAVINGS BANK OF MANCHESTER
DATED AS OF
JULY 15, 2003
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TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
THE MERGER AND THE CONVERSION
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . .10
2.2 The Bank Merger. . . . . . . . . . . . . . . . . . . . . . .10
2.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . .10
2.4 Certificate of Incorporation and Bylaws . . . . . . . . . . 10
2.5 Directors and Officers of Surviving Corporation . . . . . . 10
2.6 Directors and Officers of Surviving Bank . . . . . . . . . .10
2.7 Additional Actions . . . . . . . . . . . . . . . . . . . . .11
2.8 Effects of the Merger . . . . . . . . . . . . . . . . . . . 11
2.9 Possible Alternative Structures . . . . . . . . . . . . . . 11
2.10 The Conversion . . . . . . . . . . . . . . . . . . . . . . .11
ARTICLE III
CONVERSION OF SHARES AND OPTIONS
3.1 Merger Consideration . . . . . . . . . . . . . . . . . . . .12
3.2 Dissenters' Rights. . . . . . . . . . . . . . . . . . . . .13
3.3 Procedures for Exchange of Connecticut
Bancshares Common Stock and Options . . . . . . . . . . . . 14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CONNECTICUT BANCSHARES AND SBM
4.1 Capital Structure . . . . . . . . . . . . . . . . . . . . . 16
4.2 Organization, Standing and Authority of Connecticut
Bancshares . . . . . . . . . . . . . . . . . . . . . . . . .17
4.3 Ownership of Connecticut Bancshares
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . .17
4.4 Organization, Standing and Authority of Connecticut
Bancshares Subsidiaries . . . . . . . . . . . . . . . . . . 18
4.5 Authorized and Effective Agreement . . . . . . . . . . . . .18
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4.6 Securities Documents and Regulatory Reports . . . . . . . . 19
4.7 Financial Statements . . . . . . . . . . . . . . . . . . . .20
4.8 Material Adverse Change . . . . . . . . . . . . . . . . . . 21
4.9 Environmental Matters . . . . . . . . . . . . . . . . . . . 21
4.10 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . 23
4.11 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . 24
4.12 Compliance with Laws . . . . . . . . . . . . . . . . . . . .25
4.13 Certain Information . . . . . . . . . . . . . . . . . . . . 25
4.14 Employee Benefit Plans . . . . . . . . . . . . . . . . . . .26
4.15 Certain Contracts . . . . . . . . . . . . . . . . . . . . . 29
4.16 Brokers and Finders . . . . . . . . . . . . . . . . . . . . 30
4.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.18 Properties . . . . . . . . . . . . . . . . . . . . . . . . .31
4.19 Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.20 Certain Transactions . . . . . . . . . . . . . . . . . . . .31
4.21 Fairness Opinion. . . . . . . . . . . . . . . . . . . . . . 32
4.22 Loan Portfolio . . . . . . . . . . . . . . . . . . . . . . .32
4.23 Required Vote; Inapplicability of Anti-takeover Statutes . .33
4.24 Material Interests of Certain Persons . . . . . . . . . . .33
4.25 Joint Ventures . . . . . . . . . . . . . . . . . . . . . . .33
4.26 Intellectual Property . . . . . . . . . . . . . . . . . . .33
4.27 Disclosures . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF NHSB
5.1 Capital Structure . . . . . . . . . . . . . . . . . . . . . 34
5.2 Organization, Standing and Authority
of NHSB . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.3 Authorized and Effective Agreement . . . . . . . . . . . . 35
5.4 Financial Statements . . . . . . . . . . . . . . . . . . . 36
5.5 Material Adverse Change. . . . . . . . . . . . . . . . . . 37
5.6 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . .37
5.7 Legal Proceedings . . . . . . . . . . . . . . . . . . . . .38
5.8 Compliance with Laws . . . . . . . . . . . . . . . . . . .38
5.9 Brokers and Finders . . . . . . . . . . . . . . . . . . . 39
5.10 Disclosures. . . . . . . . . . . . . . . . . . . . . . . . .39
5.11 Financial Ability . . . . . . . . . . . . . . . . . . . . ..39
ARTICLE VI
COVENANTS OF CONNECTICUT BANCSHARES AND SBM
6.1 Conduct of Business . . . . . . . . . . . . . . . . . . . .39
6.2 Current Information . . . . . . . . . . . . . . . . . . . .44
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6.3 Access to Properties and Records . . . . . . . . . . . . . 45
6.4 Financial and Other Statements . . . . . . . . . . . . . . 45
6.5 Maintenance of Insurance . . . . . . . . . . . . . . . . . 46
6.6 Disclosure Supplements. . . . . . . . . . . . . . . . . . . 46
6.7 Consents and Approvals of Third Parties. . . . . . . . . . 46
6.8 Reasonable Best Efforts . . . . . . . . . . . . . . . . . .46
6.9 Failure to Fulfill Conditions . . . . . . . . . . . . . . .47
6.10 Acquisition Proposals. . . . . . . . . . . . . . . . . . . 47
6.11 Board of Directors and Committee Meetings . . . . . . . . .48
6.12 Reserves and Merger-Related Costs. . . . . . . . . . . . . 49
6.13 Transaction Expenses of Connecticut
Bancshares . . . . . . . . . . . . . . . . . . . . . . . . .49
ARTICLE VII
COVENANTS OF NHSB
7.1 Disclosure Supplements . . . . . . . . . . . . . . . . . . 50
7.2 Consents and Approvals of Third Parties. . . . . . . . . . .50
7.3 Reasonable Best Efforts. . . . . . . . . . . . . . . . . . .50
7.4 Failure to Fulfill Conditions . . . . . . . . . . . . . . .50
7.5 NEWCO Organizational Documents . . . . . . . . . . . . . . .50
7.6 Employees and Employee Benefits . . . . . . . . . . . . . . 51
7.7 Directors and Officers Indemnification and Insurance . . . .53
7.8 Connecticut Bancshares Main Office. . . . . . . . . . . . . 55
7.9 Charitable Foundation. . . . . . . . . . . . . . . . . . . .55
7.10 Directorships. . . . . . . . . . . . . . . . . . . . . . . .55
7.11 Maintenance of SBM Liquidation Account. . . . . . . . . . . 55
ARTICLE VIII
REGULATORY AND OTHER MATTERS
8.1 Connecticut Bancshares Special Meeting . . . . . . . . . . .55
8.2 Proxy Statement . . . . . . . . . . . . . . . . . . . . . .56
8.3 NHSB Conversion . . . . . . . . . . . . . . . . . . . . . . 57
8.4 Regulatory Approvals . . . . . . . . . . . . . . . . . . . 58
8.5 Compliance with Anti-Trust Laws . . . . . . . . . . . . . .59
8.6 Execution of Bank Merger Agreement . . . . . . . . . . . . 59
ARTICLE IX
CLOSING CONDITIONS
9.1 Conditions to Each Party's Obligations under
this Agreement . . . . . . . . . . . . . . . . . . . . . . .59
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9.2 Conditions to the Obligations of NHSB
under this Agreement . . . . . . . . . . . . . . . . . . . .60
9.3 Conditions to the Obligations of Connecticut Bancshares
under this Agreement . . . . . . . . . . . . . . . . . . . 61
ARTICLE X
THE CLOSING
10.1 Time and Place . . . . . . . . . . . . . . . . . . . . . . .62
10.2 Deliveries at the Closing . . . . . . . . . . . . . . . . . 62
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 62
11.2 Effect of Termination . . . . . . . . . . . . . . . . . . .65
11.3 NHSB Special Payment. . . . . . . . . . . . . . . . . . . . 66
11.4 Amendment, Extension and Waiver . . . . . . . . . . . . . .68
ARTICLE XII
MISCELLANEOUS
12.1 Confidentiality . . . . . . . . . . . . . . . . . . . . . .68
12.2 Public Announcements . . . . . . . . . . . . . . . . . . . 68
12.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 68
12.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . .69
12.5 Parties in Interest . . . . . . . . . . . . . . . . . . . .69
12.6 Complete Agreement . . . . . . . . . . . . . . . . . . . . 70
12.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 70
12.8 Severability . . . . . . . . . . . . . . . . . . . . . . . 70
12.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . .70
12.10 Interpretation . . . . . . . . . . . . . . . . . . . . . . 70
12.11 Specific Performance . . . . . . . . . . . . . . . . . . . 70
Exhibit A Plan of Liquidation . . . . . . . . . . . . . . . . . . . . . . . .A-1
Exhibit B Bank Merger Agreement . . . . . . . . . . . . . . . . . . . . . . B-1
Exhibit C Form of Voting Agreement . . . . . . . . . . . . . . . . . . . . .C-1
Exhibit D-1 Form of Termination and Release Agreement. . . . . . . . . . . .D1-1
Exhibit D-2 Form of Termination and Release Agreement. . . . . . . . . . . .D2-1
Exhibit E Form of Non-Competition Agreement. . . . . . . . . . . . . . . . .E-1
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement") dated as of July
15, 2003 is by and among THE NEW HAVEN SAVINGS BANK, a Connecticut-chartered
mutual savings bank ("NHSB"), CONNECTICUT BANCSHARES, INC., a Delaware
corporation ("Connecticut Bancshares"), and THE SAVINGS BANK OF MANCHESTER, a
Connecticut savings bank and wholly-owned subsidiary of Connecticut Bancshares
("SBM").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Boards of Directors of NHSB, Connecticut Bancshares and
SBM have determined that it is in the best interest of their respective
companies and shareholders or depositors as the case may be, to consummate the
business combination transactions provided for herein whereby, subject to the
terms and conditions set forth herein;
WHEREAS, NHSB will convert to a stock bank/stock holding company form
of organization pursuant to its proposed plan of conversion (the "Plan"), and in
connection therewith will form a new Delaware corporation ("NEWCO"), which shall
become the parent holding company of NHSB;
WHEREAS, Connecticut Bancshares will merge with and into an interim
corporation ("Interim"), a Delaware corporation to be formed as a subsidiary of
NEWCO, with Connecticut Bancshares being the surviving entity (the "Surviving
Corporation") (the "Merger");
WHEREAS, simultaneously with, or as soon as practicable after the
Merger, the Surviving Corporation will be merged with and liquidated into NEWCO
in accordance with a Plan of Liquidation in form and substance substantially
similar to that attached hereto as Exhibit A.
WHEREAS, prior to the consummation of the Merger, NHSB and SBM will
enter into a merger agreement, in form and substance substantially similar to
that attached hereto as Exhibit B (the "Bank Merger Agreement") pursuant to
which SBM will merge with and into NHSB, with NHSB being the surviving entity
(the "Bank Merger"), which Bank Merger shall be consummated immediately
following the Merger;
WHEREAS, all of the directors of Connecticut Bancshares have agreed, in
their capacities as shareholders of Connecticut Bancshares, to vote their shares
of Connecticut Bancshares Common Stock in favor of this Agreement pursuant to
separate voting agreements entered into by and between each such director and
NHSB prior to or on the date hereof in the form attached hereto as Exhibit C;
WHEREAS, the parties hereto desire to make certain representations,
warranties and agreements in connection with the business combination
transactions described in this Agreement and to prescribe certain conditions
thereto.
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NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 CERTAIN DEFINITIONS. As used in this Agreement, the following terms
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have the following meanings, unless the context otherwise requires (both here
and throughout this Agreement, references to Articles and Sections refer to
Articles and Sections of this Agreement).
"ACQUISITION AGREEMENT" shall have the meaning set forth in Section
11.1.11 hereof.
"ACQUISITION PROPOSAL" means any proposal or offer with respect to any
of the following (other than the transactions contemplated hereunder) involving
Connecticut Bancshares or any Connecticut Bancshares Subsidiaries: (i) any
merger, consolidation, share exchange, business combination or other similar
transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 25% or more of its consolidated assets in a single transaction or
series of transactions; (iii) any tender offer or exchange offer for 25% or more
of the outstanding shares of its capital stock or the filing of a registration
statement under the Securities Act in connection therewith; or (iv) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.
"ACQUISITION TRANSACTION" means any of the following (other than the
transaction contemplated hereunder) involving Connecticut Bancshares or any
Connecticut Bancshares Subsidiaries: (i) any merger, consolidation, share
exchange, business combination or other similar transaction; (ii) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of 25% or more
of its consolidated assets in a single transaction or series of transactions; or
(iii) any tender offer or exchange offer for 25% or more of the outstanding
shares of its capital stock or the filing of a registration statement under the
Securities Act in connection therewith.
"AFFILIATE" shall mean, with respect to a Person, any Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"BANKING LAW" shall mean the Banking Law of Connecticut, Connecticut
General Statutes ss. 36a-1 et seq., as amended.
"BANK MERGER" shall have the meaning set forth in the recitals hereto.
"BANK MERGER AGREEMENT" shall have the meaning set forth in the
recitals hereto.
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"BANK REGULATOR" shall mean any federal or state banking regulator that
regulates NHSB or SBM, or any of their respective holding companies or
subsidiaries, as the case may be, including but not limited to the FDIC, the
Department, and the FRB.
"BENCHMARK PRICE" shall have the meaning set forth in Section 11.3.4
hereof.
"BENEFIT AGREEMENT" shall have the meaning set forth in Section 7.6.3
hereof.
"BIF" shall mean the Bank Insurance Fund administered by the FDIC.
"BUSINESS DAY" means Monday through Friday of each week, except a legal
holiday recognized as such by the U.S. Government or any day on which banking
institutions in the State of Connecticut are authorized or obligated to close.
"CERTIFICATE" shall mean certificates evidencing shares of Connecticut
Bancshares Common Stock.
"CLAIM" shall have the meaning set forth in Section 7.7.2 hereof.
"CLOSING" shall have the meaning set forth in Section 2.3 hereof.
"CLOSING DATE" shall have the meaning set forth in Section 2.3 hereof.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY RESTRICTED SHARE" shall have the meaning set forth in Section
3.1.4 hereof.
"CONFIDENTIALITY AGREEMENTS" shall mean the confidentiality agreements
referred to in Section 12.1 of this Agreement.
"CONNECTICUT BANCSHARES" shall mean Connecticut Bancshares, Inc., a
Delaware corporation with its principal office located at 000 Xxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxx.
"CONNECTICUT BANCSHARES COMMON STOCK" shall mean the common stock, par
value $.01 per share, of Connecticut Bancshares.
"CONNECTICUT BANCSHARES DEFINED BENEFIT PLAN" shall have the meaning
set forth in Section 4.14.3 hereof.
"CONNECTICUT BANCSHARES DISCLOSURE SCHEDULE" shall mean a written,
signed disclosure schedule delivered by Connecticut Bancshares to NHSB
specifically referring to the appropriate section of this Agreement and
describing in reasonable detail the matters contained therein.
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"CONNECTICUT BANCSHARES EMPLOYEE PLAN(S)" shall mean all stock option,
employee stock purchase, stock bonus and any other stock-based plans, qualified
pension or profit-sharing plans, any deferred compensation, non-qualified plan
or arrangement, supplemental retirement, consultant, bonus or group insurance
contract or any other incentive, health and welfare or employee benefit plan or
agreement maintained for the benefit of any of the employees or former employees
or directors of Connecticut Bancshares or any Connecticut Bancshares Subsidiary,
whether written or oral.
"CONNECTICUT BANCSHARES FINANCIAL STATEMENTS" shall mean (i) the
audited consolidated balance sheets (including related notes and schedules, if
any) of Connecticut Bancshares as of December 31, 2002, 2001 and 2000 and the
consolidated statements of operations, changes in shareholders' equity and cash
flows (including related notes and schedules, if any) of Connecticut Bancshares
for each of the three (3) years ended 2002, 2001 and 2000 as filed by
Connecticut Bancshares in its Securities Documents, and (ii) the unaudited
interim and audited annual consolidated financial statements of Connecticut
Bancshares as of the end of each calendar quarter and fiscal year, respectively,
following December 31, 2002 as filed by Connecticut Bancshares in its Securities
Documents.
"CONNECTICUT BANCSHARES NET INCOME" shall mean the amount set forth as
net income on Connecticut Bancshares' consolidated statements of operations
prepared in accordance with GAAP in a manner consistent with the preparation of
the Connecticut Bancshares Financial Statements as adjusted to (i) exclude any
gain or loss on sale of assets other than in the ordinary course of business,
including but not limited to the sales of loans, investment securities and
repossessed assets, (ii) exclude any transaction expenses paid or to be paid as
a result of the Merger as detailed in Section 6.13 hereof, which have been
reflected in Connecticut Bancshares consolidated statements of operations, and
(iii) exclude any additional accruals and reserves that may be established in
accordance with Section 6.12 hereof.
"CONNECTICUT BANCSHARES OPTION PLANS" shall mean the Connecticut
Bancshares, Inc. 2000 Stock-Based Incentive Plan and the Connecticut Bancshares,
Inc. 2002 Equity Compensation Plan.
"CONNECTICUT BANCSHARES PENSION PLAN" shall have the meaning set forth
in Section 4.14.4 hereof.
"CONNECTICUT BANCSHARES SHAREHOLDERS MEETING" shall have the meaning
set forth in Section 8.1 hereof.
"CONNECTICUT BANCSHARES TERMINATION FEE" shall have the meaning set
forth in Section 11.2.2.
"CONNECTICUT BANCSHARES WELFARE PLAN" shall have the meaning set forth
in Section 4.14.11 hereof.
"CONTINUING EMPLOYEE" shall have the meaning set forth in Section 7.6.2
hereof.
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"CONVERSION" shall have the meaning set forth in Section 2.10 hereof.
"CONVERSION PROSPECTUS" shall mean a prospectus issued by NEWCO in
connection with the Offering, which meets all of the requirements of the
Securities Act, applicable state securities laws and banking laws and
regulations.
"CONVERSION REGISTRATION STATEMENT" shall mean the registration
statement, together with all amendments and supplements, filed with the SEC
under the Securities Act for the purpose of registering shares of NEWCO Common
Stock to be offered and issued in connection with the Offering.
"CORPORATORS" shall mean the corporators of NHSB.
"COSTS" shall have the meaning set forth in Section 11.2.3 hereof.
"DGCL" shall mean the Delaware General Corporation Law, as amended.
"DEPARTMENT" shall mean the Connecticut Department of Banking.
"DISSENTING SHARES" shall have the meaning set forth in Section 3.2.1
hereof.
"DISSENTING SHAREHOLDER" shall have the meaning set forth in Section
3.2.1 hereof.
"DOJ" shall mean the United States Department of Justice.
"EFFECTIVE DATE" shall mean the date on which the Effective Time
occurs. The Effective Date shall occur as soon as practicable after the closing
of the Offering.
"EFFECTIVE TIME" shall mean the date and time specified pursuant to
Section 2.3 hereof as the effective time of the Merger.
"ENVIRONMENTAL LAWS" means any applicable federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with any
governmental entity relating to (1) the protection, preservation or restoration
of the environment (including, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, surface soil, subsurface soil, plant
and animal life or any other natural resource), and/or (2) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Materials of Environment Concern.
The term Environmental Law includes without limitation (a) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
ss. 9601, et seq.; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. ss. 6901, et seq.; the Clean Air Act, as amended, 42 U.S.C. ss. 7401, et
seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. ss. 1251,
et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. ss. 9601, et
seq.; the Emergency Planning and Community Right to Know Act, 42 U.S.C. ss.
ll0l, et seq.; the Safe Drinking Water Act, 42 U.S.C. ss. 300f, et seq.; the
Connecticut Transfer Act, Connecticut General Statutes ss. 22a-134 et seq.; and
all
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applicable comparable state and local laws, and (b) any common law (including
without limitation common law that may impose strict liability) that may impose
liability or obligations for injuries or damages due to the presence of or
exposure to any Materials of Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA AFFILIATE" shall have the meaning set forth in Section 4.14.3
hereof.
"ESOP" shall have the meaning set forth in Section 6.1.2(j) hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXCHANGE AGENT" shall mean a bank or trust company designated by NHSB
and reasonably acceptable to Connecticut Bancshares, which shall act as agent
for NHSB in connection with the exchange procedures for converting Connecticut
Bancshares Common Stock and Options into the Merger Consideration.
"EXCHANGE FUND" shall have the meaning set forth in Section 3.3.1
hereof.
"EXECUTIVE AGREEMENTS" shall have the meaning set forth in Section
7.6.3 hereof.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"FINAL DIVIDEND RECORD DATE" shall have the meaning set forth in
Section 6.1.2(e) hereof.
"FRB" shall mean the Board of Governors of the Federal Reserve System
or any successor thereto.
"GAAP" shall mean accounting principles, generally accepted in the
United States.
"GOVERNMENTAL ENTITY" shall mean any federal or state court,
administrative agency or commission or other governmental authority or
instrumentality.
"HOLA" shall mean the Home Owners Loan Act.
"INDEMNIFIED LIABILITIES" shall have the meaning set forth in Section
7.7.2 hereof.
"INDEMNIFIED PARTIES" shall have the meaning set forth in Section 7.7.2
hereof.
"INTELLECTUAL PROPERTY" shall have the meaning set forth in Section
4.26 hereof.
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"INTERIM" shall have the meaning set forth in the recitals hereto.
"JOINT VENTURE" shall mean any limited partnership, joint venture,
corporation, or venture capital investment.
"LOAN PROPERTY" shall have the meaning set forth in Section 4.9.2
hereof.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to Connecticut
Bancshares or NHSB, respectively, any effect that (i) is material and adverse to
the financial condition, results of operations or business of Connecticut
Bancshares and its Subsidiaries taken as a whole, or NHSB and its Subsidiaries
taken as a whole, respectively, or (ii) materially impairs the ability of either
Connecticut Bancshares, on the one hand, or NHSB, on the other hand, to
consummate the transactions contemplated by this Agreement; provided that
"Material Adverse Effect" shall not be deemed to include the impact of (a)
changes in laws and regulations affecting banks generally, (b) changes in GAAP
or regulatory accounting principles generally applicable to banks and their
holding companies, (c) actions and omissions of a party (or any of its
Subsidiaries) taken with the prior written consent of the other party, (d)
changes in economic conditions affecting financial institutions generally,
including but not limited to changes in market interest rates or the projected
future interest rate environment, and (e) the direct effects of compliance with
this Agreement on the operating performance of the parties.
"MATERIALS OF ENVIRONMENTAL CONCERN" shall mean petroleum and petroleum
products, byproducts or breakdown products, radioactive materials,
asbestos-containing materials and polychlorinated biphenyls and any other
chemicals, materials or substances regulated as toxic or hazardous or as a
pollutant, contaminant or waste under any applicable Environmental Laws.
"MERGER" shall have the meaning set forth in the recitals hereto.
"MERGER CONSIDERATION" shall mean the cash paid by NEWCO to holders of
Connecticut Bancshares Common Stock and Options under Section 3.1 hereof.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NEWCO" shall mean a Delaware corporation to be organized by NHSB
pursuant to the DGCL and the Banking Law, which shall own 100% of the common
stock of NHSB following the consummation of the transactions contemplated in the
Plan.
"NEWCO COMMON STOCK" shall mean the common stock, par value $0.01 per
share, of NEWCO to be issued in the Offering.
"NEW EXECUTIVE AGREEMENTS" shall have the meaning set forth in Section
7.6.3 hereof.
"NEW OPTION PLAN" shall have the meaning set forth in Section 7.6.2
hereof.
"NHSB" shall mean The New Haven Savings Bank, either as a
Connecticut-chartered mutual savings bank or, following the Conversion, a stock
savings bank, with its principal
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offices located at 000 Xxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxxx 00000.
"NHSB DISCLOSURE SCHEDULE" shall mean a written, signed disclosure
schedule delivered by NHSB to Connecticut Bancshares specifically referring to
the appropriate section of this Agreement and describing in reasonable detail
the matters contained therein.
"NHSB FINANCIAL STATEMENTS" shall mean the audited consolidated balance
sheets (including related notes and schedules, if any) of NHSB as of March 31,
2003, 2002 and 2001 and the consolidated statements of income and cash flows
(including related notes and schedules, if any) of NHSB for each of the three
(3) years ended March 31, 2003, 2002 and 2001, and the NHSB call reports as of
the end of each quarter following March 31, 2003.
"NHSB PROPOSAL" shall have the meaning set forth in Section 6.10
hereof.
"OFFERING" shall mean the offering, in connection with the Conversion,
of shares of NEWCO Common Stock in a subscription offering and, if necessary, a
community offering and/or a syndicated community offering.
"OPTION CONSIDERATION" shall have the meaning set forth in Section
3.1.3 hereof.
"OPTION PRICE" shall have the meaning set forth in Section 3.1.3
hereof.
"OPTIONS" shall mean options to purchase shares of Connecticut
Bancshares Common Stock granted pursuant to the Connecticut Bancshares Option
Plans as set forth in Section 4.1 of the Connecticut Bancshares Disclosure
Schedule.
"PARTICIPATION FACILITY" shall have the meaning set forth in Section
4.9.2 hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, association, trust or "group" (as that term is defined under the
Exchange Act).
"PER SHARE MERGER CONSIDERATION" shall have the meaning set forth in
Section 3.1 hereof.
"PLAN" shall have the meaning set forth in the recitals hereto.
"PROXY STATEMENT" shall have the meaning set forth in Section 8.2.1
hereof.
"PURCHASE PRICE ADJUSTMENT" means the amount, not less than zero, equal
to the Connecticut Bancshares Net Income for each full month after March 31,
2004 minus the amount of any cash dividends paid after March 31, 2004 on
Connecticut Bancshares Common Stock which relates to Connecticut Bancshares Net
Income earned after said date.
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"RIGHTS" shall mean warrants, options, rights, convertible securities,
stock appreciation rights and other arrangements or commitments that obligate an
entity to issue or dispose of any of its capital stock or other ownership
interests or that provide for compensation based on the equity appreciation of
its capital stock.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURITIES DOCUMENTS" shall mean all reports, offering circulars,
proxy statements, registration statements and all similar documents filed, or
required to be filed, pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended; and the rules and
regulations of the SEC promulgated thereunder.
"SPECIAL PAYMENT" shall have the meaning set forth in Section 11.3.1
hereof.
"SPECIAL PAYMENT EVENT" shall have the meaning set forth in Section
11.3.1 hereof.
"STOCK EXCHANGE" shall mean the Nasdaq National Market.
"SUBSIDIARY" shall have the meaning set forth in Rule 1-02 of
Regulation S-X of the SEC.
"SUPERIOR PROPOSAL" shall have the meaning set forth in Section 6.10
hereof.
"SURVIVING BANK" shall mean NHSB as the resulting institution of the
Bank Merger.
"SURVIVING CORPORATION" shall have the meaning set forth in the
recitals hereof.
"TAX" shall have the meaning set forth in Section 4.10.6 hereof.
"TAX RETURN" shall have the meaning set forth in Section 4.10.6 hereof.
"TERMINATION DATE" shall mean October 15, 2004.
Other terms used herein are defined in the preamble and elsewhere in
this Agreement.
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ARTICLE II
THE MERGER AND THE CONVERSION
2.1 THE MERGER. As promptly as practicable following the satisfaction
----------
or waiver of the conditions to each party's respective obligations hereunder,
and subject to the terms and conditions of this Agreement, at the Effective Time
Interim shall merge with and into Connecticut Bancshares with Connecticut
Bancshares as the Surviving Corporation in accordance with the provisions of the
DGCL, simultaneously with or as soon as practicable after the Bank Merger, the
Surviving Corporation shall be merged with and liquidated into NEWCO in
accordance with a Plan of Liquidation, in the form attached hereto as Exhibit A.
At the Effective Time of the Merger, each share of Connecticut Bancshares Common
Stock and each Option will be converted into the right to receive the Merger
Consideration pursuant to the terms of Article III hereof.
2.2 THE BANK MERGER. The Bank Merger shall be consummated immediately
---------------
following the Merger in accordance with a Bank Merger Agreement substantially in
the form attached hereto as Exhibit A.
2.3 EFFECTIVE TIME. The Merger shall be effected by the filing of a
---------------
certificate of merger with the Delaware Office of the Secretary of State on the
day of the closing ("Closing Date"), in accordance with the DGCL (the
"Closing"). The "Effective Time" of the Merger shall be the date and time upon
which the certificate of merger as to the Merger is filed with the Delaware
Office of the Secretary of State, or as otherwise stated in such certificate of
merger.
2.4 CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate of
-------------------------------------------
Incorporation and Bylaws of Connecticut Bancshares as in effect immediately
prior to the Effective Time, shall be the Certificate of Incorporation and
Bylaws of the Surviving Corporation until thereafter amended as provided therein
and by applicable law.
2.5 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION. The directors of
------------------------------------------------
the Surviving Corporation immediately after the Effective Time shall be the
directors of Interim immediately prior to the Effective Time, plus two (2)
directors of Connecticut Bancshares immediately prior to the Effective Time who
shall be selected by the Board of Directors of NEWCO in accordance with the
provisions of Section 7.10 hereof, each to meet the qualifications of and hold
office in accordance with the Certificate of Incorporation and Bylaws of the
Surviving Corporation. The officers of NEWCO immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation, in each case
until their respective successors are duly elected or appointed and qualified.
2.6 DIRECTORS AND OFFICERS OF SURVIVING BANK. The directors of the
------------------------------------------
Surviving Bank immediately after the Effective Time shall be the directors of
NHSB prior to the Effective Time plus two (2) directors of SBM immediately prior
to the Effective Time who shall be selected by the Board of Directors of NHSB,
each to meet the qualifications of and hold office in accordance with the
Certificate of Incorporation and Bylaws of the Surviving Bank. The officers of
NHSB immediately prior to the Effective Time shall be the initial officers of
the Surviving Bank, in
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each case until their respective successors are duly elected or appointed and
qualified.
2.7 ADDITIONAL ACTIONS. If, at any time after the Effective Time, the
-------------------
Surviving Corporation or the Surviving Bank shall consider or be advised that
any further assignments or assurances in law or any other acts are necessary or
desirable (a) to vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation or the Surviving Bank, title to and possession of any
property or right of Connecticut Bancshares (or SBM) acquired or to be acquired
by reason of, or as a result of, the Merger, or (b) otherwise to carry out the
purposes of this Agreement, Connecticut Bancshares, SBM and their officers and
directors shall be deemed to have granted to the Surviving Corporation an
irrevocable power of attorney to execute and deliver all such proper deeds,
assignments and assurances in law and to do all acts necessary or proper to
vest, perfect or confirm title to and possession of such property or rights in
the Surviving Corporation or the Surviving Bank and otherwise to carry out the
purposes of this Agreement; and the officers and directors of the Surviving
Corporation and the Surviving Bank are fully authorized in the name of
Connecticut Bancshares, SBM or otherwise to take any and all such action.
2.8 EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
---------------------
shall have the effects set forth in the DGCL with respect to Interim and
Connecticut Bancshares, and the Bank Merger shall have the effects set forth in
the Banking Law with respect to NHSB and SBM.
2.9 POSSIBLE ALTERNATIVE STRUCTURES. Notwithstanding anything to the
--------------------------------
contrary contained in this Agreement, prior to the Effective Time NHSB shall be
entitled to revise the structure of the Merger described in Section 2.1 hereof,
provided that (i) there are no adverse federal or state income tax consequences
to Connecticut Bancshares and its shareholders as a result of the modification;
(ii) the consideration to be paid to the holders of Connecticut Bancshares
Common Stock and Options under this Agreement is not thereby changed in kind or
value or reduced in amount; (iii) there are no adverse changes to the benefits
and other arrangements provided to or on behalf of Connecticut Bancshares'
directors, officers and other employees; and (iv) such modification will not
delay materially or jeopardize receipt of any required regulatory approvals or
non-objection of Governmental Entities. NHSB, Connecticut Bancshares and SBM
agree to amend this Agreement and any related documents appropriately in order
to reflect any such revised structure.
2.10 THE CONVERSION. Concurrently with the approval of this Agreement
--------------
by the Board of Directors of NHSB, the Board of Directors of NHSB shall adopt
the Plan pursuant to which, subject to the receipt of all necessary approvals
(including the approval of the Corporators and any others as set forth in
Section 9.1.1(ii) hereof), NHSB shall take all steps reasonably necessary to
convert from a mutual savings bank to a capital stock savings bank as part of a
transaction in which a holding company is organized to acquire upon issuance all
of the capital stock of the converted bank (the "Conversion").
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ARTICLE III
CONVERSION OF SHARES AND OPTIONS
3.1 MERGER CONSIDERATION.
--------------------
3.1.1 At the Effective Time, by virtue of the Merger and
without any action on the part of NHSB, Connecticut Bancshares or the holders of
any of the shares of Connecticut Bancshares Common Stock, each share of
Connecticut Bancshares Common Stock issued and outstanding immediately prior to
the Effective Time (other than any shares to be cancelled pursuant to Section
3.1.2 hereof and any Dissenting Shares) shall be converted into the right to
receive a cash payment in an amount equal to $52.00 (the "Per Share Merger
Consideration"), provided, however, that in the event the Closing does not take
place on or prior to March 31, 2004, other than as the result of a breach of a
representation or warranty of Connecticut Bancshares (subject to the standard
set forth in Section 9.2.1 of this Agreement) or a breach by Connecticut
Bancshares of one or more covenants in this Agreement (subject to the standard
set forth in Section 9.2.2), which breach of representation, warranty or
covenant is the principal cause of the failure of the Closing to take place on
or before March 31, 2004, the Per Share Merger Consideration shall be increased
by the amount determined by dividing (x) the Purchase Price Adjustment by (y)
the sum of (i) the number of shares of Connecticut Bancshares Common Stock
issued and outstanding immediately prior to the Effective Date and (ii) the
number of shares of Connecticut Bancshares Common Stock which may be acquired
immediately prior to the Effective Date upon the exercise of the Options,
subject to Connecticut Bancshares providing to NHSB the following:
(a) as soon as reasonably practicable following the end of
each calendar month ending after March 31, 2004 preceding the
Closing, Connecticut Bancshares shall deliver to NHSB a
consolidated statement of operations for such calendar month
in form consistent with the determination of Connecticut
Bancshares Net Income as defined herein; and
(b) not later than five (5) Business Days prior to the Closing
Date, NHSB shall cause PricewaterhouseCoopers, LLP ("PwC"), or
another accounting firm reasonably acceptable to the parties,
to review and issue its report on the consolidated statement
of operations of Connecticut Bancshares for the period
beginning on April 1, 2004 and ending at the date of the last
of such statements of operations. Absent manifest error, such
report shall be binding on the parties for the purpose of
calculating the Purchase Price Adjustment. No partner or
manager of PwC who is involved in the audit engagement at NHSB
shall participate in the preparation or issuance of the
report.
3.1.2 Each share of Connecticut Bancshares Common Stock (i)
held in the treasury of Connecticut Bancshares, (ii) owned by NHSB, NEWCO or any
direct or indirect wholly owned subsidiary of NEWCO or of Connecticut Bancshares
immediately prior to the Effective Time (other than shares held in a fiduciary
capacity or in connection with debts previously contracted), or (iii) reserved
for issuance under the Connecticut Bancshares Option
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Plans which has not been granted or allocated, shall, at the Effective Time,
cease to exist, and the certificates for such shares shall be cancelled as
promptly as practicable thereafter, and no payment or distribution shall be made
in consideration therefor.
3.1.3 Each Option issued and outstanding immediately prior to
the Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof and without regard to any future vesting date
thereof, be cancelled and converted into the right to receive a cash payment in
an amount determined by multiplying (i) the positive difference, if any, between
the Per Share Merger Consideration, adjusted, if applicable, pursuant to Section
3.1.1 above, and the exercise price of such Option, for each share of
Connecticut Bancshares Common Stock covered by such Option (the "Option Price")
by (ii) the number of shares of Connecticut Bancshares Common Stock subject to
such Option (the "Option Consideration"). The payment of the Option
Consideration referred to in the immediately preceding sentence to each holder
of an Option shall be subject to such holder executing such instruments of
cancellation as NEWCO and Connecticut Bancshares may reasonably deem
appropriate. Connecticut Bancshares or SBM shall make necessary tax withholdings
from the Option Consideration as they deem appropriate.
3.1.4. At the Effective Time, each unvested restricted share
of Connecticut Bancshares Common Stock granted under the Connecticut Bancshares
Option Plans (each a "Company Restricted Share"), as set forth in Connecticut
Bancshares Disclosure Schedule Section 3.1.4, which is outstanding immediately
prior to the Effective Time shall vest and become free of restrictions to the
extent provided by the terms thereof. Each holder of a Company Restricted Share
shall have the same rights to receive the Merger Consideration as are provided
to other holders of Company Common Stock pursuant to Section 3.1.
3.2 DISSENTERS' RIGHTS.
------------------
3.2.1 Each outstanding share of Connecticut Bancshares Common
Stock the holder of which has perfected his right to dissent under the DGCL and
has not effectively withdrawn or lost such right as of the Effective Time (the
"Dissenting Shares") shall not be converted into or represent a right to receive
the Merger Consolidation hereunder, and the holder thereof shall be entitled
only to such rights as are granted by the DGCL. Connecticut Bancshares shall
give NHSB notice upon receipt by Connecticut Bancshares of any such demands for
payment of the fair value of such shares of Connecticut Bancshares Common Stock
and of withdrawals of such notice and any other instruments provided pursuant to
applicable law (any shareholder duly making such demand being hereinafter called
a "Dissenting Shareholder"), and NHSB shall have the right to participate in all
negotiations and proceedings with respect to any such demands. Connecticut
Bancshares shall not, except with the prior written consent of NHSB, voluntarily
make any payment with respect to, or settle or offer to settle, any such demand
for payment, or waive any failure to timely deliver a written demand for
appraisal or the taking of any other action by such Dissenting Shareholder as
may be necessary to perfect appraisal rights under the DGCL. Any payments made
in respect of Dissenting Shares shall be made by NEWCO.
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3.2.2 If any Dissenting Shareholder shall effectively withdraw
or lose (through failure to perfect or otherwise) his right to such fair value
payment at or prior to the Effective Time, such holder's shares of Connecticut
Bancshares Common Stock shall be converted into a right to receive the Merger
Consideration in accordance with the applicable provisions of this Agreement. If
such holder shall effectively withdraw or lose (through failure to perfect or
otherwise) his right to such fair value payment after the Effective Time, each
share of Connecticut Bancshares Common Stock of such holder shall be converted
into the right to receive the Merger Consideration.
3.2.3 After the Effective Time, shares of Connecticut
Bancshares Common Stock other than Dissenting Shares shall be no longer
outstanding and shall automatically be cancelled and shall cease to exist, and
shall thereafter by operation of this section be the right to receive the Merger
Consideration as set forth in Section 3.3.4.
3.3 PROCEDURES FOR EXCHANGE OF CONNECTICUT BANCSHARES COMMON STOCK AND
-------------------------------------------------------------------
OPTIONS.
-------
3.3.1 NEWCO to Make Cash Available. Prior to the Effective
-----------------------------
Time, NHSB shall designate the Exchange Agent. NEWCO shall take all steps
necessary on or prior to Closing Date to deliver to the Exchange Agent, for the
benefit of the holders of shares of Connecticut Bancshares Common Stock and
Options, for exchange in accordance with this Section 3.3, an amount of cash
sufficient to pay the aggregate amount of cash payable in accordance with
Article III hereof (such cash for shares of Connecticut Bancshares Common Stock
and Options, together with any dividends or distributions with respect thereto
being hereinafter referred to as the "Exchange Fund") to be paid in exchange for
outstanding Connecticut Bancshares Common Stock and Options in accordance with
this Agreement.
3.3.2 Exchange of Certificates. Provided that Connecticut
-------------------------
Bancshares has delivered or caused to be delivered to the Exchange Agent all
information which is necessary for the Exchange Agent to perform its obligations
specified herein, NEWCO shall, within five (5) Business Days after the Effective
Time, take all steps necessary to cause the Exchange Agent to mail to each
holder of a Certificate or Certificates a form letter of transmittal for return
to the Exchange Agent and instructions for use in effecting the surrender of the
Certificates for cash into which the Connecticut Bancshares Common Stock
represented by such Certificates shall have been converted as a result of the
Merger. The letter of transmittal (which shall be subject to the reasonable
approval of Connecticut Bancshares) 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. 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 a check representing the amount of
cash that such holder has the right to receive in respect of Certificates
surrendered pursuant to the provisions of Section 3.1, and the Certificates so
surrendered shall forthwith be cancelled.
3.3.3 Payment of Option Price. At the Effective Time, if not
-----------------------
previously paid by Connecticut Bancshares immediately prior to the Effective
Time (to which NHSB has no objection), NEWCO shall take all steps necessary to
cause the Exchange Agent to issue and
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deliver within five (5) Business Days a check representing the amount of the
Option Price to the holders of the Options, all of which shall have been
cancelled in connection with the Merger Agreement.
3.3.4 Rights of Certificate or Option Holders after the
-------------------------------------------------------
Effective Time. The holder of (i) a Certificate (other than a Certificate with
--------------
respect to Dissenting Shares) that prior to the Merger represented issued and
outstanding Connecticut Bancshares Common Stock, or (ii) an Option shall have no
rights, after the Effective Time, with respect to such Connecticut Bancshares
Common Stock or Option except to surrender the Certificate and receive in
exchange for the Merger Consideration as provided in this Agreement.
3.3.5 Surrender by Persons Other than Record Holders. If the
-----------------------------------------------
Person surrendering a Certificate and signing the accompanying letter of
transmittal is not the record holder thereof, then it shall be a condition of
the payment of the Merger Consideration that: (i) such Certificate is properly
endorsed to such Person or is accompanied by appropriate stock powers, in either
case signed exactly as the name of the record holder appears on such
Certificate, and is otherwise in proper form for transfer, or is accompanied by
appropriate evidence of the authority of the Person surrendering such
Certificate and signing the letter of transmittal to do so on behalf of the
record holder; and (ii) the person requesting such exchange shall pay to the
Exchange Agent in advance any transfer or other taxes required by reason of the
payment to a person other than the registered holder of the Certificate
surrendered, or required for any other reason, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
3.3.6 Closing of Transfer Books. From and after the Effective
-------------------------
Time, there shall be no transfers on the stock transfer books of Connecticut
Bancshares of the Connecticut Bancshares Common Stock which were 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 exchanged for the Merger Consideration and cancelled as
provided in this Section 3.3.
3.3.7 Return of Exchange Fund. At any time following the six
------------------------
(6) month period after the Effective Time, NEWCO shall be entitled to require
the Exchange Agent to deliver to it any portions of the Exchange Fund that had
been made available to the Exchange Agent and not disbursed to holders of
Certificates and Options (including, without limitation, all interest and other
income received by the Exchange Agent in respect of all funds made available to
it), and thereafter such holders shall be entitled to look to NEWCO (subject to
abandoned property, escheat and other similar laws) with respect to any Merger
Consideration that may be payable upon due surrender of the Certificates or
Options held by them. Notwithstanding the foregoing, neither NHSB, NEWCO nor the
Exchange Agent shall be liable to any holder of a Certificate or Option for any
Merger Consideration delivered in respect of such Certificate or Option to a
public official pursuant to any abandoned property, escheat or other similar
law.
3.3.8 Lost, Stolen or Destroyed Certificates. 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 NEWCO, the posting
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by such person of a bond in such amount as NEWCO may reasonably direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration deliverable in respect thereof.
3.3.9 Withholding. NEWCO or the Exchange Agent will be
-----------
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement or the transactions contemplated hereby to any holder
of Connecticut Bancshares Common Stock or Options such amounts as NEWCO (or any
Affiliate thereof) or the Exchange Agent are required to deduct and withhold
with respect to the making of such payment under the Code, or any applicable
provision of U.S. federal, state, local or non-U.S. tax law. To the extent that
such amounts are properly withheld by NEWCO or the Exchange Agent, such withheld
amounts will be treated for all purposes of this Agreement as having been paid
to the holder of the Connecticut Bancshares Common Stock or Options in respect
of whom such deduction and withholding were made by NEWCO or the Exchange Agent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
CONNECTICUT BANCSHARES AND SBM
Connecticut Bancshares and SBM represent and warrant to NHSB that the
statements contained in this Article IV are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article IV), except as set forth in the
Connecticut Bancshares Disclosure Schedule delivered by Connecticut Bancshares
to NHSB on the date hereof, and except as to any representation or warranty
which specifically relates to an earlier date. No representation or warranty of
Connecticut Bancshares or SBM contained herein shall be deemed untrue or
incorrect, and neither Connecticut Bancshares nor SBM shall be deemed to have
breached a representation or warranty, on account of the existence of any fact,
circumstance or event, unless, as a direct or indirect consequence of such fact,
circumstance or event, individually or taken together with all other facts,
circumstances or events inconsistent with any paragraph in this Article IV, as
applicable, there is reasonably likely to exist a Material Adverse Effect. The
mere inclusion of an item in the Connecticut Bancshares Disclosure Schedule as
an exception to a representation or warranty shall not be deemed an admission by
Connecticut Bancshares that such item represents a material exception or fact,
event or circumstance or that, absent such inclusion in the Connecticut
Bancshares Disclosure Schedule, such item is or would be reasonably likely to
result in a Material Adverse Effect.
4.1 CAPITAL STRUCTURE. The authorized capital stock of Connecticut
------------------
Bancshares consists of 45,000,000 shares of common stock, par value $0.01 per
share, and 1,000,000 shares of preferred stock, par value $0.01 per share. As of
the date of this Agreement, 10,754,943 shares of Connecticut Bancshares Common
Stock, including shares of Connecticut Bancshares Common Stock issued subject to
restrictions as to vesting pursuant to the Connecticut Bancshares Option Plans,
are issued and outstanding, 558,641 shares of Connecticut Bancshares
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Common Stock are directly or indirectly held by Connecticut Bancshares as
treasury stock, and no shares of Connecticut Bancshares preferred stock, par
value $0.01 per share, are issued or outstanding. All outstanding shares of
Connecticut Bancshares Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable, and none of the outstanding shares of
Connecticut Bancshares Common Stock has been issued in violation of the
preemptive rights of any person, firm or entity. Except for the Connecticut
Bancshares Option Plans pursuant to which there are outstanding options to
acquire 1,691,168 shares of Connecticut Bancshares Common Stock, a schedule of
which is set forth in Section 4.1 of the Connecticut Bancshares Disclosure
Schedule, there are no Rights authorized, issued or outstanding with respect to
or relating to the capital stock of Connecticut Bancshares.
4.2 ORGANIZATION, STANDING AND AUTHORITY OF CONNECTICUT BANCSHARES.
-----------------------------------------------------------------
Connecticut Bancshares is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware with full corporate power
and authority to own or lease all of its properties and assets and to carry on
its business as now conducted, and is duly licensed or qualified to do business
and is in good standing in each jurisdiction in which its ownership or leasing
of property or the conduct of its business requires such licensing or
qualification, except where the failure to be so licensed or qualified would not
have a Material Adverse Effect. Connecticut Bancshares is duly registered as a
savings and loan holding company under the HOLA. Connecticut Bancshares has
heretofore delivered to NHSB and has included as Section 4.2 of the Connecticut
Bancshares Disclosure Schedule true, complete and correct copies of the
Certificate of Incorporation and Bylaws of Connecticut Bancshares as in effect
as of the date hereof.
4.3 OWNERSHIP OF CONNECTICUT BANCSHARES SUBSIDIARIES. Set forth in
---------------------------------------------------
Section 4.3 of the Connecticut Bancshares Disclosure Schedule is the name,
jurisdiction of incorporation and percentage ownership of each direct or
indirect Connecticut Bancshares Subsidiary. Except for (x) capital stock of the
Connecticut Bancshares Subsidiaries, (y) securities and other interests held in
a fiduciary capacity and beneficially owned by third parties or taken in
consideration of debts previously contracted, and (z) securities and other
interests which are set forth in the Connecticut Bancshares Disclosure Schedule,
Connecticut Bancshares does not own or have the right or obligation to acquire,
directly or indirectly, any outstanding capital stock or other voting securities
or ownership interests of any corporation, bank, savings association,
partnership, joint venture or other organization, other than investment
securities representing not more than five percent (5%) of the outstanding
capital stock of any entity. The outstanding shares of capital stock or other
ownership interests of each Connecticut Bancshares Subsidiary that are owned by
Connecticut Bancshares or any Connecticut Bancshares Subsidiary have been duly
authorized and validly issued, are fully paid and nonassessable and are directly
or indirectly owned by Connecticut Bancshares free and clear of all liens,
claims, encumbrances, charges, pledges, restrictions or rights of third parties
of any kind whatsoever. No Rights are authorized, issued or outstanding with
respect to the capital stock or other ownership interests of any Connecticut
Bancshares Subsidiary and there are no agreements, understandings or commitments
relating to the right of Connecticut Bancshares to vote or to dispose of such
capital stock or other ownership interests.
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4.4 ORGANIZATION, STANDING AND AUTHORITY OF CONNECTICUT BANCSHARES
------------------------------------------------------------------
SUBSIDIARIES. Each Connecticut Bancshares Subsidiary is a savings bank,
------------
corporation or partnership duly organized, validly existing and in good standing
or legal existence, as appropriate, under the laws of the jurisdiction in which
it is organized. Each Connecticut Bancshares Subsidiary (i) has full power and
authority to own or lease all of its properties and assets and to carry on its
business as now conducted, and (ii) is duly licensed or qualified to do business
and is in good standing or legal existence, as appropriate, in each jurisdiction
in which its ownership or leasing of property or the conduct of its business
requires such qualification, except where the failure to be so licensed or
qualified would not have a Material Adverse Effect. Connecticut Bancshares is
authorized to own each Connecticut Bancshares Subsidiary under the HOLA. The
deposit accounts of SBM are insured by the FDIC through the BIF to the maximum
extent permitted by the FDIA. SBM has paid all premiums and assessments required
by the FDIC. Connecticut Bancshares has heretofore delivered or made available
to NHSB and has included as Section 4.4 of the Connecticut Bancshares Disclosure
Schedule true, complete and correct copies of the Certificate of Incorporation
and Bylaws of SBM and each other Connecticut Bancshares Subsidiary as in effect
as of the date hereof.
4.5 AUTHORIZED AND EFFECTIVE AGREEMENT.
----------------------------------
4.5.1 Each of Connecticut Bancshares and SBM has all requisite
corporate power and authority to enter into this Agreement and the Bank Merger
Agreement, as applicable, and (subject to receipt of all necessary governmental
approvals and the approval of Connecticut Bancshares' shareholders of this
Agreement) to perform all of its obligations under this Agreement and the Bank
Merger Agreement, as applicable. The execution and delivery of this Agreement
and the Bank Merger Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of Connecticut
Bancshares and SBM, except for the approval of this Agreement by Connecticut
Bancshares' shareholders. This Agreement has been duly and validly executed and
delivered by Connecticut Bancshares and SBM and, assuming due authorization and
execution by NHSB, constitutes the legal, valid and binding obligations of
Connecticut Bancshares and SBM, enforceable against Connecticut Bancshares and
SBM in accordance with its terms, subject, as to enforceability, to bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles. The Bank Merger Agreement, upon execution and delivery by
SBM, will have been duly and validly executed and delivered by SBM and, assuming
due authorization and execution by NHSB, will constitute the legal, valid and
binding obligation of SBM, enforceable against SBM in accordance with its terms,
subject, as to enforceability, to bankruptcy, insolvency, and other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
4.5.2 Neither the execution and delivery of this Agreement by
Connecticut Bancshares or SBM, nor the execution and delivery of the Bank Merger
Agreement by SBM, nor consummation of the transactions contemplated hereby or
thereby, nor compliance by Connecticut Bancshares and SBM with any of the
provisions hereof or thereof (i) does or will conflict with or result in a
breach of any provisions of the Certificate of Incorporation or Bylaws
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of Connecticut Bancshares or the equivalent documents of any Connecticut
Bancshares Subsidiary, (ii) violate, conflict with or result in a breach of any
term, condition or provision of, or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, or
give rise to any right of termination, cancellation or acceleration with respect
to, or result in the creation of any lien, charge or encumbrance upon any
property or asset of Connecticut Bancshares or any Connecticut Bancshares
Subsidiary pursuant to, any material note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which
Connecticut Bancshares or any Connecticut Bancshares Subsidiary is a party, or
by which any of their respective properties or assets may be bound or affected,
or (iii) subject to receipt of all required governmental and shareholder
approvals, violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Connecticut Bancshares or any Connecticut Bancshares
Subsidiary.
4.5.3 Except for (i) the filing of applications and notices
with, and the consents and approvals of, as applicable, the Bank Regulators,
(ii) the filing of the Proxy Statement with the SEC, (iii) the approval of this
Agreement by the requisite vote of the shareholders of Connecticut Bancshares,
(iv) the filing of the certificate of merger with respect to the merger of
Connecticut Bancshares with and into NEWCO with the Secretary of State of the
State of Delaware pursuant to the DGCL in connection with the Merger, and (v)
the filing of a copy of the Bank Merger Agreement and a copy of the approval of
the commissioner of the Connecticut Department of Banking with the Connecticut
Secretary of the State with respect to the Bank Merger, no consents or approvals
of or filings or registrations with any Governmental Entity or with any third
party are necessary on the part of Connecticut Bancshares or SBM in connection
with the execution and delivery by Connecticut Bancshares and SBM of this
Agreement, the execution and delivery by SBM of the Bank Merger Agreement, the
consummation of the Merger by Connecticut Bancshares, and the consummation of
the Bank Merger by SBM.
4.5.4 As of the date hereof, neither Connecticut Bancshares
nor SBM is aware of any reasons relating to Connecticut Bancshares or SBM
(including without limitation Community Reinvestment Act compliance) why all
consents and approvals shall not be procured from all regulatory agencies having
jurisdiction over the Merger or the Bank Merger as shall be necessary for (i)
consummation of the Merger and the Bank Merger, and (ii) the continuation by
NEWCO and NHSB after the Effective Time of the business of Connecticut
Bancshares and SBM as such business is carried on immediately prior to the
Effective Time, free of any conditions or requirements which, in the reasonable
opinion of Connecticut Bancshares, could have a Material Adverse Effect on the
business of Connecticut Bancshares or SBM.
4.6 SECURITIES DOCUMENTS AND REGULATORY REPORTS.
-------------------------------------------
4.6.1 Since March 31, 2000, Connecticut Bancshares has timely
filed with the SEC and the NASD all Securities Documents required by the
Securities Laws and such Securities Documents, as the same may have been
amended, complied as to form in all material respects with the Securities Laws
and did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
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4.6.2 Since March 31, 2000, each of Connecticut Bancshares and
SBM, has duly filed with the Bank Regulators in correct form the reports
required to be filed under applicable laws and regulations and such reports were
complete and accurate in all material respects and in compliance in all material
respects with the requirements of applicable laws and regulations. In connection
with the most recent federal and state Bank Regulator examinations of
Connecticut Bancshares and SBM, neither Connecticut Bancshares nor SBM was
required to correct or change any action, procedure or proceeding which
Connecticut Bancshares or SBM believes has not been corrected or changed as
required as of the date hereof.
4.7 FINANCIAL STATEMENTS.
--------------------
4.7.1 Connecticut Bancshares has previously delivered or made
available to NHSB accurate and complete copies of the Connecticut Bancshares
Financial Statements which, in the case of audited Connecticut Bancshares
Financial Statements, are accompanied by the audit reports of its independent
public accountants. The Connecticut Bancshares Financial Statements referred to
herein, as well as the Connecticut Bancshares Financial Statements to be
delivered pursuant to Section 6.2 hereof, fairly present or will fairly present,
as the case may be, the consolidated financial condition of Connecticut
Bancshares as of the respective dates set forth therein, and the consolidated
results of operations, shareholders' equity and cash flows of Connecticut
Bancshares for the respective periods or as of the respective dates set forth
therein.
4.7.2 Each of the Connecticut Bancshares Financial Statements
referred to in Section 4.7.1 has been prepared in accordance with GAAP during
the periods involved, except as stated therein or, in the case of unaudited
interim Connecticut Bancshares Financial Statements, the absence of footnotes
and customary year-end adjustments. The audits of Connecticut Bancshares and
Connecticut Bancshares Subsidiaries have been conducted in accordance with
generally accepted auditing standards. The books and records of Connecticut
Bancshares and the Connecticut Bancshares Subsidiaries are being maintained in
compliance with applicable legal and accounting requirements, and such books and
records accurately reflect in all material respects all dealings and
transactions in respect of the business, assets, liabilities and affairs of
Connecticut Bancshares and its Subsidiaries. The minute books of Connecticut
Bancshares and each Connecticut Bancshares Subsidiary contain complete and
accurate records of all meetings and other corporate actions of their respective
shareholders and Boards of Directors (including all committees) authorized at
such meetings held or taken since January 1, 2000 through the date of this
Agreement.
4.7.3 Except (i) as set forth in Section 4.7.3 of the
Connecticut Bancshares Disclosure Schedule, (ii) as reflected, disclosed or
provided for in the Connecticut Bancshares Financial Statements as of December
31, 2000, 2001 and 2002 (including related notes), (iii) for liabilities
incurred since December 31, 2002 in the ordinary course of business and (iv)
liabilities incurred in connection with this Agreement and the transactions
contemplated hereby, neither Connecticut Bancshares nor any Connecticut
Bancshares Subsidiary has any liabilities, whether absolute, accrued, contingent
or otherwise, material to the financial condition, results of operations or
business of Connecticut Bancshares on a consolidated basis that would be
required according to GAAP to be reflected on an audited consolidated balance
sheet of Connecticut
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Bancshares or the notes thereto.
4.8 MATERIAL ADVERSE CHANGE. Since January 1, 2003 to the date hereof
------------------------
(i) Connecticut Bancshares and each Connecticut Bancshares Subsidiary has
conducted its respective business in the ordinary and usual course (excluding
the incurrence of expenses in connection with this Agreement, and excluding the
transactions contemplated hereby), and (ii) no event has occurred or
circumstance arisen that, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect on Connecticut Bancshares.
4.9 ENVIRONMENTAL MATTERS.
---------------------
4.9.1 Except as set forth in Section 4.9.1 of the Connecticut
Bancshares Disclosure Schedule, with respect to Connecticut Bancshares and each
Connecticut Bancshares Subsidiary:
(a) To the best of Connecticut Bancshares' knowledge, each of
Connecticut Bancshares and the Connecticut Bancshares Subsidiaries, the
Participation Facilities, and the Loan Properties are, and at all times have
been, in compliance with, and are not in violation of or liable under, any
Environmental Laws;
(b) There is no (and to the best of Connecticut Bancshares'
knowledge there is no basis to expect any) suit, claim, action, demand,
executive or administrative order, directive, investigation or proceeding
pending and, to Connecticut Bancshares' knowledge, there is no such action
threatened, before any court, governmental agency or other forum against it or
any of the Connecticut Bancshares Subsidiaries or any Participation Facility (x)
for alleged noncompliance (including by any predecessor) with, or liability
under, any Environmental Law or (y) relating to the presence of or release (as
defined herein) into the environment of any Materials of Environmental Concern
(as defined herein), whether or not occurring at or on a site currently or
formerly owned, leased or operated by it or any of the Connecticut Bancshares
Subsidiaries or any Participation Facility or (z) with respect to any property
at or to which Material of Environmental Concern were generated, Landlord,
manufactured, refined, transported, transferred, imported, used, disposed,
treated, or processed by Connecticut Bancshares or any Connecticut Bancshares
Subsidiary or any Participation Facility or from which Materials of
Environmental Concern have been transported, treated, stored, handled,
transferred, disposed, recycled, or received;
(c) There is no (and to the best of Connecticut Bancshares'
knowledge there is no basis to expect any) suit, claim, action, demand,
executive or administrative order, directive, investigation or proceeding
pending and, to Connecticut Bancshares' knowledge, no such action is threatened
before any court, governmental agency or other forum relating to or against any
Loan Property (or Connecticut Bancshares or any of the Connecticut Bancshares
Subsidiaries in respect of such Loan Property) (x) relating to alleged
noncompliance (including by any predecessor) with, or liability under, any
Environmental Law or (y) relating to the presence of or release into the
environment of any Materials of Environmental Concern;
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(d) To the best of Connecticut Bancshares' knowledge, the real
properties, leasehold or other interest in real property currently or formerly
owned or operated by Connecticut Bancshares or any Connecticut Bancshares
Subsidiary (including, without limitation, soil, groundwater or surface water
on, under or geologically or hydrologically adjacent to the properties, and
buildings thereon) are not contaminated with and do not otherwise contain any
Materials of Environmental Concern;
(e) Neither Connecticut Bancshares nor any Connecticut
Bancshares Subsidiary has received (and to the best of Connecticut Bancshares'
knowledge there is no basis to expect any) any written notice, demand letter,
executive or administrative order, directive or request for information from any
federal, state, local or foreign governmental entity or any third party
indicating that it may be in violation of, or liable under, any Environmental
Law;
(f) To the best of Connecticut Bancshares' knowledge, there
are no underground storage tanks on, in or under any properties currently or
formerly owned or operated by Connecticut Bancshares or any of the Connecticut
Bancshares Subsidiaries or any Participation Facility, and no underground
storage tanks have been closed or removed from any properties currently or
formerly owned or operated by Connecticut Bancshares or any of the Connecticut
Bancshares Subsidiaries or any Participation Facility; and
(g) To the best of Connecticut Bancshares' knowledge, during
the period of (s) Connecticut Bancshares' or any of the Connecticut Bancshares
Subsidiaries' ownership or operation of any of their respective currently or
formerly owned or operated properties or (t) Connecticut Bancshares' or any of
the Connecticut Bancshares Subsidiaries' participation in the management of any
Participation Facility, there has been no contamination by or release of
Materials of Environmental Concern in, on, under or affecting such properties.
To the best of Connecticut Bancshares' knowledge, prior to the period of (x)
Connecticut Bancshares' or any of the Connecticut Bancshares Subsidiaries'
ownership or operation of any of their respective currently or formerly owned or
operated properties or (y) Connecticut Bancshares' or any of Connecticut
Bancshares Subsidiaries' participation in the management of any Participation
Facility, there was no contamination by or release of Materials of Environmental
Concern in, on, under or affecting such properties.
4.9.2 "Loan Property" means any property (including a
leasehold interest therein) in which the applicable party (or a Subsidiary of
it) currently holds a security interest or has held a security interest within
the past five (5) years. "Participation Facility" means any facility in which
the applicable party (or a Subsidiary of it) currently participates or formerly
participated in the management (including all property held as trustee or in any
other fiduciary capacity) and, where required by the context, includes the owner
or operator of such property, but only with respect to such property.
4.9.3 Except as set forth in Section 4.9.3 of the Connecticut
Bancshares Disclosure Schedule, Connecticut Bancshares does not possess and has
not conducted or arranged for the conduct of any environmental studies, reports,
analyses, tests or monitoring during the past ten (10) years with respect to any
properties currently or formerly owned or
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leased by Connecticut Bancshares or any Connecticut Bancshares Subsidiary or any
Participation Facility. Connecticut Bancshares has delivered to NHSB true and
complete copies and results of any and all such schedules, reports, analyses,
tests or monitoring.
4.9.4 To the best of Connecticut Bancshares' knowledge, except
as set forth in Section 4.9.4 of the Connecticut Bancshares Disclosure Schedule,
no real property currently or formerly owned or leased by Connecticut Bancshares
or any Connecticut Bancshares Subsidiary, no Loan Property, and no Participation
Facility meets the statutory criteria of an "Establishment" as such term is
defined pursuant to the Connecticut Transfer Act, Connecticut General Statutes
Section 22a-134 et seq. To the best of Connecticut Bancshares' knowledge, no
condition exists at any real property currently or formerly owned or leased by
Connecticut Bancshares or any Connecticut Bancshares Subsidiary, any Loan
Property or any Participation Facility that would require investigation,
remediation, or post-remediation or natural attenuation monitoring under the
Connecticut Department of Environmental Protection's Remediation Standard
Regulations, Regulations of Connecticut State Agencies Sections 22a-133k-1 et
seq.
4.10 TAX MATTERS.
-----------
4.10.1 Connecticut Bancshares and each Connecticut Bancshares
Subsidiary (taking into account any extension of time within which to file which
has not expired) has timely filed all Tax Returns required by applicable law to
be filed by them in respect of all applicable Taxes required to be paid through
the date hereof and will timely file any such Tax Returns required to be filed
prior to the Effective Time with respect to Taxes required to be paid through
the Effective Time. Connecticut Bancshares and each Connecticut Bancshares
Subsidiary have paid, or where payment is not required to have been made, have
set up an adequate reserve or accrual for the payment of, all Taxes required to
be paid in respect of the periods covered by such Tax Returns and, as of the
Effective Time, will have paid, or where payment is not required to have been
made, will have set up an adequate reserve or accrual for the payment of, all
Taxes for any subsequent periods ending on or prior to the Effective Time. To
the knowledge of each of Connecticut Bancshares and any Connecticut Bancshares
Subsidiary, neither Connecticut Bancshares nor any Connecticut Bancshares
Subsidiary will have any liability for any such Taxes in excess of the amounts
so paid or reserves or accruals so established. As of the date hereof, except as
disclosed in Section 4.10.1 of the Connecticut Bancshares Disclosure Schedule,
no audit, examination or deficiency or refund litigation with respect to any Tax
Returns filed by Connecticut Bancshares or any Connecticut Bancshares Subsidiary
is pending or, to the best of Connecticut Bancshares' knowledge, threatened and
to the best of Connecticut Bancshares' knowledge, there is no basis for any Tax
authority to assess any additional Taxes for any period for which Tax Returns
have been filed.
4.10.2 Connecticut Bancshares and each Connecticut Bancshares
Subsidiary has withheld and paid all Taxes required to be paid in connection
with amounts paid to any employee, independent contractor, creditor, stockholder
or other third party.
4.10.3 All Tax Returns filed by Connecticut Bancshares and its
Subsidiaries are complete and accurate in all material respects. Neither
Connecticut Bancshares nor any Connecticut Bancshares Subsidiary is delinquent
in the payment of any Tax, assessment or
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governmental charge, or has requested any extension of time within which to file
any Tax Returns in respect of any fiscal year or portion thereof which have not
since been filed. Except as set forth in Section 4.10.3 of the Connecticut
Bancshares Disclosure Schedule, the Tax Returns of Connecticut Bancshares and
its Subsidiaries have been examined by the applicable tax authorities (or are
closed to examination due to the expiration of the applicable statute of
limitations) and no deficiencies for any Tax, assessment or governmental charge
have been proposed, asserted or assessed (tentatively or otherwise) against
Connecticut Bancshares or any Connecticut Bancshares Subsidiary as a result of
such examinations or otherwise which have not been settled and paid. Except as
set forth in Section 4.10.3 of the Connecticut Bancshares Disclosure Schedule,
there are currently no agreements in effect with respect to Connecticut
Bancshares or any Connecticut Bancshares Subsidiary to extend the period of
limitations for the assessment or collection of any Tax and no power of attorney
has been granted by Connecticut Bancshares and its Subsidiaries with respect to
any Tax matter currently in force.
4.10.4 Except as set forth in Section 4.10.4 of the
Connecticut Bancshares Disclosure Schedule, neither Connecticut Bancshares nor
any Connecticut Bancshares Subsidiary has made any payments, is obligated to
make any payments, or is party to any agreement that could obligate them to make
any payments that will not be deductible under Section 280G of the Code.
4.10.5 Except as set forth in Section 4.10.5 of the
Connecticut Bancshares Disclosure Schedule, neither Connecticut Bancshares nor
any Connecticut Bancshares Subsidiary (i) is a party to any agreement providing
for the allocation or sharing of taxes (other than a tax allocation agreement
between Connecticut Bancshares and SBM), (ii) is required to include in income
any adjustment pursuant to Section 481(a) of the Code by reason of a voluntary
change in accounting method initiated by Connecticut Bancshares or any
Connecticut Bancshares Subsidiary (nor does Connecticut Bancshares have any
knowledge that the Internal Revenue Service has proposed any such adjustment or
change of accounting method) or (iii) has filed a consent pursuant to Section
341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply.
4.10.6 As used in this Agreement, "Tax" means any federal,
state, local or foreign income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, windfall profits, environmental,
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, highway, estimated or other tax of any
kind whatsoever, including any interest, penalties or addition thereto, whether
disputed or not, imposed by any government or quasi-government authority; and
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
4.11 LEGAL PROCEEDINGS. Except as set forth in Section 4.11 of the
------------------
Connecticut Bancshares Disclosure Schedule, there are no actions, suits, claims,
governmental investigations or proceedings instituted, pending or, to the best
knowledge of Connecticut Bancshares or any Connecticut Bancshares Subsidiary,
threatened against Connecticut Bancshares or any Connecticut Bancshares
Subsidiary or against any asset, interest or right of Connecticut
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Bancshares or any Connecticut Bancshares Subsidiary, or to the best of
Connecticut Bancshares' knowledge, against any officer, director or employee of
any of them, and neither Connecticut Bancshares nor any Connecticut Bancshares
Subsidiary is a party to any order, judgment or decree.
4.12 COMPLIANCE WITH LAWS.
--------------------
4.12.1 Each of Connecticut Bancshares and the Connecticut
Bancshares Subsidiaries has all material permits, licenses, certificates of
authority, orders and approvals of, and has made all filings, applications and
registrations with, federal, state, local and foreign governmental or regulatory
bodies that are required in order to permit it to carry on its business in all
material respects as it is currently being conducted; all such permits,
licenses, certificates of authority, orders and approvals are in full force and
effect; and to the best knowledge of Connecticut Bancshares, no suspension or
cancellation of any of the same is threatened.
4.12.2 Except as set forth in Section 4.12.2 of the
Connecticut Bancshares Disclosure Schedule, neither Connecticut Bancshares nor
any Connecticut Bancshares Subsidiary is in violation of its respective
Certificate of Incorporation, Charter or other chartering instrument or Bylaws,
or to the best of their knowledge, in violation of any applicable federal, state
or local law or ordinance or any order, rule or regulation of any federal,
state, local or other governmental agency or body (including, without
limitation, all banking (including without limitation all regulatory capital
requirements), municipal securities, insurance, safety, health, zoning,
anti-discrimination, antitrust, and wage and hour laws, ordinances, orders,
rules and regulations), or in default with respect to any order, writ,
injunction or decree of any court, or in default under any order, license,
regulation or demand of any governmental agency and, to the best knowledge of
Connecticut Bancshares, Connecticut Bancshares along with its executive officers
and directors is not in violation of any Securities Laws; and neither
Connecticut Bancshares nor any Connecticut Bancshares Subsidiary has received
any written notice or communication from any federal, state or local
governmental authority asserting that Connecticut Bancshares or any Connecticut
Bancshares Subsidiary is in violation of any of the foregoing, which violation
has not been corrected on a prospective basis in all material respects. Neither
Connecticut Bancshares nor any Connecticut Bancshares Subsidiary is subject to
any regulatory or supervisory cease and desist order, agreement, written
directive, memorandum of understanding or written commitment (other than those
of general applicability to all savings banks or holding companies), and none of
them has received any written communication requesting that it enter into any of
the foregoing. Since March 31, 2000, no regulatory agency has initiated any
proceeding or, to the best knowledge of Connecticut Bancshares, investigation
into the business or operations of Connecticut Bancshares or any Connecticut
Bancshares Subsidiary. Connecticut Bancshares has not received any objection
from any regulatory agency to Connecticut Bancshares' response to any violation,
criticism or exception with respect to any report or statement relating to any
examination of Connecticut Bancshares or any of the Connecticut Bancshares
Subsidiaries.
4.13 CERTAIN INFORMATION. None of the information supplied by
---------------------
Connecticut Bancshares or SBM relating to Connecticut Bancshares and its
Subsidiaries to be included or incorporated by reference in (i) the Conversion
Prospectus will, at the time such prospectus is
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mailed to subscribers (and at the time the related Conversion Registration
Statement becomes effective under the Securities Act), contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and (ii) the Proxy Statement, as of the date(s) such Proxy
Statement is mailed to shareholders of Connecticut Bancshares, and up to and
including the date of the meeting of shareholders to which such Proxy Statement
relates, will contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, provided that
information as of a later date shall be deemed to modify information as of an
earlier date. The Proxy Statement mailed by Connecticut Bancshares to its
shareholders in connection with the meeting of shareholders at which this
Agreement will be considered by such shareholders will comply as to form in all
material respects with the Exchange Act and the rules and regulations
promulgated thereunder.
4.14 EMPLOYEE BENEFIT PLANS.
----------------------
4.14.1 Connecticut Bancshares has set forth in Section 4.14.1
of the Connecticut Bancshares Disclosure Schedule all Connecticut Bancshares
Employee Plans, and Connecticut Bancshares has previously furnished or made
available to NHSB accurate and complete copies of the same together with (i)
Schedule B forms and the actuarial and audited financial reports prepared with
respect to any qualified plans for the last three (3) plan years, (ii) the
annual reports filed with any governmental agency for any qualified or
non-qualified plans for the last three (3) plan years, (iii) the Summary Annual
Report provided to Participants for the last three (3) plan years; and (iv) all
rulings and determination letters and any open requests for rulings or letters
that pertain to any qualified plan.
4.14.2 None of Connecticut Bancshares, any Connecticut
Bancshares Subsidiary, any pension plan maintained by any of them and qualified
under Section 401 of the Code or, to the best of Connecticut Bancshares'
knowledge, any fiduciary of such plan has incurred any liability to the PBGC
(except for premiums payable in the ordinary course) or the Internal Revenue
Service with respect to any employees of Connecticut Bancshares or any
Connecticut Bancshares Subsidiary. No reportable event under Section 4043(b) of
ERISA has occurred with respect to any such pension plan, other than the
transactions contemplated by this Agreement.
4.14.3 Except as set forth in Section 4.14.3 of the
Connecticut Bancshares Disclosure Schedule: (a) neither Connecticut Bancshares
nor any Connecticut Bancshares Subsidiary participates in or has incurred any
liability under Section 4201 of ERISA for a complete or partial withdrawal from
a multi-employer plan (as such term is defined in ERISA); (b) no liability under
Title IV of ERISA has been incurred by Connecticut Bancshares or any Connecticut
Bancshares Subsidiary with respect to any Connecticut Bancshares Employee Plan
which is subject to Title IV of ERISA, or with respect to any "single-employer
plan" (as defined in Section 4001(a) of ERISA) ("Connecticut Bancshares Defined
Benefit Plan") currently or formerly maintained by Connecticut Bancshares or any
entity which is considered an affiliated employer with Connecticut Bancshares
under Section 4001(b) (1) of ERISA or Section 414 of the Code (an "ERISA
Affiliate") since the effective date of ERISA that has not been satisfied to the
extent required by ERISA from time to time; (c) no Connecticut Bancshares
Defined Benefit
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Plan had an "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, as of the last day of the end of the most recent
plan year ending prior to the date hereof that has not or will not be funded
within the time provided under Section 302(c) (10) of ERISA; (d) the fair market
value of the assets of each Connecticut Bancshares Defined Benefit Plan exceeds
the present value of the "benefit liabilities" (as defined in Section 4001(a)
(16) of ERISA) under such Connecticut Bancshares Defined Benefit Plan as of the
end of the most recent plan year with respect to the respective Connecticut
Bancshares Defined Benefit Plan ending prior to the date hereof, calculated on
the basis of the actuarial assumptions used in the most recent actuarial
valuation for such Connecticut Bancshares Defined Benefit Plan as of the date
hereof; (e) neither Connecticut Bancshares nor any ERISA Affiliate has provided,
or is required to provide, security to any Connecticut Bancshares Defined
Benefit Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a) (29) of the Code; (f) neither Connecticut Bancshares nor any
ERISA Affiliate has contributed to any "multiemployer plan," as defined in
Section 3(37) of ERISA, on or after September 26, 1980; (g) neither Connecticut
Bancshares, nor any ERISA Affiliate, nor any Connecticut Bancshares Employee
Plan, including any Connecticut Bancshares Defined Benefit Plan, nor any trust
created thereunder has engaged in a transaction in connection with which
Connecticut Bancshares, any ERISA Affiliate, and any Connecticut Bancshares
Employee Plan, including any Connecticut Bancshares Defined Benefit Plan, any
such trust or any trustee or administrator thereof, is subject to either a civil
liability or penalty pursuant to Section 409, 502(i) or 502(1) of ERISA or a tax
imposed pursuant to Chapter 43 of the Code.
4.14.4 Except as set forth in Section 4.14.4 of the
Connecticut Bancshares Disclosure Schedule, a favorable determination letter has
been issued by the Internal Revenue Service, with respect to each Connecticut
Bancshares Employee Plan which is an "employee pension benefit plan" (as defined
in Section 3(2) of ERISA) (a "Connecticut Bancshares Pension Plan") which is
intended to qualify under Section 401 of the Code, to the effect that such plan
is qualified under Section 401 of the Code and the trust associated with such
employee pension plan is tax exempt under Section 501 of the Code. No such
letter has been revoked or, to the best of Connecticut Bancshares' knowledge, is
threatened to be revoked, and Connecticut Bancshares does not know of any ground
on which such revocation may be based. Except as set forth in Section 4.14.4 of
the Connecticut Bancshares Disclosure Schedule, neither Connecticut Bancshares
nor any Connecticut Bancshares Subsidiary has any current liability under any
such plan that was required to be reflected as a liability on the Financial
Statements as of December 31, 2002 under GAAP, which was not reflected on the
consolidated statement of financial condition of Connecticut Bancshares at
December 31, 2002 included in the Connecticut Bancshares Financial Statements.
4.14.5 No prohibited transaction (which shall mean any
transaction prohibited by Section 406 of ERISA and not exempt under Section 408
of ERISA or Section 4975 of the Code) has occurred with respect to any
Connecticut Bancshares Employee Plan which would result in the imposition,
directly or indirectly, of a material excise tax on Connecticut Bancshares under
Section 4975 of the Code.
4.14.6 Except as specifically identified in Section 4.14.6 of
the Connecticut Bancshares Disclosure Schedule, neither Connecticut Bancshares
nor any Connecticut
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Bancshares Subsidiary has any obligations for post-retirement or post-employment
benefits under any Connecticut Bancshares Employee Plan that cannot be amended
or terminated upon sixty (60) or fewer days notice without incurring any
liability thereunder, except for coverage required by Part 6 of Title I of ERISA
or Section 4980B of the Code, or similar state law, the cost of which is borne
by the insured individual. Full payment has been made (or proper accruals have
been established) of all contributions which are required for periods prior to
the date hereof, and full payment will be so made (or proper accruals will be so
established) of all contributions which are required for periods after the date
hereof and prior to the Effective Time, under the terms of each Connecticut
Bancshares Employee Plan or ERISA; no accumulated funding deficiency (as defined
in Section 302 of ERISA or Section 412 of the Code), whether or not waived,
exists with respect to any Connecticut Bancshares Pension Plan, and there is no
"unfunded current liability" (as defined in Section 412 of the Code) with
respect to any Connecticut Bancshares Pension Plan.
4.14.7 The Connecticut Bancshares Employee Plans have been
operated in compliance in all material respects with the applicable provisions
of ERISA, the Code, all regulations, rulings and announcements promulgated or
issued thereunder and all other applicable governmental laws and regulations.
4.14.8 There are no pending or, to the best knowledge of
Connecticut Bancshares, threatened claims (other than routine claims for
benefits) by, on behalf of or against any of the Connecticut Bancshares Employee
Plans or any trust related thereto or any fiduciary thereof.
4.14.9 Section 4.14.9 of the Connecticut Bancshares Disclosure
Schedule sets forth (i) the maximum amount that could be paid to each executive
officer of Connecticut Bancshares or any Connecticut Bancshares Subsidiary as a
result of the transactions contemplated by this Agreement under all employment,
severance, and termination agreements, other compensation arrangements and
Connecticut Bancshares Employee Plans currently in effect; and (ii) the
estimated "base amount" (as such term is defined in section 280G(b) (3) of the
Code) for each such individual calculated as of the date of this Agreement based
on estimated 2003 compensation.
4.14.10 Except as set forth in Section 4.14.10 of the
Connecticut Bancshares Disclosure Schedule, no compensation payable by
Connecticut Bancshares or any Connecticut Bancshares Subsidiary to any of their
employees under any Connecticut Bancshares Employee Plan (including by reason of
the transactions contemplated hereby) will be subject to disallowance under
Section 162(m) of the Code.
4.14.11 Except as set forth in Section 4.14.11 of the
Connecticut Bancshares Disclosure Schedule, with respect to any Connecticut
Bancshares Employee Plan which is an employee welfare benefit plan (within the
meaning of ERISA Section 3(1) (a "Connecticut Bancshares Welfare Plan"): (i)
each such Connecticut Bancshares Welfare Plan which is intended to meet the
requirements for tax-favored treatment under Subchapter B of Chapter 1 of the
Code meets such requirements; (ii) there is no disqualified benefit (as such
term is defined in Code Section 4976(b)) which would subject Connecticut
Bancshares to a tax under
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Code Section 4976(a); (iii) each and every Connecticut Bancshares Welfare Plan
which is a group health plan (as such term is defined in Code Sections
5000(b)(1)) complies and in each and every case has complied with the applicable
requirements of Code Section 4980B; and (iv) each such Connecticut Bancshares
Welfare Plan (including any such plan covering former employees of Connecticut
Bancshares or any Connecticut Bancshares Subsidiary) may be amended or
terminated by Connecticut Bancshares or NHSB or NEWCO on or at any time after
the Effective Date without incurring liability thereunder except as required to
satisfy the terms of the Plan.
4.15 CERTAIN CONTRACTS.
-----------------
4.15.1 Neither Connecticut Bancshares nor any Connecticut
Bancshares Subsidiary is in default or non-compliance under any contract,
agreement, commitment, arrangement, lease, insurance policy or other instrument
to which it is a party or by which its assets, business or operations may be
bound or affected, whether entered into in the ordinary course of business or
otherwise and whether written or oral, and there has not occurred any event that
with the lapse of time or the giving of notice, or both, would constitute such a
default or non-compliance.
4.15.2 Except as set forth in Section 4.15.2 of the
Connecticut Bancshares Disclosure Schedule, neither Connecticut Bancshares nor
any Connecticut Bancshares Subsidiary is a party to, is bound or affected by,
receives, or is obligated to pay benefits under:
(a) any agreement, arrangement, policy or commitment,
including without limitation any agreement, indenture or other instrument,
relating to the borrowing of money by Connecticut Bancshares or any Connecticut
Bancshares Subsidiary (other than in the case of SBM deposits, Federal Reserve
or Federal Home Loan Bank advances, federal funds purchased and securities sold
under agreements to repurchase in the ordinary course of business) or the
guarantee by Connecticut Bancshares or any Connecticut Bancshares Subsidiary of
any obligation;
(b) any agreement, arrangement, policy or commitment relating
to the employment of a consultant or the employment, election or retention in
office of any present or former director, officer or employee of Connecticut
Bancshares or any Connecticut Bancshares Subsidiary;
(c) any agreement, arrangement, policy or understanding
pursuant to which any payment (whether of severance pay or otherwise) became or
may become due to any director, officer or employee of Connecticut Bancshares or
any Connecticut Bancshares Subsidiary upon execution of this Agreement or the
Bank Merger Agreement or upon or following consummation of the transactions
contemplated by this Agreement or the Bank Merger Agreement (either alone or in
connection with the occurrence of any additional acts or events);
(d) any agreement, arrangement, policy or understanding
pursuant to which Connecticut Bancshares or any Connecticut Bancshares
Subsidiary is obligated to indemnify any director, officer, employee or agent of
Connecticut Bancshares or any Connecticut Bancshares
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Subsidiary;
(e) any agreement, arrangement, policy or understanding to
which Connecticut Bancshares or any Connecticut Bancshares Subsidiary is a party
or by which any of the same is bound which limits the freedom of Connecticut
Bancshares or any Connecticut Bancshares Subsidiary to compete in any line of
business or with any person;
(f) any assistance agreement, supervisory agreement,
memorandum of understanding, consent order, cease and desist order or condition
of any regulatory order or decree with or by any Bank Regulator;
(g) any agreement (other than any agreement with a banking
customer for the provision of banking services entered into by any Connecticut
Bancshares Subsidiary in the ordinary course of business) that involves a
payment or series of payments of more than $50,000 in any one (1) year from or
to Connecticut Bancshares or any Connecticut Bancshares Subsidiary;
(h) any agreement, arrangement or understanding 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; or
(i) any other agreement, arrangement or understanding that
would be required to be filed as an exhibit to Connecticut Bancshares' Annual
Report on Form 10-K under the Exchange Act and which has not been so filed.
4.16 BROKERS AND FINDERS. Except as set forth in Section 4.16 of the
--------------------
Connecticut Bancshares Disclosure Schedule, neither Connecticut Bancshares nor
any Connecticut Bancshares Subsidiary nor any of their respective directors,
officers or employees, has employed any broker or finder or incurred any
liability for any broker or finder fees or commissions in connection with the
transactions contemplated hereby.
4.17 INSURANCE. Connecticut Bancshares and each Connecticut Bancshares
---------
Subsidiary are insured for reasonable amounts with reputable insurance companies
against such risks as management of Connecticut Bancshares and any Connecticut
Bancshares Subsidiary reasonably has determined to be prudent for companies
engaged in a similar business would, in accordance with good business practice,
customarily be insured and has maintained all insurance required by contracts
currently in effect and applicable laws and regulations. Section 4.17 of the
Connecticut Bancshares Disclosure Schedule sets forth all policies of insurance
maintained by Connecticut Bancshares or any Connecticut Bancshares Subsidiary as
of the date hereof and any claims thereunder in excess of $25,000 since March
31, 2000. Since April 1, 2000, neither Connecticut Bancshares nor any
Connecticut Bancshares Subsidiary has received any notice of termination of any
such insurance coverage or increase in the premiums therefor or has any reason
to believe that any such insurance coverage will be terminated or the premiums
therefor increased (except for increases in premiums in the ordinary course of
business).
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4.18 PROPERTIES. Section 4.18 of the Connecticut Bancshares Disclosure
----------
Schedule sets forth the street address of all real property in which Connecticut
Bancshares or any Connecticut Bancshares Subsidiary has an ownership or
leasehold interest (specifying, as to each, whether owned or leased) and
identifies all properties on which any Connecticut Bancshares Subsidiary
operates a bank branch. All real and personal property owned by Connecticut
Bancshares or any Connecticut Bancshares Subsidiary or presently used by any of
them in its respective business are in good condition (ordinary wear and tear
excepted) and are sufficient to carry on its business in the ordinary course of
business consistent with their past practices. Each of Connecticut Bancshares
and each Connecticut Bancshares Subsidiary has good and marketable title free
and clear of all material liens, encumbrances, charges, defaults or equities
(other than equities of redemption under applicable foreclosure laws) to all of
the properties and assets, real and personal, reflected on the consolidated
statement of financial condition of Connecticut Bancshares contained in the
Connecticut Bancshares Financial Statements dated December 31, 2002 or acquired,
through merger or otherwise, after such date (other than those disposed of for
fair value after such date), except (i) liens for current taxes not yet due or
payable, (ii) pledges to secure deposits and other liens incurred in the
ordinary course of its banking business, (iii) such imperfections of title,
easements and encumbrances, if any, as are not material in character, amount or
extent, and (iv) as reflected on the consolidated statement of financial
condition of Connecticut Bancshares contained in the Connecticut Bancshares
Financial Statements dated December 31, 2002. All real and personal property
leased or licensed by Connecticut Bancshares or any Connecticut Bancshares
Subsidiary are held pursuant to leases or licenses that are valid and
enforceable in accordance with their respective terms subject, as to
enforceability, to bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles, and no such real
property lease will terminate or lapse prior to the Effective Time, except as
disclosed in Section 4.18 of the Connecticut Bancshares Disclosure Schedule.
4.19 LABOR. No work stoppage involving Connecticut Bancshares or any
-----
Connecticut Bancshares Subsidiary is pending or, to the best knowledge of
Connecticut Bancshares, threatened. Neither Connecticut Bancshares nor any
Connecticut Bancshares Subsidiary is involved in, or to the best knowledge of
Connecticut Bancshares, threatened with or affected by, any labor dispute,
arbitration, lawsuit or administrative proceeding involving its employees.
Employees of Connecticut Bancshares and the Connecticut Bancshares Subsidiaries
are not represented by any labor union nor are any collective bargaining
agreements otherwise in effect with respect to such employees, and to the best
of Connecticut Bancshares' knowledge there have been no efforts to unionize or
organize any employees of Connecticut Bancshares or any Connecticut Bancshares
Subsidiary.
4.20 CERTAIN TRANSACTIONS. Since December 31, 2002, neither Connecticut
--------------------
Bancshares nor any Connecticut Bancshares Subsidiary has been a party to any
off-balance-sheet transactions involving interest rate and currency swaps,
options and futures contracts, or any other similar derivative transactions,
except as set forth in Section 4.20 of the Connecticut Bancshares Disclosure
Schedule.
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4.21 FAIRNESS OPINION. Connecticut Bancshares has received an opinion
----------------
from Sandler X'Xxxxx & Partners, L.P. to the effect that, subject to the terms,
conditions and qualifications set forth therein, as of the date thereof, the
Merger Consideration to be received by the shareholders of Connecticut
Bancshares pursuant to this Agreement is fair to such shareholders from a
financial point of view, and Sandler X'Xxxxx & Partners, L.P. has consented to
the inclusion of such written opinion in the Proxy Statement.
4.22 LOAN PORTFOLIO.
--------------
4.22.1 The allowance for possible losses reflected in
Connecticut Bancshares' audited consolidated statement of financial condition
contained in the Connecticut Bancshares Financial Statements dated December 31,
2002 was, and the allowance for possible losses shown on the balance sheets in
Connecticut Bancshares' Securities Documents for dates after December 31, 2002
will be, adequate in all material respects, as of the dates thereof, under GAAP.
4.22.2 Section 4.22.2 of the Connecticut Bancshares Disclosure
Schedule sets forth a listing, as of June 30, 2003, by account, of: (A) all
loans, (1) that are contractually past due ninety (90) days or more in the
payment of principal and/or interest, (2) that are on non-accrual status, (3)
that as of the date of this Agreement are classified as "Impaired" (as
contemplated under FAS 114), "Other Loans Specially Mentioned", "Special
Mention", "Substandard", "Doubtful", "Loss", "Classified", "Criticized", "Watch
list", or words of similar import, together with the principal amount of and
accrued and unpaid interest on each such loan and the identity of the obligor
thereunder, (4) where a reasonable doubt exists as to the timely future
collectibility of principal and/or interest, whether or not interest is still
accruing or the loans are less than ninety (90) days past due, (5) where the
interest rate terms have been reduced and/or the maturity dates have been
extended subsequent to the agreement under which the loan was originally created
due to concerns regarding the borrower's ability to pay in accordance with such
initial terms, or (6) where a specific reserve allocation exists in connection
therewith, and (B) all assets classified by Connecticut Bancshares or any
Connecticut Bancshares Subsidiary as real estate acquired through foreclosure or
in lieu of foreclosure, including in-substance foreclosures, and all other
assets currently held that were acquired through foreclosure or in lieu of
foreclosure.
4.22.3 All loans receivable (including discounts) and accrued
interest entered on the books of Connecticut Bancshares and the Connecticut
Bancshares Subsidiaries arose out of bona fide arm's-length transactions, were
---- ----
made for good and valuable consideration in the ordinary course of Connecticut
Bancshares' or the appropriate Connecticut Bancshares Subsidiary's respective
business, and the notes or other evidences of indebtedness with respect to such
loans (including discounts) are, in all material respects, valid, true and
genuine and are what they purport to be, except as set forth in Section 4.22.3
of the Connecticut Bancshares Disclosure Schedule. The loans, discounts and the
accrued interest reflected on the books of Connecticut Bancshares and the
Connecticut Bancshares Subsidiaries are subject to no defenses, set-offs or
counterclaims (including, without limitation, those afforded by usury or
truth-in-lending laws), except as may be provided by bankruptcy, insolvency or
similar laws affecting creditors' rights generally or by general principles of
equity. Except as set forth in Section 4.22.3 of the Connecticut Bancshares
Disclosure Schedule, all such loans are owned by Connecticut
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Bancshares or the appropriate Connecticut Bancshares Subsidiary free and clear
of any liens.
4.22.4 All pledges, mortgages, deeds of trust and other
collateral documents or security instruments relating to all notes or other
evidences of indebtedness referred to in Section 4.22.3 are, in all material
respects, valid, true and genuine, and what they purport to be.
4.23 REQUIRED VOTE; INAPPLICABILITY OF ANTI-TAKEOVER STATUTES.
--------------------------------------------------------
4.23.1 The affirmative vote of the holders of a majority of
outstanding shares of Connecticut Bancshares Common Stock and entitled to vote
is necessary to approve this Agreement and the transactions contemplated hereby
(including the Bank Merger) on behalf of Connecticut Bancshares.
4.23.2 No "fair price," "moratorium," "control share
acquisition" or other form of anti-takeover statute or regulation or provision
of Connecticut Bancshares' Certificate of Incorporation or By-Laws is applicable
to this Agreement and the transactions contemplated hereby.
4.24 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as set forth in
----------------------------------------
Section 4.24 of the Connecticut Bancshares Disclosure Schedule, no officer or
director of Connecticut Bancshares or a Connecticut Bancshares Subsidiary, or
any "associate" (as such term is defined in Rule 14a-l under the Exchange Act)
of any such officer or director, (i) has any material interest in any contract
or property (real or personal), tangible or intangible, used in or pertaining to
the business of Connecticut Bancshares or any of the Connecticut Bancshares
Subsidiaries, or (ii) is indebted to, or has the right under a line of credit to
borrow from, Connecticut Bancshares or any Connecticut Bancshares Subsidiary.
4.25 JOINT VENTURES. Section 4.25 of the Connecticut Bancshares
---------------
Disclosure Schedule sets forth (i) the identities of all Joint Ventures in which
Connecticut Bancshares or any Connecticut Bancshares Subsidiary is
participating, (ii) a list of agreements relating to such Joint Ventures, (iii)
the identities of the other participants in the Joint Venture, (iv) the
percentage of the Joint Venture owned by each participant, (v) copies of the
most recent available financial statements (on an audited basis if available) of
such Joint Ventures, and (vi) the amount of the investment or contractually
binding commitment of Connecticut Bancshares or any Connecticut Bancshares
Subsidiary to invest in such Joint Venture.
4.26 INTELLECTUAL PROPERTY. Connecticut Bancshares and each Connecticut
---------------------
Bancshares Subsidiary own or possess valid and binding licenses and other rights
to use without payment of any material amount all material patents, trademarks,
trade names, service marks, copyrights and any applications therefor,
schematics, technology, know-how, trade secrets, inventory, ideas, algorithms,
processes, computer programs and applications (in both source code and object
code form) and tangible and intangible proprietary information or material that
are used in their businesses ("Intellectual Property"), and all such
Intellectual Property is described in Section 4.26 of the Connecticut Bancshares
Disclosure Schedule. Neither Connecticut Bancshares nor any Connecticut
Bancshares Subsidiary has any material undisclosed liability with respect to (i)
the Intellectual Property or (ii) licenses, sublicenses and other agreements as
to which
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Connecticut Bancshares or any Connecticut Bancshares Subsidiary is a
party and pursuant to which Connecticut Bancshares or any Connecticut Bancshares
Subsidiary is authorized to use any third party patents, trademarks or
copyrights, including software which are incorporated in, or form a part of any
Connecticut Bancshares or any Connecticut Bancshares Subsidiary product.
4.27 DISCLOSURES. None of the representations and warranties of
-----------
Connecticut Bancshares and SBM or any of the written information or documents
furnished or to be furnished by Connecticut Bancshares or SBM to NHSB in
connection with or pursuant to this Agreement or the consummation of the
transactions contemplated hereby (including the Bank Merger), when considered as
a whole, contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact required to be stated or necessary
to make any such information or document, in light of the circumstances, not
misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF NHSB
NHSB represents and warrants to Connecticut Bancshares and SBM that the
statements contained in this Article V are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article V), except as set forth in the NHSB
Disclosure Schedule delivered by NHSB to Connecticut Bancshares on the date
hereof. Unless otherwise specified, any reference to NHSB in this Article V
shall include NEWCO and any direct or indirect Subsidiary of NHSB. No
representation or warranty of NHSB contained herein shall be deemed untrue or
incorrect, and NHSB shall not be deemed to have breached a representation or
warranty, on account of the existence of any fact, circumstance or event,
unless, as a direct or indirect consequence of such fact, circumstance or event,
individually or taken together with all other facts, circumstances or events
inconsistent with any paragraph in this Article V, as applicable, there is
reasonably likely to exist a Material Adverse Effect. The mere inclusion of an
item in the NHSB Disclosure Schedule as an exception to a representation or
warranty shall not be deemed an admission by NHSB that such item represents a
material exception or fact, event or circumstance or that, absent such inclusion
in the NHSB Disclosure Schedule, such item is or would be reasonably likely to
result in a Material Adverse Effect.
5.1 CAPITAL STRUCTURE. As of the date hereof, NHSB is a
-------------------
Connecticut-chartered savings bank in mutual form and, as a result, has no
authorized or outstanding capital stock. Upon consummation of the Conversion,
NHSB will be a duly organized Connecticut-chartered savings bank in stock form
and will have authorized capital stock as set forth in its Certificate of
Incorporation.
5.2 ORGANIZATION, STANDING AND AUTHORITY OF NHSB.
--------------------------------------------
5.2.1 NHSB is a mutual savings bank duly organized and in
legal existence under the laws of the State of Connecticut with full corporate
power and authority to own or
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lease all of its properties and assets and to carry on its business as now
conducted, and is duly licensed or qualified to do business and is in good
standing or legal existence, as appropriate, in each jurisdiction in which its
ownership or leasing of property or the conduct of its business requires such
licensing or qualification. The deposit accounts of NHSB are insured by the FDIC
through the BIF to the maximum extent permitted by the FDIA. NHSB has paid all
premiums and assessments required by the FDIC. NHSB has heretofore delivered or
made available to Connecticut Bancshares, true and complete copies of the
Certificate of Incorporation and Bylaws of NHSB as in effect on the date hereof.
5.2.2 Prior to the filing of the Conversion Registration
Statement, NEWCO will be duly organized and validly existing under the DGCL.
5.2.3 NHSB is a member in good standing of the Federal Home
Loan Bank of Boston and owns the requisite amount of stock therein.
5.3 AUTHORIZED AND EFFECTIVE AGREEMENT.
----------------------------------
5.3.1 NHSB has all requisite corporate power and authority to
enter into this Agreement and the Bank Merger Agreement and (subject to receipt
of all necessary governmental approvals and the approval of the Conversion
and/or the Plan by the Corporators) to perform all of its obligations under this
Agreement and the Bank Merger Agreement. The execution and delivery of this
Agreement and the Bank Merger Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of NHSB except for
approval of the Conversion and/or the Plan by the Corporators. This Agreement
has been duly and validly executed and delivered by NHSB and, assuming due
authorization, execution and delivery by Connecticut Bancshares and SBM,
constitutes the legal, valid and binding obligation of NHSB, enforceable against
NHSB in accordance with its terms, subject, as to enforceability, to bankruptcy,
insolvency and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles. The Bank Merger Agreement,
upon execution and delivery by NHSB, will have been duly and validly executed
and delivered by NHSB and, assuming due authorization, execution and delivery by
Connecticut Bancshares and SBM, constitutes the legal, valid and binding
obligation of NHSB, enforceable against NHSB in accordance with its terms,
subject, as to enforceability, to bankruptcy, insolvency and other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
5.3.2 Neither the execution and delivery of this Agreement or
the Bank Merger Agreement, nor consummation of the transactions contemplated
hereby or thereby (including the Conversion) nor compliance by NHSB with any of
the provisions hereof or thereof (i) does or will conflict with or result in a
breach of any provisions of the Certificate of Incorporation or Bylaws of NHSB,
(ii) violate, conflict with or result in a breach of any term, condition or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon any property or asset of NHSB
pursuant to, any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which NHSB is a
party, or by which any of its properties or assets may be bound or affected, or
(iii) subject to receipt of all
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required governmental, Corporator, and Board of Director approvals, violate any
order, writ, injunction, decree, statute, rule or regulation applicable to NHSB.
5.3.3 Except for (i) the filing of applications and notices
with, and the consents and approvals of, the applicable Bank Regulators, (ii)
the filing and effectiveness of the Conversion Registration Statement with the
SEC in connection with the Conversion, (iii) the approval of the Conversion
and/or the Plan by the requisite vote of the Corporators, (iv) the filing of a
certificate of merger with the Secretary of State of the State of Delaware
pursuant to the DGCL in connection with the Merger, (v) the filing of a copy of
the Bank Merger Agreement and the approval of the commissioner of the
Connecticut Department of Banking with the Connecticut Secretary of the State in
connection with the Bank Merger, and (vi) compliance with applicable state
securities or "blue sky" laws, no consents or approvals of or filings or
registrations with any Governmental Entity or with any third party are necessary
on the part of NHSB in connection with the execution and delivery of this
Agreement or the Bank Merger Agreement, the consummation of the Merger by NEWCO,
and the consummation of the Bank Merger by NHSB.
5.3.4 As of the date hereof, NHSB is not aware of any reasons
relating to NHSB why all consents and approvals shall not be procured from all
regulatory agencies having jurisdiction over the transactions contemplated by
this Agreement and the Bank Merger Agreement as shall be necessary for
consummation of the transactions contemplated by this Agreement and the Bank
Merger Agreement.
5.4 FINANCIAL STATEMENTS.
--------------------
5.4.1 NHSB has previously made available to Connecticut
Bancshares the NHSB Financial Statements. The NHSB Financial Statements have
been prepared in accordance with GAAP and (including the related notes where
applicable) fairly present in each case in all material respects (subject in the
case of the unaudited interim statements to normal year-end adjustments) the
consolidated financial position, results of operations and cash flows of NHSB
and the NHSB Subsidiaries on a consolidated basis as of and for the respective
periods ending on the dates thereof, in accordance with GAAP during the periods
involved, except as indicated in the notes thereto.
5.4.2 At the date of each balance sheet included in the NHSB
Financial Statements, NHSB did not have any liabilities, obligations or loss
contingencies of any nature (whether absolute, accrued, contingent or otherwise)
of a type required to be reflected in such NHSB Financial Statements or in the
footnotes thereto which are not fully reflected or reserved against therein or
fully disclosed in a footnote thereto, except for liabilities, obligations and
loss contingencies which are not material individually or in the aggregate or
which are incurred in the ordinary course of business, consistent with past
practice, and except for liabilities, obligations and loss contingencies which
are within the subject matter of a specific representation and warranty herein
and subject, in the case of any unaudited statements, to normal, recurring audit
adjustments and the absence of footnotes.
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5.5 MATERIAL ADVERSE CHANGE. Since March 31, 2003 to the date hereof
-------------------------
(i) NHSB has conducted its business in the ordinary and usual course (excluding
the incurrence of expenses in connection with this Agreement, and excluding the
incurrence of expenses in connection with the transactions contemplated hereby
and the transactions contemplated by or referred to in the Plan), and (ii) no
event has occurred or circumstance arisen that, individually or in the
aggregate, has had or is reasonably likely to have a Material Adverse Effect on
NHSB.
5.6 TAX MATTERS.
-----------
5.6.1 NHSB (taking into account any extension of time within
which to file which has not expired) has timely filed all Tax Returns required
by applicable law to be filed by it in respect of all applicable Taxes required
to be paid through the date hereof and will timely file any such Tax Returns
required to be filed prior to the Effective Time with respect to Taxes required
to be paid through the Effective Time. NHSB has paid, or where payment is not
required to have been made, has set up an adequate reserve or accrual for the
payment of, all Taxes required to be paid in respect of the periods covered by
such Tax Returns and, as of the Effective Time, will have paid, or where payment
is not required to have been made, will have set up an adequate reserve or
accrual for the payment of, all Taxes for any subsequent periods ending on or
prior to the Effective Time. To the knowledge of NHSB, NHSB will have no
liability for any such Taxes in excess of the amounts so paid or reserves or
accruals so established. As of the date hereof, no audit, examination or
deficiency or refund litigation with respect to any Tax Returns filed by NHSB is
pending or, to the best of NHSB's knowledge, threatened and, to the best of
NHSB's knowledge, there is no basis for any Tax authority to assess any
additional Taxes for any period for which Tax Returns have been filed.
5.6.2 NHSB has withheld and paid all Taxes required to be paid
in connection with amounts paid to any employee, independent contractor,
creditor, stockholder or other third party.
5.6.3 All Tax Returns filed by NHSB are complete and accurate,
in all material respects. NHSB is not delinquent in the payment of any Tax,
assessment or governmental charge, or has requested any extension of time within
which to file any Tax Returns in respect of any fiscal year or portion thereof
which have not since been filed. Except as set forth in Section 5.6.3 of the
NHSB Disclosure Schedule, the Tax Returns of NHSB have been examined by the
applicable tax authorities (or are closed to examination due to the expiration
of the applicable statute of limitations) and no deficiencies for any Tax,
assessment or governmental charge have been proposed, asserted or assessed
(tentatively or otherwise) against NHSB as a result of such examinations or
otherwise which have not been settled and paid. There are currently no
agreements in effect with respect to NHSB to extend the period of limitations
for the assessment or collection of any Tax and no power of attorney has been
granted by NHSB with respect to any Tax matter currently in force.
5.6.4 Except as set forth in Section 5.6.4 of the NHSB
Disclosure Schedule, NHSB has made no payments, is obligated to make no
payments, and is party to no agreement that could obligate it to make any
payments that will not be deductible under Section 280G of the
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Code.
5.6.5 Except as set forth in Section 5.6.5 of the NHSB
Disclosure Schedule, NHSB (i) is not a party to any agreement providing for the
allocation or sharing of taxes, (ii) is not required to include in income any
adjustment pursuant to Section 481(a) of the Code by reason of a voluntary
change in accounting method initiated by NHSB (NHSB does not have any knowledge
that the Internal Revenue Service has proposed any such adjustment or change of
accounting method) or (iii) has not filed a consent pursuant to Section 341(f)
of the Code or agreed to have Section 341(f)(2) of the Code apply.
5.6.6 As used in this Agreement, "Tax" means any federal,
state, local or foreign income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, windfall profits, environmental,
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, highway, estimated or other tax of any
kind whatsoever, including any interest, penalties or addition thereto, whether
disputed or not, imposed by any government or quasi-government authority; and
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
5.7 LEGAL PROCEEDINGS. Except as set forth in Section 5.7 of the NHSB
------------------
Disclosure Schedule, there are no actions, suits, claims, governmental
investigations or proceedings instituted, pending or, to the best knowledge of
NHSB, threatened against NHSB or against any asset, interest or right of NHSB,
or against any officer, director or employee of any of them, and NHSB is not a
party to any order, judgment or decree.
5.8 COMPLIANCE WITH LAWS.
--------------------
5.8.1 NHSB has all material permits, licenses, certificates of
authority, orders and approvals of, and has made all filings, applications and
registrations with, federal, state, local and foreign governmental or regulatory
bodies that are required in order to permit it to carry on its business in all
material respects as it is currently being conducted; all such permits,
licenses, certificates of authority, orders and approvals are in full force and
effect; and to the best knowledge of NHSB, no suspension or cancellation of any
of the same is threatened.
5.8.2 Except as set forth in Section 5.8.2 of the NHSB
Disclosure Schedule, NHSB is not in violation of its respective Certificate of
Incorporation, Charter or other chartering instrument or Bylaws, or to its
knowledge, in violation of any applicable federal, state or local law or
ordinance or any order, rule or regulation of any federal, state, local or other
governmental agency or body (including, without limitation, all banking
(including without limitation all regulatory capital requirements), municipal
securities, insurance, safety, health, zoning, anti-discrimination, antitrust,
and wage and hour laws, ordinances, orders, rules and regulations), or in
default with respect to any order, writ, injunction or decree of any court, or
in default under any order, license, regulation or demand of any governmental
agency and, to the best knowledge of NHSB along with its executive officers and
directors, is not in violation of any Securities Laws; and NHSB has not received
any written notice or communication from any
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federal, state or local governmental authority asserting that NHSB is in
violation of any of the foregoing, which violation has not been corrected on a
prospective basis in all material respects. NHSB is not subject to any
regulatory or supervisory cease and desist order, agreement, written directive,
memorandum of understanding or written commitment (other than those of general
applicability to all savings banks), and it has not received any written
communication requesting that it enter into any of the foregoing. Since March
31, 2000, no regulatory agency has initiated any proceeding or, to the best
knowledge of NHSB, investigation into the business or operations of NHSB. NHSB
has not received any objection from any regulatory agency to NHSB's response to
any violation, criticism or exception with respect to any report or statement
relating to any examination of NHSB.
5.9 BROKERS AND FINDERS. Except as set forth in Section 5.9 of the NHSB
-------------------
Disclosure Schedule, neither NHSB nor any of its directors, officers or
employees, has employed any broker or finder or incurred any liability for any
broker or finder fees or commissions in connection with the transactions
contemplated hereby.
5.10 DISCLOSURES. None of the representations and warranties of NHSB or
-----------
any of the written information or documents furnished or to be furnished by NHSB
to Connecticut Bancshares in connection with or pursuant to this Agreement or
the consummation of the transactions contemplated hereby (including the Bank
Merger), when considered as a whole, contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
required to be stated or necessary to make any such information or document, in
light of the circumstances, not misleading.
5.11 FINANCIAL ABILITY. On the Effective Date and through the date of
------------------
payment of the aggregate amount of cash payable pursuant to Article III hereof,
NHSB or NEWCO will have the funds necessary to consummate the Merger and pay the
aggregate amount of cash to be paid to holders of Connecticut Bancshares Common
Stock and Options pursuant to Section 3.3 hereof.
ARTICLE VI
COVENANTS OF CONNECTICUT BANCSHARES AND SBM
6.1 CONDUCT OF BUSINESS.
-------------------
6.1.1 Affirmative Covenants. Except with the written consent
----------------------
of NHSB, during the period from the date of this Agreement to the Effective
Time, Connecticut Bancshares will operate its business, and it will cause each
of the Connecticut Bancshares Subsidiaries to operate its business, only in the
usual, regular and ordinary course of business; use its reasonable best efforts
in good faith to preserve intact its business organization and assets, keep
available the present services of the employees, maintain its rights and
franchises, and preserve the goodwill of its customers and others with whom
business relationships exist; and voluntarily take no action which would or be
reasonably likely to (i) adversely affect the ability of Connecticut Bancshares
or SBM to obtain any necessary approvals of Governmental Entities required for
the transactions contemplated hereby or under the Bank Merger Agreement or
increase the period of
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time necessary to obtain such approvals, or (ii) adversely affect its ability to
perform its covenants and agreements under this Agreement or the Bank Merger
Agreement.
6.1.2 Negative Covenants. Connecticut Bancshares agrees that
------------------
from the date of this Agreement to the Effective Time, except as otherwise
specifically permitted or required by this Agreement and except to the extent
required by law or regulation or any Governmental Entity, or consented to by
NHSB in writing, Connecticut Bancshares will not, and will cause each of the
Connecticut Bancshares Subsidiaries not to:
(a) change or waive any provision of its Certificate of
Incorporation, Charter or Bylaws, except as required by law;
(b) change the number of shares of its authorized capital
stock;
(c) issue any capital stock or issue or grant any option,
restricted stock award, warrant, call, commitment, subscription, right to
purchase or agreement of any character relating to the authorized or issued
capital stock of Connecticut Bancshares or any of the Connecticut Bancshares
Subsidiaries, or any securities convertible into shares of such stock; except
that Connecticut Bancshares may issue shares of Connecticut Bancshares Common
Stock or permit treasury shares to become outstanding to satisfy currently
outstanding Company Restricted Stock awards or Options exercised prior to the
Effective Date under and in accordance with the terms of the Connecticut
Bancshares Option Plans described in Section 4.1 hereof;
(d) effect any recapitalization, reclassification, stock
dividend, stock split or like change in capitalization, or redeem, repurchase or
otherwise acquire any shares of its capital stock;
(e) declare or pay any dividends or other distributions with
respect to its capital stock except for dividends paid by any Connecticut
Bancshares Subsidiary to Connecticut Bancshares, and except for a quarterly cash
dividend not to exceed $0.18 per share through December 31, 2003 and $0.20 per
share thereafter, with payment and record dates consistent with past practice.
The Board of Directors of Connecticut Bancshares shall cause its last quarterly
dividend record date prior to the Effective Time to occur on the day immediately
preceding the Effective Date (the "Final Dividend Record Date") with the
dividend amount to be calculated as follows: the quotient of $0.80 divided by
365, multiplied by the number of days between the Final Dividend Record Date and
the record date of the immediately preceding dividend paid by Connecticut
Bancshares;
(f) enter into or terminate any material contract or agreement
(including without limitation any settlement agreement with respect to
litigation) except in the ordinary course of business or except as set forth in
Section 6.1.2(f) of the Connecticut Bancshares Disclosure Schedule;
(g) except in the ordinary course of business consistent with
past practice, incur any liabilities or obligations (excluding customer deposit
accounts and commercial "Bottom Line" repurchase agreements), whether directly
or by way of guaranty, including any
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obligation for borrowed money whether or not evidenced by a note, bond,
debenture or similar instrument other than borrowings from the Federal Home Loan
Bank of Boston reflected on the Connecticut Bancshares Financial Statements as
of June 30, 2003, plus five percent (5%);
(h) make any capital expenditures in excess of $50,000
individually or $250,000 in the aggregate, except pursuant to binding
commitments existing on the date hereof and as set forth in Section 6.1.2(h) of
the Connecticut Bancshares Disclosure Schedule and except for expenditures
reasonable and necessary to maintain assets in good repair;
(i) except for commitments issued prior to the date of this
Agreement which have not yet expired and which have been disclosed in Section
6.1.2(i) of the Connecticut Bancshares Disclosure Schedule, and the renewal of
existing lines of credit, make any new loan or other credit facility commitment
or increase any loan or other credit facility commitment to any borrower or
group of affiliated borrowers in excess of the following limitations without
prior consultation with and approval from NHSB's Executive Vice President -
Business Banking (which approval shall not be unreasonably withheld and, if
granted, shall be granted in a timely manner):
(i) unsecured loan in excess of $500,000;
(ii) residential first mortgage loan in excess of
$1,000,000;
(iii) residential construction loan in excess of
$1,000,000;
(iv) commercial and industrial loan in excess of
$2,000,000;
(v) commercial real estate loan in excess of
$3,000,000;
(vi) commercial construction loan in excess of
$2,000,000;
(vii) consumer loan (including home equity loan) in
excess of $500,000;
(viii) residential development, acquisition, and
construction loan in excess of $4,000,000; and
(ix) loans of new monies to criticized borrowers or
borrowing relationships (unless the criticism has
been corrected at the time of advance) shall not
be made in any amount.
and, provided that, the outstanding balance of each of the following portfolios
shall not increase by more than the lesser of (A) fifteen percent (15%) or (B)
$10,000,000 over the balance of the respective portfolio at June 30, 2003,
without prior consultation with and approval from NHSB's Executive Vice
President - Business Banking (which approval shall not be unreasonably withheld
and, if granted, shall be granted in a timely manner):
(i) loans or other credit facility commitments to
condominium associations;
(ii) loans or other credit facility commitments to
finance personal property leases;
(iii) loans or other credit facility commitments
with respect to and/or secured by special use
properties, including without limitation, golf
courses, motels, hotels and the like; and
(iv) loans with respect to the construction of
residential or commercial property and
secured by same;
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(j) (i) grant any increase in rates of compensation to its
non-officer employees other than in the ordinary course of business consistent
with past practice provided that no such increase shall result in an annual
adjustment of more than 4% without prior consultation with and approval from
NHSB; grant any increase in rates of compensation to, or pay or agree to pay any
bonus or severance to, or provide any other new employee benefit or incentive to
its directors or to its officers except for non-discretionary payments required
by agreements existing as of the date hereof and set forth on Schedule
6.1.2(j)(i) of the Connecticut Bancshares Disclosure Schedule without prior
consultation with and approval from NHSB; grant any increases in compensation or
bonuses to its non-officer employees other than in the ordinary course of
business consistent with past practice and other than cash bonuses that are
reasonable and necessary to compensate Connecticut Bancshares or SBM employees
in lieu of option grants between the date hereof through the Effective Date, in
consultation with the Chief Operating Officer of NHSB; enter into any
employment, severance or similar agreements or arrangements with any director or
employee; adopt or amend or terminate any employee benefit plan, pension plan or
incentive plan except as required by law or the terms of such plan or as
provided in Section 6.1.2(j)(i) of the Connecticut Bancshares Disclosure
Schedule, or permit the vesting of any material amount of benefits under any
such plan other than pursuant to the provisions thereof as in effect on the date
of this Agreement; or make any contributions to any Connecticut Bancshares
Employee Plan not in the ordinary course of business consistent with past
practice; or make any contributions to Connecticut Bancshares' Employee Stock
Ownership Plan (the "ESOP"), other than regular periodic contributions
sufficient to cover regularly scheduled debt service with respect to the ESOP,
with no prepayment thereof permitted; or
(ii) increase the number of (A) non-officer personnel
employed by Connecticut Bancshares or any Connecticut Bancshares Subsidiary over
the staffing level previously authorized as set forth in Section 6.1.2(j)(ii) of
the Connecticut Bancshares Disclosure Schedule, or (B) officers employed by
Connecticut Bancshares or any Connecticut Bancshares Subsidiary over the number
of such officers currently so employed, without the prior consent of NHSB's
Chief Operating Officer.
(k) make application for the opening or closing of any, or
open or close any, branch or automated banking facility, except that, with the
prior written consent of NHSB, it may proceed with negotiations for and the
opening of a branch at the location referred to in Section 6.1.2(k) of the
Connecticut Bancshares Disclosure Schedule;
(l) 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 foreclosures, settlements in lieu of foreclosure or troubled
loan or debt restructurings in the ordinary course of business consistent with
customary banking practices;
(m) subject to Section 6.10 hereof, merge into, consolidate
with, affiliate with, or be purchased or acquired by, any other Person, or
permit any other Person to be merged, consolidated or affiliated with it or be
purchased or acquired by it, or, except to realize upon collateral in the
ordinary course of its business, acquire a significant portion of the assets of
any other Person, or sell a significant portion of its assets;
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(n) make any change in its accounting methods or practices,
except changes as may be required by GAAP or by law or regulatory requirements;
(o) enter into any off-balance sheet transaction involving
interest rate and currency swaps, options and futures contracts, or any other
similar derivative transactions other than to hedge forward loan sale
commitments in the ordinary course of business consistent with past practices;
(p) except for commitments outstanding as of June 30, 2003,
invest in or commit to invest in, or otherwise increase, decrease or alter its
investment in, any existing or new Joint Venture;
(q) except as set forth in Section 6.1.2(q) of the Connecticut
Bancshares Disclosure Schedule, make any material change in policies in
existence as of the date of this Agreement with regard to the extension of
credit, the establishment of reserves with respect to the possible loss thereon
or the charge off of losses incurred thereon, investment, asset/liability
management or other material banking policies, except as may be required by
changes in applicable law or regulations or by GAAP;
(r) waive, release, grant or transfer any rights of value or
modify or change any existing agreement or indebtedness to which Connecticut
Bancshares or any Connecticut Bancshares Subsidiary is a party, other than in
the ordinary course of business, consistent with past practice;
(s) purchase any debt securities below investment grade "A" or
any equity securities (other than index funds of no more than $5 million in the
aggregate), or purchase any security for its investment portfolio inconsistent
with Connecticut Bancshares' or any Connecticut Bancshares Subsidiary's current
investment policy, or otherwise take any action that would materially alter the
mix, maturity, credit or interest rate risk profile of its portfolio of
investment securities or its portfolio of collateralized mortgage obligations
(CMO) and mortgage-backed securities (MBS) (changes in mix, maturity or interest
rate risk profile arising from (a) sale of all or part of the equity securities
portfolio, (b) changes in open-market interest rates, or (c) changes in CMO/MBS
prepayment speeds are not subject to the limitations of this Section 6.1.2(s));
(t) enter into, renew, extend or modify any other transaction
with any Affiliate;
(u) except for the execution of this Agreement, and actions
taken or which will be taken in accordance with the provisions of this Agreement
and performance thereunder, take any action that would give rise to a right of
payment to any individual under any employment or severance agreement or similar
agreement;
(v) except for the execution of this Agreement, and actions
taken or which will be taken in accordance with the provisions of this
Agreement, take any action that would
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give rise to an acceleration of the right to payment to any individual under any
Connecticut Bancshares Employee Plan;
(w) without the prior consultation and consent of NHSB's
Executive Vice President - Business Banking, sell any participation interest in
any existing or newly originated loan other than as permitted under Section
6.1.2(i), or acquire a participation in any loan that would properly be included
in the Connecticut Bancshares Commercial and Industrial Loan Portfolio except as
set forth in and subject to the restrictions of Section 6.1.2(i) hereof;
(x) enter into any new or depart from any existing line of
business;
(y) materially increase or decrease the rate of interest paid
on time deposits or certificates of deposit, except in a manner and pursuant to
policies consistent with past practices;
(z) take any action that (i) would, or is reasonably likely
to, prevent or impede the Merger from qualifying as a qualified stock purchase
within the meaning of Section 338 of the Code or (ii) is intended or is
reasonably likely to result in (x) any of its representations and warranties set
forth in this Agreement being or becoming untrue in any material respect at or
prior to the Effective Time, (y) any of the conditions to the Merger set forth
in Article IX not being satisfied or (z) a material violation of any provision
of this Agreement or the Bank Merger Agreement, except, in each case, as may be
required by applicable law or regulation; or
(aa) agree to do any of the foregoing.
6.2 CURRENT INFORMATION. During the period from the date of this
--------------------
Agreement to the Effective Time, Connecticut Bancshares will cause one or more
of its representatives to confer with representatives of NHSB and report on the
general status of its ongoing operations at such times as NHSB may reasonably
request, which reports shall include, but not be limited to, discussion of the
possible termination by Connecticut Bancshares or SBM of third-party service
provider arrangements effective at the Effective Time or at a date thereafter,
non-renewal of personal property leases and software licenses used by
Connecticut Bancshares or any of its Subsidiaries in connection with its systems
operations, retention of outside consultants and additional employees to assist
with the conversion, and outsourcing, as appropriate, of proprietary or
self-provided system services, it being understood that Connecticut Bancshares
shall not be obligated to take any such action prior to the Effective Time and,
unless Connecticut Bancshares otherwise agrees, no conversion shall take place
prior to the Effective Time. Connecticut Bancshares will promptly notify NHSB of
any material change from the normal course of the business of Connecticut
Bancshares or any Connecticut Bancshares Subsidiary or in the operation of the
properties of Connecticut Bancshares or any Connecticut Bancshares Subsidiary
and, to the extent permitted by applicable law, of any governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated), or the institution or the threat of litigation involving
Connecticut Bancshares or any Connecticut Bancshares Subsidiary. With respect to
such events, Connecticut Bancshares will also provide NHSB such information as
NHSB may reasonably request from time to time. Within twenty-five (25) days
after the end of each month, Connecticut Bancshares will deliver to NHSB an
unaudited consolidated balance sheet and an unaudited consolidated statement of
operations,
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without related notes, for such month prepared in accordance with Connecticut
Bancshares' current financial reporting practices.
6.3 ACCESS TO PROPERTIES AND RECORDS. In order to facilitate the
-----------------------------------
consummation of the Merger and the Bank Merger and the integration of the
business and operations of the parties, subject to Section 12.1 hereof and
subject to applicable laws relating to exchange of information, Connecticut
Bancshares will permit NHSB and its officers, employees, counsel, accountants
and other authorized representatives, access, upon reasonable notice, to its
personnel and properties and those of the Connecticut Bancshares Subsidiaries,
and shall disclose and make available to NHSB during normal business hours
throughout the period prior to the Effective Time all of the books, papers and
records of Connecticut Bancshares or any Connecticut Bancshares Subsidiary
relating to the assets, properties, operations, obligations and liabilities,
including, but not limited to, all books of account (including the general
ledger), tax records, minute books of directors' (other than minutes that
discuss any of the transactions contemplated by this Agreement or other
strategic alternatives) and shareholders' meetings, organizational documents,
Bylaws, material contracts and agreements, filings with any regulatory
authority, litigation files, plans affecting employees, and any other business
activities or prospects in which NHSB may have a reasonable interest; provided,
however, that Connecticut Bancshares shall not be required to take any action
that would provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights or business interests or
confidences of any customer or other person or would result in the waiver by it
of the privilege protecting communications between it and any of its counsel.
Connecticut Bancshares shall provide and shall request its auditors to provide
NHSB with such historical financial information regarding Connecticut Bancshares
and any Connecticut Bancshares Subsidiary (and related audit reports and
consents) as NHSB may reasonably request for securities disclosure purposes.
NHSB shall use reasonable efforts to minimize any interference with Connecticut
Bancshares' and any Connecticut Bancshares Subsidiary's regular business
operations during any such access to Connecticut Bancshares' or any Connecticut
Bancshares Subsidiary's personnel, property, books or records. Connecticut
Bancshares and its Subsidiaries shall permit NHSB, at NHSB's expense, to cause
so-called "Phase I Environmental Site Assessments" and/or "Phase II
Environmental Site Assessments" to be performed at any physical location owned
or operated by Connecticut Bancshares or any Connecticut Bancshares Subsidiary
and, to the extent Connecticut Bancshares or the applicable Connecticut
Bancshares Subsidiary has the contractual right to do so, at any Loan Property
or Participation Facility.
6.4 FINANCIAL AND OTHER STATEMENTS.
------------------------------
6.4.1 Promptly upon receipt thereof, Connecticut Bancshares
will furnish to NHSB copies of each annual, interim or special audit of the
books of Connecticut Bancshares and the Connecticut Bancshares Subsidiaries made
by its independent accountants and/or its internal auditors and copies of all
internal control reports submitted to Connecticut Bancshares by such accountants
and/or internal auditors in connection with each annual, interim or special
audit of the financial statements of Connecticut Bancshares and the Connecticut
Bancshares Subsidiaries made by such accountants and/or internal auditors.
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6.4.2 As soon as reasonably available, but in no event later
than the date such documents are filed with the SEC, Connecticut Bancshares will
deliver to NHSB any and all Securities Documents filed by it with the SEC under
the Securities Laws. As soon as practicable, Connecticut Bancshares will furnish
to NHSB copies of all such financial statements and reports as it or any
Connecticut Bancshares Subsidiary shall send to its shareholders, the FDIC, the
FRB, the Department or any other regulatory authority, except as legally
prohibited thereby.
6.4.3 Connecticut Bancshares will advise NHSB promptly of the
receipt of any examination report of any Bank Regulator with respect to the
condition or activities of Connecticut Bancshares or any of the Connecticut
Bancshares Subsidiaries.
6.4.4 Connecticut Bancshares will promptly furnish to NHSB
such additional financial data as NHSB may reasonably request, including without
limitation, detailed routine monthly loan reports and other reports that
Connecticut Bancshares routinely produces.
6.5 MAINTENANCE OF INSURANCE. Connecticut Bancshares shall maintain,
------------------------
and shall cause its Subsidiaries to maintain, such insurance in such amounts as
are reasonable to cover such risks management of Connecticut Bancshares and any
Connecticut Bancshares Subsidiary reasonably has determined to be prudent and as
are customary in relation to the character and location of its and their
respective properties and the nature of its and their respective businesses
consistent with past practices.
6.6 DISCLOSURE SUPPLEMENTS. From time to time prior to the Effective
-----------------------
Time, Connecticut Bancshares and SBM will promptly supplement or amend the
Connecticut Bancshares Disclosure Schedule delivered in connection herewith with
respect to any matter hereafter arising which, if existing, occurring or known
at the date of this Agreement, would have been required to be set forth or
described in such Connecticut Bancshares Disclosure Schedule or which is
necessary to correct any information in such Connecticut Bancshares Disclosure
Schedule which has been rendered materially inaccurate thereby. No supplement or
amendment to such Connecticut Bancshares Disclosure Schedule shall be deemed to
have modified the representation, warranties and covenants for the purpose of
determining satisfaction of the conditions set forth in Article IX.
6.7 CONSENTS AND APPROVALS OF THIRD PARTIES. Connecticut Bancshares
-----------------------------------------
shall use all reasonable best efforts in good faith to obtain as soon as
practicable all consents and approvals of any other persons necessary or
desirable for the consummation of the transactions contemplated by this
Agreement and the Bank Merger Agreement. Without limiting the generality of the
foregoing, Connecticut Bancshares shall utilize the services of a professional
proxy soliciting firm to help obtain the shareholder vote required to be
obtained by it hereunder.
6.8 REASONABLE BEST EFFORTS. Subject to the terms and conditions herein
-----------------------
provided, Connecticut Bancshares shall use its reasonable best efforts in good
faith 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 transactions contemplated
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by this Agreement and the Bank Merger Agreement.
6.9 FAILURE TO FULFILL CONDITIONS. In the event that Connecticut
--------------------------------
Bancshares determines that a condition to its obligation to complete the Merger
or the Bank Merger cannot be fulfilled and that it will not waive that
condition, it will immediately so notify NHSB.
6.10 ACQUISITION PROPOSALS. (a) From and after the date of this
----------------------
Agreement and until the termination of this Agreement, Connecticut Bancshares
agrees that neither it nor any of Connecticut Bancshares' Subsidiaries shall,
and that it shall direct and use its reasonable best efforts in good faith to
cause its and each such Subsidiary's directors, officers, employees, agents and
representatives not to, directly or indirectly, initiate, solicit, knowingly
encourage or otherwise facilitate any inquiries or the making of any proposal or
offer with respect to an Acquisition Proposal. Connecticut Bancshares further
agrees that neither it nor any of its Subsidiaries shall, and that it shall
direct and use its reasonable best efforts in good faith to cause its and each
such Subsidiary's directors, officers, employees, agents and representatives not
to, directly or indirectly, engage in any negotiations concerning, or provide
any confidential information or data to, or have any discussions with, any
Person relating to an Acquisition Proposal, or otherwise knowingly facilitate
any effort or attempt to make or implement an Acquisition Proposal; provided,
however, that nothing contained in this Agreement shall prevent Connecticut
Bancshares or its Board of Directors from (A) complying with its disclosure
obligations under federal or state law; (B) providing information in response to
a request therefore by a Person who has made an unsolicited bona fide written
Acquisition Proposal if the Connecticut Bancshares Board of Directors receives
from the Person so requesting such information an executed confidentiality
agreement substantially similar to that entered into with NHSB; (C) engaging in
any negotiations or discussions with any Person who has made an unsolicited bona
fide written Acquisition Proposal or (D) recommending such an Acquisition
Proposal to the shareholders of Connecticut Bancshares, if and only to the
extent that, in each such case referred to in clause (B), (C) or (D) above, (i)
the Connecticut Bancshares Board of Directors determines in good faith (after
consultation with outside legal counsel) that such action would be required in
order for its directors to comply with their respective fiduciary duties under
applicable law, and (ii) the Connecticut Bancshares Board of Directors
determines in good faith (after consultation with its financial advisor) that
such Acquisition Proposal, if accepted, is at least as reasonably likely to be
consummated, taking into account all legal, financial and regulatory aspects of
the proposal and the Person making the proposal and, if consummated, would
result in a transaction more favorable to the Connecticut Bancshares'
shareholders from a financial point of view than the Merger. An Acquisition
Proposal which is received and considered by Connecticut Bancshares in
compliance with this Section 6.10 and which meets the requirements set forth in
clause (D) of the preceding sentence is herein referred to as a "Superior
Proposal." Connecticut Bancshares agrees that it will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any Acquisition Proposals.
Connecticut Bancshares agrees that it will notify NHSB immediately if any such
inquiries, proposals or offers are received by, any such information is
requested from, or any such discussions or negotiations are sought to be
initiated or continued with Connecticut Bancshares or any of its representatives
after the date hereof, and the identity of the person making such inquiry,
proposal or offer and the substance thereof and will keep NHSB informed of any
material developments with respect thereto immediately upon
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the occurrence thereof.
(b) In the event that the Board of Directors of Connecticut Bancshares
determines in good faith, after consultation with its financial advisor and upon
advice from outside counsel, that it desires to accept a Superior Proposal, it
shall notify NHSB in writing of its intent to terminate this Agreement in order
to enter into an acquisition agreement with respect to, or recommend acceptance
of, the Superior Proposal. Such notice shall specify all of the material terms
and conditions of such Superior Proposal and identify the Person making such
Superior Proposal. NHSB shall have five Business Days to evaluate and respond to
Connecticut Bancshares' notice. If NHSB notifies Connecticut Bancshares in
writing prior to the expiration of the five Business Day period provided above
that it shall increase the Merger Consideration to an amount at least equal to
that of such Superior Proposal (the "NHSB Proposal"), then Connecticut
Bancshares shall not be permitted to enter into an acquisition agreement with
respect to, or permit its Board to recommend acceptance to its shareholders of,
such Superior Proposal. Such notice by NHSB shall specify the new Merger
Consideration. Connecticut Bancshares shall have five Business Days to evaluate
the NHSB Proposal.
(c) In the event the Superior Proposal involves consideration to Connecticut
Bancshares' shareholders consisting of securities, in whole or in part, a NHSB
Proposal shall be deemed to be at least equal to the Superior Proposal, if the
NHSB Proposal offers Merger Consideration that equals or exceeds the
consideration being offered to Connecticut Bancshares' shareholders in the
Superior Proposal valuing any securities forming a part of the Superior Proposal
at its cash equivalent based upon (a) the average trading price of such
securities for the 10 trading days immediately preceding the date of the NHSB
Proposal, or (b) the written valuation of such securities by a nationally
recognized investment banking firm selected if such securities are not traded on
a nationally recognized exchange or will be newly issued securities that are not
of a class then trading on a nationally recognized exchange. Any written
valuation shall be attached as an exhibit to the NHSB Proposal.
(d) In the event that the Board of Directors Connecticut Bancshares determines
in good faith, upon the advice of its financial advisor and outside counsel,
that the NHSB Proposal is not at least equal to the Superior Proposal,
Connecticut Bancshares can terminate this Agreement in order to execute an
acquisition agreement with respect to, or to allow its Board to adopt a
resolution recommending acceptance to Connecticut Bancshares' shareholders of,
the Superior Proposal as provided in Section 11.1.10.
6.11 BOARD OF DIRECTORS AND COMMITTEE MEETINGS. Connecticut Bancshares
-----------------------------------------
shall provide to NHSB (a) notice of any and all regular meetings of the Board of
Directors of Connecticut Bancshares or SBM, which notice shall be no less timely
than the notice required to be provided to Connecticut Bancshares' or SBM's
directors, and (b) at such time as customarily provided to Connecticut
Bancshares' and SBM's directors, copies of all written materials (i)
accompanying any such notices, (ii) presented to the participants of any and all
such meetings, and (iii) copies of drafts of meeting minutes and credit
memoranda produced with respect to such meeting excluding, however, any
materials pertaining to NHSB, the transactions contemplated by this Agreement,
and any third party proposal to acquire a controlling interest in Connecticut
Bancshares or SBM.
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6.12 RESERVES AND MERGER-RELATED COSTS. On or before the Effective
-----------------------------------
Time, Connecticut Bancshares shall use its reasonable best efforts in good faith
to establish such additional accruals and reserves as may be necessary to
conform the accounting reserve practices and methods (including credit loss
practices and methods) of Connecticut Bancshares and SBM to those of NHSB (as
such practices and methods are to be applied to Connecticut Bancshares and SBM
from and after the Closing Date) and NHSB's plans with respect to the conduct of
the business of Connecticut Bancshares and SBM following the Merger and
otherwise to reflect Merger-related expenses and costs incurred by Connecticut
Bancshares, provided, however, that Connecticut Bancshares shall not be required
to take such action unless NHSB agrees in writing that all conditions to Closing
set forth in Article IX have been satisfied or waived (including the expiration
of any applicable waiting periods but excluding the delivery of certificates and
other documents to be delivered at the Closing); prior to the delivery by NHSB
of the writing referred to in the preceding clause, Connecticut Bancshares
shall, upon NHSB's request, provide NHSB a written statement that the
representation made in Section 4.22.1, hereof with respect to Connecticut
Bancshares' allowance for possible loan losses is true as of such date or,
alternatively, setting forth in detail the circumstances that prevent such
representation from being true as of such date; and no accrual or reserve made
by Connecticut Bancshares or any Connecticut Bancshares Subsidiary pursuant to
this subsection, or any litigation or regulatory proceeding arising out of any
such accrual or reserve, shall constitute a breach of this Agreement within the
meaning of Section 11.1.2 hereof. No action shall be required to be taken by
Connecticut Bancshares pursuant to this Section 6.12 if, in the opinion of
Connecticut Bancshares' independent auditors, such action would contravene GAAP.
6.13 TRANSACTION EXPENSES OF CONNECTICUT BANCSHARES.
----------------------------------------------
6.13.1 For planning purposes, Connecticut Bancshares shall,
within thirty (30) days from the date hereof, provide NHSB with Connecticut
Bancshares' estimated budget of transaction-related expenses reasonably
anticipated to be payable by Connecticut Bancshares in connection with this
transaction, including the fees and expenses of counsel, accountants, investment
bankers and other professionals. Connecticut Bancshares shall promptly notify
NHSB if or when it determines that it expects to exceed its budget.
6.13.2 Promptly after the execution of this Agreement,
Connecticut Bancshares shall ask all of its attorneys and other professionals to
render current and correct invoices for all unbilled time and disbursements.
Connecticut Bancshares shall accrue and/or pay all of such amounts that are
actually due and owing as soon as possible.
6.13.3 Connecticut Bancshares shall advise NHSB monthly of all
out-of-pocket expenses that Connecticut Bancshares has incurred in connection
with the transactions contemplated by this Agreement (including the Bank
Merger).
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ARTICLE VII
COVENANTS OF NHSB
7.1 DISCLOSURE SUPPLEMENTS. From time to time prior to the Effective
-----------------------
Time, NHSB will promptly supplement or amend the NHSB Disclosure Schedule
delivered in connection herewith with respect to any material matter hereafter
arising which, if existing, occurring or known at the date of this Agreement,
would have been required to be set forth or described in such NHSB Disclosure
Schedule or which is necessary to correct any information in such NHSB
Disclosure Schedule which has been rendered inaccurate thereby. No supplement or
amendment to such NHSB Disclosure Schedule shall have any effect for the purpose
of determining satisfaction of the conditions set forth in Article IX.
7.2 CONSENTS AND APPROVALS OF THIRD PARTIES. NHSB shall use all
-------------------------------------------
reasonable best efforts in good faith to obtain as soon as practicable all
consents and approvals of any other Persons, including the Corporators,
necessary or desirable for the consummation of the transactions contemplated by
this Agreement and the Bank Merger Agreement, including the Conversion.
7.3 REASONABLE BEST EFFORTS. Subject to the terms and conditions herein
-----------------------
provided, NHSB agrees to use its reasonable best efforts in good faith 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 transactions contemplated by this Agreement
and the Bank Merger Agreement, including the Conversion. It is NHSB's intention
that the Closing shall occur as soon as practicable following the consummation
of the Conversion.
7.4 FAILURE TO FULFILL CONDITIONS. In the event that NHSB determines
------------------------------
that a condition to its obligation to complete the Merger or the Bank Merger
Agreement cannot be fulfilled and that it will not waive that condition, it will
immediately so notify Connecticut Bancshares.
7.5 NEWCO ORGANIZATIONAL DOCUMENTS. Prior to the filing of the
--------------------------------
Conversion Registration Statement, NEWCO will be a corporation duly organized
and in good standing or legal existence, as appropriate, under the laws of the
jurisdiction in which it is organized with full corporate power and authority to
own or lease all of its properties and assets and to carry on its business as
then conducted and shall be duly licensed or qualified to do business and be in
good standing or legal existence, as appropriate, in each jurisdiction in which
its ownership or leasing of property or the conduct of its business requires
such licensing or qualification. Promptly following the organization of NEWCO,
the Board of Directors thereof shall approve this Agreement and the transactions
contemplated hereby, and NHSB shall cause NEWCO to execute and deliver an
appropriate instrument of accession to this Agreement, whereupon NEWCO shall
become a party to, and be bound by, this Agreement. On the Effective Date, NEWCO
will be a bank holding company under the BHCA.
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7.6 EMPLOYEES AND EMPLOYEE BENEFITS.
-------------------------------
7.6.1 NHSB anticipates employing substantially all branch
office customer service employees of SBM and such other employees of SBM as NHSB
shall reasonably require for the conduct of NHSB's business following the
Effective Time. NHSB may, after consultation with SBM, pay a retention bonus to
certain key employees in an amount to be determined by NHSB in its sole
discretion, in the event such employee remains in the employ of Connecticut
Bancshares or SBM through the Effective Time and is an employee of NHSB or NEWCO
for a period of time to be negotiated between NHSB and each such key employee.
Each SBM employee whose employment is terminated at the Effective Time shall be
eligible to receive COBRA health care continuation benefits as required by law.
7.6.2 Each employee of SBM who remains employed by NEWCO or
NHSB following the Effective Time (each, a "Continuing Employee") shall be
entitled to participate in (i) such of the employee benefit plans, deferred
compensation arrangements, bonus or incentive plans and other compensation and
benefit plans that NEWCO or NHSB may continue for the benefit of Continuing
Employees following the Effective Time and (ii) whatever employee benefit plans
and other compensation and benefit plans that NEWCO or a NEWCO Subsidiary may
maintain for the benefit of its similarly situated employees on an equitably
equivalent basis, if such Continuing Employee is not otherwise then
participating in a similar plan. The parties hereto acknowledge that Continuing
Employees shall be eligible to participate in any stock option plan or employee
stock ownership plan implemented by NEWCO after the Effective Time based upon
the same criteria as other employees of NHSB or NEWCO. Continuing Employees
shall be eligible to receive credit for service with Connecticut Bancshares and
the Connecticut Bancshares Subsidiaries under any existing NHSB employee plan,
NHSB benefit plan or NHSB personnel policy in which such employees would be
eligible to enroll or participate for purposes of determining eligibility to
participate and vesting therein but not for purposes of calculating benefits
thereunder; provided, however, that such service shall not be recognized to the
extent that such recognition would result in a duplication of benefits. Each
Continuing Employee shall be credited with service as an SBM employee for
purposes of determining their status under NHSB's policies with respect to
vacation, sick and other leave. With respect to the NHSB defined benefit pension
plan, each Continuing Employee shall be credited with service as an SBM employee
for purposes of determining eligibility under the early retirement, normal
retirement and disability provisions of such plan. With respect to any NHSB plan
which is a health, life or disability insurance plan, each Continuing Employee
shall not be subject to any pre-existing condition limitation for conditions
covered under such plans and each such plan which provides health insurance
benefits shall honor any deductible and out-of-pocket expenses incurred under
any comparable SBM plan for the year in which the Effective Time occurs. Nothing
herein shall limit the ability of NHSB or NEWCO to amend or terminate any of the
Connecticut Bancshares Employee Plans in accordance with their terms at any
time. NHSB shall consult with Connecticut Bancshares prior to the Effective Time
as to the advisability of outplacement assistance for any Continuing Employee
whose employment is terminated within six months of the Effective Date. The
structure of such assistance will be in the sole discretion of NHSB, at a cost
not to exceed $30,000.
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7.6.3 Section 7.6.3 of the Connecticut Bancshares Disclosure
Schedule contains all employment and change of control, severance and similar
agreements, arrangements, policies or programs with any employee or director of
Connecticut Bancshares or any Connecticut Bancshares Subsidiary ("Benefit
Agreements"). At and following the Effective Time, NHSB and NEWCO shall honor,
and the Surviving Corporation shall continue to be obligated to perform, in
accordance with their terms, all benefit obligations of Connecticut Bancshares
existing as of the Effective Time under the Benefit Agreements other than those
employment agreements, change in control agreements and supplemental executive
retirement plans covered by the Termination and Release Agreements referenced in
Section 7.6.5 hereof. NHSB acknowledges (i) that the consummation of the Merger
will constitute a "change-in-control" of Connecticut Bancshares for purposes of
any of the Benefit Agreements of Connecticut Bancshares (except where otherwise
set forth in Section 7.6.3 of the Connecticut Bancshares Disclosure Schedule).
Any employee of Connecticut Bancshares or any of its Subsidiaries who is a party
to an agreement (excluding the employment agreements, change in control
agreements and supplemental retirement agreements covered by the Termination and
Release Agreements referenced in Section 7.6.5 hereof) which has been set forth
in Section 7.6.3 of the Connecticut Bancshares Disclosure Schedule (the
"Executive Agreements") who becomes entitled to benefits thereunder shall be
entitled to receive the cash and other benefits payable or provided under such
agreement; provided, however, that the employee executes and delivers to NHSB an
instrument in form and substance satisfactory to NHSB releasing NHSB and its
affiliates from any further liability for monetary payments under such
agreement. Connecticut Bancshares represents and warrants that the amounts set
forth in Section 7.6.3 of the Connecticut Bancshares Disclosure Schedule (A)
have been calculated in a manner consistent with, and according to, the
provisions of the Executive Agreements (copies of which have been furnished by
Connecticut Bancshares to NHSB) and (B) represent good faith estimates of the
amounts payable as of the future date specified therein based upon assumptions
regarding interest rates, compensation or the assumed Closing Date, which have
been set forth in Section 7.6.3 of the Connecticut Bancshares Disclosure
Schedule, and (ii) the amounts payable under such Executive Agreements will not
exceed, individually or in the aggregate, the amounts set forth in Section 7.6.3
of the Connecticut Bancshares Disclosure Schedule (except to the extent that any
good faith estimates set forth in Section 7.6.3 of Connecticut Bancshares's
Disclosure Schedule change due to changes in interest rates or the assumed
Closing Date). To the extent that an employee of Connecticut Bancshares or any
of its Subsidiaries is entitled to the continued receipt of health insurance,
life insurance, disability insurance, automobile allowance or other similar
fringe benefits pursuant to an Executive Agreement, and such employee becomes a
director, officer, employee or consultant of NEWCO or any of its Subsidiaries
following the Effective Time and as a result becomes entitled to receive the
same fringe benefits in his or her capacity as a director, officer, employee or
consultant of NEWCO or any of its Subsidiaries, then the fringe benefits
provided to such person shall be deemed to be provided in connection with such
person's service as a director, officer, employee or consultant of NEWCO or any
of its Subsidiaries for so long as such person serves in such capacity and shall
be in lieu of, and not in addition to (and for the sole purpose to avoid
duplication of benefits), the same fringe benefits that would have otherwise
been provided pursuant to the Executive Agreement.
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7.6.4 The ESOP shall be terminated as of the Effective Time
(all shares held by the ESOP shall be converted into the right to receive the
Merger Consideration), all outstanding ESOP indebtedness shall be repaid as of
the Effective Time, and the balance remaining with respect to unallocated shares
held by the ESOP prior to the Effective Time shall be allocated and distributed
to the ESOP participants (subject to the receipt of a determination letter from
the IRS), as provided for in the ESOP and unless otherwise required by
applicable law. As soon as practicable after the date hereof, Connecticut
Bancshares shall file a request for a determination letter from the IRS
regarding the continued qualified status of the ESOP upon its termination. Prior
to the Effective Time, Connecticut Bancshares and, following the Effective Time,
NHSB shall use their respective reasonable best efforts in good faith to obtain
such favorable determination letter (including, but not limited to, making such
changes to the ESOP and the proposed allocations described herein as may be
requested by the IRS as a condition to its issuance of a favorable determination
letter). NHSB and NEWCO will adopt such additional amendments to the ESOP as may
be reasonably required by the IRS subsequent to the Effective Time as a
condition to granting such favorable determination and termination letters
provided that such amendments do not substantially change the terms outlined
herein or would result in an additional material liability to NHSB or NEWCO.
Neither Connecticut Bancshares nor NHSB shall make any distribution from the
ESOP except as may be required by applicable law until receipt of such favorable
determination letter.
7.6.5 Concurrently with the execution of this Agreement by the
parties hereto, (i) each of Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxx, Xxxxxxx X.
Xxxxxxxx, Xxxxx X. Xxxxxxxxxxx and SBM, Connecticut Bancshares and NHSB shall
enter into a Termination and Release Agreement substantially in the form of
Exhibit D-1 hereto, (ii) each of Xxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx, III, Xxxx
X. Xxxxx, Xxxxxxx X. Xxxxx, Xxxx X. Xxxxx, Xxxxxxxxxxx Xxxxxx, Xxxxxxxx
XxXxxxxxxx, Xxxxx X. Xxxxxxxxx, Xxxx X. Xxxxx, Xxxxxxx X. Xxxxxx, Xxxxx X.
Trainer, Xxxxx X. Xxxxx and SBM, Connecticut Bancshares and NHSB shall enter
into a Termination and Release Agreement substantially in the form of Exhibit
D-2, and (iii) each of Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxx, Xxxxxxx X. Xxxxxxxx,
Xxxxx X. Xxxxxxxxxxx shall enter into a Noncompetition Agreement substantially
in the form of Exhibit E hereto.
7.7 DIRECTORS AND OFFICERS INDEMNIFICATION AND INSURANCE.
----------------------------------------------------
7.7.1 NHSB shall maintain, and/or shall cause NEWCO to
maintain, in effect for six (6) years following the Effective Time, the current
directors' and officers' liability insurance policies maintained by Connecticut
Bancshares and the Connecticut Bancshares Subsidiaries (provided, that NHSB may
substitute therefor policies of at least the same coverage containing terms and
conditions which are not materially less favorable) with respect to matters
occurring prior to the Effective Time; provided, however, that in no event shall
NHSB be required to expend in the aggregate pursuant to this Section 7.7.1 more
than 150% of the annual cost currently expended by Connecticut Bancshares with
respect to such insurance. In connection with the foregoing, Connecticut
Bancshares agrees to provide such insurer or substitute insurer with such
representations as such insurer may request with respect to the reporting of any
prior claims.
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7.7.2 From and after the Effective Time, NHSB shall, and/or
shall cause NEWCO or the appropriate NEWCO Subsidiary to, indemnify, defend and
hold harmless each person who is now, or who has been at any time before the
date hereof or who becomes before the Effective Time, an officer, director or
employee of Connecticut Bancshares or SBM (the "Indemnified Parties") against
all losses, claims, damages, costs, expenses (including reasonable attorney's
fees), liabilities or judgments or amounts that are paid in settlement (which
settlement shall require the prior written consent of NEWCO, which consent shall
not be unreasonably withheld) of or in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, investigative or
administrative (each a "Claim"), in which an Indemnified Party is, or is
threatened to be made, a party or witness in whole or in part on or arising in
whole or in part out of the fact that such person is or was a director, officer
or employee of Connecticut Bancshares or a Connecticut Bancshares Subsidiary if
such Claim pertains to any matter of fact arising, existing or occurring at or
before the Effective Time (including, without limitation, the Merger and the
other transactions contemplated hereby), regardless of whether such Claim is
asserted or claimed before, or after, the Effective Time (the "Indemnified
Liabilities"), to the fullest extent permitted under applicable state or federal
law and under Connecticut Bancshares' Certificate of Incorporation and Bylaws.
NEWCO shall pay expenses in advance of the final disposition of any such action
or proceeding to each Indemnified Party to the full extent permitted by
applicable state or federal law upon receipt of an undertaking to repay such
advance payments if he or she shall be adjudicated or determined not to be
entitled to indemnification in the manner set forth below. Any Indemnified Party
wishing to claim indemnification under this Section 7.7.2 upon learning of any
Claim, shall notify NEWCO (but the failure so to notify NEWCO shall not relieve
it from any liability which it may have under this Section 7.7.2, except to the
extent such failure prejudices NEWCO) and shall deliver to NEWCO the undertaking
referred to in the previous sentence. In the event of any such Claim (whether
arising before or after the Effective Time) (1) NEWCO shall have the right to
assume the defense thereof (in which event the Indemnified Parties will
cooperate in the defense of any such matter) and upon such assumption NEWCO
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 NEWCO elects not to assume
such defense, or counsel for the Indemnified Parties reasonably advises the
Indemnified Parties that there are or may be (whether or not any have yet
actually arisen) issues which raise conflicts of interest between NEWCO and the
Indemnified Parties, the Indemnified Parties may retain counsel reasonably
satisfactory to them, and NEWCO shall pay the reasonable fees and expenses of
such counsel for the Indemnified Parties, (2) NEWCO shall be obligated pursuant
to this paragraph to pay for only one (1) firm of counsel for all Indemnified
Parties whose reasonable fees and expenses shall be paid promptly as statements
are received unless there is a conflict of interest that necessitates more than
one (1) law firm, (3) NEWCO shall not be liable for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld), and (4) no Indemnified Party shall be entitled to indemnification
hereunder with respect to a matter as to which (x) he shall have been
adjudicated in any proceeding not to have acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of
Connecticut Bancshares or any Connecticut Bancshares Subsidiary, or (y) in the
event that a proceeding is compromised or settled so as to impose any liability
or obligation upon an Indemnified Party, if there is a determination that with
respect to said matter said Indemnified Party did not act in good faith and in a
manner he reasonably believed to be in, or not opposed to,
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the best interests of Connecticut Bancshares or any Connecticut Bancshares
Subsidiary. The determination shall be made by a majority vote of a quorum
consisting of the Directors of NEWCO who are not involved in such proceeding.
7.7.3 If NHSB, NEWCO or any of their successors or assigns
shall consolidate with or merge into any other entity and shall not be the
continuing or surviving entity of such consolidation or merger or shall transfer
all or substantially all of its assets to any other entity, then in each case,
proper provision shall be made so that the successors and assigns of NHSB and
NEWCO shall assume the obligations set forth in this Section 7.7.
7.7.4 NHSB shall honor and/or shall cause NEWCO to honor
Connecticut Bancshares' "Directors' Consultation Plan" as it exists as of the
date hereof.
7.8 CONNECTICUT BANCSHARES MAIN OFFICE. NHSB shall occupy, or cause a
-----------------------------------
third party to occupy, the Connecticut Bancshares main office building located
at 000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000 for a period of twenty-four
(24) months after the Effective Date.
7.9 CHARITABLE FOUNDATION. NHSB acknowledges and agrees that SBM
----------------------
Charitable Foundation, Inc., the charitable foundation affiliated with
Connecticut Bancshares, is in existence and will continue to be operated for the
benefit of Connecticut Bancshares' community, notwithstanding that it is NHSB's
intention that The New Haven Savings Bank Foundation, Inc., the charitable
foundation affiliated with NHSB and/or a new charitable foundation to be
established in connection with the Conversion, may at some time subsequent to
the Effective Date, service each of Connecticut Bancshares' and NHSB's
respective communities.
7.10 DIRECTORSHIPS. On or prior to the Effective Time, each of NHSB and
-------------
NEWCO agrees to take all action necessary (i) to increase the size of their
respective Boards of Directors, if necessary, to accommodate the appointment and
election of, and (ii) to appoint or elect, effective as of the Effective Time,
two (2) non-employee directors of Connecticut Bancshares as of the date hereof
who are designated by NHSB and NEWCO.
7.11 MAINTENANCE OF SBM LIQUIDATION ACCOUNT. NHSB shall take all action
--------------------------------------
as of the Effective Time to comply with the requirements of Section
36-142m-10(c) of the Regulations of the Department.
ARTICLE VIII
REGULATORY AND OTHER MATTERS
8.1 CONNECTICUT BANCSHARES SPECIAL MEETING.
--------------------------------------
Connecticut Bancshares will, in accordance with applicable law and
Connecticut Bancshares' Certificate of Incorporation and Bylaws, (i) as promptly
as reasonably practicable take all steps necessary to duly call, give notice of,
convene and hold a meeting of its
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shareholders (the "Connecticut Bancshares Shareholders Meeting") for the purpose
of approving the transactions contemplated by this Agreement, and for such other
purposes as may be, in Connecticut Bancshares' and NHSB's reasonable judgment,
necessary or desirable, (ii) subject to the fiduciary responsibility of the
Board of Directors of Connecticut Bancshares as advised by counsel, recommend to
its shareholders the approval of the aforementioned matters to be submitted by
it to its shareholders and oppose any third party proposal or other action that
is inconsistent with this Agreement or the consummation of the transactions
contemplated herein (including the Bank Merger), and (iii) cooperate and consult
with NHSB with respect to each of the foregoing matters. Except with the prior
approval of NHSB, no other matters shall be submitted for approval of the
Connecticut Bancshares shareholders at the Connecticut Bancshares Shareholders
Meeting.
8.2 PROXY STATEMENT.
---------------
8.2.1 For the purposes of holding the Connecticut Bancshares
Shareholders Meeting, Connecticut Bancshares shall draft and prepare, and NHSB
shall cooperate in the preparation of, a proxy statement or statements
satisfying all applicable requirements of the Exchange Act and the rules and
regulations thereunder (such proxy statement in the form mailed by Connecticut
Bancshares to the Connecticut Bancshares shareholders, together with any and all
amendments or supplements thereto, being herein referred to as the "Proxy
Statement"). Connecticut Bancshares shall file the Proxy Statement with the SEC
in accordance with its Regulation 14A under the Exchange Act. Connecticut
Bancshares shall upon expiration of the period of time within which the SEC may
comment on the preliminary Proxy Statement, thereafter promptly mail the Proxy
Statement to its shareholders.
8.2.2 NHSB shall provide Connecticut Bancshares with any
information concerning NHSB that Connecticut Bancshares may reasonably request
in connection with the drafting and preparation of the Proxy Statement, and
Connecticut Bancshares shall notify NHSB promptly of the receipt of any comments
of the SEC with respect to the Proxy Statement and of any requests by the SEC
for any amendment or supplement thereto or for additional information and shall
provide to NHSB promptly copies of all correspondence between Connecticut
Bancshares or any of its representatives and the SEC. Connecticut Bancshares
shall give NHSB and its counsel the opportunity to review and comment on the
Proxy Statement prior to its being filed with the SEC and shall give NHSB and
its counsel the opportunity to review and comment on all amendments and
supplements to the Proxy Statement and all responses to requests for additional
information and replies to comments prior to their being filed with, or sent to,
the SEC. Each of NHSB and Connecticut Bancshares agrees to use all reasonable
efforts, after consultation with the other party hereto, to respond promptly to
all such comments of and requests by the SEC and to cause the Proxy Statement
and all required amendments and supplements thereto to be mailed to the holders
of Connecticut Bancshares Common Stock entitled to vote at the Connecticut
Bancshares Shareholders Meeting at the earliest practicable time.
8.2.3 NHSB and Connecticut Bancshares each shall promptly
notify the other party if at any time either of them, respectively, becomes
aware that the Proxy Statement contains any untrue statement of a material fact
or omits to state a material fact about themselves
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required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. In such event, NHSB shall cooperate with Connecticut Bancshares in
the preparation of a supplement or amendment to such Proxy Statement which
corrects such misstatement or omission, and Connecticut Bancshares shall mail an
amended Proxy Statement to Connecticut Bancshares' shareholders.
8.3 NHSB CONVERSION. Commencing promptly after the date of this
----------------
Agreement, NHSB will take all steps reasonably necessary to effect the
Conversion. In addition, without limiting the generality of the foregoing, NHSB
shall cause the following to be done:
8.3.1 NHSB will (i) as promptly as practicable after receipt
of all approvals or non-objections necessary from the applicable Bank
Regulators, take all steps necessary to duly call, give notice of, convene and
hold a special meeting or meetings of the Corporators for the purpose of
approving the Plan and for such other purposes as may be, in the reasonable
judgment of NHSB, necessary or desirable, and (ii) recommend to its Corporators
the approval of the aforementioned matters to be submitted by it to its
Corporators, and (iii) cooperate and consult with Connecticut Bancshares with
respect to each of the foregoing matters.
8.3.2 NHSB will use its reasonable best efforts in good faith
(i) to prepare and file by September 30, 2003 all required regulatory
applications and notices required in connection with the Merger, the Bank Merger
and the Conversion, including, without limitation, filing applications with the
Department, the FDIC, and the FRB and (ii) to effectuate the provisions of the
Plan in a timely manner. NHSB shall notify Connecticut Bancshares promptly of
the receipt of any comments with respect to such applications and notices from
the Department, the FDIC, the FRB or any other Governmental Entity and of any
requests (written or oral) by the Department, the FDIC, the FRB or any
Governmental Entity for any amendment or supplement to such regulatory
applications and notices or for additional information and shall provide to
Connecticut Bancshares promptly copies of all correspondence between NHSB or any
of its representatives and the Department, the FDIC, the FRB or any other
Governmental Entity. NHSB shall give Connecticut Bancshares and its counsel the
opportunity to review and comment on all required regulatory applications
required in connection with the Merger, the Bank Merger and the Conversion and
all amendments and supplements to the foregoing and all responses to the
requests for additional information and replies to comments prior to their being
filed with, or sent to, any Governmental Entity or the SEC, the FRB, the FDIC or
the Department.
8.3.3 NHSB shall prepare as promptly as practicable (using its
reasonable best efforts in good faith to effect the preparation on or before
September 30, 2003) and Connecticut Bancshares shall co-operate in the
preparation of, the Conversion Registration Statement and the Conversion
Prospectus. NHSB shall file the Conversion Registration Statement with the SEC
and all appropriate State Securities Offices. NHSB shall use its reasonable best
efforts in good faith to have the Conversion Registration Statement declared
effective under the Securities Act as promptly as practicable after such filing
and on a basis coordinated with the other steps required in the Plan.
8.3.4 Connecticut Bancshares shall provide NHSB with any
information concerning it that NHSB may reasonably request in connection with
the Conversion Prospectus.
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Connecticut Bancshares shall provide NHSB a "comfort" letter from its
independent certified public accountant, dated as of the date of the Conversion
Prospectus and updated as of the date of consummation of the Merger, with
respect to certain financial information regarding Connecticut Bancshares, in
form and substance which is customary in transactions such as the Conversion and
NHSB shall notify Connecticut Bancshares promptly of the receipt of any comments
of the SEC, the FRB, the FDIC or the Department with respect to the Conversion
Prospectus and of any requests by the SEC, the FRB, the FDIC or the Department
for any amendment or supplement thereto or for additional information, and shall
provide to Connecticut Bancshares promptly copies of all correspondence between
NHSB or any representative of NHSB and the SEC, the FRB, the FDIC or the
Department. NHSB shall give Connecticut Bancshares and its counsel the
opportunity to review and comment on the Conversion Prospectus prior to its
being filed with the SEC, the FRB, the FDIC or the Department and shall give
Connecticut Bancshares and its counsel the opportunity to review and comment on
all amendments and supplements to the Conversion Prospectus and all responses to
requests for additional information and replies to comments prior to their being
filed with, or sent to, the SEC, the FRB, the FDIC or the Department. Each of
NHSB and Connecticut Bancshares agrees to use their reasonable best efforts,
after consultation with the other party hereto, in good faith to respond
promptly to all such comments of and requests by the SEC, the FRB, the FDIC or
the Department.
8.3.5 Connecticut Bancshares shall promptly notify NHSB if at
any time it becomes aware that the Conversion Prospectus or the Conversion
Registration Statement contains any untrue statement of a material fact or omits
to state a material fact with respect to Connecticut Bancshares or a Connecticut
Bancshares Subsidiary required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. In such event, Connecticut Bancshares shall cooperate
with NHSB in the preparation of a supplement or amendment to such Conversion
Prospectus, which corrects such misstatement or omission, and NHSB shall file an
amended Conversion Registration Statement with the SEC. Connecticut Bancshares
shall provide to NHSB and the marketing agent for the sale of NEWCO Common Stock
in the Offering a "comfort" letter from the independent certified public
accountants for Connecticut Bancshares, dated as of the effective date of the
Conversion Registration Statement with respect to certain financial information
regarding Connecticut Bancshares, each in form and substance which is customary
in transactions such as the Conversion.
8.4 REGULATORY APPROVALS. Each of Connecticut Bancshares, SBM and NHSB
--------------------
will cooperate with the other and use all reasonable efforts to promptly prepare
all necessary documentation, to effect all necessary filings and to obtain all
necessary permits, consents, approvals and authorizations of all third parties
and governmental bodies necessary to consummate the transactions contemplated by
this Agreement, including without limitation the Merger, the Bank Merger, the
Conversion and the Offering. Connecticut Bancshares and NHSB will furnish each
other and each other's counsel with all information concerning themselves, their
subsidiaries, directors, officers and shareholders and such other matters as may
be necessary or advisable in connection with the Conversion Prospectus, the
Proxy Statement and any application, petition or any other statement or
application made by or on behalf of NHSB, Connecticut Bancshares or SBM to any
governmental body in connection with the Conversion,
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the Merger, the Bank Merger, the Offering and the other transactions
contemplated by this Agreement. Each party hereto shall have the right to review
and approve in advance all characterizations of the information relating to such
party and any of its Subsidiaries that appear in any filing made in connection
with the transactions contemplated by this Agreement with any governmental body.
In addition, NHSB, Connecticut Bancshares and SBM shall each furnish to the
other for review a copy of each such filing made in connection with the
transactions contemplated by this Agreement with any governmental body prior to
its filing.
8.5 COMPLIANCE WITH ANTI-TRUST LAWS. Each of NHSB and Connecticut
----------------------------------
Bancshares shall use reasonable best efforts in good faith to resolve
objections, if any, which may be asserted with respect to the Merger under
anti-trust laws. In the event a suit is threatened or instituted challenging the
Merger as violative of anti-trust laws, each of NHSB and Connecticut Bancshares
shall use reasonable best efforts in good faith to avoid the filing of, or
resist or resolve such suit, NHSB and Connecticut Bancshares shall use
reasonable best efforts in good faith to take such action as may be required:
(a) by the FRB, the Connecticut Banking Commissioner, and the Antitrust Division
of the DOJ or the United States Federal Trade Commission in order to resolve
such objections as any of them may have to the Merger under antitrust laws, or
(b) by any federal or state court of the United States, in any suit brought by a
private party or Governmental Entity challenging the Merger as violative of
antitrust laws, in order to avoid the entry of, or to effect the dissolution of,
any injunction, temporary restraining order, or other order which has the effect
of preventing the consummation of the Merger. Reasonable best efforts in good
faith shall not include, among other things and only to the extent NHSB so
desires, the willingness of NHSB to accept an order agreeing to the divestiture,
or the holding separate, of any assets of NHSB or Connecticut Bancshares.
8.6 EXECUTION OF BANK MERGER AGREEMENT. Prior to the Effective Time,
-----------------------------------
SBM and NHSB each shall execute and deliver the Bank Merger Agreement,
substantially in the form attached hereto as Exhibit A.
ARTICLE IX
CLOSING CONDITIONS
9.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS UNDER THIS AGREEMENT. The
-------------------------------------------------------------
respective obligations of each party under this Agreement shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions,
none of which may be waived:
9.1.1 Stockholder, Corporator and Other Approvals.
-------------------------------------------
(i) This Agreement shall have been approved by
the requisite vote of shareholders of
Connecticut Bancshares.
(ii) The Plan shall have been approved by the
requisite vote of Corporators and by the
requisite vote of any others as may be
required.
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9.1.2 Injunctions. None of the parties hereto shall be subject
-----------
to any order, decree or injunction of a court or agency of competent
jurisdiction which enjoins or prohibits the consummation of the transactions
contemplated by this Agreement.
9.1.3 Regulatory Approvals. All necessary approvals,
----------------------
authorizations and consents of all Governmental Entities required to consummate
the transactions contemplated by this Agreement, including the Merger, the Bank
Merger and the Conversion, shall have been obtained and shall remain in full
force and effect and all waiting periods relating to such approvals,
authorizations or consents shall have expired; and no such approval,
authorization or consent shall include any condition or requirement, excluding
standard conditions that are normally imposed by the regulatory authorities in
bank merger transactions or in mutual-to-stock conversions, that would, in the
good faith reasonable judgment of the Board of Directors of NHSB and Connecticut
Bancshares, materially and adversely affect the business, operations, financial
condition, property or assets of the combined enterprise of Connecticut
Bancshares, SBM and NHSB or otherwise materially impair the value of Connecticut
Bancshares or SBM to NHSB.
9.1.4 Conversion. NHSB shall have consummated the Conversion.
----------
9.2 CONDITIONS TO THE OBLIGATIONS OF NHSB UNDER THIS AGREEMENT. The
------------------------------------------------------------
obligations of NHSB under this Agreement shall be further subject to the
satisfaction of the conditions set forth in Sections 9.2.1 through 9.2.5 at or
prior to the Closing:
9.2.1 Representations and Warranties. Except as otherwise
--------------------------------
contemplated by this Agreement or consented to in writing by NHSB, the
representations and warranties of Connecticut Bancshares and SBM set forth in
this Agreement shall be true and correct in all material respects as of the date
of this Agreement and as of the Effective Time as though made on and as of the
Effective Time (or on the date when made in the case of any representation and
warranty which specifically relates to an earlier date), except as otherwise
contemplated by this Agreement or consented to in writing by NHSB; provided,
however, that (i) in determining whether or not the condition contained in this
Section 9.2.1 shall be satisfied, no effect shall be given to any exceptions in
such representations and warranties relating to materiality or Material Adverse
Effect and (ii) the condition contained in this Section 9.2.1 shall be deemed to
be satisfied unless the failure of such representations and warranties to be so
true and correct constitute, individually or in the aggregate, a Material
Adverse Effect on Connecticut Bancshares and SBM, taken as a whole; and
Connecticut Bancshares shall have delivered to NHSB a certificate of Connecticut
Bancshares to such effect signed by the Chief Executive Officer and the Chief
Financial Officer of Connecticut Bancshares as of the Effective Time.
9.2.2 Agreements and Covenants. As of the Closing Date,
--------------------------
Connecticut Bancshares and each Connecticut Bancshares Subsidiary shall have
performed in all material respects all obligations and complied in all material
respects with all agreements or covenants of Connecticut Bancshares and such
Connecticut Bancshares Subsidiary to be performed or complied with by each of
them at or prior to the Effective Date under this Agreement, except to the
extent that any failure to perform or comply shall not individually, or in the
aggregate, have a
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Material Adverse Effect on Connecticut Bancshares and the Connecticut Bancshares
Subsidiaries, taken as a whole, or materially adversely affect consummation of
the Merger and other transactions contemplated hereby, and NHSB shall have
received a certificate signed on behalf of Connecticut Bancshares by the Chief
Executive Officer and Chief Financial Officer of Connecticut Bancshares to such
effect dated as of the Effective Time.
9.2.3 Permits, Authorizations, Etc. Connecticut Bancshares and
----------------------------
the Connecticut Bancshares Subsidiaries shall have obtained any and all material
permits, authorizations, consents, waivers, clearances or approvals required for
the lawful consummation of the Merger by Connecticut Bancshares and the Bank
Merger by SBM, the failure to obtain which would have a Material Adverse Effect
on Connecticut Bancshares and the Connecticut Bancshares Subsidiaries, taken as
a whole.
9.2.4 Accountants' Letter. NHSB shall have received a
---------------------
"comfort" letter from the independent certified public accountants for
Connecticut Bancshares, dated the effective date of the Conversion Registration
Statement, with respect to certain financial information regarding Connecticut
Bancshares, each in form and substance which is customary in transactions of the
nature contemplated by this Agreement.
9.2.5 No Material Adverse Effect. Since January 1, 2003, no
----------------------------
event has occurred or circumstance has arisen that, individually or in the
aggregate, has had or is reasonably likely to have a Material Adverse Effect on
Connecticut Bancshares.
9.3 CONDITIONS TO THE OBLIGATIONS OF CONNECTICUT BANCSHARES UNDER THIS
-------------------------------------------------------------------
AGREEMENT. The obligations of Connecticut Bancshares under this Agreement shall
---------
be further subject to the satisfaction of the conditions set forth in Sections
9.3.1 through 9.3.4 at or prior to the Closing:
9.3.1 Representations and Warranties. Except as otherwise
--------------------------------
contemplated by this Agreement or consented to in writing by Connecticut
Bancshares, the representations and warranties of NHSB set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Effective Time as though made on and as of the
Effective Time (or on the date when made in the case of any representation and
warranty which specifically relates to an earlier date), except as otherwise
contemplated by this Agreement or consented to in writing by Connecticut
Bancshares; provided, however, that (i) in determining whether or not the
condition contained in this Section 9.3.1 shall be satisfied, no effect shall be
given to any exceptions in such representations and warranties relating to
materiality or Material Adverse Effect and (ii) the condition contained in this
Section 9.3.1 shall be deemed to be satisfied unless the failure of such
representations and warranties to be so true and correct constitute,
individually or in the aggregate, a Material Adverse Effect on NHSB; and NHSB
shall have delivered to Connecticut Bancshares a certificate of NHSB to such
effect signed by the Chief Executive Officer and the Chief Financial Officer of
NHSB as of the Effective Time.
9.3.2 Agreements and Covenants. As of the Closing Date, NEWCO
------------------------
and NHSB shall have performed in all material respects all obligations and
complied in all material respects with all agreements or covenants of NEWCO and
NHSB to be performed or complied with by
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them at or prior to the Effective Date under this Agreement except to the extent
that any failure to perform or comply shall not individually, or in the
aggregate, have a Material Adverse Effect on NEWCO, NHSB and the NHSB
Subsidiaries, taken as a whole, or materially adversely affect consummation of
the Merger and other transactions contemplated hereby; and Connecticut
Bancshares shall have received a certificate signed on behalf of NHSB and NEWCO
by the Chief Executive Officer and Chief Financial Officer of each of NEWCO and
NHSB to such effect dated as of the Effective Time.
9.3.3 Permits, Authorizations, Etc. NEWCO and NHSB shall have
-----------------------------
obtained any and all material permits, authorizations, consents, waivers,
clearances or approvals required for the lawful consummation of the Merger, the
Bank Merger and the Conversion by NEWCO and NHSB, the failure to obtain which
would have a Material Adverse Effect on NEWCO, NHSB, and its Subsidiaries, taken
as a whole.
9.3.4 Payment of Merger Consideration. NHSB shall have
----------------------------------
delivered the Exchange Fund to the Exchange Agent on or before the Closing Date
and the Exchange Agent shall provide Connecticut Bancshares with a certificate
evidencing such delivery.
ARTICLE X
THE CLOSING
10.1 TIME AND PLACE. Subject to the provisions of Articles IX and XI
--------------
hereof, the Closing of the transactions contemplated hereby shall take place at
the offices of Xxxxx Xxxxxx & Xxxxxx, LLP, 000 Xxxxxx Xxxxxx, Xxx Xxxxx,
Xxxxxxxxxxx at 10:00 a.m. on the date determined by NHSB, in its sole
discretion, upon five (5) days prior written notice to Connecticut Bancshares,
but in no event later than thirty (30) days after the last condition precedent
pursuant to this Agreement has been fulfilled or waived (including the
expiration of any applicable waiting period), or at such other place, date or
time upon which NHSB and Connecticut Bancshares mutually agree.
10.2 DELIVERIES AT THE CLOSING. At the Closing there shall be delivered
-------------------------
(i) to NHSB and Connecticut Bancshares the certificates and other documents and
instruments required to be delivered at the Closing under Article IX hereof and
(ii) to the Exchange Agent on behalf of Connecticut Bancshares the Merger
Consideration required to be delivered at the Closing under Section 9.3.4
hereof.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1 TERMINATION. This Agreement may be terminated at any time prior to
-----------
the Closing Date, whether before or after approval of the Merger by the
stockholders of Connecticut Bancshares:
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11.1.1 By the mutual written agreement of NHSB and Connecticut
Bancshares;
11.1.2 By either NHSB or Connecticut Bancshares (provided that
the terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) 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 such that the conditions set forth in Sections
9.2.1 or 9.3.1, as the case may be, would not be satisfied and such breach by
its nature cannot be cured prior to the Closing Date or shall not have been
cured within thirty (30) days after written notice by NHSB to Connecticut
Bancshares (or by Connecticut Bancshares to NHSB) of such breach;
11.1.3 By either NHSB or Connecticut Bancshares (provided that
the terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been
a failure to perform or comply with any of the covenants or agreements set forth
in this Agreement on the part of the other party such that the conditions set
forth in Sections 9.2.2 or 9.3.2, as the case may be, would not be satisfied and
such failure by its nature cannot be cured prior to the Closing Date or shall
not have been cured within thirty (30) days after written notice by NHSB to
Connecticut Bancshares (or by Connecticut Bancshares to NHSB) of such failure;
11.1.4 By (a) Connecticut Bancshares, if NHSB shall not have
received all required regulatory approvals, authorizations, consents and
non-objections required in connection with the Merger and the Bank Merger and
the Conversion (except only for any approvals, authorizations, consents and
non-objections with respect to the Conversion to be received following the
completion of the Offering and before the consummation of the Conversion) and
the Conversion Registration Statement shall not have been declared effective by
the Securities and Exchange Commission within the meaning of the Securities Laws
by August 16, 2004, or (b) either NHSB or Connecticut Bancshares, if the Closing
shall not have occurred by the Termination Date, or such later date as shall
have been agreed to in writing by NHSB and Connecticut Bancshares; provided,
that no party may terminate this Agreement pursuant to either clause (a) or (b)
of this Section 11.1.4 if the failure of the Closing to have occurred on or
before said date was due to such party's breach of any of its obligations under
this Agreement;
11.1.5 By either NHSB or Connecticut Bancshares if (a) the
shareholders of Connecticut Bancshares shall have voted at the Connecticut
Bancshares Shareholders Meeting on the Agreement and such vote shall not have
been sufficient to approve the Agreement; (b) the Corporators shall have voted
at a meeting of the Corporators and such vote shall not have been sufficient to
approve the Plan; or (c) any other party as may be required to vote on the Plan
shall have voted at a meeting of such party and such vote shall not have been
sufficient to approve the Plan;
11.1.6 By either NHSB or Connecticut Bancshares (i) if final
action has been taken by a Government Entity whose approval or non-objection is
required in connection with this Agreement or the Bank Merger Agreement and the
transactions contemplated hereby or thereby (other than the Conversion), which
final action (x) has become unappealable and (y) does not approve or state a
non-objection to this Agreement or the Bank Merger Agreement or
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the transactions contemplated hereby or thereby, (ii) if any regulatory
authority whose approval or non-objection is required in connection with this
Agreement or the Bank Merger Agreement and the transactions contemplated hereby
or thereby (other than the Conversion) has stated in writing that it will not
issue the required approval or non-objection, or (iii) if any court of competent
jurisdiction or other governmental authority shall have issued an order, decree,
ruling or taken any other action restraining, enjoining or otherwise prohibiting
the Merger or the Bank Merger and such order, decree, ruling or other action
shall have become final and nonappealable;
11.1.7 By either NHSB or Connecticut Bancshares (i) if final
action has been taken by a Government Entity whose approval or non-objection is
required in connection with the Conversion, which final action (x) has become
unappealable and (y) does not approve or state a non-objection to the
Conversion, or (ii) if any regulatory authority whose approval or non-objection
is required in connection with the Conversion has stated in writing that it will
not issue the required approval or non-objection, (iii) if any court of
competent jurisdiction or other governmental authority shall have issued an
order, decree, ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Conversion and such order, decree, ruling or other
action shall have become final and nonappealable;
11.1.8 By (a) Connecticut Bancshares (provided that
Connecticut Bancshares is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) in the event that any of
the conditions precedent to the obligations of Connecticut Bancshares to
consummate the Merger or the Bank Merger, as set forth in Article IX, cannot be
satisfied or fulfilled (except, with respect to the condition precedent set
forth in Section 9.3.3, such permits, authorizations, consents, waivers,
clearances or approvals with respect to the Conversion to be received following
the completion of the Offering and before the consummation of the Conversion) by
August 16, 2004 or (b) either NHSB or Connecticut Bancshares (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) in the event that any of
the conditions precedent to the obligations of such party to consummate the
Merger or the Bank Merger, as set forth in Article IX, cannot be satisfied or
fulfilled by the Termination Date;
11.1.9 By NHSB if (a) at any time prior to the Connecticut
Bancshares Shareholder meeting, the Connecticut Bancshares Board of Directors
shall have failed for any reason to make its recommendation referred to in
Section 8.1, withdrawn such recommendation or modified or changed such
recommendation in a manner adverse in any respect to the interests of NHSB, or
(ii) the Connecticut Bancshares Board of Directors shall have failed for any
reason to call, give notice of, convene and hold the Connecticut Bancshares
Shareholder Meeting;
11.1.10 By NHSB if a tender offer or exchange offer for 25% or
more of the outstanding shares of Connecticut Bancshares Common Stock is
commenced (other than by NHSB), and the Connecticut Bancshares Board of
Directors recommends that the shareholders of Connecticut Bancshares tender
their shares in such tender or exchange offer or otherwise fails to recommend
that such shareholders reject such tender offer or exchange offer within the
ten-Business Day period specified in Rule 14e-2(a) under the Exchange Act;
11.1.11 At any time prior to the Connecticut Bancshares
Shareholders Meeting,
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by Connecticut Bancshares in order to concurrently enter into an acquisition
agreement or similar agreement (each, an "Acquisition Agreement") with respect
to a Superior Proposal which has been received and considered by Connecticut
Bancshares and the Connecticut Bancshares Board of Directors in compliance with
Section 6.10 hereof, provided, however, that this Agreement may be terminated by
Connecticut Bancshares pursuant to this Section 11.1.11 only after the fifth
Business Day following NHSB's receipt of written notice from Connecticut
Bancshares advising NHSB that Connecticut Bancshares is prepared to enter into
an Acquisition Agreement with respect to a Superior Proposal, and only if,
during such five-Business Day period, NHSB does not, in its sole discretion,
make an offer to Connecticut Bancshares that the Connecticut Bancshares' Board
of Directors determines in good faith, after consultation with its financial and
legal advisors, is at least as favorable as the Superior Proposal.
For purposes of this Section 11.1, termination of this Agreement by
NHSB shall be deemed to constitute a termination on behalf of NEWCO.
11.2 EFFECT OF TERMINATION.
---------------------
11.2.1 In the event of termination of this Agreement pursuant
to any provision of Section 11.1, this Agreement shall forthwith become void and
have no further force, except that (i) the provisions of Sections 11.1, 11.3,
12.1, 12.2, 12.6, 12.9, 12.10, this Section 11.2, and (ii) any other Section
which, by its terms, relates to post-termination rights or obligations, shall
survive such termination of this Agreement and remain in full force and effect.
11.2.2 In recognition of the efforts, expenses and other
opportunities foregone by NHSB while structuring and pursuing the Merger, the
parties hereto agree that Connecticut Bancshares shall pay to NHSB a termination
fee of Thirty Million Dollars ($30,000,000) (the "Connecticut Bancshares
Termination Fee") in the manner and subject to the conditions set forth below
only if:
(i) this Agreement is terminated by NHSB pursuant
to Section 11.1.9 or 11.1.10;
(ii) this Agreement is terminated by (A) NHSB
pursuant to Sections 11.1.2 or 11.1.3, or (B)
by either NHSB or Connecticut Bancshares
pursuant to Section 11.1.5(a), and in the case
of any termination pursuant to clause (A) or
(B) an Acquisition Proposal shall have been
publicly announced or otherwise communicated or
made known to the senior management of
Connecticut Bancshares or the Connecticut
Bancshares Board of Directors (or any Person
shall have publicly announced, communicated or
made known an intention, whether or not
conditional, to make an Acquisition Proposal)
at any time after the date of this Agreement
and prior to the taking of the vote of the
shareholders of Connecticut Bancshares
contemplated by this Agreement at the
Connecticut Bancshares Shareholder Meeting, in
the case of clause (B), or the date of
termination of this Agreement, in the case of
clause (A); or
(iii) this Agreement is terminated by Connecticut
Bancshares pursuant
to Section 11.1.11.
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In the event the Connecticut Bancshares Termination Fee shall
become payable pursuant to Section 11.2.2(i) or (ii), (x) Connecticut Bancshares
shall pay to NHSB an amount equal to Ten Million Dollars ($10,000,000) on or
before the third Business Day following termination of this Agreement, and (y)
if within 18 months after such termination Connecticut Bancshares or a
Connecticut Bancshares Subsidiary enters into any agreement with respect to, or
consummates, any Acquisition Transaction, Connecticut Bancshares shall pay to
NHSB the Connecticut Bancshares Termination Fee (net of any payment made
pursuant to clause (x) above) on the date of execution of such agreement or
consummation of the Acquisition Transaction. In the event the Connecticut
Bancshares Termination Fee shall become payable pursuant to Section 11.2.2(iii),
Connecticut Bancshares shall pay to NHSB the entire Connecticut Bancshares
Termination Fee within three Business Days following the date of termination of
this Agreement. Any amount that becomes payable pursuant to this Section 11.2.2
shall be paid by wire transfer of immediately available funds to an account
designated by NHSB.
11.2.3 In the event of a termination of this Agreement
pursuant to Section 11.1.2 or 11.1.3 hereof resulting from the willful conduct
or gross negligence of a party, such party shall be obligated to reimburse the
other party for up to Two Million Dollars ($2,000,000) of out-of-pocket costs
and expenses, including, without limitation, reasonable legal, accounting and
investment banking fees and expenses, incurred by such other party in connection
with the entering into of this Agreement and the carrying out of any and all
acts contemplated hereunder (collectively referred to as "Costs"). The payment
of Costs is not an exclusive remedy, but is in addition to any other rights or
remedies available to the parties hereto at law or in equity or as is
contemplated herein. Notwithstanding anything to the contrary herein, if (i)
Connecticut Bancshares makes the payment contemplated in Section 11.2.2 of this
Agreement or (ii) if NHSB makes the payment contemplated in Section 11.3 of this
Agreement, such party shall not have any further liability to the other party
(or its Subsidiaries), whether for Costs, breach or otherwise.
11.2.4 Except as provided in Sections 11.2.2, 11.2.3 and 11.3,
whether or not the Merger is consummated, all Costs incurred in connection with
this Agreement and the transactions contemplated hereby shall be borne by the
party incurring such Costs.
11.2.5 In no event shall any officer, agent or director of
Connecticut Bancshares, any Connecticut Bancshares Subsidiary, NHSB or any NHSB
Subsidiary, be personally liable thereunder for any default by any party in any
of its obligations hereunder unless any such default was intentionally caused by
such officer, agent or director.
11.3 NHSB SPECIAL PAYMENT.
--------------------
11.3.1 NHSB Special Payment. As a condition of Connecticut
---------------------
Bancshares' willingness to, and in order to induce Connecticut Bancshares to,
enter into this Agreement, and to reimburse Connecticut Bancshares for incurring
the damages, costs and expenses related to entering into this Agreement and
consummating the transactions contemplated by this Agreement, NHSB hereby agrees
to pay to Connecticut Bancshares, as liquidated damages and
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in lieu of any other rights or remedies under this Agreement, a cash payment in
the amount of Thirty Million Dollars ($30,000,000) (the "Special Payment") only
if (i) the Agreement is terminated pursuant to Section 11.1.5(b) or 11.1.5(c) of
this Agreement, or (ii) the Agreement is terminated pursuant to Section 11.1.6
or 11.1.7, or (iii) NHSB otherwise does not consummate the Merger by no later
than the Termination Date or such later date agreed as contemplated in Section
11.1.4(b), or (iv) Connecticut Bancshares has terminated this Agreement in
accordance with Section 11.1.2 or Section 11.1.3 because NHSB has intentionally
and willfully breached any of its representations or warranties herein or
intentionally and willfully failed to perform or comply with any of its
covenants or agreements herein, to such extent as to permit such termination
(each of such reasons for termination being hereinafter referred to as the
"Special Payment Event"). Notwithstanding the foregoing, NHSB shall have no
obligation to make the Special Payment to Connecticut Bancshares if the Special
Payment Event is primarily due to a breach of a representation or warranty of
Connecticut Bancshares (subject to the standard set forth in Section 9.2.1 of
this Agreement) or a breach by Connecticut Bancshares of one or more covenants
in this Agreement (subject to the standard set forth in Section 9.2.2 of this
Agreement), which breach of representation, warranty or covenant is the
principal cause of the occurrence of the Special Payment Event.
11.3.2 Payments Required. Any payment required to be made
------------------
under this Section 11.3 shall be paid by NHSB to Connecticut Bancshares by wire
transfer of immediately available funds to an account designated by Connecticut
Bancshares within three (3) Business Days after demand by Connecticut
Bancshares.
11.3.3 Exclusivity of Remedy. Notwithstanding anything to the
---------------------
contrary set forth in this Agreement, if NHSB pays or causes to be paid to
Connecticut Bancshares the Special Payment, NHSB will not have any further
obligations or liabilities to Connecticut Bancshares or SBM with respect to this
Agreement or the transactions contemplated by this Agreement.
11.3.4 Return of Portion of NHSB Special Payment. In the event
-----------------------------------------
NHSB pays the Special Payment to Connecticut Bancshares and prior to the earlier
of (a) October 15, 2006 or (b) two years after demand for payment from
Connecticut Bancshares pursuant to Section 11.3.2 of this Agreement, Connecticut
Bancshares or a Connecticut Bancshares Subsidiary consummates any acquisition or
merger transaction pursuant to which the shareholders of Connecticut Bancshares
are entitled to receive per share merger consideration in excess of $51.60 (the
"Benchmark Price"), Connecticut Bancshares shall pay to NHSB Fifteen Million
Dollars ($15,000,000). The Benchmark Price shall be adjusted for any subsequent
stock dividends or splits by Connecticut Bancshares. The Benchmark Price shall
be determined on the date of closing of such acquisition or merger transaction.
If the consideration in such transaction includes or consists of shares of
capital stock of another entity, the value of such shares shall equal the
average of the last sales prices for such shares on the five trading days ending
on the day prior to the consummation of such transaction. Any amount that
becomes payable pursuant to this Section 11.3.4 shall be paid by wire transfer
of immediately available funds to an account designed by NHSB within ten (10)
Business Days of the closing of such acquisition or merger transaction.
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11.4 AMENDMENT, EXTENSION AND WAIVER. Subject to applicable law, at any
-------------------------------
time prior to the Effective Time (whether before or after approval thereof by
the shareholders of Connecticut Bancshares), the parties hereto by action of
their respective Boards of Directors, may (a) amend this Agreement, (b) extend
the time for the performance of any of the obligations or other acts of any
other party hereto, (c) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, or (d)
waive compliance with any of the agreements or conditions contained herein;
provided, however, that after any approval of this Agreement and the
transactions contemplated hereby by the shareholders of Connecticut Bancshares,
there may not be, without further approval of such shareholders, any amendment
of this Agreement which reduces the amount, value or changes the form of
consideration to be delivered to Connecticut Bancshares' shareholders or Option
holders pursuant to this Agreement. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto. Any
agreement on the part of a party hereto to any extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party, but such waiver or failure to insist on strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE XII
MISCELLANEOUS
12.1 CONFIDENTIALITY. Except as specifically set forth herein, NHSB and
---------------
Connecticut Bancshares mutually agree to be bound by the terms of the
confidentiality agreements dated February 27, 2003 and March 13, 2003
(collectively, the "Confidentiality Agreements") previously executed by the
parties hereto, which Confidentiality Agreements are hereby incorporated herein
by reference. The parties hereto agree that such Confidentiality Agreements
shall continue in accordance with their respective terms, notwithstanding the
termination of this Agreement.
12.2 PUBLIC ANNOUNCEMENTS. Connecticut Bancshares and NHSB shall
---------------------
cooperate with each other in the development and distribution of all news
releases and other public information disclosures with respect to this
Agreement, except as may be otherwise required by law, and neither Connecticut
Bancshares nor NHSB shall issue any joint news releases with respect to this
Agreement unless such news releases have been mutually agreed upon in writing by
the parties hereto, except as required by law.
12.3 SURVIVAL. All representations, warranties and covenants in this
--------
Agreement or in any instrument delivered pursuant hereto or thereto shall expire
on and be terminated and extinguished at the Effective Date, other than those
covenants set forth in Sections 2.4, 2.5, 2.6, 2.7, 7.6, 7.7, 7.8, 7.9 and 7.11,
or any other covenant that by its terms is to survive or be performed after the
Effective Date.
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12.4 NOTICES. All notices or other communications hereunder shall be in
-------
writing and shall be deemed given if delivered by receipted hand delivery or
mailed by prepaid registered or certified mail (return receipt requested) or by
cable, telegram, telex or fax addressed as follows:
If to Connecticut Bancshares or SBM, to:
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, President and Chief Executive Officer
Fax: (000) 000-0000
With required copies to:
Xxxxxxx Xxxxxx & Xxxxxxxx, LLP
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx X.X. 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
If to NHSB, to:
000 Xxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, President
Fax: (000) 000-0000
With required copies to:
Xxxxx Xxxxxx & Xxxxxx, LLP
000 Xxxxxx Xxxxxx / 00xx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx III, Esq.
Fax: (000) 000-0000
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
so mailed.
12.5 PARTIES IN INTEREST. This Agreement shall be binding upon and
--------------------
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other party, and that (except as
otherwise expressly provided in this Agreement) nothing in this Agreement is
intended to confer upon any other person any rights or remedies under or by
reason of this Agreement.
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12.6 COMPLETE AGREEMENT. This Agreement, including the Exhibits and
-------------------
Disclosure Schedules hereto and the documents and other writings referred to
herein or therein or delivered pursuant hereto or thereto, together with the
Confidentiality Agreements referred to in Section 12.1, contains the entire
agreement and understanding of the parties with respect to its subject matter.
There are no restrictions, agreements, promises, warranties, covenants or
undertakings between the parties other than those expressly set forth herein or
therein. This Agreement supersedes all prior agreements and understandings
(other than the Confidentiality Agreements referred to in Section 12.1 hereof)
between the parties, both written and oral, with respect to its subject matter.
12.7 COUNTERPARTS. This Agreement may be executed in counterparts all
------------
of which shall be considered one and the same agreement and each of which shall
be deemed an original.
12.8 SEVERABILITY. In the event that any one or more provisions of this
------------
Agreement shall for any reason be held invalid, illegal or unenforceable in any
respect, by any court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement and the
parties shall use their reasonable efforts to substitute a valid, legal and
enforceable provision which, insofar as practical, implements the purposes and
intents of this Agreement.
12.9 GOVERNING LAW. This Agreement shall be governed by the laws of the
-------------
State of Connecticut, without giving effect to conflicts of laws principles that
would require the application of any other law.
12.10 INTERPRETATION. When a reference is made in this Agreement to
--------------
Sections or Exhibits, such reference shall be to a Section of or Exhibit to this
Agreement unless otherwise indicated. The recitals hereto constitute an integral
part of this Agreement. References to Sections include subsections, which are
part of the related Section (e.g., a section numbered "Section 5.5.1" would be
part of "Section 5.5" and references to "Section 5.5" would also refer to
material contained in the subsection described as "Section 5.5.1"). The table of
contents, index 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". The phrases "the date of this Agreement", "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to the date set forth in the Recitals to this Agreement.
12.11 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
---------------------
damage would occur in the event that the provisions contained in 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
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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.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, NHSB, Connecticut Bancshares and SBM have caused
this Agreement to be executed under seal by their duly authorized officers as of
the date first set forth above.
THE NEW HAVEN SAVINGS BANK
By: ___________________________________
Name: ___________________________________
Title:___________________________________
CONNECTICUT BANCSHARES, INC.
By: ____________________________________
Name: ____________________________________
Title:____________________________________
THE SAVINGS BANK OF MANCHESTER
By: ____________________________________
Name: ____________________________________
Title:____________________________________
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EXHIBIT A
[PLAN OF LIQUIDATION]
AGREEMENT AND PLAN OF LIQUIDATION AND DISSOLUTION
This Agreement and Plan of Liquidation and Dissolution ("Plan") made as
of the ___ day of ______, 200_, between [____________________] ("NEWCO"), a
Delaware Corporation, and CONNECTICUT BANCSHARES, INC., a Delaware Corporation
("Subsidiary"), is for the purpose of effecting the liquidation and dissolution
of Subsidiary in accordance with the provisions of Section 332 of the Internal
Revenue Code of 1986, as amended, and the requirements of Chapter 10 of the
Delaware General Corporation Law.
NOW THEREFORE, the parties hereto hereby agree as follows:
1. NEWCO is the owner of all the issued and outstanding capital stock of
Subsidiary.
2. NEWCO approves of and consents to the voluntary dissolution of
Subsidiary pursuant to Chapter 10 of the Delaware General Corporation
Law and authorizes the officers of Subsidiary to file a Certificate of
Dissolution with the Secretary of State of Delaware.
3. After _________________, 200_, Subsidiary shall not perform business
activities other than those required for the winding up of its affairs,
preserving the value of its assets, and distributing all of its
remaining assets, subject to all liabilities of Subsidiary, to NEWCO by
appropriate instruments of transfer, in accordance with this Plan. The
liquidation and dissolution is to be effected as promptly as possible
and in no event later than __________________, 200_.
4. NEWCO shall assume and discharge all outstanding liabilities required
to be satisfied by Subsidiary in connection with the Plan to the extent
that Subsidiary does not have sufficient funds to satisfy such
liabilities.
5. The directors and officers of Subsidiary shall cause to be executed and
filed, a Certificate of Dissolution of Subsidiary in accordance with
Chapter 10 of the Delaware General Corporation Law. In addition, the
directors and officers of Subsidiary shall execute and file Treasury
Department Form 966 within 30 days of adoption of this Plan and shall
timely file all other tax returns, certificates, documents, and
information required to be filed by reason of the complete liquidation
and dissolution of Subsidiary.
6. The officers and directors of Subsidiary shall execute and consummate
the Plan, and shall have power to adopt all resolutions, execute all
documents, and file all papers, and take
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all action they deem necessary or desirable for the complete liquidation and
dissolution of Subsidiary.
IN WITNESS WHEREOF, the parties have caused this Agreement and Plan of
Liquidation to be executed by their respective duly authorized officers, this
_________ day of ___________, 200_.
[NEWCO]
By:__________________
Name:
Title:
CONNECTICUT BANCSHARES, INC.
By:__________________
Name:
Title:
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EXHIBIT B
[FORM OF BANK MERGER AGREEMENT]
ARTICLES OF COMBINATION
AND
BANK MERGER AGREEMENT
These Articles of Combination and Bank Merger Agreement (this
"Bank Merger Agreement") are made and entered into this ______ day of
___________, 2000 between The New Haven Savings Bank, a Connecticut chartered
savings bank ("NHSB"), and The Savings Bank of Manchester, a Connecticut
chartered savings bank ("SBM").
WITNESSETH
WHEREAS, NHSB, SBM and Connecticut Bancshares, Inc., a
Delaware corporation ("Connecticut Bancshares") have entered into an Agreement
and Plan of Merger, dated as of July __, 2003 (the "Agreement");
WHEREAS, pursuant to the Agreement, all of the outstanding
capital stock of NHSB is now held by [________________________________________],
a Delaware corporation ("NEWCO");
WHEREAS, pursuant to the Agreement, NEWCO has acquired
Connecticut Bancshares through a merger of Connecticut Bancshares with and into
a wholly owned subsidiary of NEWCO, with Connecticut Bancshares the surviving
entity, all of the capital stock of which is held by NEWCO, and NHSB will
acquire SBM through a merger of SBM with and into NHSB, with NHSB the surviving
bank;
WHEREAS, NHSB has issued and outstanding [_____] shares of
common stock, par value [_____] per share ("NHSB Common Stock"), and SBM has
issued and outstanding [________] shares of common stock, par value [________]
per share ("SBM Stock"), all of which is eligible to vote; and
WHEREAS, all of the issued and outstanding shares of NHSB
Common Stock, and all of the issued and outstanding shares of SBM Stock have
been voted in favor of the merger of SBM with and into NHSB.
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:
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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 SBM with and into NHSB
as provided in Section 2.1 of this Bank Merger Agreement.
1.2 "BANKING COMMISSIONER" shall mean the Commissioner of Banking of
the State of Connecticut.
1.3 "EFFECTIVE TIME" shall mean the date and time at which the Bank
Merger contemplated by this Bank Merger Agreement becomes effective as provided
in Section 2.2 hereof.
1.4 "MERGING BANKS" shall collectively refer to SBM and NHSB.
1.5 "SOS" means the Connecticut Office of the Secretary of the
State.
1.6 "SURVIVING BANK" shall refer to NHSB as the surviving bank in the
Bank Merger. The location of the main office will be in the City of New Haven,
Connecticut.
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, SBM shall be merged with and into NHSB pursuant
to Sections 36a-125 and 36a-126 of the Banking Law of Connecticut. NHSB shall be
the Surviving Bank in the Bank Merger and shall continue to be regulated by the
Banking Commissioner.
(b) As a result of the Bank Merger,
(i) each share of SBM Stock issued and
outstanding prior to the Effective Time
shall automatically be canceled and shall
cease to exist as shares of capital stock of
SBM or the Surviving Bank; and
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(ii) the [_____] shares of NHSB Common Stock
issued and outstanding immediately prior to
the Effective Time shall constitute all of
the issued and outstanding shares of the
Surviving Bank.
(c) The Bank Merger shall have the effects set
forth at Sections 36a-125 and 36a-126(a) of the Banking Law of Connecticut.
2.2 EFFECTIVE TIME
The Bank Merger shall become effective as of the close of
business on the date that this Bank Merger Agreement and Articles of Combination
are filed with the SOS. The Bank Merger shall not be effective unless and until
approved by the Banking Commissioner and all other "Governmental Entities" as
contemplated by the Agreement.
2.3 NAME OF THE SURVIVING BANK
The name of the Surviving Bank shall be "[___________________]."
2.4 CHARTER
On and after the Effective Time, the Certificate of
Incorporation, as amended, of NHSB in effect immediately prior to the Effective
Time shall be the Certificate of Incorporation of the Surviving Bank, until
further amended in accordance with applicable law.
2.5 BYLAWS
On and after the Effective Time, the Bylaws, as amended, of
NHSB in effect immediately prior to the Effective Time shall be the Bylaws of
the Surviving Bank, until further amended in accordance with applicable law.
2.6 DIRECTORS AND OFFICERS
On and after the Effective Time, the directors and officers of
the Surviving Bank shall be the directors ( ) and officers of NHSB immediately
prior to the Effective Time plus two new directors selected from SBM's Board of
Directors, as provided in the Agreement. Pursuant to its Bylaws, the maximum
number of NHSB directors is [FIFTEEN], the minimum number is [SIX]. The
directors and officers of the Surviving Bank shall hold office in accordance
with the Certificate of Incorporation and Bylaws of the Surviving Bank.
2.7 EFFECTS OF THE MERGER.
Upon consummation of the Merger, and in addition to the effects under
applicable law,
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including without limitation 12 U.S.C.ss.215a,
(i) all rights, franchises and interests of SBM in and to
every type of property (real, personal and mixed), tangible and intangible, and
choses in action shall be transferred to and vested in the Surviving Bank by
virtue of the Merger without any deed or other transfer, and the Surviving Bank,
without any order or other action on the part of any court or otherwise, shall
hold and enjoy all rights of property, franchises and interests, including
appointments, designations and nominations, and all other rights and interests
as trustee, executor, administrator, registrar of stocks and bonds, guardian of
estates, assignee, receiver and committee of estates of the mentally impaired,
and in every other fiduciary capacity, in the same manner and to the same extent
as such rights, franchises and interests were held or enjoyed by SBM immediately
prior to the Effective Time; and
(ii) the Surviving Bank shall be liable for all liabilities of
SBM, fixed or contingent, including all deposits, accounts, debts, obligations
and contracts thereof, matured or unmatured, whether accrued, absolute,
contingent or otherwise, and whether or not reflected or reserved against on
balance sheets, books of account or records thereof, and all rights of creditors
or obligees and all liens on property of SBM shall be preserved unimpaired.
ARTICLE 3
MISCELLANEOUS
3.1 AMENDMENTS. To the extent permitted by law, this Bank Merger
Agreement may be amended by a subsequent writing signed by the parties hereto
upon the approval of the board of directors of each of the parties hereto.
3.2 ADDITIONAL ACTIONS. If, at any time after the Effective Time, the
Surviving Bank shall consider that any further assignments or assurances in law
or any other acts are necessary or desirable to (i) vest, perfect or confirm, of
record or otherwise, in the Surviving Bank its rights, title or interest in, to
or under any of the rights, properties or assets of SBM acquired or to be
acquired by the Surviving Bank as a result of, or in connection with, the
Merger, or (ii) otherwise carry out the purposes of this Agreement and Plan of
Merger, SBM and its proper officers and directors shall be deemed to have
granted to the Surviving Bank an irrevocable power of attorney to execute and
deliver all such proper deeds, assignments and assurances in law and to do all
acts necessary or proper to vest, perfect or confirm title to and possession of
such rights, properties or assets in the Surviving Bank and otherwise to carry
out the purposes of this Agreement and Plan of Merger; and the proper officers
and directors of the Surviving Bank are fully authorized in the name of The
Savings Bank of Manchester or otherwise to take any and all such action.
3.3 SUCCESSORS. This Bank Merger Agreement shall be binding on the
successors of NHSB and SBM.
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3.4 COUNTERPARTS. This Bank Merger Agreement may be executed in
counterparts, each of which shall be considered one and the same agreement and
each of which shall be deemed to be an original, and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
party, it being understood that all parties need not sign the same counterpart.
In accordance with the procedures set forth in the Banking Law
of the State of Connecticut and other applicable law, NHSB and SBM have caused
this Bank Merger Agreement to be executed by their duly authorized
representatives on the date indicated.
THE NEW HAVEN SAVINGS BANK
ATTEST:
By: ____________________________ By: _________________________________
Name: Name: Xxxxxx X. Xxxxxxxxx
Title: Title: Chairman and Chief Executive Officer
The Board of Directors of The New Haven Savings Bank:
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
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THE SAVINGS BANK OF MANCHESTER
ATTEST:
By: _______________________ By: ______________________________
Name: _____________________ Xxxxxxx X. Xxxxxxx
Title: Its: Chairman of the Board
The Board of Directors of The Savings Bank of Manchester:
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________
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EXHIBIT C
FORM OF VOTING AGREEMENT
___________, 2003
New Haven Savings Bank
000 Xxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxxx 00000
Ladies and Gentlemen:
The undersigned is a director of Connecticut Bancshares, Inc. ("CONNECTICUT
BANCSHARES") and is the beneficial holder of shares of common stock of
Connecticut Bancshares ("CONNECTICUT BANCSHARES COMMON STOCK").
Connecticut Bancshares and New Haven Savings Bank ("NHSB") are considering the
execution of an Agreement and Plan of Merger ("AGREEMENT") contemplating the
merger of Connecticut Bancshares with and into a holding company to be formed by
NHSB (referred to as "NEWCO"), with NEWCO as the surviving corporation of the
merger (the "MERGER"), and the merger of The Savings Bank of Manchester with and
into NHSB, with NHSB as the surviving corporation (the "BANK MERGER"), such
execution being subject in the case of NHSB to the execution and delivery of
this letter agreement ("LETTER AGREEMENT"). In consideration of the substantial
expenses that NHSB will incur in connection with the transactions contemplated
by the Agreement and in order to induce NHSB to execute the Agreement and to
proceed to incur such expenses, the undersigned agrees and undertakes, in his or
her capacity as a shareholder of Connecticut Bancshares and not in his or her
capacity as a director of Connecticut Bancshares as follows:
1. The undersigned, while this Letter Agreement is in effect, shall vote or
cause to be voted IN FAVOR OF the Agreement and the Merger all of the shares of
Connecticut Bancshares Common Stock that the undersigned shall be entitled to so
vote, whether such shares are beneficially owned by the undersigned on the date
of this Letter Agreement or are subsequently acquired, whether pursuant to the
exercise of stock options or otherwise (the "SUBJECT SHARES"), at the special
meeting of Connecticut Bancshares' shareholders to be called and held following
the date hereof, to consider the Agreement, the Merger and the Bank Merger (the
"SPECIAL MEETING"). The undersigned shall not sell, pledge, transfer or
otherwise dispose of any Subject Shares, except as contemplated in any
Termination and Release Agreement executed in connection with
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the Agreement. The Subject Shares owned by the undersigned as of the date of
this Letter Agreement are identified on Annex I.
2. At the Special Meeting or at any adjournment thereof, or in any other
circumstances in which the undersigned is entitled to vote, consent or give any
other approval, except as otherwise agreed to in writing in advance by NHSB, the
undersigned shall vote or cause to be voted the Subject Shares AGAINST the
following actions:
(i) any action or agreement that would result in a breach in
any material respect of any covenant, representation or warranty or any other
obligation or agreement of Connecticut Bancshares or SBM under the Agreement or
of the undersigned hereunder; or
(ii) any action or agreement that could reasonably be expected
to impede, interfere with, delay, postpone or attempt to discourage the Merger
or the Bank Merger, including, but not limited to: (A) the adoption by
Connecticut Bancshares of any proposal or offer with respect to any of the
following (other than the transactions contemplated by the Agreement) involving
Connecticut Bancshares or any Connecticut Bancshares Subsidiaries: (i) any
merger, consolidation, share exchange, business combination or other similar
transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 25% or more of its consolidated assets in a single transaction or
series of transactions; or (iii) any tender offer or exchange offer for 25% or
more of the outstanding shares of its capital stock or the filing of a
registration statement under the Securities Act in connection therewith; or (B)
after the Agreement and Merger have been approved by the shareholders of
Connecticut Bancshares, any action to abandon the Agreement and Merger. The
undersigned further agrees not to commit or agree to take any action
inconsistent with the foregoing agreements.
3. The undersigned acknowledges and agrees that any remedy at law for breach of
the foregoing provisions shall be inadequate and that, in addition to any other
relief which may be available, NHSB shall be entitled to temporary and permanent
injunctive relief without the necessity of proving actual damages.
4. The foregoing restrictions shall not apply to shares with respect to which
the undersigned may have voting power as a fiduciary for others. In addition,
this Letter Agreement shall only apply to actions taken by the undersigned in
his or her capacity as a shareholder of Connecticut Bancshares and shall not in
any way limit or affect actions the undersigned may take in his or her capacity
as a director of Connecticut Bancshares.
5. This Letter Agreement shall automatically terminate if the Agreement is not
entered into by the parties thereto or upon the earlier of (i) the Effective
Time or (ii) the termination of the Agreement in accordance with its terms.
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6. This Letter Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same document.
IN WITNESS WHEREOF, the undersigned has executed this Letter Agreement
as of the date first above written.
Very truly yours,
________________________________________
Name: __________________________________
Accepted and agreed to as of the date first above written:
THE NEW HAVEN SAVINGS BANK
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
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ANNEX I
SHAREHOLDER AGREEMENT
Shares of Connecticut Bancshares
Common Stock
Beneficially Owned Options on Connecticut
(exclusively of Bancshares
Name of Shareholder unexercised stock options) Common Stock
------------------- ------------------------- ------------
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EXHIBIT D-1
[FORM OF TERMINATION AND RELEASE AGREEMENT]
TERMINATION AND RELEASE AGREEMENT
This Termination and Release Agreement (this "Agreement") is entered
into as of July 15, 2003 by and among ____________________ (the "Executive"),
Connecticut Bancshares, Inc., a Delaware corporation ("Connecticut Bancshares"),
The Savings Bank of Manchester, a Connecticut savings bank and a wholly-owned
subsidiary of Connecticut Bancshares ("Manchester"), and The New Haven Savings
Bank, a Connecticut mutual savings bank ("New Haven").
RECITALS
--------
WHEREAS, New Haven, Connecticut Bancshares and Manchester have entered
into an Agreement and Plan of Merger, dated as of July 15, 2003 (the "Merger
Agreement"); and
WHEREAS, Section 7.6.5 of the Merger Agreement provides that New Haven,
Connecticut Bancshares, Manchester and the Executive shall enter into this
Agreement which shall terminate (1) the Employment Agreement between the
Executive, Connecticut Bancshares and Manchester dated March 1, 2000 (the "Bank
Employment Agreement"), (2) the Employment Agreement between the Executive and
Connecticut Bancshares dated March 1, 2000 (the "Company Employment Agreement"),
(3) the Manchester Supplemental Executive Retirement Plan, as amended and
restated and dated January 1, 2000 (the "SERP"),1 and (4) the Supplemental
Retirement Benefit Agreement between Manchester and the Executive dated
September 9, 1997, as amended on October 21, 2002 (the "Supplemental
Agreement"),2 as of the Effective Date of the Merger, and in lieu of any rights
and payments under the Bank Employment Agreement, the Company Employment
Agreement, the SERP and the Supplemental Agreement, the Executive shall be
entitled to the rights and payments set forth herein.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the Executive, Connecticut Bancshares, Manchester and New Haven
agree as follows
-------------------------
1 All references to SERP will be deleted for Xx. Xxxxxxxxxx.
2. All references to the Supplemental Agreement will be deleted for Messrs.
Xxxxxxxx and Xxxxxxxxxx.
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1. CERTAIN ACTIONS TO BE TAKEN OR NOT TAKEN IN 2003.
------------------------------------------------
(a) The Executive hereby agrees to take the following actions between
the date hereof and December 31, 2003, it being the intention of the parties
hereto that all of such actions shall be fully effective and consummated no
later than December 31, 2003:
(i) exercise all vested non-qualified stock options granted to the
Executive under Connecticut Bancshares' 2000 Stock-Based Incentive Plan (the
"Incentive Plan"), including non-qualified stock options scheduled to vest prior
to December 31, 2003;
(ii) both (A) exercise all vested incentive stock options granted
to the Executive under the Incentive Plan (including incentive stock options
scheduled to vest prior to December 31, 2003) and (B) effect a sale of the
shares of Connecticut Bancshares' common stock acquired upon such exercise in a
manner that will constitute a "disqualifying disposition" of such shares for
purposes of Section 421(b) of the Code; and
(iii) refrain from exercising any stock options granted to the
Executive under Connecticut Bancshares' 2002 Equity Compensation Plan (the
"Compensation Plan").
(b) Connecticut Bancshares and Manchester agree to take such actions as
may be necessary or advisable by them in order to permit the Executive to take
the actions set forth in Section 1(a) above and have them be fully effective and
consummated no later than December 31, 2003, including without limitation
promptly processing all exercises of stock options by the Executive under the
Incentive Plan. Neither Connecticut Bancshares nor Manchester shall (i)
accelerated the vesting of any unvested restricted stock awards granted to the
Executive under the Incentive Plan or the Compensation Plan, or (ii) accelerate
payment of any cash bonus to which the Executive may be entitled to receive
pursuant to Manchester's Bonus Plan for services rendered in 2003.
2. ACKNOWLEDGEMENT OF PAYMENT, RELEASE AND WAIVER.
----------------------------------------------
(a) On the Effective Date of the Merger, provided the Executive is
still employed by Manchester immediately prior to such date and has taken all of
the actions set forth in Section 1(a) hereof, Connecticut Bancshares and/or
Manchester shall pay to the Executive an amount equal to (i)
__________________dollars ($______), subject to adjustment as set forth in
Section 2(b) below (the "Maximum Amount"), minus (ii) the Initial Present Value
Amount (as defined in Section 3(c) below) of the welfare benefits to be provided
to the Executive pursuant to Section 3(a) below, with applicable withholding
taxes to be subtracted from the amount payable to the Executive. In
consideration of such payment and the other provisions of this Agreement, the
Executive, Connecticut Bancshares, Manchester and New Haven hereby agree that,
except as provided in Section 4 below, the Bank Employment Agreement, the
Company Employment
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Agreement, the SERP and the Supplemental Agreement shall be terminated without
any further action of any parties hereto, effective immediately prior to the
Effective Date of the Merger.
(b) If the payment pursuant to Section 2(a) hereof, either alone or
together with other payments and benefits which the Executive has the right to
receive from Connecticut Bancshares, Manchester or New Haven (but excluding
amounts payable pursuant to the Noncompetition Agreement of even date being
entered into between New Haven and the Executive), would constitute a "parachute
payment" under Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), including but not limited to the parachute payments associated
with the accelerated vesting of stock options and restricted stock awards, then
the amount payable by Connecticut Bancshares and/or Manchester pursuant to
Section 2(a) hereof shall be reduced by the amount which is the minimum
necessary to result in no portion of the payment payable by Connecticut
Bancshares and/or Manchester under Section 2(a) being non-deductible to
Connecticut Bancshares and/or Manchester (or any successors thereto) pursuant to
Section 280G of the Code and subject to the excise tax imposed under Section
4999 of the Code. The parties hereto agree that the present value of the
payments and benefits payable pursuant to this Agreement to the Executive upon
termination of the Executive's employment pursuant to Section 2(a) shall not
exceed three times the Executive's "base amount," as that term is defined in
Section 280G(b)(3) of the Code, less one dollar. The determination of any
reduction in the payment to be made pursuant to Section 2(a) shall be based upon
an analysis prepared by Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P. ("EMTH") and paid
for by New Haven. EMTH shall provide its analysis no later than five (5) days
prior to the Effective Date of the Merger, and may use such actuaries as it may
deem necessary or advisable for the purpose.
(c) On the Effective Date of the Merger, Connecticut Bancshares and/or
Manchester shall pay to the Executive a lump sum cash amount equal to his vested
benefit under the SERP and his vested benefit under the Supplemental Agreement,
provided that none of such amount is deemed to be a parachute payment under
Section 280G of the Code.
3. PAYMENT OF WELFARE BENEFITS.
---------------------------
(a) For a period of thirty-six (36) full calendar months following the
Effective Date of the Merger, New Haven agrees to cause to be continued life,
health, dental and disability coverage pursuant to the policies offered to its
employees for the Executive and any of his dependents covered by Connecticut
Bancshares or Manchester immediately prior to the Effective Date of the Merger,
except as set forth in Section 3(b) below. During such thirty-six (36) full
calendar month period, the Executive shall continue to be responsible for paying
the employee share of any premiums, copayments or deductibles. In the event the
Executive's participation in any such plan or program is barred, New Haven shall
arrange to provide the Executive and his dependents with benefits substantially
similar to those which the Executive and his dependents would otherwise have
received under such plans and programs from which their continued participation
is barred or provide their economic equivalent.
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(b) In lieu of receiving one or more of the coverages specified in
Section 3(a) above, the Executive may elect to receive a cash payment equal to
the present value of the cost to New Haven of providing such coverage, in which
event (i) Section 3(a) shall no longer require such coverage to be provided by
New Haven, (ii) the cash payment in lieu of such coverage shall be included in
the amount set forth in Section 2(a)(i) hereof, and (iii) the present value of
such coverage shall not be included in the deduction specified in Section
2(a)(ii) hereof. If the Executive desires to receive a cash payment in lieu of
receiving one or more of the coverages specified in Section 3(a) above, the
Executive shall give written notice of such election to New Haven on or before
December 31, 2003.
(c) The value of the benefits to be provided by New Haven pursuant to
Section 3(a) above shall be discounted to present value in accordance with
Section 280G of the Code, and an amount equal to 33% of such present value shall
be added to the present value amount to cover anticipated premium increases over
the 36 month period specified in Section 2(a) above. The present value
calculations shall be based on the discount rates published by the Internal
Revenue Service for the month in which the Effective Date of the Merger occurs.
The aggregate present value of the coverages actually provided by New Haven
pursuant to Section 3(a) hereof (excluding those coverages, if any, which the
Executive has elected to receive a cash payment in lieu of such coverage), as
determined as of the Effective Date of the Merger and as increased by the 33%
factor set forth in the first sentence of this Section 3(c), is referred to
herein as the "Initial Present Value Amount."
(d) In the event the costs to New Haven of providing the benefits set
forth in Section 3(a) (excluding those coverages, if any, which the Executive
has elected to receive a cash payment in lieu of such coverage) increase due to
increases in premiums or otherwise and the effect of such increase is to
increase the present value of the benefits provided by New Haven above the
Initial Present Value Amount (the "Adjusted Present Value Amount"), then the
Executive shall elect to either reduce one or more of his insurance coverages or
pay a higher share of the total premium cost so that the Adjusted Present Value
Amount does not exceed the Initial Present Value Amount.
4. AMENDMENTS TO THE EMPLOYMENT AGREEMENTS. Each of Section 5(c) of the
---------------------------------------
Bank Employment Agreement and Section 5(c) of the Company Employment Agreement
is hereby amended, effective as of the date of this Agreement, by revising the
second sentence of such section to read in its entirety as follows:
"In determining Executive's average annual
compensation, annual compensation shall include Base Salary
and any other taxable income, including but not limited to
amounts related to the granting, vesting or exercise of
restricted stock or stock option awards, commissions, bonuses,
pension, profit sharing and employee stock ownership plan
contributions or benefits (whether pursuant to a tax-qualified
plan or a deferred compensation arrangement and whether or not
taxable), severance payments, retirement benefits, director or
committee fees and
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fringe benefits paid or to be paid to Executive or paid for
Executive's benefit during any such year, except that
compensation in 2003 shall not include amounts related to (1)
any granting or vesting of restricted stock awards after
October 31, 2003, (2) the granting, vesting or exercise of
stock options, (3) the income resulting from the disqualifying
disposition of shares received upon the exercise of incentive
stock options, (4) any payment to the Executive in 2003 of a
bonus for services rendered in 2003, or (5) any other income
(whether taxable or not) not included in the amounts shown
under "Severance Calculation" on Exhibit 1 attached hereto."
5. AMENDMENTS TO THE SERP. Section 4.01 of the SERP is hereby amended,
----------------------
effective as of the date of this Agreement, by adding Section 4.01(c) at the end
of such Section to read in its entirety as follows:
"(c) Notwithstanding the foregoing, the Supplemental ESOP
Benefit shall exclude compensation in 2003 related to (1) the
granting or vesting of restricted stock awards after October
31, 2003, (2) the granting, vesting or exercise of stock
options, (3) the income resulting from the disqualifying
disposition of shares received upon the exercise of incentive
stock options, (4) any payment to the Executive in 2003 of a
bonus for services rendered in 2003, or (5) any other income
(whether taxable or not) not included in the amounts shown
under "Severance Calculation" on Exhibit 1 attached hereto."
Section 4.03 of the SERP is hereby amended, effective as of the date of
this Agreement, by adding the following new paragraph at the end of such
Section:
"Notwithstanding the foregoing, the Supplemental Pension Benefit shall
exclude compensation in 2003 related to (1) the granting or vesting of
restricted stock awards after October 31, 2003, (2) the granting,
vesting or exercise of stock options, (3) the income resulting from the
disqualifying disposition of shares received upon the exercise of
incentive stock options, (4) any payment to the Executive in 2003 of a
bonus for services rendered in 2003, or (5) any other income (whether
taxable or not) not included in the amounts shown under "Severance
Calculation" on Exhibit 1 attached hereto. Consequently, the Change in
Control provisions under the First Amendment to the SERP, as signed on
October 21, 2002 and effective on January 1, 2002, shall be
inapplicable in 2003."
Section 4.04 of the SERP is hereby amended, effective as of the date of
this Agreement, by adding Section 4.04(c) at the end of such Section to read in
its entirety as follows:
"(c) Notwithstanding the foregoing, the Supplemental Savings
Benefit shall exclude compensation in 2003 related to (1) the
granting or vesting of restricted stock awards after October
31, 2003, (2) the granting, vesting or exercise of stock
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options, (3) the income resulting from the disqualifying
disposition of shares received upon the exercise of incentive
stock options, (4) any payment to the Executive in 2003 of a
bonus for services rendered in 2003, or (5) any other income
(whether taxable or not) not included in the amounts shown
under "Severance Calculation" on Exhibit 1 attached hereto."
6. AMENDMENT TO THE SUPPLEMENTAL AGREEMENT. Section 2 of the
------------------------------------------
Supplemental Agreement is hereby amended, effective as of the
date of this Agreement, by adding the following new paragraph
at the end of such Section:
"Notwithstanding the foregoing, the amount of the supplemental
pension benefit shall exclude compensation in 2003 related to (1) the
granting or vesting of restricted stock awards after October 31, 2003,
(2) the granting, vesting or exercise of stock options, (3) the income
resulting from the disqualifying disposition of shares received upon
the exercise of incentive stock options, (4) any payment to the
Executive in 2003 of a bonus for services rendered in 2003, or (5) any
other income (whether taxable or not) not included in the amounts shown
under "Severance Calculation" on Exhibit 1 attached hereto.
Consequently, the Change in Control provisions under the First
Amendment to the Supplemental Agreement, dated October 21, 2002, shall
be inapplicable in 2003."
7. RELEASES.
--------
(a) Upon payment of the amounts set forth in Sections 2(a) (as
such amount may be adjusted pursuant to Section 2(b) hereof) and Section 2(d)
hereof, the Executive, for himself and for his heirs, successors and assigns,
does hereby release completely and forever discharge Connecticut Bancshares,
Manchester and their successors from any obligation under the Bank Employment
Agreement, the Company Employment Agreement, the SERP and the Supplemental
Agreement, provided that, notwithstanding the foregoing, the Executive does not
hereby release Connecticut Bancshares, Manchester and their successors from any
obligation to the Executive under Sections 5(h), (i) and (j) of the Bank
Employment Agreement and the Company Employment Agreement with respect to
payments by them to the Executive (except as set forth in Section 2(b) hereof),
which the parties hereto agree shall remain in full force and effect. The
obligations of New Haven to provide benefits pursuant to Section 3 above shall
continue for the period specified therein.
(b) For and in consideration of the commitments made herein by
the Executive, each of Connecticut Bancshares and Manchester for itself, and for
its successors and assigns, does hereby release completely and forever discharge
the Executive and his heirs, successors and assigns, to the fullest extent
permitted by applicable law, from any obligation under the Bank Employment
Agreement and the Company Employment Agreement, provided that, notwithstanding
the foregoing, Connecticut Bancshares and Manchester (and their successors) do
not hereby release the Executive from any obligation under Sections 5(j), 9 and
10(b) of the Bank Employment Agreement and the Company Employment Agreement.
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8. GENERAL.
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(A) HEIRS, SUCCESSORS AND ASSIGNS. The terms of this Agreement shall be
-----------------------------
binding upon the parties hereto and their respective heirs, successors and
assigns.
(B) FINAL AGREEMENT. This Agreement represents the entire understanding
---------------
of the parties with respect to the subject matter hereof and supersedes all
prior understandings, written or oral. The terms of this Agreement may be
changed, modified or discharged only by an instrument in writing signed by each
of the parties hereto.
(C) GOVERNING LAW. This Agreement shall be construed, enforced and
--------------
interpreted in accordance with and governed by the laws of the State of
Connecticut, without reference to its principles of conflicts of law, except to
the extent that federal law shall be deemed to preempt such state laws.
(D) DEFINED TERMS. Any capitalized terms not defined in this Agreement
-------------
shall have as their meaning the definitions contained in the Merger Agreement.
(E) VOLUNTARY ACTION AND WAIVER. The Executive acknowledges that by his
---------------------------
free and voluntary act of signing below, the Executive agrees to all of the
terms of this Agreement and intends to be legally bound thereby. The Executive
acknowledges that he has been advised to consult with an attorney prior to
executing this Agreement.
9. EFFECTIVENESS. Notwithstanding anything to the contrary contained
-------------
herein, this Agreement shall be subject to consummation of the Merger in
accordance with the terms of the Merger Agreement, as the same may be amended by
the parties thereto in accordance with its terms. In the event the Merger
Agreement is terminated for any reason, this Agreement shall be deemed null and
void.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Connecticut Bancshares, Manchester and New Haven
have each caused this Agreement to be executed by their duly authorized
officers, and the Executive has signed this Agreement, effective as of the date
first above written.
WITNESS: EXECUTIVE:
________________________________ ____________________________________
Name: __________________________ Name: ______________________________
Title: _____________________________
ATTEST: CONNECTICUT BANCSHARES, INC.
______________________________ By:_______________________________
Name:_________________________ Name: ____________________________
Title: ___________________________
ATTEST: THE SAVINGS BANK OF
MANCHESTER
______________________________ By:_______________________________
Name:_________________________ Name: ____________________________
Title: ___________________________
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ATTEST: THE NEW HAVEN SAVINGS BANK
______________________________ By:_______________________________
Name: ________________________ Name: Xxxxxx X. Xxxxxxxxx
Title: Chairman, President and CEO
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EXHIBIT D-2
[FORM OF TERMINATION AND RELEASE AGREEMENT]
TERMINATION AND RELEASE AGREEMENT
This Termination and Release Agreement (this "Agreement") is entered
into as of July 15, 2003 by and among ____________________ (the "Executive"),
Connecticut Bancshares, Inc., a Delaware corporation ("Connecticut Bancshares"),
The Savings Bank of Manchester, a Connecticut savings bank and a wholly-owned
subsidiary of Connecticut Bancshares ("Manchester"), and The New Haven Savings
Bank, a Connecticut mutual savings bank ("New Haven").
RECITALS
--------
WHEREAS, New Haven, Connecticut Bancshares and Manchester have entered
into an Agreement and Plan of Merger, dated as of July 15, 2003 (the "Merger
Agreement"); and
WHEREAS, Section 7.6.5 of the Merger Agreement provides that New Haven,
Connecticut Bancshares, Manchester and the Executive shall enter into this
Agreement which shall terminate the Change in Control Agreement between the
Executive, Connecticut Bancshares and Manchester dated ___________, ____ (the
"Control Agreement") as of the Effective Date of the Merger, and in lieu of any
rights and payments under said Control Agreement, the Executive shall be
entitled to the rights and payments set forth herein.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the Executive, Connecticut Bancshares, Manchester and New Haven
agree as follows:
1. CERTAIN ACTIONS TO BE TAKEN IN 2003.
-----------------------------------
(a) The Executive hereby agrees to take the following actions between
the date hereof and December 31, 2003, it being the intention of the parties
hereto that all of such actions shall be fully effective and consummated no
later than December 31, 2003:
(i) exercise all vested non-qualified stock options granted to the
Executive under Connecticut Bancshares' 2000 Stock-Based Incentive Plan (the
"Incentive Plan") and 2002 Equity Compensation Plan (the "Compensation Plan"),
including non-qualified stock options scheduled to vest prior to December 31,
2003 (i.e., all vested non-qualified options under either plan to be exercised);
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(ii) both (A) exercise all vested incentive stock options granted to
the Executive under the Incentive Plan and/or the Compensation Plan (including
incentive stock options scheduled to vest prior to December 31, 2003) and (B)
effect a sale of all of the shares of Connecticut Bancshares' common stock
acquired upon such exercise (including shares acquired upon the exercise of
incentive stock options in 2003 prior to the date of this Agreement if such
shares have not been sold prior to the date hereof) in a manner that will
constitute a "disqualifying disposition" of such shares for purposes of Section
421(b) of the Code (i.e., all vested incentive options under either plan to be
exercised, with the underlying shares sold);
(iii) agree to the accelerated vesting as of December 31, 2003 of all
then unvested restricted stock awards granted to the Executive under the
Incentive Plan and/or the Compensation Plan (i.e., all unvested restricted stock
awards under either plan to be accelerated); and
(iv) accept payment on December 31, 2003 of any cash bonus to which the
Executive may be entitled to receive pursuant to Manchester's Bonus Plan for
services rendered in 2003 and which otherwise would be payable in the ordinary
course by Manchester to the Executive in 2004.
(b) Connecticut Bancshares and Manchester agree to take such actions as
may be necessary or advisable by them in order to permit the Executive to take
the actions set forth in Section 1(a) above and have them be fully effective and
consummated no later than December 31, 2003, including without limitation (i)
promptly processing all exercises of stock options by the Executive under the
Incentive Plan and/or the Compensation Plan, (ii) accelerating to December 31,
2003 the vesting of all then unvested restricted stock awards granted to the
Executive under the Incentive Plan and/or the Compensation Plan, and (iii)
accelerating the payment of any cash bonus to which the Executive may be
entitled to receive pursuant to Manchester's Bonus Plan for services rendered in
2003 to December 31, 2003.
2. ACKNOWLEDGEMENT OF PAYMENT, RELEASE AND WAIVER.
----------------------------------------------
(a) On the Effective Date of the Merger, provided the Executive is
still employed by Manchester immediately prior to such date and has taken all of
the actions set forth in Section 1(a) hereof, Connecticut Bancshares and/or
Manchester shall pay to the Executive an amount equal to (i)
__________________dollars ($______), subject to adjustment as set forth in
Section 2(b) below (the "Maximum Amount"), minus (ii) the Initial Present Value
Amount (as defined in Section 3(c) below) of the welfare benefits to be provided
to the Executive pursuant to Section 3(a) below, with applicable withholding
taxes to be subtracted from the amount payable to the Executive. In
consideration of such payment, the Executive, Connecticut Bancshares, Manchester
and New Haven hereby agree that, except as provided in Section 4 below, the
Control Agreement shall be terminated without any further action of any parties
hereto, effective immediately prior to the Effective Date of the Merger.
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100
(b) If the payment pursuant to Section 2(a) hereof, either alone or
together with other payments and benefits which the Executive has the right to
receive from Connecticut Bancshares, Manchester or New Haven, would constitute a
"parachute payment" under Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), including but not limited to the parachute payments
associated with the accelerated vesting of stock options and restricted stock
awards, then the amount payable by Connecticut Bancshares and/or Manchester
pursuant to Section 2(a) hereof shall be reduced by the amount which is the
minimum necessary to result in no portion of the payment payable by Connecticut
Bancshares and/or Manchester under Section 2(a) being non-deductible to
Connecticut Bancshares and/or Manchester (or any successors thereto) pursuant to
Section 280G of the Code and subject to the excise tax imposed under Section
4999 of the Code. The parties hereto agree that the present value of the
payments and benefits payable pursuant to this Agreement to the Executive upon
termination of the Executive's employment pursuant to Section 2(a) shall not
exceed three times the Executive's "base amount," as that term is defined in
Section 280G(b)(3) of the Code, less one dollar. The determination of any
reduction in the payment to be made pursuant to Section 2(a) shall be based upon
an analysis prepared by Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P. ("EMTH") and paid
for by New Haven. EMTH shall provide its analysis no later than five (5) days
prior to the Effective Date of the Merger, and may use such actuaries as it may
deem necessary or advisable for the purpose.
3. PAYMENT OF WELFARE BENEFITS.
---------------------------
(a) For a period of thirty-six (36) full calendar months following the
Effective Date of the Merger, New Haven agrees to cause to be continued life,
medical and disability coverage pursuant to the policies offered to its
employees for the Executive and any of the Executive's dependents covered by
Connecticut Bancshares or Manchester immediately prior to the Effective Date of
the Merger, except as set forth in Section 3(b) below. During such thirty-six
(36) full calendar month period, the Executive shall continue to be responsible
for paying the employee share of any premiums, copayments or deductibles. In the
event the Executive's participation in any such plan or program is barred, New
Haven shall arrange to provide the Executive and the Executive's covered
dependents with benefits similar to those which the Executive and the
Executive's covered dependents would otherwise have received under such plans
and programs from which their continued participation is barred or provide their
economic equivalent.
(b) In lieu of receiving one or more of the coverages specified in
Section 3(a) above, the Executive may elect to receive a cash payment equal to
the present value of the cost to New Haven of providing such coverage, in which
event (i) Section 3(a) shall no longer require such coverage to be provided by
New Haven, (ii) the cash payment in lieu of such coverage shall be included in
the amount set forth in Section 2(a)(i) hereof, and (iii) the present value of
such coverage shall not be included in the deduction specified in Section
2(a)(ii) hereof. If the Executive desires to receive a cash payment in lieu of
receiving one or more of the coverages specified in Section 3(a) above, the
Executive shall give written notice of such election to New Haven on or before
December 31, 2003.
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(c) The value of the benefits to be provided by New Haven pursuant to
Section 3(a) above shall be discounted to present value in accordance with
Section 280G of the Code, and an amount equal to 33% of such present value shall
be added to the present value amount to cover anticipated premium increases over
the 36 month period specified in Section 3(a) above. The present value
calculations shall be based on the discount rates published by the Internal
Revenue Service for the month in which the Effective Date of the Merger occurs.
The aggregate present value of the coverages actually provided by New Haven
pursuant to Section 3(a) hereof (excluding those coverages, if any, which the
Executive has elected to receive a cash payment in lieu of such coverage), as
determined as of the Effective Date of the Merger and as increased by the 33%
factor set forth in the first sentence of this Section 3(c), is referred to
herein as the "Initial Present Value Amount."
(d) In the event the costs to New Haven of providing the benefits set
forth in Section 3(a) (excluding those coverages, if any, which the Executive
has elected to receive a cash payment in lieu of such coverage) increase due to
increases in premiums or otherwise and the effect of such increase is to
increase the present value of the benefits provided by New Haven above the
Initial Present Value Amount (the "Adjusted Present Value Amount"), then the
Executive shall elect to either reduce one or more of his insurance coverages or
pay a higher share of the total premium cost so that the Adjusted Present Value
Amount does not exceed the Initial Present Value Amount.
4. AMENDMENT TO THE CONTROL AGREEMENT. Section 3(a) of the Control
------------------------------------
Agreement is hereby amended, effective as of the date of this Agreement, by
revising the second sentence of such section to read in its entirety as follows:
"Such average annual compensation shall include base
salary and any other taxable income, including but not limited
to amounts related to the granting, vesting or exercise of
restricted stock or stock option awards, commissions, bonuses,
pension and profit sharing plan contributions or benefits
(whether or not taxable), severance payments, retirement
benefits, and fringe benefits paid or to be paid to Executive
or paid for Executive's benefit during any such year, except
that compensation in 2003 shall not include amounts related to
(1) the granting or vesting of restricted stock awards after
October 31, 2003, (2) the granting, vesting or exercise of
stock options, (3) the income resulting from the disqualifying
disposition of shares received upon the exercise of incentive
stock options, (4) any payment to the Executive in 2003 of a
bonus for services rendered in 2003, or (5) any other income
(whether taxable or not) not included in the amounts shown
under "Severance Calculation" on Exhibit 1 attached hereto."
5. RELEASES. Upon payment of the amount set forth in Section 2(a)
--------
hereof, as such amount may be adjusted pursuant to Section 2(b) hereof, the
Executive, for himself and for his heirs, successors and assigns, does hereby
release completely and forever discharge Connecticut
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Bancshares, Manchester and their successors from any obligation under the
Control Agreement. The obligations of New Haven to provide benefits pursuant to
Section 3 above shall continue for the period specified therein.
6. GENERAL.
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(A) HEIRS, SUCCESSORS AND ASSIGNS. The terms of this Agreement shall be
-----------------------------
binding upon the parties hereto and their respective heirs, successors and
assigns.
(B) FINAL AGREEMENT. This Agreement represents the entire understanding
---------------
of the parties with respect to the subject matter hereof and supersedes all
prior understandings, written or oral. The terms of this Agreement may be
changed, modified or discharged only by an instrument in writing signed by each
of the parties hereto.
(C) GOVERNING LAW. This Agreement shall be construed, enforced and
--------------
interpreted in accordance with and governed by the laws of the State of
Connecticut, without reference to its principles of conflicts of law, except to
the extent that federal law shall be deemed to preempt such state laws.
(D) DEFINED TERMS. Any capitalized terms not defined in this Agreement
-------------
shall have as their meaning the definitions contained in the Merger Agreement.
(E) VOLUNTARY ACTION AND WAIVER. The Executive acknowledges that by his
---------------------------
or her free and voluntary act of signing below, the Executive agrees to all of
the terms of this Agreement and intends to be legally bound thereby. The
Executive acknowledges that he or she has been advised to consult with an
attorney prior to executing this Agreement.
6. EFFECTIVENESS. Notwithstanding anything to the contrary contained
-------------
herein, this Agreement shall be subject to consummation of the Merger in
accordance with the terms of the Merger Agreement, as the same may be amended by
the parties thereto in accordance with its terms. In the event the Merger
Agreement is terminated for any reason, this Agreement shall be deemed null and
void.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Connecticut Bancshares, Manchester and New Haven
have each caused this Agreement to be executed by their duly authorized
officers, and the Executive has signed this Agreement, effective as of the date
first above written.
WITNESS: EXECUTIVE:
___________________________________ ____________________________________
Name: _____________________________ Name: ______________________________
Title: _____________________________
ATTEST: CONNECTICUT BANCSHARES, INC.
___________________________________ ____________________________________
Name: _____________________________ Name: ______________________________
Title: _____________________________
ATTEST: THE SAVINGS BANK OF
MANCHESTER
___________________________________ ____________________________________
Name: _____________________________ Name: ______________________________
Title: _____________________________
ATTEST: THE NEW HAVEN SAVINGS BANK
______________________________ By:_________________________________
Name: ________________________ Name: Xxxxxx X. Xxxxxxxxx
Title: Chairman, President and CEO
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EXHIBIT E
[FORM OF NONCOMPETITION AGREEMENT]
NONCOMPETITION AGREEMENT
This Agreement (this "Agreement") is entered into as of July 15, 2003,
by and between The New Haven Savings Bank, a Connecticut-chartered mutual
savings bank ("New Haven"), and ___________________ (the "Executive"), _________
of Connecticut Bancshares, Inc., a Delaware corporation ("Connecticut
Bancshares"), and _______________________ [LIST TITLES] of The Savings Bank of
Manchester, a Connecticut savings bank and a wholly-owned subsidiary of
Connecticut Bancshares ("Manchester").
RECITALS:
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of July
15, 2003 (the "Merger Agreement"), by and among New Haven, Connecticut
Bancshares and Manchester, the following will occur (except as contemplated by
Section 2.9 of the Merger Agreement): (i) New Haven will convert to a stock
bank/stock holding company form of organization and in connection therewith will
form a new Delaware corporation ("NEWCO"),which shall become the parent holding
company of New Haven; (ii) NEWCO will form an interim subsidiary as a Delaware
corporation ("Interim"), and Connecticut Bancshares will merge with and into
Interim (the "Merger"), with Connecticut Bancshares being the surviving entity
(the "Interim Surviving Corporation"); and (iii) immediately following the
Merger, Manchester will merge with and into New Haven, with New Haven being the
surviving entity (the "Bank Merger") (the Merger and the Bank Merger are
collectively referred to herein as the "Mergers");
WHEREAS, the Executive is the _________ and _______________________ of
Connecticut Bancshares and Manchester and as a result of the Mergers will no
longer hold such positions; and
WHEREAS, the parties hereto recognize and acknowledge the interest of
New Haven in protecting the business and goodwill associated with Connecticut
Bancshares, Manchester and New Haven following the Mergers by having the
Executive enter into this Agreement.
NOW THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Any capitalized terms not defined in this Agreement shall have as
their meanings the definitions contained in the Merger Agreement.
2. The Executive agrees that during the ___-month period following the
Effective Date of the Merger, the Executive will not, directly or indirectly,
(i) become a director, officer,
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105
employee, shareholder, principal, agent, consultant or independent contractor of
any insured depository institution, trust company or parent holding company of
any such institution or company which has an office in any of Fairfield,
Hartford, Litchfield, Middlesex, New Haven, New London, Tolland or Xxxxxxx
Counties in the State of Connecticut or Kent, Providence or Washington Counties
in the State of Rhode Island (collectively, the "Counties" and individually a
"County") or in the New York, New York Primary Metropolitan Statistical Area
("PMSA"), or any other entity whose business in the aforesaid Counties or PMSA
materially competes with the depository, lending or other business activities of
New Haven or its subsidiaries or affiliates (in each case, a "Competing
Business"), provided, however, that this provision shall not prohibit the
Executive from owning bonds, non-voting preferred stock or up to five percent
(5%) of the outstanding common stock of any such entity if such common stock is
publicly traded, (ii) solicit or induce, or cause others to solicit or induce,
any employee of New Haven or any of its subsidiaries to leave the employment of
such entities, or (iii) solicit (whether by mail, telephone, personal meeting or
any other means) any customer of New Haven or any of its subsidiaries to
transact business with any other entity, whether or not a Competing Business, or
to reduce or refrain from doing any business with New Haven or its subsidiaries,
or interfere with or damage (or attempt to interfere with or damage) any
relationship between New Haven or its subsidiaries and any such customers.
3. In consideration of the obligations and commitments of the Executive
under this Agreement, New Haven shall pay to the Executive an amount equal to
____________________ dollars ($_______) on the Effective Date of the Merger,
with applicable withholding taxes to be subtracted from such amount.
4. Notwithstanding any other provision hereof, the Executive agrees to
treat as confidential all information (excluding, however, information contained
in publicly available reports filed by New Haven or any parent holding company
with any governmental entity and information published or disclosed to the
public by a third party) concerning the records, properties, books, contracts,
commitments and affairs of New Haven and/or its subsidiaries and affiliates,
including but not limited to, information regarding accounts, shareholders,
finances, strategies, marketing, customers and potential customers (their
identities, preferences, likes and dislikes) and other information of a similar
nature not available to the public.
5. The term of this Agreement shall expire _______ months after the
Effective Date of the Merger.
6. No rights under this Agreement shall be assignable nor duties
delegable by either party, except that New Haven may assign any of its rights
hereunder to any acquiror of all or substantially all of the assets of New
Haven. This Agreement will inure to the benefit of and be binding upon any
successor to New Haven by merger or consolidation or any other change in form or
any other person or firm or entity to which all or substantially all of the
assets and business of New Haven may be sold or otherwise transferred. Nothing
contained in this Agreement is intended to confer upon any person or entity,
other than the parties hereto, their successors in interest and permitted
transferees, any rights or remedies under or by reason of this Agreement unless
expressly so stated to the contrary.
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000
0. This Agreement shall be construed, enforced and interpreted in
accordance with and governed by the laws of the State of Connecticut, without
reference to its principles of conflict of laws, except to the extent that
federal law shall be deemed to preempt such state laws.
8. It is the intention of the parties hereto that the provisions of
this Agreement shall be enforced to the fullest extent permissible under all
applicable laws and public policies, but that the unenforceability or the
modification to conform with such laws or public policies of any provision
hereof shall not render unenforceable or impair the remainder of the Agreement.
The covenants in Section 2 of this Agreement with respect to the Counties and
the PMSA shall be deemed to be separate covenants with respect to each County
and PMSA, and should any court of competent jurisdiction conclude or find that
this Agreement or any portion is not enforceable with respect to any of the
Counties or PMSA, such conclusion or finding shall in no way render invalid or
unenforceable the covenants herein with respect to any other County or PMSA.
Accordingly, if any provision shall be determined to be invalid or unenforceable
either in whole or in part, this Agreement shall be deemed amended to delete or
modify as necessary the invalid or unenforceable provisions to alter the balance
of this Agreement in order to render the same valid and enforceable.
9. The Executive acknowledges that New Haven would not have entered
into the Merger Agreement or intend to consummate the Mergers unless the
Executive had, among other things, entered into this Agreement. Any breach of
this Agreement will result in irreparable damage to New Haven for which New
Haven will not have an adequate remedy at law. In addition to any other remedies
and damages available to New Haven, the Executive further acknowledges that New
Haven shall be entitled to injunctive relief hereunder to enjoin any breach of
this Agreement, and the parties hereby consent to an injunction in favor of New
Haven by any court of competent jurisdiction, without prejudice to any other
right or remedy to which New Haven may be entitled. The Executive represents and
acknowledges that, in light of his experience and capabilities, the Executive
can obtain employment with other than a Competing Business or in a business
engaged in other lines and/or of a different nature than those engaged in by New
Haven or its subsidiaries or affiliates, and that the enforcement of a remedy by
way of injunction will not prevent the Executive from earning a livelihood. In
the event of a breach of this Agreement by the Executive, the Executive
acknowledges that in addition to or in lieu of New Haven seeking injunctive
relief, New Haven may also seek to recoup any or all amounts paid by New Haven
to the Executive pursuant to Section 3 hereof. Each of the remedies available to
New Haven in the event of a breach by the Executive shall be cumulative and not
mutually exclusive.
10. If an action is instituted to enforce any of the provisions of this
Agreement, the prevailing party in such action shall be entitled to recover from
the losing party its, her or his reasonable attorneys' fees and costs.
11. Notwithstanding anything to the contrary contained in this
Agreement, the effectiveness of this Agreement shall be subject to consummation
of the Mergers in accordance with the terms of the Merger Agreement, as the same
may be amended by the parties thereto in accordance with its terms. In the event
the Merger Agreement is terminated for any reason, this Agreement shall be
deemed null and void.
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107
IN WITNESS WHEREOF, New Haven has caused this Agreement to be executed
by its duly authorized officer, and the Executive has signed this Agreement,
effective as of the date first above written.
WITNESS: EXECUTIVE:
_________________________________ ____________________________________
Name:
_________________________________ Name: _____________________________
Title: _____________________________
ATTEST: THE NEW HAVEN SAVINGS BANK
________________________________ By:________________________________
Name:___________________________ Name: Xxxxxx X. Xxxxxxxxx
Title: Chairman, President and CEO
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