EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
XXXXXXX FINANCIAL CORPORATION
AND
MECH FINANCIAL, INC.
DATED AS OF
DECEMBER 1, 1999
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER..............................................................................................1
1.1 The Merger.........................................................................................1
1.2 Effective Time.....................................................................................1
1.3 Effects of the Merger..............................................................................2
1.4 Conversion of MECH Common Stock....................................................................2
1.5 Options............................................................................................3
1.6 Certificate of Incorporation.......................................................................4
1.7 Bylaws.............................................................................................4
1.8 Directors and Officers.............................................................................4
1.9 Tax Consequences...................................................................................4
1.10 Accounting Treatment...............................................................................4
ARTICLE II EXCHANGE OF SHARES.....................................................................................5
2.1 Webster to Make Shares Available...................................................................5
2.2 Exchange of Shares.................................................................................5
2.3 Disclosure Schedule................................................................................6
2.4 Standards..........................................................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF MECH................................................................7
3.1 Corporate Organization.............................................................................7
3.2 Capitalization.....................................................................................7
3.3 Authority; No Violation............................................................................8
3.4 Consents and Approvals.............................................................................9
3.5 Loan Portfolio; Reports...........................................................................10
3.6 Financial Statements; Exchange Act Filings; Books and Records.....................................10
3.7 Broker's Fees.....................................................................................11
3.8 Absence of Certain Changes or Events..............................................................11
3.9 Legal Proceedings.................................................................................11
3.10 Taxes and Tax Returns.............................................................................11
3.11 Employee Plans....................................................................................13
3.12 Certain Contracts.................................................................................14
3.13 Agreements with Governmental Agencies.............................................................14
3.14 State Takeover Laws; Certificate of Incorporation.................................................14
3.15 Environmental Matters.............................................................................15
3.16 Reserves for Losses...............................................................................16
3.17 Properties and Assets.............................................................................16
3.18 Insurance.........................................................................................17
3.19 Mechanics Investment Services, Inc................................................................17
3.20 Compliance with Applicable Laws...................................................................17
3.21 Loans.............................................................................................17
3.22 Affiliates........................................................................................18
3.23 Ownership of Webster Common Stock.................................................................19
3.24 Year 2000 Compliance..............................................................................19
3.25 Intellectual Property.............................................................................19
3.26 MECH Information..................................................................................19
3.27 Fairness Opinion..................................................................................20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF WEBSTER.............................................................20
4.1 Corporate Organization............................................................................20
4.2 Capitalization....................................................................................20
4.3 Authority; No Violation...........................................................................21
4.4 Regulatory Approvals..............................................................................22
4.5 Financial Statements; Exchange Act Filings; Books and Records.....................................22
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4.6 Agreements with Governmental Agencies.............................................................23
4.7 Legal Proceedings.................................................................................23
4.8 Webster Information...............................................................................23
4.9 Absence of Certain Changes or Events..............................................................23
4.10 Compliance with Applicable Laws...................................................................24
4.11 Tax and Accounting Treatment of Merger............................................................24
4.12 Year 2000.........................................................................................24
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS..............................................................24
5.1 Covenants of MECH.................................................................................24
5.2 Covenants of Webster..............................................................................27
5.3 Merger Covenants..................................................................................28
5.4 Compliance with Antitrust Laws....................................................................28
5.5 Qualified Plans...................................................................................28
ARTICLE VI ADDITIONAL AGREEMENTS.................................................................................28
6.1 Regulatory Matters................................................................................28
6.2 Access to Information.............................................................................30
6.3 Shareholder Meetings..............................................................................31
6.4 Legal Conditions to Merger........................................................................31
6.5 Stock Exchange Listing............................................................................31
6.6 Employees.........................................................................................31
6.7 Indemnification...................................................................................32
6.8 Subsequent Interim and Annual Financial Statements................................................33
6.9 Additional Agreements.............................................................................34
6.10 Advice of Changes.................................................................................34
6.11 Current Information...............................................................................34
6.12 Execution and Authorization of Bank Merger Agreement..............................................34
6.13 Change in Structure...............................................................................34
6.14 Transaction Expenses of MECH......................................................................35
6.15 Further Actions of MECH...........................................................................35
6.16 Publication of Earnings...........................................................................35
ARTICLE VII CONDITIONS PRECEDENT.................................................................................36
7.1 Conditions to Each Party's Obligation To Effect the Merger........................................36
7.2 Conditions to Obligations of Webster..............................................................37
7.3 Conditions to Obligations of MECH.................................................................38
ARTICLE VIII TERMINATION AND AMENDMENT...........................................................................39
8.1 Termination.......................................................................................39
8.2 Effect of Termination.............................................................................42
8.3 Amendment.........................................................................................42
8.4 Extension; Waiver.................................................................................42
ARTICLE IX GENERAL PROVISIONS....................................................................................42
9.1 Closing...........................................................................................42
9.2 Nonsurvival of Representations, Warranties and Agreements.........................................42
9.3 Expenses; Breakup Fee.............................................................................43
9.4 Notices...........................................................................................43
9.5 Interpretation....................................................................................44
9.6 Counterparts......................................................................................44
9.7 Entire Agreement..................................................................................44
9.8 Governing Law.....................................................................................45
9.9 Enforcement of Agreement..........................................................................45
9.10 Severability......................................................................................45
9.11 Publicity.........................................................................................45
9.12 Assignment; Limitation of Benefits................................................................45
9.13 Additional Definitions............................................................................46
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EXHIBITS
A Articles of Combination and Bank Merger Agreement
B Option Agreement
C Certificate of Merger
D MECH Stockholder Agreement
E MECH Counsel's Legal Opinions
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of December 1, 1999 (this
"Agreement"), is entered into by and between Xxxxxxx Financial Corporation, a
Delaware corporation ("Webster") and MECH Financial, Inc., a Connecticut
corporation ("MECH").
WHEREAS, the Boards of Directors of Webster and MECH have determined
that it is advisable and in the best interests of their respective companies and
shareholders to consummate the business combination transaction provided for
herein in which MECH will, subject to the terms and conditions set forth herein,
merge with and into Webster, with Webster being the Surviving Corporation (as
hereinafter defined) (the "Merger");
WHEREAS, prior to the consummation of the Merger, Webster and MECH will
respectively cause Xxxxxxx Bank ("Xxxxxxx Bank"), a federally chartered savings
bank and wholly owned subsidiary of Webster, and Mechanics Savings Bank, a
Connecticut-chartered savings bank and wholly-owned subsidiary of MECH ("MS
Bank"), to enter into a merger agreement, in the form attached hereto as Exhibit
A (the "Bank Merger Agreement"), providing for the merger (the "Bank Merger") of
MS Bank with and into Xxxxxxx Bank, with Xxxxxxx Bank being the "Surviving Bank"
of the Bank Merger, and the Bank Merger to be consummated immediately after
consummation of the Merger;
WHEREAS, as an inducement to Webster to enter into this Agreement, MECH
will enter into an option agreement, in the form attached hereto as Exhibit B
(the "Option Agreement"), with Webster immediately following the execution of
this Agreement pursuant to which MECH will xxxxx Xxxxxxx an option to purchase,
under certain circumstances, an aggregate of 994,150 newly issued shares of
common stock, par value $.01 per share, of MECH ("MECH Common Stock") upon the
terms and conditions therein contained; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER.
Subject to the terms and conditions of this Agreement, in accordance
with the Delaware General Corporation Law (the "DGCL") and the State of
Connecticut Business Corporations Act, as amended (the "Connecticut Corporation
Law"), at the Effective Time (as defined in Section 1.2 hereof), MECH shall
merge into Webster, with Webster being the surviving corporation (hereinafter
sometimes called the "Surviving Corporation") in the Merger. Upon consummation
of the Merger, the corporate existence of MECH shall cease, and the Surviving
Corporation shall continue to exist as a Delaware corporation.
1.2 EFFECTIVE TIME.
The Merger shall become effective on the date and at the time set forth
in the certificate of merger (the "Certificate of Merger"), substantially in the
form attached as Exhibit C hereto, which shall be filed with the Secretaries of
State of the States of Connecticut and Delaware on or before the Closing
Date. The term "Effective Time" shall be the date and time when the Merger
becomes effective, as set forth in the Certificate of Merger.
1.3 EFFECTS OF THE MERGER.
At and after the Effective Time, the Merger shall have the effects set
forth in Sections 259 and 261 of the DGCL and Sections 33-820 and 33-821 of the
Connecticut Corporation Law.
1.4 CONVERSION OF MECH COMMON STOCK.
(a) At the Effective Time, subject to Sections 1.4(b), 1.4(c),
1.4(d) and 8.1(h) hereof, each share of MECH Common Stock issued and outstanding
prior to the Effective Time shall, by virtue of this Agreement and without any
action on the part of the holder thereof, be converted into and exchangeable for
1.52 shares of Webster common stock, par value $.01 per share ("Webster Common
Stock"). The number of shares of Webster Common Stock to be exchanged for each
share of MECH Common Stock issued and outstanding is hereinafter referred to as
the "Exchange Ratio."
(b) All of the shares of MECH Common Stock converted into
Webster Common Stock pursuant to this Article I shall no longer be outstanding
and shall automatically be canceled and shall cease to exist, and each
certificate (each a "Certificate") previously representing any such shares of
MECH Common Stock shall thereafter represent the right to receive (i) the number
of whole shares of Webster Common Stock and (ii) cash in lieu of fractional
shares into which the shares of MECH Common Stock represented by such
Certificate have been converted pursuant to Section 1.4(a) and Section 1.4(d)
hereof. Certificates previously representing shares of MECH Common Stock shall
be exchanged for certificates representing whole shares of Webster Common Stock
and cash in lieu of fractional shares issued in consideration therefor upon the
surrender of such Certificates in accordance with Section 2.2 hereof, without
any interest thereon. If, prior to the Effective Time, Webster should split or
combine the Webster Common Stock, or pay a dividend or other distribution in
such common stock, then the Exchange Ratio shall be appropriately adjusted to
reflect such split, combination, dividend or distribution.
(c) At the Effective Time, all shares of MECH Common Stock
that are owned by MECH as treasury stock and all shares of MECH Common Stock
that are owned directly or indirectly by Webster or MECH or any of their
respective Subsidiaries (other than shares of MECH Common Stock held directly or
indirectly in trust accounts, managed accounts and the like or otherwise held in
a fiduciary capacity that are beneficially owned by third parties (any such
shares, and shares of Webster Common Stock which are similarly held, whether
held directly or indirectly by Webster or MECH, as the case may be, being
referred to herein as "Trust Account Shares") and other than any shares of MECH
Common Stock held by Webster or MECH or any of their respective Subsidiaries in
respect of a debt previously contracted (any such shares of MECH Common Stock,
and shares of Webster Common Stock which are similarly held, whether held
directly or indirectly by Webster or MECH, being referred to herein as "DPC
Shares")) shall be canceled and shall cease to exist and no stock of Webster or
other consideration shall be delivered in exchange therefor. All shares of
Webster Common Stock that are owned by MECH or MS Bank (other than Trust Account
Shares and DPC Shares) shall become treasury stock of Webster.
(d) Certificates for fractions of shares of Webster Common
Stock will not be issued. In lieu of a fraction of a share of Webster Common
Stock, each holder of MECH Common Stock otherwise entitled to a fraction of a
share of Webster Common Stock shall be entitled to receive an amount of cash
equal to (i) the fraction of a share of the Webster Common Stock to which such
holder would otherwise be entitled, multiplied by (ii) the actual market value
of the Webster Common Stock, which shall be deemed to be the average of the
daily closing prices per share for
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Webster Common Stock for the fifteen consecutive trading days on which shares of
Webster Common Stock are actually traded (as reported on the Nasdaq Stock Market
National Market System) ending on the third trading day preceding the Closing
Date. Following consummation of the Merger, no holder of MECH Common Stock shall
be entitled to dividends or any other rights in respect of any such fraction.
(e) Notwithstanding anything in this Agreement to the contrary
and unless otherwise provided by applicable law, shares of MECH Common Stock
that are issued and outstanding immediately prior to the Effective Time and that
are owned by shareholders who have properly objected within the meaning of
Sections 33-855 through 33-872 of the Connecticut Corporation Law (the
"Objecting Shares"), shall not be converted into the right to receive shares of
Webster Common Stock, unless and until such shareholders shall have failed to
perfect or shall have effectively withdrawn or lost their right of payment under
applicable law. If any such shareholder shall have failed to perfect or shall
have effectively withdrawn or lost such right of payment, each share of MECH
Common Stock held by such shareholder shall thereupon be deemed to have been
converted into the right to receive and become exchangeable for, at the
Effective Time, shares of Webster Common Stock pursuant to Section 1.4(a)
hereof.
(f) MECH shall give Webster (i) prompt notice of any
objections filed pursuant to Section 33-861 of the Connecticut Corporation Law
received by MECH, withdrawals of such objections and any other instruments
served in connection with such objections pursuant to the Connecticut
Corporation Law and received by MECH and (ii) the opportunity to direct all
negotiations and proceedings with respect to objections under the Connecticut
Corporation Law consistent with the obligations of MECH thereunder. MECH shall
not, except with the prior written consent of Webster, (x) make any payment with
respect to any such objection, (y) offer to settle or settle any such objections
or (z) waive any failure to timely deliver a written objection in accordance
with the Connecticut Corporation Law, subject to MECH's legal duties and
obligations thereunder.
(g) For purposes of this Agreement, references to Webster
Common Stock shall be deemed to include, where appropriate, references to the
right to receive shares of Xxxxxxx'x Series C Participating Preferred Stock
pursuant to the Rights Agreement, dated as of February 5, 1996, as amended,
between Webster and American Stock Transfer & Trust Company.
1.5 OPTIONS.
At the Effective Time, each option granted by MECH to purchase shares
of MECH Common Stock which is outstanding and unexercised immediately prior
thereto shall be converted automatically into an option to purchase shares of
Webster Common Stock in an amount and at an exercise price determined as
provided below and otherwise subject to the terms of the Employee Stock
Ownership Plan, the 1996 Mechanics Savings Bank Officer Stock Option Plan and
the 1996 Mechanics Savings Bank Director Stock Option Plan (the "MECH Stock
Plans");
(1) The number of shares of Webster Common Stock to be subject
to the option immediately after the Effective Time shall be
equal to the product of the number of shares of MECH Common
Stock subject to the option immediately before the Effective
Time, multiplied by the Exchange Ratio, provided that any
fractional shares of Webster Common Stock resulting from such
multiplication shall be rounded down to the nearest whole
share; and
(2) The exercise price per share of Webster Common Stock under
the option immediately after the Effective Time shall be equal
to the exercise price per share of MECH Common Stock under the
option immediately before the Effective Time divided
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by the Exchange Ratio, provided that such exercise price shall
be rounded up to the nearest cent.
The adjustment provided herein shall be and is intended to be effected in a
manner which is consistent with Section 424(a) of the Internal Revenue Code of
1986, as amended (the "Code"). The duration and other terms of the option
immediately after the Effective Time shall be the same as the corresponding
terms in effect immediately before the Effective Time, except that all
references to MECH or MS Bank in the MECH Stock Plans (and the corresponding
references in the option agreement documenting such option) shall be deemed to
be references to Webster or Xxxxxxx Bank, as applicable. Nothing herein shall be
construed as preventing option holders from exercising the same before the
Effective Time in accordance with the terms thereof.
1.6 CERTIFICATE OF INCORPORATION.
At the Effective Time, the Certificate of Incorporation of Webster, as
in effect at the Effective Time, shall be the Certificate of Incorporation of
the Surviving Corporation.
1.7 BYLAWS.
At the Effective Time, the Bylaws of Webster, as in effect immediately
prior to the Effective Time, shall be the Bylaws of the Surviving Corporation.
1.8 DIRECTORS AND OFFICERS.
At the Effective Time, the directors and officers of Webster
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation. As of the Effective Time, Webster shall cause Xxxxxxx
Bank to amend its bylaws to increase the size of its Board of Directors by one
member, and thereupon Webster shall invite Xxxxx X. Xxxxxx to serve as an
additional member (the "New Member") of the Board of Directors of Xxxxxxx Bank
for a period to terminate no earlier than the annual meeting of Webster
stockholders next following the third anniversary of the Effective Time;
provided, however, that Xxxxxxx Bank shall have no obligation to invite Xx.
Xxxxxx to serve on Xxxxxxx Bank's Board of Directors if Xx. Xxxxxx is not both
President of MECH and a member in good standing of MECH's Board of Directors
immediately prior to the Effective Time. Additionally, as of the Effective Time,
Webster shall, if necessary, amend its bylaws to increase the size of its Board
of Directors by one member. Webster shall appoint Xx. Xxxxxx to the Board of
Directors of the Surviving Corporation to serve as a director for a period to
terminate no earlier than at the annual meeting next following the first
anniversary of the Effective Time; provided, however, that Webster shall have no
obligation to invite Xx. Xxxxxx to serve on Xxxxxxx'x Board of Directors if Xx.
Xxxxxx is not both President of MECH and a member in good standing of MECH's
Board of Directors immediately prior to the Effective Time.
1.9 TAX CONSEQUENCES.
It is intended that the Merger shall constitute a reorganization within
the meaning of Section 368(a) of the Code, and that this Agreement shall
constitute a "plan of reorganization" for the purposes of the Code.
1.10 ACCOUNTING TREATMENT.
It is intended that the Merger shall be accounted for as a "pooling of
interests" under generally accepted accounting principles ("GAAP").
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ARTICLE II
EXCHANGE OF SHARES
2.1 WEBSTER TO MAKE SHARES AVAILABLE.
At or prior to the Effective Time, Webster shall deposit, or shall
cause to be deposited, with Xxxxxxx'x transfer agent, American Stock Transfer &
Trust Company, or such other bank, trust company or transfer agent as Webster
may select (the "Exchange Agent"), for the benefit of the holders of
Certificates, for exchange in accordance with this Article II, certificates
representing the shares of Webster Common Stock and the cash in lieu of
fractional shares (such cash and certificates for shares of Webster Common
Stock, being hereinafter referred to as the "Exchange Fund") to be issued
pursuant to Section 1.4 and paid pursuant to Section 2.2(a) hereof
(collectively, sometimes referred to herein as the "Shares") in exchange for
outstanding shares of MECH Common Stock.
2.2 EXCHANGE OF SHARES.
(a) As soon as practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a Certificate or
Certificates a form letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent) and instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing the shares of Webster Common Stock and the cash in
lieu of fractional shares into which the shares of MECH Common Stock represented
by such Certificate or Certificates shall have been converted pursuant to this
Agreement. MECH shall have the right to review both the letter of transmittal
and the instructions prior to such documents being finalized. Upon surrender of
a Certificate for exchange and cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive promptly in exchange therefor (x) a certificate
representing that number of whole shares of Webster Common Stock to which such
holder of MECH Common Stock shall have become entitled pursuant to the
provisions of Article I hereof and (y) a check representing the amount of cash
in lieu of fractional shares, if any, which such holder has the right to receive
in respect of the Certificate surrendered pursuant to the provisions of Article
I, and the Certificate so surrendered shall forthwith be canceled. No interest
will be paid or accrued on the cash in lieu of fractional shares and unpaid
dividends and distributions, if any, payable to holders of Certificates.
(b) No dividends or other distributions declared after the
Effective Time with respect to Webster Common Stock and payable to the holders
of record thereof shall be paid to the holder of any unsurrendered Certificate
until the holder thereof shall surrender such Certificate in accordance with
this Article II. After the surrender of a Certificate in accordance with this
Article II, the record holder thereof shall be entitled to receive any such
dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to shares of Webster Common Stock
represented by such Certificate. No holder of an unsurrendered Certificate shall
be entitled, until the surrender of such Certificate, to vote the shares of
Webster Common Stock into which his MECH Common Stock shall have been converted.
(c) If any certificate representing shares of Xxxxxxx Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the Certificate so surrendered shall be properly endorsed
(or accompanied by an appropriate instrument of transfer) and otherwise in
proper form for transfer, and that the person requesting such exchange shall pay
to the Exchange Agent in advance any transfer or other taxes required by reason
of the issuance of a certificate representing shares of Xxxxxxx Common Stock in
any name other than that of the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not payable.
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(d) As of the close of business on the day immediately prior
to the Effective Time, there shall be no transfers on the stock transfer books
of MECH of the shares of MECH Common Stock which were issued and outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates representing such shares are presented for transfer to the Exchange
Agent, they shall be canceled and exchanged for certificates representing shares
of Xxxxxxx Common Stock as provided in this Article II.
(e) Any portion of the Exchange Fund that remains unclaimed by
the shareholders of MECH for six months after the Effective Time may be returned
to Xxxxxxx. After such funds have been returned to Xxxxxxx, any shareholders of
MECH who have not theretofore complied with this Article II shall thereafter
look only to Xxxxxxx for payment of their shares of Xxxxxxx Common Stock, cash
in lieu of fractional shares and unpaid dividends and distributions on Xxxxxxx
Common Stock deliverable in respect of each share of MECH Common Stock such
shareholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon. Notwithstanding the foregoing, none of Xxxxxxx,
MECH, the Exchange Agent or any other person shall be liable to any former
holder of shares of MECH Common Stock for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(f) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Xxxxxxx, the posting by such person of a bond in such amount as Xxxxxxx may
reasonably direct as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the shares of Xxxxxxx Common Stock
and cash in lieu of fractional shares deliverable in respect thereof pursuant to
this Agreement.
2.3 DISCLOSURE SCHEDULE.
Prior to the execution and delivery hereof, MECH has delivered to
Xxxxxxx a schedule (the "MECH Disclosure Schedule"), and Xxxxxxx has delivered
to MECH a schedule (the "Xxxxxxx Disclosure Schedule"), in each case setting
forth, among other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure requirement contained in
a provision hereof or as an exception to one or more of such party's
representations or warranties contained in Articles III or IV, as applicable, or
to one or more of its covenants contained in Article V; provided, however, that
the mere inclusion of an item in a Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an admission by a party that such
item represents a material exception or fact, event or circumstance or that such
item has had or would have a Material Adverse Effect (as defined in Section
9.13) with respect to such party.
2.4 STANDARDS.
No representation or warranty of MECH contained in Article III or of
Xxxxxxx contained in Article IV shall be deemed untrue or incorrect for any
purpose under this Agreement, and no party hereto shall be deemed to have
breached a representation or warranty for any purpose under this Agreement, as a
consequence of the existence or absence of any fact, circumstance or event
unless such fact, circumstance or event, individually or when taken together
with all other facts, circumstances or events inconsistent with any
representations or warranties contained in Article III, in the case of MECH, or
Article IV, in the case of Xxxxxxx, has had or would be reasonably certain to
have a Material Adverse Effect with respect to MECH or Xxxxxxx, respectively.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MECH
MECH hereby makes the following representations and warranties to
Xxxxxxx as set forth in this Article III, each of which is being relied upon by
Xxxxxxx as a material inducement to enter into and perform this Agreement. All
of the disclosure schedules of MECH referenced below and thereby required of
MECH pursuant to this Agreement, which disclosure schedules shall be
cross-referenced to the specific sections and subsections of this Agreement and
delivered herewith, are referred to herein as the "MECH Disclosure Schedule."
3.1 CORPORATE ORGANIZATION.
(a) MECH is a corporation duly organized, validly existing and
in good standing under the laws of the State of Connecticut. MECH has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business in each jurisdiction in which the nature of its
business conducted by it or the character or location of any properties or
assets owned or leased by it makes such licensing or qualification necessary.
MECH is duly registered as a bank holding company with the Board of Governors of
the Federal Reserve System ("FRB") under the Banking Holding Company Act of
1956, as amended ("BHCA"). The Certificate of Incorporation and Bylaws of MECH,
copies of which are included in Section 3.1(a) of the MECH Disclosure Schedule,
are true, correct and complete copies of such documents as in effect as of the
date of this Agreement.
(b) MS Bank is a Connecticut-chartered savings bank duly
organized and validly existing and in good standing under the laws of the state
of Connecticut. The deposit accounts of MS Bank are insured by the Federal
Deposit Insurance Corporation (the "FDIC") through the Bank Insurance Fund (the
"BIF") to the fullest extent permitted by law, and all premiums and assessments
required in connection therewith have been paid by MS Bank. MS Bank, Mechanics
Investment Services, Inc. ("MIS") and Mechanics Mortgage Company ("MMC") are the
only Subsidiaries of MECH that qualify as a "Significant Subsidiary" as such
term is defined in Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC"). MS Bank has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it is now
being conducted and is duly licensed or qualified to do business in each
jurisdiction in which the nature of its business conducted by it or the
character or the location of any properties or assets owned or leased by it
makes such licensing or qualification necessary. The Certificate of
Incorporation and Bylaws of each of MS Bank, MIS and MMC, copies of which have
previously been delivered to Xxxxxxx, are true, correct and complete copies of
such documents as in effect as of the date of this Agreement.
3.2 CAPITALIZATION.
(a) The authorized capital stock of MECH consists of
15,000,000 shares of MECH Common Stock and 1,000,000 shares of serial preferred
stock, par value $.01 per share (the "MECH Preferred Stock"). As of the date
hereof, there are (x) 4,995,731 shares of MECH Common Stock issued and
outstanding and 251,500 shares of MECH Common Stock are held in MECH's treasury,
(y) 460,702 shares of MECH Common Stock reserved for issuance upon exercise of
outstanding stock options under the MECH Stock Plans and (z) 994,150 shares of
MECH Common Stock reserved for issuance upon exercise of the option to be issued
to Xxxxxxx pursuant to the Option Agreement. As of the date hereof, no shares of
MECH Preferred Stock are outstanding. All of the issued and outstanding shares
of MECH Common Stock have been duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. Except for the Option Agreement and
outstanding options under the MECH Stock Plans, MECH does not have and is not
bound by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of
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any character calling for the purchase or issuance of any shares of MECH Common
Stock or MECH Preferred Stock or any other equity security of MECH or any
securities representing the right to purchase or otherwise receive any shares of
MECH Common Stock or any other equity security of MECH. The names of the
optionees, the date of each option to purchase MECH Common Stock granted, the
number of shares subject to each such option, the expiration date of each such
option, and the price at which each such option may be exercised under the MECH
Stock Plans are set forth in Section 3.2(a) of the MECH Disclosure Schedule.
Except as set forth at Section 3.2(a) of the MECH Disclosure Schedule, since
December 31, 1998 MECH has not issued any shares of its capital stock or any
securities convertible into or exercisable for any shares of its capital stock,
other than pursuant to the exercise of director or employee stock options
granted under the MECH Stock Plans.
(b) Section 3.2(b) of the MECH Disclosure Schedule sets forth
a true, correct and complete list of all direct or indirect Subsidiaries of MECH
as of the date of this Agreement. Except as set forth at Section 3.2(b) of the
MECH Disclosure Schedule, MECH owns, directly or indirectly, all of the issued
and outstanding shares of capital stock of each of its Subsidiaries, free and
clear of all liens, charges, encumbrances and security interests whatsoever, and
all of such shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No MECH Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of capital
stock or any other equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Subsidiary.
3.3 AUTHORITY; NO VIOLATION.
(a) MECH has full corporate power and authority to execute and
deliver this Agreement and the Option Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly approved by the Board
of Directors of MECH The Board of Directors of MECH has directed that this
Agreement and the transactions contemplated hereby be submitted to MECH's
shareholders for approval at a meeting of such shareholders and, except for the
adoption of this Agreement by the requisite vote of MECH's shareholders, no
other corporate proceedings on the part of MECH (except for matters related to
setting the date, time, place and record date for the meeting) are necessary to
approve this Agreement or the Option Agreement or to consummate the transactions
contemplated hereby or thereby. This Agreement has been, and the Option
Agreement will be, duly and validly executed and delivered by MECH and (assuming
due authorization, execution and delivery by Xxxxxxx of this Agreement and by
Xxxxxxx of the Option Agreement) will constitute valid and binding obligations
of MECH, enforceable against MECH in accordance with their terms, except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally.
(b) MS Bank has full corporate power and authority to execute
and deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby have been duly and
validly approved by the Board of Directors of MS Bank and by MECH as the sole
shareholder of MS Bank. No other corporate proceedings on the part of MS Bank
will be necessary to consummate the transactions contemplated thereby. The Bank
Merger Agreement, upon execution and delivery by MS Bank, will be duly and
validly executed and delivered by MS Bank and will (assuming due authorization,
execution and delivery by Xxxxxxx Bank) constitute a valid and binding
obligation of MS Bank, enforceable against MS Bank in accordance with its terms,
except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court
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of equity and by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally.
(c) Neither the execution and delivery of this Agreement and
the Option Agreement by MECH or the Bank Merger Agreement by MS Bank, nor the
consummation by MECH or MS Bank, as the case may be, of the transactions
contemplated hereby or thereby, nor compliance by MECH or MS Bank with any of
the terms or provisions hereof or thereof, will (i) violate any provision of the
Certificate of Incorporation or Bylaws of MECH or the Certificate of
Incorporation or Bylaws of MS Bank, or (ii) assuming that the consents and
approvals referred to in Section 3.4 hereof are duly obtained, (x) violate any
Laws (as defined in Section 9.13) applicable to MECH or MS Bank, or any of their
respective properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of MECH or MS Bank
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which MECH or MS Bank is a party, or by which they or any of their
respective properties or assets may be bound or affected.
3.4 CONSENTS AND APPROVALS.
(a) Except for (i) the filing of applications and notices, as
applicable, as to the Merger with the FRB under the BHCA and with the Office of
Thrift Supervision ("OTS") under the Home Owners' Loan Act of 1933 ("HOLA") and
the Bank Merger Act, as to the Bank Merger with the OTS, (ii) the filing of
applications and notices with the Banking Commissioner of the State of
Connecticut (the "Connecticut Commissioner"), as well as any other applications
and notices to state officials related to the Merger and the Bank Merger (the
"State Banking Approvals"), (iii) the filing with the Connecticut Commissioner
of an acquisition statement pursuant to Section 36a-184 of the Banking Law of
the State of Connecticut prior to the acquisition of more than 10% of MECH
Common Stock pursuant to the Option Agreement, if not exempt, (iv) the filing of
any required applications or notices with the FDIC and OTS as to any subsidiary
activities of MS Bank which becomes a service corporation or operating
subsidiary of Xxxxxxx Bank and approval of such applications and notices, (v)
the filing with the SEC of a registration statement on Form S-4 to register the
shares of Xxxxxxx Common Stock to be issued in connection with the Merger
(including the shares of Xxxxxxx Common Stock that may be issued upon the
exercise of the options referred to in Section 1.5 hereof), which will include
the proxy statement/prospectus to be used in soliciting the approval of MECH's
shareholders at a meeting to be held in connection with this Agreement and the
transactions contemplated hereby (the "Proxy Statement/Prospectus"), (vi) the
filing of the Certificate of Merger with the Secretary of State of Connecticut
pursuant to the Connecticut Corporation Law; (vii) the filing of the Certificate
of Merger with the Secretary of State of Delaware pursuant to the DGCL, (viii)
the filing of the Bank Merger Agreement with the OTS and the Secretary of State
of Connecticut, (ix) such filings and approval as may be required to be made or
obtained under the securities or "Blue Sky" laws of various states or with
Nasdaq (or such other exchange as may be applicable), (x) the filing of the
required application and notices to National Association of Securities Dealers,
Inc. ("NASD") regarding the change of control of MIS and (x) such filings,
authorizations or approvals as may be set forth in Section 3.4(a) of the MECH
Disclosure Schedule, no consents or approvals of or filings or registrations
with any court, administrative agency or commission or other governmental
authority or instrumentality (each a "Governmental Entity"), or with any third
party are necessary in connection with (1) the execution and delivery by MECH of
this Agreement and the Option Agreement, (2) the consummation by MECH of the
Merger and the other transactions contemplated hereby, (3) the execution and
delivery by MS Bank of the Bank Merger Agreement, (4) the consummation by MECH
of the Option Agreement; and (5) the consummation by MS Bank of the Bank Merger
and the transactions contemplated thereby, except, in
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each case, for such consents, approvals or filings, the failure of which to
obtain will not have a material adverse effect on the ability of Xxxxxxx to
consummate the transactions contemplated hereby.
(b) MECH hereby represents to Xxxxxxx that it has no knowledge
of any reason why approval or effectiveness of any of the applications, notices
or filings referred to in Section 3.4(a) cannot be obtained or granted on a
timely basis.
3.5 LOAN PORTFOLIO; REPORTS.
(a) Except as set forth at Section 3.5 of the MECH Disclosure
Schedule, as of December 31, 1998 and thereafter through and including the date
of this Agreement, MECH, MS Bank nor any of their Subsidiaries is a party to any
written or oral loan agreement, note or borrowing arrangement (including,
without limitation, leases, credit enhancements, commitments, guarantees and
interest-bearing assets) (collectively, "Loans"), with any director, officer or
five percent or greater shareholder of MECH or MS Bank, or any Affiliated Person
(as defined in Section 9.13) of the foregoing.
(b) MECH, MS Bank and each of their Subsidiaries have timely
filed all reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file with
(i) the FRB, (ii) the FDIC, (iii) the Connecticut Commissioner and any other
state banking commissions or any other state regulatory authority (each a "State
Regulator"), (iv) the SEC and (v) any other self-regulatory organization
("SRO"). Except for normal examinations conducted by a regulatory agency in the
regular course of the business of MECH and any Subsidiary, no Governmental
Entity is conducting, or has conducted at any time subsequent to December 31,
1997, any proceeding or investigation into the business or operations of MECH or
any Subsidiary.
3.6 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
MECH has previously delivered to Xxxxxxx true, correct and complete
copies of the consolidated statements of position of MECH and its Subsidiaries
as of December 31 for the fiscal years 1996, 1997 and 1998 and the related
consolidated statements of earnings, shareholders' equity and cash flows for the
fiscal years 1996, 1997 and 1998, inclusive, as reported in MECH's Annual Report
on Form 10-K for the fiscal year ended December 31, 1998 filed with the SEC
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in
each case accompanied by the audit report of MECH's independent public
accountants, and the interim financial statements of MECH as of and for the nine
months ended September 30, 1999, as included in the quarterly report on Form
10-Q for the period ended September 30, 1999 as filed with the SEC. The
financial statements referred to in this Section 3.6 (including the related
notes, where applicable) fairly present, and the financial statements referred
to in Section 6.8 hereof will fairly present (subject, in the case of the
unaudited statements, to recurring audit adjustments normal in nature and
amount), the results of the consolidated operations and consolidated financial
condition of MECH and its Subsidiaries for the respective fiscal periods or as
of the respective dates therein set forth; each of such statements (including
the related notes, where applicable) comply, and the financial statements
referred to in Section 6.8 hereof will comply, with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto and each of such statements (including the related notes, where
applicable) has been, and the financial statements referred to in Section 6.8
hereof will be prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved ("GAAP"), except in
each case as indicated in such statements or in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q. MECH's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998 and all reports filed
under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act since January 1,
1998 comply in all material respects with the appropriate requirements for such
reports under the Exchange Act, and MECH has previously delivered or made
available to Xxxxxxx true, correct and complete copies of such reports. The
books and records of MECH and each of its Subsidiaries have been, and are being,
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maintained in all material respects in accordance with GAAP and any other
applicable legal and accounting requirements.
3.7 BROKER'S FEES.
Neither MECH, MS Bank, any of their Subsidiaries nor any of their
respective officers or directors has employed any broker or finder or incurred
any liability for any broker's fees, commissions or finder's fees in connection
with any of the transactions contemplated by this Agreement, the Bank Merger
Agreement or the Option Agreement, except that MECH has engaged, and will pay a
financial advisor's fee to Xxxxx, Xxxxxxxx & Xxxxx, Inc.. ("KBW") in accordance
with the terms of a letter agreement between KBW and MECH, dated July 6, 1999 a
true, complete and correct copy of which is attached at Section 3.7 of the MECH
Disclosure Schedule. Such fee to KBW is the only fee, commission or other
expense to be incurred by or on behalf of MECH, MS Bank or any Subsidiary with
respect to any financial advisor, broker or finder in connection with the Merger
and the transactions contemplated thereby.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as set forth at Section 3.8(a) of the MECH
Disclosure Schedule, or as disclosed in MECH's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998, since December 31, 1998 (i) neither
MECH nor any Subsidiary has incurred any material liability, except as
contemplated by the Agreement or in the ordinary course of their business
consistent with their past practices, and (ii) no event has occurred which has
had, or is likely to have, individually or in the aggregate, a Material Adverse
Effect (as defined in Section 9.13) on MECH.
(b) Since December 31, 1998 MECH and each of its Subsidiaries
have carried on their respective businesses in the ordinary and usual course
consistent with their past practices.
3.9 LEGAL PROCEEDINGS.
(a) Except as set forth at Section 3.9(a) of the MECH
Disclosure Schedule, neither MECH, MS Bank nor any of their Subsidiaries is a
party to any, and there are no pending or to the knowledge of MECH, threatened,
legal, administrative, arbitration or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against MECH, MS Bank or
any Subsidiary in which, to the knowledge of MECH or any Subsidiary, there is a
reasonable probability of any material recovery against or other material effect
upon MECH or any Subsidiary or which challenge the validity or propriety of the
transactions contemplated by this Agreement, the Bank Merger Agreement or the
Option Agreement and as to which there is a reasonable probability of success.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon MECH, MS Bank or any of their Subsidiaries,
or the assets of MECH, MS Bank or any of their Subsidiaries.
3.10 TAXES AND TAX RETURNS.
(a) Each of MECH, MS Bank and their Subsidiaries have duly
filed all Tax Returns, as hereinafter defined, required to be filed by it on or
prior to the date hereof (all such returns being accurate and complete in all
material respects) and has duly paid or made provision (or will make provision)
on the financial statements referred to in Sections 3.6 and 6.8 hereof in
accordance with GAAP for the payment of all material Taxes, as hereinafter
defined, which have been incurred or are due or claimed to be due from it by
Taxing Authorities, as hereinafter defined, on or prior to the date
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hereof other than Taxes (a) which (x) are not yet delinquent or (y) are being
contested in good faith and set forth in Section 3.10(a) of the MECH Disclosure
Schedule and (b) which have not been finally determined. All liability with
respect to the Tax Returns of MECH and any Subsidiary has been satisfied for all
years to and including 1998. The Internal Revenue Service ("IRS") has not
notified MECH of, or otherwise asserted, that there are any material
deficiencies with respect to the federal income Tax Returns of MECH subsequent
to 1993. There are no material disputes pending, or claims asserted for, Taxes
or assessments upon MECH or any Subsidiary, nor has MECH or any Subsidiary been
requested to give any currently effective waivers extending the statutory period
of limitation applicable to any federal or state income Tax Return for any
period. In addition, Tax Returns which are accurate and complete in all material
respects have been filed by MECH and each Subsidiary for all periods for which
returns were due with respect to income tax withholding, Social Security and
unemployment taxes and the amounts shown on such Tax Returns to be due and
payable have been paid in full or adequate provision therefor in accordance with
GAAP has been (or will be) included by MECH in the financial statements referred
to in Sections 3.6 and 6.8 hereto. All MECH Tax Returns have been examined by
the relevant Taxing Authorities, or closed without audit by applicable statutes
of limitations, and all deficiencies proposed as a result of such examinations
have been paid or settled, for all periods before and including the taxable year
ended 1993. Neither MECH nor any Subsidiary has consented to any waiver or
extension of any statute of limitations with respect to any Tax. Neither MECH
nor any Subsidiary has made an election under Section 341(f) of the IRC. MECH
has provided or made available to Xxxxxxx complete and correct copies of its and
its Subsidiaries' Tax Returns and all material correspondence and documents, if
any, relating directly or indirectly to taxes for each taxable year or other
relevant period as to which the applicable statute of limitations has not run on
the date hereof. For this purpose, "correspondence and documents" include,
without limitation, amended Tax Returns, claims for refunds, notices from Taxing
Authorities of proposed changes or adjustments to Taxes or Tax Returns, consents
to assessment or collection of Taxes, acceptances of proposed adjustments,
closing agreements, rulings and determination letters and requests therefor, and
all other written communications to or from Taxing Authorities relating to any
material Tax liability of MECH or MS Bank. MECH will not be a "foreign person"
as that term is used in ss. 1.1445-2 of the Treasury Regulations promulgated
under the IRC. MS Bank is not a "United States real property holding
corporation" within the meaning of ss. 897 of the IRC and was not a "United
States real property holding corporation" on any "determination date" (as
defined in ss. 1.897-2(c) of such Regulations) that occurred during any relevant
period.
(b) For purposes of this Agreement:
"Tax" means any tax (including any income tax, capital gains
tax, value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Taxing Authority or payable pursuant to any tax-sharing agreement or any
other contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"Tax Return" means any return (including any information
return), report, statement, schedule, notice, form, or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Taxing Authority in connection with the determination,
assessment, collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any law,
regulation or other legal requirement relating to any Tax.
"Taxing Authority" means any:
(i) nation, state, county, city, town, village,
district, or other jurisdiction of any nature;
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(ii) federal, state, local, municipal, foreign, or
other government;
(iii) governmental or quasi-governmental authority of
any nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal);
(iv) multi-national organization or body; or
(v) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
3.11 EMPLOYEE PLANS.
(a) Section 3.11(a) of the MECH Disclosure Schedule sets forth
a true and complete list of each employee benefit plan (within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), arrangement or agreement that is maintained or contributed to as of
the date of this Agreement, or that has within the last six years been
maintained or contributed to, by MECH or any Subsidiary or any other entity
which together with MECH would be deemed a "single employer" within the meaning
of Section 4001 of ERISA or Code Sections 414(b), (c) or (m) or under which MECH
or any Subsidiary has any liability (collectively, the "Plans").
(b) MECH has heretofore delivered or made available to Xxxxxxx
true, correct and complete copies of each of the Plans and all related
documents, including but not limited to (i) the actuarial report for such Plan
(if applicable) for each of the last five years, (ii) the most recent
determination letter from the IRS (if applicable) for such Plan, (iii) the
current summary plan description and any summaries of material modification,
(iv) all annual reports (Form 5500 series) for each Plan filed for the preceding
five plan years, (v) all agreements with fiduciaries and service providers
relating to the Plan, and (vi) all substantive correspondence relating to any
such Plan addressed to or received from the Internal Revenue Service, the
Department of Labor, the Pension Benefit Guaranty Corporation or any other
governmental agency.
(c) Except as set forth at Section 3.11 (c) of the MECH
Disclosure Schedule, (i) each of the Plans has been operated and administered in
all material respects in compliance with applicable Laws, including but not
limited to ERISA and the Code, (ii) each of the Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified, (iii) no such
Plan is subject to Title IV of ERISA, (iv) no Plan provides benefits, including,
without limitation, death or medical benefits (whether or not insured), with
respect to current or former employees of MECH or any Subsidiary beyond their
retirement or other termination of service, other than (w) coverage mandated by
applicable Law, (x) benefits under a Plan that is a "qualified plan," for
purposes of Section 401(a) of the Code, (y) deferred compensation benefits under
a Plan that are accrued as liabilities on the books of MECH or any Subsidiary,
or (z) benefits the full cost of which is borne by the current or former
employee (or his beneficiary), (v) no liability under Title IV of ERISA has been
incurred by MECH or any Subsidiary that has not been satisfied in full, and no
condition exists that presents a material risk of MECH or any Subsidiary
incurring a material liability thereunder, (vi) no Plan is a "multiemployer
pension plan," as such term is defined in Section 3(37) of ERISA, (vii) all
contributions or other amounts payable by MECH or any Subsidiary as of the
Effective Time with respect to each Plan and all other liabilities of each such
entity with respect to each Plan, in respect of current or prior plan years have
been paid or accrued in accordance with generally accepted accounting practices
and Section 412 of the Code, (viii) neither MECH nor any Subsidiary has engaged
in a transaction in connection with which MECH or any Subsidiary could be
subject to either a civil penalty assessed pursuant to Section 409 or 502(i) of
ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code, (ix) to the
knowledge of MECH, there are no pending, threatened or anticipated claims (other
than routine claims for benefits) by, on behalf of or against any of the Plans
or any trusts related thereto, and (x) all Plans could be terminated as of the
Effective Time without any liability materially in excess of the amounts accrued
with respect to
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such Plans on the financial statements referenced in Section 3.2 hereof and, for
the purposes of Section 7.2(a) hereof, on the financial statements referred to
in Section 6.8 hereof, (xi) no Plan, program, agreement or other arrangement,
either individually or collectively, provides for any payment by MECH or any
Subsidiary that would not be deductible under Code Sections 162(a)(1), 162(m) or
404 or that would constitute a "parachute payment" within the meaning of Code
Section 280G, (xii) no Plan is subject to the minimum funding requirements of
Section 302 of ERISA or Section 412 of the Code.
3.12 CERTAIN CONTRACTS.
(a) Except as set forth at Section 3.12 of the MECH Disclosure
Schedule, neither MECH nor any Subsidiary is a party to or bound by any
contract, arrangement or commitment (i) with respect to the employment of any
directors, officers, employees or consultants, (ii) which, upon the consummation
of the transactions contemplated by this Agreement or the Bank Merger Agreement,
will (either alone or upon the occurrence of any additional acts or events)
result in any payment (whether of severance pay or otherwise) becoming due from
Xxxxxxx, MECH, MS Bank, Xxxxxxx Bank or any of their respective Subsidiaries to
any director, officer or employee of MECH or any Subsidiary, (iii) which
materially restricts the conduct of any line of business by MECH or any
Subsidiary, (iv) with or to a labor union or guild (including any collective
bargaining agreement) or (v) any of the benefits of which will be increased, or
the vesting of the benefits of which will be accelerated by the occurrence of
any of the transactions contemplated by this Agreement or the Bank Merger
Agreement, or the value of any of the benefits of which will be calculated on
the basis of any of the transactions contemplated by this Agreement or the Bank
Merger Agreement (including as to this clause (v), any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan). Except
as set forth at Section 3.12 of the MECH Disclosure Schedule, there are no
employment, consulting and deferred compensation agreements to which MECH or any
of its Subsidiaries is a party. Section 3.12 of the MECH Disclosure Schedule
sets forth a list of all material contracts (as defined in Item 601(b)(10) of
Regulation S-K) of MECH and each of its Subsidiaries. Each contract, arrangement
or commitment of the type described in this Section 3.12(a), whether or not set
forth in Section 3.12 of the MECH Disclosure Schedule, is referred to herein as
a "MECH Contract," and neither MECH nor any Subsidiary has received notice of,
any violation of any MECH Contract by MECH.
(b) (i) Each MECH Contract is valid and binding and in full
force and effect, (ii) MECH and its Subsidiaries has in all material respects
performed all obligations required to be performed by it to date under each MECH
Contract, and (iii) no event or condition exists which constitutes or, after
notice or lapse of time or both, would constitute, a material default on the
part of MECH or any Subsidiary under any such MECH Contract.
3.13 AGREEMENTS WITH GOVERNMENTAL AGENCIES.
Neither of MECH nor any Subsidiary is subject to any cease-and-desist
or other order issued by, or is a party to any written agreement, consent
agreement or memorandum of understanding with, or has adopted any board
resolutions at the request of (each, whether or not set forth on Section 3.13 of
the MECH Disclosure Schedule, a "Regulatory Agreement"), any Governmental Entity
that restricts the conduct of its business or that in any manner relates to its
capital adequacy, its credit policies, its management or its business, nor has
MECH or any Subsidiary been advised by any Governmental Entity that it is
considering issuing or requesting any Regulatory Agreement.
3.14 STATE TAKEOVER LAWS; CERTIFICATE OF INCORPORATION.
The Board of Directors of MECH has approved the offer of Xxxxxxx to
enter into this Agreement, the Bank Merger Agreement and the Option Agreement,
and has approved MECH entering into this Agreement, the Bank Merger Agreement
and the Option Agreement, and the transactions
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contemplated thereby, such that under applicable law and MECH's Certificate of
Incorporation the only vote of MECH shareholders necessary to consummate the
transactions contemplated hereby (including the Bank Merger and issuance under
the Option Agreement) is the approval of a majority of all votes entitled to be
cast by the holders of the outstanding shares of MECH Common Stock.
3.15 ENVIRONMENTAL MATTERS.
(a) Each of MECH and each of its Subsidiaries is in compliance
in all respects with all applicable federal and state laws and regulations
relating to pollution or protection of the environment (including without
limitation, laws and regulations relating to emissions, discharges, releases and
threatened releases of Hazardous Material (as hereinafter defined), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, except for such matters
as would not individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect on MECH or any of its Subsidiaries or materially impair
their ability to consummate the transactions contemplated by this Agreement.
(b) There is no suit, claim, action, proceeding, investigation
or notice pending, or to the knowledge of MECH or any of its Subsidiaries,
threatened, in which MECH or any of its Subsidiaries has been or, with respect
to threatened suits, claims, actions, proceedings, investigations or notices, is
threatened to be, named as a defendant or, to the knowledge of MECH or any of
its Subsidiaries, threatened with respect to past or present actions or events
that could form the basis of any such suit, claim, action, proceeding,
investigation or notice (x) for alleged noncompliance (including by any
predecessor), with any environmental law, rule or regulation or (y) relating to
any release or threatened release into the environment of any Hazardous
Material, whether or not occurring at or on a site owned, leased or operated by
MECH or any Subsidiary, except for such matters as would not individually or in
the aggregate, be reasonably expected to have a Material Adverse Effect on MECH
or any Subsidiary or materially impair their ability to consummate the
transactions contemplated by this Agreement;
(c) To the knowledge of MECH or any Subsidiary, during the
period of MECH's or any Subsidiary's ownership or operation of any of its
properties, there has not been any release of Hazardous Material in, on, under
or affecting any such property.
(d) To the knowledge of MECH and any of its Subsidiaries,
neither MECH nor any of its Subsidiaries has made or participated in any loan to
any person who is subject to any suit, claim, action, proceeding, investigation
or notice, pending or threatened, with respect to (i) any alleged noncompliance
as to any property securing such loan with any environmental law, rule or
regulation, or (ii) the release or the threatened release into the environment
of any Hazardous Material at a site owned, leased or operated by such person on
any property securing such loan.
(e) For purposes of this Section 3.15, the term "Hazardous
Material" means any hazardous waste, petroleum product, polychlorinated
biphenyl, chemical, pollutant, contaminant, pesticide, radioactive substance, or
other toxic material, or other material or substance (in each such case, other
than small quantities of such substances in retail containers) regulated under
any applicable environmental or public health statute, law, ordinance, rule or
regulation.
(f) Except as set forth at Section 3.15 of the MECH Disclosure
Schedule, no real property owned or leased by MECH or any of its Subsidiaries as
other real estate owned ("OREO") or otherwise, or owned or controlled by MECH or
any Subsidiary as a trustee or fiduciary meets the statutory criteria of an
"Establishment" as that term is defined pursuant to Section 22a-134(3) of the
General Statutes of Connecticut.
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3.16 RESERVES FOR LOSSES.
All reserves or other allowances for possible losses reflected in
MECH's most recent financial statements referred to in Section 3.6 complied with
all Laws and are adequate under GAAP. Neither of MECH or MS Bank has been
notified by the FRB, the FDIC, the Connecticut Commissioner or MECH's
independent auditor, in writing or otherwise, that such reserves are inadequate
or that the practices and policies of MECH or MS Bank in establishing such
reserves and in accounting for delinquent and classified assets generally fail
to comply with applicable accounting or regulatory requirements, or that the
FRB, the FDIC, the Connecticut Commissioner or MECH's independent auditor
believes such reserves to be inadequate or inconsistent with the historical loss
experience of MECH or MS Bank. MECH has previously furnished Xxxxxxx with a
complete list of all extensions of credit and OREO that have been classified by
any bank or trust examiner (regulatory or internal) as other loans specially
mentioned, special mention, substandard, doubtful, loss, classified or
criticized, credit risk assets, concerned loans or words of similar import. MECH
agrees to update such list no less frequently than monthly after the date of
this Agreement until the earlier of the Closing Date or the date that this
Agreement is terminated in accordance with Section 8.1. All OREO held by MECH or
MS Bank is being carried net of reserves at the lower of cost or net realizable
value.
3.17 PROPERTIES AND ASSETS.
Section 3.17 of the MECH Disclosure Schedule lists as of the date of
this Agreement (i) all real property owned by MECH and any Subsidiary; (ii) each
real property lease, sublease or installment purchase arrangement to which MECH
or any Subsidiary is a party; (iii) a description of each contract for the
purchase, sale, or development of real estate to which MECH or any Subsidiary is
a party; and (iv) all items of MECH's or any Subsidiary's tangible personal
property and equipment with a book value of $50,000 or more or having any annual
lease payment of $25,000 or more. Except for (a) items reflected in MECH's
consolidated financial statements as of December 31, 1998 referred to in Section
3.6 hereof, (b) exceptions to title that do not interfere materially with MECH's
or any Subsidiary's use and enjoyment of owned or leased real property (other
than OREO), (c) liens for current real estate taxes not yet delinquent, or being
contested in good faith, properly reserved against (and reflected on the
financial statements referred to in Section 3.6 above), (d) properties and
assets sold or transferred in the ordinary course of business consistent with
past practices since December 31, 1998, and (e) items listed in Section 3.17 of
the MECH Disclosure Schedule, MECH and its Subsidiaries have good and, as to
owned real property, marketable and insurable, title to all their properties and
assets, free and clear of all liens, claims, charges and other encumbrances.
MECH and its Subsidiaries, as lessees, have the right under valid and subsisting
leases to occupy, use and possess all property leased by them, and neither MECH
nor any Subsidiary has experienced any material uninsured damage or destruction
with respect to such properties since December 31, 1998. All properties and
assets used by MECH and any of its Subsidiaries are in good operating condition
and repair suitable for the purposes for which they are currently utilized and
comply in all material respects with all Laws relating thereto now in effect or
scheduled to come into effect. MECH and its Subsidiaries enjoy peaceful and
undisturbed possession under all leases for the use of all property under which
they are the lessees, and all leases to which MECH or its Subsidiaries are a
party are valid and binding obligations in accordance with the terms thereof.
Neither MECH nor any Subsidiary is in default with respect to any such lease,
and there has occurred no default by MECH or any Subsidiary or event which with
the lapse of time or the giving of notice, or both, would constitute a material
default under any such lease. There are no Laws, conditions of record, or other
impediments which interfere with the intended use by MECH or any Subsidiary of
any of the property owned, leased, or occupied by them.
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3.18 INSURANCE.
Section 3.18 of the MECH Disclosure Schedule contains a true, correct
and complete list of all insurance policies and bonds maintained by MECH and its
Subsidiaries, including the name of the insurer, the policy number, the type of
policy and any applicable deductibles, and all such insurance policies and bonds
(or other insurance policies and bonds that have, from time to time, in respect
of the nature of the risks insured against and amount of coverage provided, been
substantially similar in kind and amount to that customarily carried by parties
similarly situated who own properties and engage in businesses substantially
similar to that of MECH and its Subsidiaries, as the case may be) are in full
force and effect and have been in full force and effect. As of the date hereof,
neither MECH nor any Subsidiary has received any notice of cancellation or
amendment of any such policy or bond or is in default under any such policy or
bond, no coverage thereunder is being disputed and all material claims
thereunder have been filed in a timely fashion. The existing insurance carried
by MECH and it Subsidiaries is and will continue to be, in respect of the nature
of the risks insured against and the amount of coverage provided, substantially
similar in kind and amount to that customarily carried by parties similarly
situated who own properties and engage in businesses substantially similar to
that of MECH and its Subsidiaries, as the case may be, and is sufficient for
compliance by MECH and its Subsidiaries with all requirements of Law and
agreements to which MECH or its Subsidiaries is subject or is party. True,
correct and complete copies of all such policies and bonds reflected at Section
3.18 of the MECH Disclosure Schedule, as in effect on the date hereof, have been
delivered to Xxxxxxx.
3.19 MECHANICS INVESTMENT SERVICES, INC.
MIS is a wholly owned subsidiary of MS Bank, and is a corporation duly
organized and validly existing under the laws of the State of Connecticut. MIS
has the full corporate power and authority to own and operate its properties and
assets, and to carry on its business as currently conducted and is duly licensed
or qualified to do business in each jurisdiction in which the nature of its
business conducted by it or the character or location of any properties or
assets owned or leased by it makes such licensing or qualification necessary.
MIS is a licensed broker/dealer with the NASD and in all states where the nature
of its operations requires it to be so licensed, and is registered with the SEC
as an investment advisor under the Investment Advisors Act of 1940, as amended.
MIS has complied in all material respects with all applicable federal, state,
local, self-regulatory and foreign laws, statutes, ordinances, rules and
regulations, and is not in violation in any material respect of, and has not
received any notices of violation with respect to, its respective certificate or
articles of incorporation or bylaws or other charter or organizational
documents, or any federal, state, local, self-regulatory or foreign statute,
law, ordinance, rule or regulation applicable to the conduct of its business or
the ownership or operation of its business.
3.20 COMPLIANCE WITH APPLICABLE LAWS.
Each of MECH, MS Bank and their Subsidiaries has complied with all laws
applicable to it or to the operation of its business. Neither MECH nor any
Subsidiary has received any notice of any material alleged or threatened claim,
violation, or liability under any such Laws that has not heretofore been cured
and for which there is no remaining liability.
3.21 LOANS.
As of the date hereof:
(a) All loans owned by MECH, MS Bank or MMC, or in which MECH,
MS Bank or MMC has an interest, comply with all Laws, including, but not limited
to, applicable usury statutes,
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underwriting and recordkeeping requirements and the Truth in Lending Act, the
Equal Credit Opportunity Act, and the Real Estate Procedures Act, and other
applicable consumer protection statutes and the regulations thereunder.
(b) All loans owned by MECH, MS Bank or MMC , or in which
MECH, MS Bank or MMC has an interest, have been made or acquired in accordance
with board of director-approved loan policies and all of such loans are
collectible, except to the extent reserves have been made against such loans in
MECH's consolidated financial statements at September 30, 1999 referred to in
Section 3.6 hereof. Each of MECH, MS Bank and MMC holds mortgages contained in
its loan portfolio for its own benefit to the extent of its interest shown
therein; such mortgages evidence liens having the priority indicated by their
terms, subject, as of the date of recordation or filing of applicable security
instruments, only to such exceptions as are discussed in attorneys' opinions
regarding title or in title insurance policies in the mortgage files relating to
the loans secured by real property or are not material as to the collectability
of such loans; and all loans owned by MECH, MS Bank and MMC are with full
recourse to the borrowers (except as set forth at Section 3.21 of the MECH
Disclosure Schedule), and each of MECH, MS Bank and MMC has taken no action
which would result in a waiver or negation of any rights or remedies available
against the borrower or guarantor, if any, on any loan. All applicable remedies
against all borrowers and guarantors are enforceable except as may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting creditors'
rights and except as may be limited by the exercise of judicial discretion in
applying principles of equity. Except as set forth at Section 3.21 of the MECH
Disclosure Schedule, all loans purchased or originated by MECH, MS Bank or MMC
and subsequently sold by MECH, MS Bank or MMC have been sold without recourse to
MECH, MS Bank or MMC and without any liability under any yield maintenance or
similar obligation. True, correct and complete copies of loan delinquency
reports as of each of October 31 and November 30, 1999 prepared by MECH, MS Bank
and MMC which reports include all loans delinquent or otherwise in default, have
been furnished to Xxxxxxx. True, correct and complete copies of the currently
effective lending policies and practices of MECH, MS Bank and MMC also have been
furnished to Xxxxxxx.
(c) Except as set forth at Section 3.21(c) of the MECH
Disclosure Schedule each outstanding loan participation sold by MECH, MS Bank or
MMC was sold with the risk of non-payment of all or any portion of that
underlying loan to be shared by each participant (including MECH, MS Bank or
MMC) proportionately to the share of such loan represented by such participation
without any recourse of such other lender or participant to MECH, MS Bank or MMC
for payment or repurchase of the amount of such loan represented by the
participation or liability under any yield maintenance or similar obligation.
MECH, MS Bank and MMC have properly fulfilled in all material respects its
contractual responsibilities and duties in any loan in which it acts as the lead
lender or servicer and has complied in all material respects with its duties as
required under applicable regulatory requirements.
(d) MECH, MS Bank and MMC have properly perfected or caused to
be properly perfected all security interests, liens, or other interests in any
collateral securing any loans made by it.
(e) Section 3.21(e) of the MECH Disclosure Schedule sets forth
a list of all loans or other extensions of credit to all directors, officers and
employees, or any other person covered by Regulation O of the FRB.
3.22 AFFILIATES.
Each director, executive officer and other person who is an "affiliate"
(for purposes of Rule 145 under the Securities Act of 1933, as amended (the
"Securities Act"), and for purposes of qualifying the Merger for
"pooling-of-interests" accounting treatment) of MECH is listed at Section 3.22
of the MECH Disclosure Schedule, and each such person has delivered to Xxxxxxx,
concurrently with the execution of this Agreement, a stockholder agreement in
the form of Exhibit D hereto (the "MECH Stockholder Agreement"). The MECH
Stockholder Agreement has been duly and validly executed and delivered by
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each person that is a party thereto and, assuming due authorization, execution
and delivery by Xxxxxxx, constitutes the valid and binding obligation of such
person, enforceable against such person in accordance with their terms, except
as enforcement may be limited by general principles of equity whether applied in
a court of law or a court of equity and by bankruptcy, insolvency and similar
laws affecting creditors' rights and remedies generally.
3.23 OWNERSHIP OF XXXXXXX COMMON STOCK.
Except as set forth at Section 3.23 of the MECH Disclosure Schedule,
neither MECH nor any of its directors, officers, 5% or greater shareholders or
affiliates (as used above in Section 3.22) (i) beneficially own, directly or
indirectly, or (ii) is a party to any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of, in each case, any
shares of outstanding capital stock of Xxxxxxx (other than those agreements,
arrangements or understandings specifically contemplated hereby).
3.24 YEAR 2000 COMPLIANCE.
MECH, MS Bank and MIS have taken all reasonable steps necessary to
address the software, accounting and record keeping issues raised in order to be
substantially Year 2000 compliant on or before the end of 1999, and MECH does
not expect the future cost of addressing such issues to be material. None of
MECH, MS Bank or MIS has received a rating of less than satisfactory from any
bank regulatory agency with respect to Year 2000 compliance. MECH, MS Bank and
MIS are in compliance with all guidelines provided by the FDIC and the Federal
Financial Institution's Examination Council regarding Year 2000 issues, except
for such noncompliance as would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect on MECH, MS Bank or MIS,
or materially impair their ability to consummate the transactions contemplated
by this Agreement.
3.25 INTELLECTUAL PROPERTY.
Neither MECH nor any Subsidiary has any material undisclosed liability
with respect to (i) patents, trademarks, trade names, service marks, copyrights
and any applications therefor, net lists, schematics, technology, know-how,
trade secrets, inventory, ideas, algorithms, processes, computer software
programs and applications (in both source code and object code form), and
tangible or intangible proprietary information or material that are used in the
business of MECH or any Subsidiary or (ii) licenses, sublicenses and other
agreements as to which MECH or any Subsidiary is a party and pursuant to which
MECH or any Subsidiary is authorized to use any third party patents, trademarks
or copyrights, including software which are incorporated in, or form a part of
any MECH or any Subsidiary product.
3.26 MECH INFORMATION.
The information relating to MECH and its Subsidiaries to be provided by
MECH to be contained in the Proxy Statement/Prospectus (defined below) and the
Registration Statement (defined below) will not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances in which they are made, not
misleading. The Proxy Statement/Prospectus (except for the portions thereof
relating solely to Xxxxxxx or any of its Subsidiaries, as to which MECH makes no
representation or warranty) will comply in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
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3.27 FAIRNESS OPINION.
MECH has received an oral opinion from KBW to be confirmed in writing
to the effect that, in its opinion, the consideration to be paid by Xxxxxxx to
stockholders of MECH pursuant to this Agreement is fair to such holders of MECH
Common Stock from a financial point of view ("Fairness Opinion") and KBW has
consented to the inclusion of the written Fairness Opinion in the Registration
Statement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXXXX
Xxxxxxx hereby makes the following representations and warranties to
MECH as set forth in this Article IV, each of which is being relied upon by MECH
as a material inducement to enter into and perform this Agreement.
4.1 CORPORATE ORGANIZATION.
(a) Xxxxxxx is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Xxxxxxx has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties or
assets owned or leased by it makes such licensing or qualification necessary.
Xxxxxxx is duly registered as a savings and loan holding company with the OTS
under the HOLA. The Certificate of Incorporation and Bylaws of Xxxxxxx, copies
of which have previously been made available to MECH, are true, correct and
complete copies of such documents as in effect as of the date of this Agreement.
(b) Xxxxxxx Bank is a federal savings bank chartered by the
OTS under the laws of the United States with its main office in the State of
Connecticut. Xxxxxxx Bank has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties or assets owned or leased by it makes such licensing or
qualification necessary. The Charter and Bylaws of Xxxxxxx Bank, copies of which
have previously been made available to MECH, are true, correct and complete
copies of such documents as in effect as of the date of this Agreement.
4.2 CAPITALIZATION.
(a) The authorized capital stock of Xxxxxxx consists of 200
million shares of Xxxxxxx Common Stock, of which 37,944,859 shares were issued
(net of 408,565 shares held in the treasury) at November 30, 1999 and 3,000,000
shares of serial preferred stock, par value $.01 per share ("Xxxxxxx Preferred
Stock"), 14,000 of which are designated as Series C Preferred Stock, none of
which were outstanding at November 30, 1999. At such date, there were options
outstanding to purchase 2,222,909 shares of Xxxxxxx Common Stock. All of the
issued and outstanding shares of Xxxxxxx Common Stock have been duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof, and upon
issuance in accordance with the terms hereof, the Shares will be duly authorized
and validly issued, and fully paid, nonassessable and free of preemptive rights.
As of the date of this Agreement, except as set forth above, Xxxxxxx does not
have and is not bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of Xxxxxxx Common Stock or Xxxxxxx Preferred Stock or any
other equity of Xxxxxxx or any securities
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representing the right to purchase or otherwise receive any shares of Xxxxxxx
Common Stock or Xxxxxxx Preferred Stock, other than pursuant to the Xxxxxxx
Rights Agreement.
(b) All of the outstanding shares of Xxxxxxx Bank Common Stock
are owned by Xxxxxxx free and clear of all liens, charges, encumbrances and
security interests whatsoever, and all of such shares are duly authorized and
validly issued and fully paid, nonassessable and free of preemptive rights, with
no personal liability attaching to ownership thereof.
4.3 AUTHORITY; NO VIOLATION.
(a) Xxxxxxx has full corporate power and corporate authority
to execute and deliver this Agreement and the Option Agreement and to consummate
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly approved by the Board
of Directors of Xxxxxxx. No other corporate proceedings on the part of Xxxxxxx
are necessary to approve this Agreement or the Option Agreement or to consummate
the transactions contemplated hereby or thereby. This Agreement has been, and
the Option Agreement will be, duly and validly executed and delivered by Xxxxxxx
and (assuming due authorization, execution and delivery by MECH) will constitute
valid and binding obligations of Xxxxxxx, enforceable against Xxxxxxx in
accordance with their terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar law affecting creditors' rights and
remedies generally.
(b) Xxxxxxx Bank has full corporate power and corporate
authority to execute and deliver the Bank Merger Agreement and to consummate the
transactions contemplated thereby. The execution and delivery of the Bank Merger
Agreement and the consummation of the transactions contemplated thereby have
been duly and validly approved by the Board of Directors of Xxxxxxx Bank and by
Xxxxxxx as the sole shareholder of Xxxxxxx Bank. All corporate proceedings on
the part of Xxxxxxx Bank necessary to consummate the transactions contemplated
thereby will have been taken prior to the Effective Time. The Bank Merger
Agreement, upon execution and delivery by Xxxxxxx Bank, will be duly and validly
executed and delivered by Xxxxxxx Bank and (assuming due authorization,
execution and delivery by MS Bank) will constitute a valid and binding
obligation of Xxxxxxx Bank, enforceable against Xxxxxxx Bank in accordance with
its terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
(c) Neither the execution and delivery of this Agreement or
the Option Agreement by Xxxxxxx or the Bank Merger Agreement by Xxxxxxx Bank,
nor the consummation by Xxxxxxx or Xxxxxxx Bank, as the case may be, of the
transactions contemplated hereby or thereby, nor compliance by Xxxxxxx or
Xxxxxxx Bank with any of the terms or provisions hereof or thereof, will (i)
violate any provision of the Certificate of Incorporation or Bylaws of Xxxxxxx
or the Charter or Bylaws of Xxxxxxx Bank, as the case may be, or (ii) assuming
that the consents and approvals referred to in Section 4.4(a) hereof are duly
obtained, (x) violate any Laws applicable to Webster, Webster Bank or any of
their respective properties or assets, or (y) violate, conflict with, result in
a breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of Xxxxxxx or
Xxxxxxx Bank under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Xxxxxxx or Xxxxxxx Bank is a party, or by
which they or any of their respective properties or assets may be bound or
affected, except in the case of clause (ii) for such matters as would not,
individually or in the aggregate,
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be reasonably expected to have a Material Adverse Effect on Xxxxxxx or Xxxxxxx
Bank or materially impair their ability to consummate the transactions
contemplated by the Agreement.
4.4 REGULATORY APPROVALS.
(a) Except for (i) the filing of applications and notices, as
applicable, as to the Merger and the Bank Merger with the FRB and the OTS and
approval of such applications and notices, (ii) the filing of any required
applications or notices with the FDIC and the OTS as to any subsidiary
activities of MS Bank which becomes a service corporation or operating
subsidiary of Xxxxxxx Bank and approval of such applications and notices, (iii)
the State Banking Approvals, (iv) the filing with the Connecticut Commissioner
of an acquisition statement pursuant to Section 36a-184 of the Connecticut
Banking Law prior to the acquisition of more than 10% of the MECH Common Stock
pursuant to the Option Agreement, if not exempt, (v) the filing with the SEC of
a registration statement on Form S-4 to register the shares of Xxxxxxx Common
Stock to be issued in connection with the Merger (including the shares of
Xxxxxxx Common Stock that may be issued upon the exercise of the options
referred to in Section 1.5 hereof), which will include the Proxy
Statement/Prospectus, (vi) the filing of the Certificate of Merger with the
Secretary of State of Connecticut pursuant to the Connecticut Corporation Law,
(vii) the filing of the Certificate of Merger with the Secretary of State of
Delaware pursuant to the DGCL, (viii) the filing of the Bank Merger Agreement
with the OTS and the Secretary of State of Connecticut, and (ix) the filings of
the required applications and notices to the NASD, Inc. regarding the change of
control of MIS, (x) such filings and approvals as are required to be made or
obtained under the securities or "Blue Sky" laws of various states or with
Nasdaq (or such other exchange as may be applicable) in connection with the
issuance of the shares of Xxxxxxx Common Stock pursuant to this Agreement, or
(xi) any necessary filing, authorization, approvals or consents of third
parties, no consents or approvals of or filings or registrations with any
Governmental Entity or with any third party are necessary in connection with (1)
the execution and delivery by Xxxxxxx of this Agreement and the Option
Agreement, (2) the consummation by Xxxxxxx of the Merger and the other
transactions contemplated hereby, (3) the execution and delivery by Xxxxxxx Bank
of the Bank Merger Agreement, and (4) the consummation by Xxxxxxx Bank of the
transactions contemplated by the Bank Merger Agreement except for such consents,
approvals or filings the failure of which to obtain will not have a material
adverse effect on the ability of MECH to consummate the transactions
contemplated thereby.
(b) Xxxxxxx hereby represents to MECH that it has no knowledge
of any reason why approval or effectiveness of any of the applications, notices
or filings referred to in Section 4.4(a) cannot be obtained or granted on a
timely basis.
4.5 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
Xxxxxxx has previously delivered to MECH true, correct and complete
copies of the consolidated balance sheets of Xxxxxxx and its Subsidiaries as of
December 31 for the fiscal years 1997 and 1998 and the related consolidated
statements of income, changes in shareholders' equity and cash flows for the
fiscal years 1996 through 1998, inclusive, as reported in Xxxxxxx'x Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 filed with the
SEC under the Exchange Act, in each case accompanied by the audit report of KPMG
LLP, independent public accountants with respect to Xxxxxxx, and the interim
financial statements of Xxxxxxx as of and for the three months ended September
30, 1998 and 1999, as included in Xxxxxxx'x quarterly report on Form 10-Q for
the period ended September 30, 1999, as filed with the SEC. The financial
statements referred to in this Section 4.5 (including the related notes, where
applicable) fairly present, and the financial statements referred to in Section
6.8 hereof will fairly present (subject, in the case of the unaudited
statements, to recurring audit adjustments normal in nature and amount), the
results of the consolidated operations and consolidated financial condition of
Xxxxxxx and its Subsidiaries for the respective fiscal periods or as of the
respective dates therein set forth; each of such statements (including the
related notes, where
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applicable) comply, and the financial statements referred to in Section 6.8
hereof will comply, in all material respects, with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto; and each of such statements (including the related notes, where
applicable) has been, and the financial statements referred to in Section 6.8
hereof will be, prepared in accordance with GAAP consistently applied during the
periods involved, except as indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-X. Xxxxxxx'x Annual Report on Form
10-K for the fiscal year ended December 31, 1998 and all subsequently filed
reports under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act comply in
all material respects with the appropriate requirements for such reports under
the Exchange Act, and Xxxxxxx has previously delivered or made available to MECH
true, correct and complete copies of such reports. The books and records of
Xxxxxxx and Xxxxxxx Bank have been, and are being, maintained in all material
respects in accordance with GAAP and any other applicable legal and accounting
requirements and reflect only actual transactions.
4.6 AGREEMENTS WITH GOVERNMENTAL AGENCIES.
Neither Xxxxxxx nor any of its affiliates is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or has adopted
any board resolutions at the request of any Governmental Entity that restricts
the conduct of its business or that in any manner relates to its capital
adequacy, its credit policies, its management or its business, nor has Xxxxxxx,
nor Xxxxxxx Bank been advised by any Governmental Entity that it is considering
issuing or requesting any Regulatory Agreement.
4.7 LEGAL PROCEEDINGS.
(a) Neither Xxxxxxx nor any of its Subsidiaries is a party to
any, and there are no pending or, to Xxxxxxx'x knowledge, threatened, legal,
administrative, arbitration or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against Xxxxxxx or any
of its Subsidiaries in which, to Xxxxxxx'x knowledge, there is a reasonable
probability of any material recovery against or other material effect upon
Xxxxxxx or any of its Subsidiaries or which challenge the validity or propriety
of the transactions contemplated by this Agreement, the Bank Merger Agreement or
the Option Agreement as to which there is a reasonable probability of success.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon Xxxxxxx, any of its Subsidiaries or the
assets of Xxxxxxx or any of its Subsidiaries.
4.8 XXXXXXX INFORMATION.
The information relating to Xxxxxxx and its Subsidiaries to be provided
by Xxxxxxx to be contained in the Proxy Statement/Prospectus and the
Registration Statement will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances in which they are made, not misleading. The Proxy
Statement/Prospectus (except for the portions thereof relating solely to MECH or
any Subsidiary of MECH, as to which Xxxxxxx makes no representation or warranty)
will comply in all material respects with the provisions of the Securities Act,
Exchange Act and the rules and regulations thereunder.
4.9 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in Xxxxxxx'x Annual Report on Form
10-K for the fiscal year ended December 31, 1998 and all reports subsequently
filed by Xxxxxxx under Sections 13(a), 13(e), 14 or 15(d) of the Exchange Act,
true, correct and complete copies of which have previously been delivered
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or made available to MECH, since December 31, 1998, no event has occurred which
has had, individually or in the aggregate, a Material Adverse Effect on Xxxxxxx.
(b) Since December 31, 1998, Xxxxxxx and its Subsidiaries have
carried on their respective businesses in the ordinary and usual course
consistent with their past practices.
4.10 COMPLIANCE WITH APPLICABLE LAWS.
Xxxxxxx and each Xxxxxxx Subsidiary has complied in all material
respects with all Laws applicable to it or to the operation of its business.
Neither Xxxxxxx nor any Xxxxxxx Subsidiary has received any notice of any
alleged or threatened claim, violation of or liability or potential
responsibility under any such Laws that has not heretofore been cured and for
which there is no remaining liability.
4.11 TAX AND ACCOUNTING TREATMENT OF MERGER.
As of the date of this Agreement, Xxxxxxx is not aware of any fact or
state of affairs that could cause the Merger not to be treated as a
"reorganization" under Section 368(a) of the Code or to qualify for
"pooling-of-interests" accounting treatment.
4.12 YEAR 2000.
None of Xxxxxxx or any Xxxxxxx Subsidiary has received, or reasonably
expects to receive, a "Year 2000 Deficiency Notification Letter." Xxxxxxx has
made available to MECH a complete and accurate copy of Xxxxxxx'x plan, including
an estimate of the anticipated associated costs, for addressing Year 2000
Issues. Between the date of this Agreement and the Effective Time, Xxxxxxx shall
use reasonably best efforts to implement such plan. Xxxxxxx and its Subsidiaries
have complied in all material respects with the "Interagency Guidelines
Establishing Year 2000 Standards for Safety and Soundness" issued pursuant to
section 39 of the Federal Deposit Insurance Act and effective October 15, 1998.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 COVENANTS OF MECH
During the period from the date of this Agreement and continuing until
the Effective Time, except as expressly contemplated or permitted by this
Agreement, the Bank Merger Agreement or the Option Agreement or with the prior
written consent of Xxxxxxx, MECH and MS Bank shall carry on their respective
businesses in the ordinary course consistent with past practices and consistent
with prudent banking practices. MECH will use its reasonable efforts to (x)
preserve its business organization and that of its Subsidiary intact, (y) keep
available to itself and Xxxxxxx the present services of the employees of MECH
and its Subsidiary and (z) preserve for itself and Xxxxxxx the goodwill of the
customers of MECH and its Subsidiary and others with whom business relationships
exist. Without limiting the generality of the foregoing, and except as set forth
in the MECH Disclosure Schedule or as otherwise contemplated by this Agreement
or consented to by Xxxxxxx in writing, MECH shall not, and shall not permit its
Subsidiary to:
(a) declare or pay any dividends on, or make other
distributions in respect of, any of its capital stock (except for the payment of
regular quarterly cash dividends by MECH not to exceed $.20 per share on the
MECH Common Stock with declaration, record and payment dates corresponding
- 24 -
to the quarterly dividends paid by MECH during its fiscal year ended December
31, 1998 and except that its Subsidiary may declare and pay dividends and
distributions to MECH); provided, however, that under no circumstances shall
MECH declare, set aside or pay any dividends if it would result in the holders
of MECH Common Stock receiving more than four cash dividend payments in fiscal
1999 and 2000, when considered with anticipated Xxxxxxx dividends based on past
practice, nor shall MECH be prohibited from declaring, setting aside or paying
dividends consistent herewith if the Closing Date is such that holders of MECH
Common Stock would receive fewer than four cash dividends in fiscal 1999 and
2000, when considered with anticipated Xxxxxxx dividends based on past practice
it being understood that the parties hereto intend for MECH to pay its regular
quarterly cash dividends to shareholders as to any completed fiscal quarter
prior to the Effective Time; and provided that MECH is permitted to increase its
regular quarterly cash dividend proportionate to any increase by Xxxxxxx in its
regular quarterly cash dividend payment;
(b) (i) split, combine or reclassify any shares of its capital
stock or issue, authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock except
upon the exercise or fulfillment of rights or options issued or existing
pursuant to the MECH Stock Plans in accordance with their present terms, all to
the extent outstanding and in existence on the date of this Agreement, and
except pursuant to the Option Agreement, or (ii) repurchase, redeem or otherwise
acquire (except for the acquisition of Trust Account Shares and DPC Shares, as
such terms are defined in Section 1.4(c) hereof), any shares of the capital
stock of MECH or its Subsidiary, or any securities convertible into or
exercisable for any shares of the capital stock of MECH or its Subsidiary;
(c) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares, or enter into any agreement with respect to any of the
foregoing, other than (i) the issuance of MECH Common Stock pursuant to stock
options or similar rights to acquire MECH Common Stock granted pursuant to the
MECH Stock Plans and outstanding prior to the date of this Agreement, in each
case in accordance with their present terms and (ii) pursuant to the Option
Agreement;
(d) amend its Certificate of Incorporation, Bylaws or other
similar governing documents;
(e) authorize or permit any of its officers, directors,
employees or agents to, directly or indirectly, (i) solicit, initiate or
encourage any inquiries relating to, or the making of any proposal from, (ii)
engage in substantive discussions or negotiations with or (iii) provide any
information to, any person, entity or group (other than Xxxxxxx) concerning any
Acquisition Transaction (as defined below). Notwithstanding the foregoing, MECH
may provide information in connection with a possible Acquisition Transaction if
the Board of Directors of MECH, following receipt of advice of counsel,
determined that not to provide such information or participate in such
negotiations and discussions could cause the members of such Board to breach
their fiduciary duties under applicable laws. MECH shall promptly communicate to
Xxxxxxx the material terms of any proposal, whether written or oral, which it
may receive in respect of any such Acquisition Transaction and whether it is
providing information in connection with, or which may lead to, an Acquisition
Transaction with a third party. MECH will promptly cease and cause to be
terminated any existing activities, discussions or negotiations previously
conducted with any parties other than Xxxxxxx with respect to any of the
foregoing. As used in this Agreement, Acquisition Transaction shall mean any
offer, proposal or expression of interest relating to (I) any tender or exchange
offer, (II) merger, consolidation or other business combination involving MECH
or any Subsidiary, or (III) the acquisition in any manner of a substantial
equity interest in, or a substantial portion of the assets and/or liabilities,
out of the ordinary course of business, of, MECH or MS Bank other than the
transactions contemplated or permitted by this Agreement, the Bank Merger
Agreement and the Option Agreement;
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(f) make capital expenditures aggregating in excess of
$100,000;
(g) enter into any new line of business;
(h) acquire or agree to acquire, by merging or consolidating
with, or by purchasing an equity interest in or the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire any assets, other
than in connection with foreclosures, settlements in lieu of foreclosure or
troubled loan or debt restructurings, or in the ordinary course of business
consistent with prudent banking practices;
(i) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue or in any of the conditions to the
Merger set forth in Article VII not being satisfied, or in a violation of any
provision of this Agreement, the Bank Merger Agreement or the Option Agreement,
except, in every case, as may be required by applicable law;
(j) change its methods of accounting in effect at December 31,
1998 except as required by changes in GAAP or regulatory accounting principles
as concurred to by Xxxxxxx'x independent auditors;
(k) (i) except as required by applicable law or Section 5.5 of
this Agreement or to maintain qualification pursuant to the Code, adopt, amend,
renew or terminate any Plan or any other agreement, arrangement, plan or policy
between MECH or its Subsidiaries and one or more of its current or former
directors, officers, employees or independent contractors; (ii) other than merit
or promotional increases (x) in the ordinary course of business consistent with
past practices, (y) not to exceed 4% of base pay for individuals who are senior
vice presidents or higher and (z) not to exceed 4% of the aggregate MECH payroll
as of the date hereof, increase in any manner the compensation of any employee
or director or pay any benefit not required by any plan or agreement as in
effect as of the date hereof (including, without limitation, the granting of
stock options, stock appreciation rights, restricted stock, restricted stock
units or performance units or shares), (iii) enter into, modify or renew any
contract, agreement, commitment or arrangement providing for the payment to any
director, officer or employee of compensation or benefits, (iv) hire any new
employee at an annual compensation in excess of $35,000, (vi) pay expenses of
any employees or directors for attending conventions or similar meetings which
conventions or meetings are held after the date hereof, (vi) promote to a rank
of vice president or more senior any employee, or (vii) pay any retention
payments to any employees except for retention payments bonuses totaling in the
aggregate no more than $150,000; or (viii) make any nondeductible contribution
to any Plan. Bonus, commission and other incentive payments may continue to be
made in the ordinary course in accordance with past practices to the extent such
payments do not jeopardize the pooling-of-interest accounting treatment for the
Merger;
(l) incur any indebtedness for borrowed money, assume,
guarantee, endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity, except for
Federal Home Loan Bank borrowings in the ordinary course consistent with past
practices or to provide for cash needed which results from a Year 2000
extraordinary event;
(m) sell, purchase, enter into a lease, relocate, open or
close any banking or other office, or file an application pertaining to such
action with any Governmental Entity;
(n) make any equity investment or commitment to make such an
investment in real estate or in any real estate development project, other than
in connection with foreclosure, settlements in lieu of foreclosure, or troubled
loan or debt restructuring, in the ordinary course of business consistent with
past banking practices;
- 26 -
(o) make any new loans to, modify the terms of any existing
loan to, or engage in any other transactions (other than routine banking
transactions) with, any Affiliated Person of MECH or its Subsidiary;
(p) make any investment, or incur deposit liabilities, other
than in the ordinary course of business consistent with past practices,
including deposit pricing, and which would not change the risk profile of MS
Bank based on its existing deposit and lending policies or make any equity
investments;
(q) purchase any loans, except in the ordinary course in
accordance with past practices, or sell, purchase or lease any real property,
except for the sale of real estate that is the subject of a casualty loss or
condemnation or the sale of OREO on a basis consistent with past practices;
(r) originate (i) any loans except in accordance with existing
lending policies of MS Bank, (ii) residential non-conforming mortgage loans in
excess of $400,000, (iii) unsecured consumer loans in excess of $25,000, (iv)
commercial business loans in excess of $1,000,000 as to any loan or $1,500,000
in the aggregate as to related loans, or loans to related persons, (v)
commercial real estate first mortgage loans in excess of $1,000,000 as to any
loan or $1,500,000 in the aggregate as to related loans, or loans to related
persons, or (vi) land acquisition loans to borrowers who intend to construct a
residence on such land in excess of the lesser of 75% of the appraised value of
such land or $100,000, except in each case for loans for which written
applications have been received by MS Bank as of the date hereof, as set forth
at Section 5.1 of the MECH Disclosure Schedule;
(s) make any investments in any equity or derivative
securities, or any debt securities issued or guaranteed by any municipality or
otherwise exempt to any extent from federal, state or local taxation, or engage
in any forward commitment, futures transaction, financial options transaction,
hedging or arbitrage transaction or covered asset trading activities or make any
investments in any investment security with a maturity of greater than one year;
(t) sell or purchase any mortgage loan servicing rights; or
(u) agree or commit to do any of the actions set forth in (a)
- (t) above.
The consent of Xxxxxxx to any action by MECH or its Subsidiary that is not
permitted by any of the preceding paragraphs shall be evidenced by a writing
signed by the Chairman or any Executive Vice President of Xxxxxxx.
5.2 COVENANTS OF XXXXXXX.
During the period from the date of this Agreement and continuing until
the Effective Time, except as expressly contemplated or permitted by this
Agreement or with MECH's prior written consent, Xxxxxxx shall not, and shall not
permit Xxxxxxx Bank to:
(a) take any action that will result in any of Xxxxxxx'x
representations and warranties set forth in this Agreement being or becoming
untrue or any of the conditions to the Merger set forth in Article VII not being
satisfied or in violation of any provision of this Agreement, except, in every
case, as may be required by applicable Law; or
(b) take any other action that would materially adversely
affect or materially delay the ability of Xxxxxxx to obtain the Requisite
Regulatory Approvals or otherwise materially adversely affect Xxxxxxx'x and
Xxxxxxx Bank's ability to consummate the transactions contemplated by this
Agreement.
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5.3 MERGER COVENANTS.
Notwithstanding that MECH believes that it has established all reserves
and taken all provisions for possible loan losses required by GAAP and
applicable laws, rules and regulations, MECH recognizes that Xxxxxxx may have
adopted different loan, accrual and reserve policies (including loan
classifications and levels of reserves for possible loan losses). In that
regard, and in general, from and after the date of this Agreement to the
Effective Time, MECH and Xxxxxxx shall consult and cooperate with each other in
order to formulate the plan of integration for the Merger, including, among
other things, with respect to conforming, based upon such consultation, MECH's
loan, accrual and reserve policies to those policies of Xxxxxxx to the extent
appropriate and consistent with the fiduciary duties of MECH's Board of
Directors.
5.4 COMPLIANCE WITH ANTITRUST LAWS.
Each of Xxxxxxx and MECH shall use commercially reasonable efforts to
resolve objections, if any, which may be asserted with respect to the Merger
under antitrust laws. In the event a suit is threatened or instituted
challenging the Merger as violative of antitrust laws, each of Xxxxxxx and MECH
shall use commercially reasonable best efforts to avoid the filing of, or resist
or resolve such suit. Xxxxxxx and MECH shall use commercially reasonable efforts
to take such action as may be required: (a) by the OTS, the Connecticut
Commissioner, and the Antitrust Division of the Department of Justice or the
Federal Trade Commission in order to resolve such objections as any of them may
have to the Merger under antitrust laws, or (b) by any federal or state court of
the United States, in any suit brought by a private party or Governmental Entity
challenging the Merger as violative of antitrust laws, in order to avoid the
entry of, or to effect the dissolution of, any injunction, temporary restraining
order, or other order which has the effect of preventing the consummation of the
Merger. Commercially reasonable efforts shall not include, among other things
and only to the extent Xxxxxxx so desires, the willingness of Xxxxxxx to accept
an order agreeing to the divestiture, or the holding separate, of any assets of
Xxxxxxx or MECH.
5.5 QUALIFIED PLANS.
MECH and its Subsidiary may terminate any of their respective plans
that are intended to be "qualified" under Code section 401 to the extent that
such termination would not jeopardize the pooling-of-interest accounting
treatment in connection with the Merger or the "qualified" status of the
applicable plan. If any of the plans are not terminated, prorata proportional
accruals may be made to the account of each participant in such plan at the
Effective Time, in accordance with the provisions of the plan and in accordance
with past practice and in the same proportion as the percentage of a year that
has passed as of the Effective Time bears to the full year. For example, if the
Effective Time is July 1, 2000, 183 days will have passed, including the day of
the Effective Time as a day that has passed, representing 50% of the days in the
year 2000. Accordingly, an accrual of 50% of the aggregate annual accrual for
the applicable plan may be made at the Effective Time. Nevertheless, no such
accruals shall be made to the extent any such accrual jeopardizes the
pooling-of-interest accounting treatment of the Merger or the qualified status
of the applicable plan.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS.
(a) Upon the execution and delivery of this Agreement and
availability of Xxxxxxx financial statements in form required for use on Form
S-4, Xxxxxxx and MECH (as to information to be included therein pertaining to
MECH) shall promptly cause to be prepared and filed with the SEC a
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registration statement of Xxxxxxx on Form S-4, including the Proxy
Statement/Prospectus (the "Registration Statement") for the purpose of
registering the Xxxxxxx Common Stock to be issued in the Merger, and for
soliciting the approval of this Agreement and the Merger by the shareholders of
MECH. Xxxxxxx and MECH shall use their reasonable best efforts to have the
Registration Statement declared effective by the SEC as soon as possible after
the filing. The parties shall cooperate in responding to and considering any
questions or comments from the SEC staff regarding the information contained in
the Registration Statement. If at any time after the Registration Statement is
filed with the SEC, and prior to the Closing Date, any event relating to MECH is
discovered by MECH which should be set forth in an amendment of, or a supplement
to, the Registration Statement, including the Prospectus/Proxy Statement, MECH
shall promptly inform Xxxxxxx, and shall furnish Xxxxxxx with all necessary
information relating to such event whereupon Xxxxxxx shall promptly cause an
appropriate amendment to the Registration Statement to be filed with the SEC.
Upon the effectiveness of such amendment, each of Xxxxxxx and MECH (if prior to
the meeting of shareholders pursuant to Section 6.3 hereof) will take all
necessary action as promptly as practicable to permit an appropriate amendment
or supplement to be transmitted to its shareholders entitled to vote at such
meeting. If at any time after the Registration Statement is filed with the SEC,
and prior to the Closing Date, any event relating to Xxxxxxx is discovered by
Xxxxxxx which should be set forth in an amendment of, or a supplement to, the
Registration Statement, including the Prospectus/Proxy Statement, Xxxxxxx shall
promptly inform MECH, and Xxxxxxx shall promptly cause an appropriate amendment
to the Registration Statement to be filed with the SEC. Upon the effectiveness
of such amendment, each of Xxxxxxx and MECH (if prior to the meeting of
shareholders pursuant to Section 6.3 hereof) will take all necessary action as
promptly as practicable to permit an appropriate amendment or supplement to be
transmitted to its shareholders entitled to vote at such meeting. Xxxxxxx shall
also use reasonable efforts to obtain all necessary state securities law or
"Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement and the Bank Merger Agreement and MECH shall
furnish all information concerning MECH and the holders of MECH Common Stock as
may be reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use
their best efforts to promptly prepare and file all necessary documentation to
effect all applications, notices, petitions and filings, and to obtain as
promptly as practicable all permits, consents, approvals and authorizations of
all third parties and Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement (including without
limitation the Merger and the Bank Merger). MECH and Xxxxxxx shall have the
right to review in advance, and to the extent practicable each will consult the
other on, in each case subject to applicable laws relating to the exchange of
information, all the information relating to MECH and MS Bank or Xxxxxxx or
Xxxxxxx Bank, as the case may be, which appears in any filing made with, or
written materials submitted to, any third party or any Governmental Entity in
connection with the transactions contemplated by this Agreement; provided,
however, that nothing contained herein shall be deemed to provide either party
with a right to review any information provided to any Governmental Entity on a
confidential basis in connection with the transactions contemplated hereby. In
exercising the foregoing right, each of the parties hereto shall act reasonably
and as promptly as practicable. The parties hereto agree that they will consult
with each other with respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and Governmental Entities
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other apprised of the status of matters
relating to contemplation of the transactions contemplated herein.
(c) MECH shall, upon request, furnish Xxxxxxx with all
information concerning MECH, MS Bank and their directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with the Registration Statement or any other statement, filing,
notice or application made by or on behalf of Xxxxxxx to any Governmental Entity
in connection with the Merger, the Bank Merger or the other transactions
contemplated by this Agreement.
- 29 -
(d) Xxxxxxx and MECH shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement which causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval (defined in Section 7.1(c)
hereof) will not be obtained or that the receipt of any such approval will be
materially delayed.
6.2 ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable Laws
relating to the exchange of information, MECH shall accord to the officers,
employees, accountants, counsel and other representatives of Xxxxxxx, access,
during normal business hours during the period prior to the Effective Time, to
all its, and MS Bank's properties, books, contracts, commitments and records
and, during such period, MECH shall make available to Xxxxxxx (i) a copy of each
report, schedule, registration statement and other document filed or received by
it (including MS Bank) during such period pursuant to the requirements of
federal securities laws or federal or state banking laws and (ii) all other
information concerning its (including MS Bank) business, properties and
personnel as Xxxxxxx may reasonably request. Xxxxxxx shall receive notice of the
meetings of the MECH and MS Bank Board of Directors and any committees thereof,
and of any management committees (in all cases, at least as timely as MECH and
MS Bank, as the case may be, representatives to such meetings are required to be
provided notice). Up to two representatives of Xxxxxxx shall be permitted to
attend all meetings of the Board of Directors (except for the portion of such
meetings which relate to the Merger or an Acquisition Transaction or such other
matters deemed confidential ("Confidential Matters") of MECH or MS Bank, as the
case may be) and one representative of Xxxxxxx may attend such meetings of
committees of the Board of Directors and management of MECH and MS Bank which
Xxxxxxx desires. Xxxxxxx will hold all such information in confidence to the
extent required by, and in accordance with, the provisions of the
confidentiality agreement which Xxxxxxx entered into with MECH dated November 5,
1999 (the "Confidentiality Agreement").
(b) Upon reasonable notice and subject to applicable Laws
relating to the exchange of information, Xxxxxxx shall afford to the officers,
employees, accountants, counsel and other representatives of MECH, access,
during normal business hours during the period prior to the Effective Time, to
such information regarding Xxxxxxx as shall be reasonably necessary for MECH to
fulfill its obligations pursuant to this Agreement or which may be reasonably
necessary for MECH to confirm that the representations and warranties of Xxxxxxx
contained herein are true and correct and that the covenants of Xxxxxxx
contained herein have been performed in all material respects. MECH will hold
all such information in confidence to the extent required by, and in accordance
with, the provisions of the Confidentiality Agreement.
(c) No investigation by either of the parties or their
respective representatives shall affect the representations and warranties of
the other set forth herein.
(d) MECH shall provide Xxxxxxx with true, correct and complete
copies of all financial and other information provided to directors of MECH and
MS Bank in connection with meetings of their Boards of Directors or committees
thereof.
(e) MECH acknowledges that Xxxxxxx is in or may be in the
process of acquiring other businesses, banks and financial institutions and that
in connection with such acquisitions, information concerning MECH may be
required to be included in the registration statements, if any, for the sale of
securities of Xxxxxxx or in SEC reports in connection with such acquisitions.
MECH agrees to provide Xxxxxxx with any information, certificates, documents or
other materials about MECH as are reasonably necessary to be included in such
other SEC reports or registration statements, including registration statements
which may be filed by Xxxxxxx prior to the Effective Time. MECH shall use its
reasonable best efforts to cause its attorneys and accountants to provide
Xxxxxxx and any underwriters
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for Xxxxxxx with any consents, comfort letters, opinion letters, reports or
information which are necessary to complete the registration statements and
applications for any such acquisition or issuance of securities. Xxxxxxx shall
reimburse MECH for reasonable expenses thus incurred by MECH should the
transactions contemplated by this Agreement be terminated for any reason.
6.3 SHAREHOLDER MEETINGS.
(a) MECH shall take all steps necessary to duly call, give
notice of, convene and hold a meeting of its shareholders within 40 days after
the Registration Statement becomes effective for the purpose of voting upon the
approval of this Agreement and the Merger (the "Meeting"). Management and the
Board of Directors of MECH shall recommend to MECH's shareholders approval of
this Agreement, including the Merger, and the transactions contemplated hereby,
together with any matters incident thereto, and shall oppose any third party
proposal or other action that is inconsistent with this Agreement or the
consummation of the transactions contemplated hereby, unless the Board of
Directors of MECH reasonably determines, based upon the written advice of MECH's
legal counsel, that such recommendation or opposition, as the case may be, would
constitute a breach of the exercise of its fiduciary duty. MECH and Xxxxxxx
shall coordinate and cooperate with respect to the foregoing matters.
6.4 LEGAL CONDITIONS TO MERGER.
Each of Xxxxxxx and MECH shall use their reasonable best efforts (a) to
take, or cause to be taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements which may be imposed on such party with
respect to the Merger and, subject to the conditions set forth in Article VII
hereof, to consummate the transactions contemplated by this Agreement and (b) to
obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity and any other third party which is required to be obtained by MECH or
Xxxxxxx in connection with the Merger and the other transactions contemplated by
this Agreement.
6.5 STOCK EXCHANGE LISTING.
Xxxxxxx shall cause the shares of Xxxxxxx Common Stock to be issued in
the Merger and pursuant to options referred to herein to be approved for
quotation on the Nasdaq Stock Market National Market System (or such other
exchange on which the Xxxxxxx Common Stock has become listed, or approved for
listing) prior to or at the Effective Time.
6.6 EMPLOYEES.
(a) To the extent permissible under the applicable provisions
of the Code and ERISA, for purposes of crediting periods of service for
eligibility to participate and vesting under the 401(k) Plan maintained by
Xxxxxxx or Xxxxxxx Bank, as applicable and for purposes of eligibility to
participate (but not for purposes of benefit accrual) under the defined benefit
pension plan maintained by Xxxxxxx or Xxxxxxx Bank, as applicable, individuals
who are employees of MECH or MS Bank at the Effective Time will be credited with
periods of service with MECH or MS Bank before the Effective Time as if such
service had been with Xxxxxxx or Xxxxxxx Bank, as applicable; provided, however,
that if, after the Effective Time, Xxxxxxx or Xxxxxxx Bank continues in effect
the money purchase pension plan previously maintained by MECH or MS Bank,
Xxxxxxx and Xxxxxxx Bank shall not be required to cause employees who are
covered by such money purchase pension plan to accrue benefits under such
defined benefit pension plan with respect to any period for which Xxxxxxx or
Xxxxxxx Bank makes contributions to such money purchase pension plan, and
nothing in this Section 6.6 shall be
- 31 -
construed to require any duplication of benefits. Similar service credit shall
also be given by Xxxxxxx or Xxxxxxx Bank in determining eligibility to
participate in vacation and welfare plans provided to such employees of MECH or
MS Bank after the Merger. Employees of MECH and MS Bank as of the Effective Time
will be immediately eligible to participate in the comprehensive health and
welfare plans maintained by Xxxxxxx or Xxxxxxx Bank on the same basis that they
were eligible to participate in the corresponding plans at MECH or MS Bank
immediately before the Effective Time and restrictions under such plans relating
to preexisting conditions will be waived for such employees and their covered
dependents.
(b) Following the Effective Time and until such time as
Xxxxxxx in its reasonable discretion and in accordance with applicable law
determines that the employees of MECH as of the Effective Time (the "MECH
Employees") shall participate in the employee benefits plans and programs
provided to similarly situated employees of Xxxxxxx Bank, the benefits to be
provided to the MECH Employees shall be the benefit plans and programs that were
provided by MECH to such employees immediately before the Effective Time.
(c) Following the Merger, Xxxxxxx agrees that it shall honor
the existing written deferred compensation, employment, change of control and
severance contracts or plans with directors and employees of MECH and its
Subsidiaries that are specifically listed at Section 6.6 of the MECH Disclosure
Schedule; provided, however, that in making the foregoing agreement, except as
otherwise required by law, Xxxxxxx will honor such contracts only to the extent
that none of such deferred compensation, employment, change of control and
severance contracts, nor any other Plan, program, agreement or other
arrangement, either individually or collectively, provides for any payment by
MECH or its Subsidiary that would not be deductible under Code Sections
162(a)(1), 162(m) or 404 or that would constitute a "parachute payment" within
the meaning of Code Section 280G that is not disclosed in response to Section
3.11 hereof. Xxxxxxx will cause Xxxxxxx Bank to offer employment, with
reasonably comparable positions and compensation, to all non-managerial branch
personnel of MS Bank. Xxxxxxx will post at MS Bank job openings at Xxxxxxx or
Xxxxxxx Bank immediately following the execution of this Agreement and will
"lease" MECH and MS Bank employees where possible prior to the Effective Time.
Xxxxxxx will cause Xxxxxxx Bank to offer to employees of MECH and MS Bank who
are not retained after the Effective Time opportunities for employment with
Xxxxxxx Bank as vacancies occur, subject to the employees' qualifications for
positions that may become available. Xxxxxxx recognizes that MS Bank's senior
officers have valuable knowledge, experience and familiarity with MS Bank's
operations. In order to take advantage of such value, Xxxxxxx will attempt, by
December 17, 1999, in good faith to enter into agreements (which may provide for
a period of noncompetition, consulting or employment following the Effective
Time, in Xxxxxxx'x sole discretion) with the eight senior officers of MECH who
currently have change of control agreements. Employees of MECH or MS Bank as of
the Effective Time who are not retained by Xxxxxxx or Xxxxxxx Bank for a period
of one year after the Effective Time, and who are not otherwise covered by
employment or change in control agreements, will be eligible to receive
severance benefits provided by MECH, MS Bank, Xxxxxxx or Xxxxxxx Bank before the
date hereof whichever provides greater benefits to the employee. A copy of the
MSB Severance Plan is attached hereto as Schedule 6.6(c).
6.7 INDEMNIFICATION.
(a) In the event of any threatened or actual claim, action,
suit, proceeding or investigation, whether civil, criminal or administrative, in
which any person who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or officer or
employee of MECH (the "Indemnified Parties") is, or is threatened to be, made a
party based in whole or in part on, or arising in whole or in part out of, or
pertaining to (i) the fact that he is or was a director, officer or employee of
MECH or any of their respective predecessors or (ii) this Agreement or any of
the transactions contemplated hereby, whether in any case asserted or arising
before or after the
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Effective Time, the parties hereto agree to cooperate and defend against and
respond thereto to the extent permitted by applicable law and the Certificate of
Incorporation and Bylaws of MECH. It is understood and agreed that after the
Effective Time, Xxxxxxx shall indemnify and hold harmless, as and to the fullest
extent permitted by applicable law and the Certificate of Incorporation and
Bylaws of Xxxxxxx as in effect on the date hereof (subject to change as required
by law), each such Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including reasonable attorney's fees and expenses
in advance of the final disposition of any claim, suit, proceeding or
investigation to each Indemnified Party to the fullest extent permitted by law
upon receipt of any undertaking required by applicable law), judgments, fines
and amounts paid in settlement ("Damages") in connection with any such
threatened or actual claim, action, suit, proceeding or investigation, and in
the event of any such threatened or actual claim, action, suit, proceeding or
investigation (whether asserted or arising before or after the Effective Time),
the Indemnified Parties may retain counsel reasonably satisfactory to Xxxxxxx;
provided, however, that (1) Xxxxxxx shall have the right to assume the defense
thereof and upon such assumption Xxxxxxx shall not be liable to any Indemnified
Party for any legal expenses of other counsel or any other expenses subsequently
incurred by any Indemnified Party in connection with the defense thereof, except
that if Xxxxxxx elects not to assume such defense or counsel for the Indemnified
Parties reasonably advises the Indemnified Parties that there are issues which
raise conflicts of interest between Xxxxxxx and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to Xxxxxxx, and
Xxxxxxx shall pay the reasonable fees and expenses of such counsel for the
Indemnified Parties, (2) Xxxxxxx shall be obligated pursuant to this paragraph
to pay for only one firm of counsel for each Indemnified Party, (3) Xxxxxxx
shall not be liable for any settlement effected without its prior written
consent (which consent shall not be unreasonably withheld or delayed), and (4)
Xxxxxxx shall not be obligated pursuant to this paragraph to the extent that a
final judgment determines that any Damages are as a result of the gross
negligence or willful misconduct or result from a decision made by the
Indemnified Party when the Indemnified Party had no good faith belief that he or
she was acting in the best interests of MECH. Xxxxxxx shall have no obligation
to advance expenses incurred in connection with a threatened or pending action,
suit or preceding in advance of final disposition of such action, suit or
proceeding, unless (i) Xxxxxxx would be permitted to advance such expenses
pursuant to the DGCL and Xxxxxxx'x Certificate of Incorporation or Bylaws, and
(ii) Xxxxxxx receives an undertaking by the Indemnified Party to repay such
amount if it is determined that such party is not entitled to be indemnified by
Xxxxxxx pursuant to the DGCL and Xxxxxxx'x Certificate of Incorporation or
Bylaws. Any Indemnified Party wishing to claim indemnification under this
Section 6.7, upon learning of any such claim, action, suit, proceeding or
investigation, shall notify Xxxxxxx thereof; provided, however, that the failure
to so notify shall not affect the obligations of Xxxxxxx under this Section 6.7
except to the extent such failure to notify materially prejudices Xxxxxxx.
Xxxxxxx'x obligations under this Section 6.7 continue in full force and effect
for a period of six years from the Effective Time; provided, however, that all
rights to indemnification in respect of any claim asserted or made within such
period shall continue until the final disposition of such claim.
(b) Xxxxxxx shall purchase for the benefit of the persons
serving as executive officers and directors of MECH immediately prior to the
Effective Time, directors' and officers' liability insurance coverage for three
years after the Effective Time, under either MECH's policy in existence on the
date hereof, or under a policy of similar coverage and amounts containing terms
and conditions which are generally not less advantageous than Xxxxxxx'x current
policy, and in either case, with respect to acts or omissions occurring prior to
the Effective Time which were committed by such executive officers and directors
in their capacity as such ("Tail Insurance"), provided, however, that Xxxxxxx
shall not be required to expend more than 200% of the current amount expended by
MECH to maintain or procure insurance coverage pursuant hereto.
6.8 SUBSEQUENT INTERIM AND ANNUAL FINANCIAL STATEMENTS.
As soon as reasonably available, but in no event more than 45 days
after the end of each fiscal quarter (other than the fourth fiscal quarter, as
to which the time period shall be 90 days), Xxxxxxx will
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deliver to MECH and MECH will deliver to Xxxxxxx their respective Quarterly
Reports on Form 10-Q and Annual Reports on Form 10-K, as filed with the SEC
under the Exchange Act. Each party shall deliver to the other any Current
Reports on Form 8-K promptly after filing such reports with the SEC.
6.9 ADDITIONAL AGREEMENTS.
In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, or to vest
the Surviving Corporation or the Surviving Bank with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, or the constituent banks to the Bank Merger, as the case
may be, the proper officers and directors of each party to this Agreement and
Xxxxxxx'x and MECH's Subsidiaries shall take all such necessary action as may be
reasonably requested by Xxxxxxx.
6.10 ADVICE OF CHANGES.
Xxxxxxx and MECH shall promptly advise the other party of any change or
event that, individually or in the aggregate, has or would be reasonably likely
to have a Material Adverse Effect on it or to cause or constitute a material
breach of any of its representations, warranties or covenants contained herein.
From time to time prior to the Effective Time, each party will promptly
supplement or amend its disclosure schedule delivered in connection with the
execution of this Agreement to reflect any matter which, if existing, occurring
or known at the date of this Agreement, would have been required to be set forth
or described in such disclosure schedule or which is necessary to correct any
information in such disclosure schedule which has been rendered inaccurate
thereby. No supplement or amendment to such disclosure schedule shall have any
effect for the purpose of determining satisfaction of the conditions set forth
in Sections 7.2(a) or 7.3(a) hereof, as the case may be, or the compliance by
MECH with the covenants set forth in Section 5.1 hereof.
6.11 CURRENT INFORMATION.
During the period from the date of this Agreement to the Effective
Time, MECH will cause one or more of its designated representatives to confer on
a regular and frequent basis (not less than monthly) with representatives of
Xxxxxxx and to report the general status of the ongoing operations of MECH. MECH
will promptly notify Xxxxxxx of any material change in the normal course of
business or in the operation of the properties of MECH and of any governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated), or the institution or the threat of litigation
involving MECH, and will keep Xxxxxxx fully informed of such events.
6.12 EXECUTION AND AUTHORIZATION OF BANK MERGER AGREEMENT.
Prior to the Effective Time, (a) Xxxxxxx and MECH each shall execute
and deliver the Certificate of Merger substantially in the form at Exhibit C,
and (b) Xxxxxxx and MECH each shall cause Xxxxxxx Bank and MS Bank,
respectively, to execute and deliver the Bank Merger Agreement, in substantially
the form at Exhibit A.
6.13 CHANGE IN STRUCTURE.
Xxxxxxx may elect to modify the structure of the transactions
contemplated by this Agreement as noted herein so long as (i) there are no
material adverse federal income tax consequences to the MECH shareholders as a
result of such modification, (ii) the consideration to be paid to the MECH
shareholders under this Agreement is not thereby changed or reduced in kind or
amount, and (iii) such modification will not be reasonably likely to delay
materially or jeopardize receipt of any required
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regulatory approvals. In the event that Xxxxxxx elects to change the structure
of the Merger, the Bank Merger or any other transactions contemplated hereby,
the parties agree to modify this Agreement and the various exhibits hereto, or
enter into any other agreements, to reflect such revised structure. In such
event, Xxxxxxx shall prepare appropriate amendments to this Agreement and the
exhibits hereto, or other documents, for execution by the parties hereto.
Xxxxxxx and MECH agree to cooperate fully with each other to effect such
amendments or other documents.
6.14 TRANSACTION EXPENSES OF MECH.
(a) For planning purposes, MECH shall, within 15 days from the
date hereof, provide Xxxxxxx with its estimated budget of transaction-related
expenses reasonably anticipated to be payable by MECH in connection with this
transaction, including the fees and expenses of counsel, accountants, investment
bankers and other professionals. MECH shall promptly notify Xxxxxxx if or when
it determines that it will expect to exceed its budget.
(b) Promptly after the execution of this Agreement, MECH shall
ask all of its attorneys and other professionals to render current and correct
invoices for all unbilled time and disbursements. MECH shall accrue and/or pay
all of such amounts which are actually due and owing as soon as possible.
(c) MECH shall advise Xxxxxxx monthly of all out-of-pocket
expenses which MECH has incurred in connection with this transaction.
(d) Xxxxxxx, in reasonable consultation with MECH, shall make
all arrangements with respect to the printing and mailing of the Proxy
Statement/Prospectus. MECH shall, if Xxxxxxx reasonably deems necessary, also
engage a proxy solicitation firm to assist in the solicitation of proxies for
the meeting. MECH agrees to cooperate as to such matters.
6.15 FURTHER ACTIONS OF MECH.
Upon the written request of Xxxxxxx, MECH shall, within 5 business days
of the date of such written request, demand payment of, or cause MS Bank to
demand payment of, any and all loans (to the extent identified by Xxxxxxx) of
MECH or MS Bank, as the case may be, which loans are (or should have been) set
forth at Sections 3.5(a) or 3.21(e) of the MECH Disclosure Schedule, and which
loans are secured or collateralized in any way by MECH Common Stock.
6.16 PUBLICATION OF EARNINGS
Xxxxxxx shall use its best efforts to publish as promptly as reasonably
practicable, but in no event later than 45 days after the end of the first month
after the Effective Time in which there are at least 30 days of post-Merger
combined operations (which month may be the month in which the Effective Time
occurs), combined sales and net income figures as completed by and in accordance
with the terms of SEC Accounting Series Release No. 135.
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ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(A) SHAREHOLDER APPROVALS.
(i) This Agreement, including the Certificate of
Merger, and the Merger shall have been approved and adopted by the affirmative
vote of the holders of at least majority of the outstanding shares of MECH
Common Stock entitled to vote thereon.
(B) STOCK EXCHANGE LISTING.
The shares of Xxxxxxx Common Stock which shall be issued in
the Merger (including the Xxxxxxx Common Stock that may be issued upon exercise
of the options referred to in Section 1.5 hereof) upon consummation of the
Merger shall have been authorized for quotation on the Nasdaq Stock Market
National Market System (or such other exchange on which the Xxxxxxx Common Stock
may become listed).
(C) OTHER APPROVALS.
All regulatory approvals from Governmental Entities required
to consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired (all such approvals and the expiration of all
such waiting periods being referred to herein as the "Requisite Regulatory
Approvals"). No Requisite Regulatory Approval shall contain a non-customary
condition that Xxxxxxx reasonably determines to be burdensome or otherwise alter
the benefits for which it bargained in this Agreement.
(D) REGISTRATION STATEMENT.
The Registration Statement shall have become effective under
the Securities Act, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC.
(E) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY.
No order, injunction or decree issued by any court or agency
of competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger or any of the other transactions (an "Injunction")
contemplated by this Agreement or the Certificate of Merger shall be in effect.
No statute, rule, regulation, order, injunction or decree shall have been
enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits, restricts or makes illegal consummation of the Merger.
(F) FEDERAL TAX OPINION.
Xxxxxxx and MECH shall have received from Xxxxx & Xxxxxxx
L.L.P., Xxxxxxx'x special counsel, an opinion in form and substance reasonably
satisfactory to Xxxxxxx and MECH, substantially to the effect that on the basis
of facts, representations, and assumptions set forth in such opinion which are
consistent with the state of facts existing at the time of such opinion, the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of
- 36 -
the Code. In rendering such opinion, such counsel may require and, to the extent
such counsel deems necessary or appropriate, may rely upon representations made
in certificates of officers of MECH, Xxxxxxx, their respective affiliates and
others. The parties hereby agree that this condition shall not be subject to
waiver following receipt of MECH shareholder approval of this Agreement.
(G) POOLING OF INTERESTS.
Xxxxxxx shall have received (i) advice of KPMG LLP,
independent accountants, within two weeks of the date hereof, to the effect that
the Merger will be accounted for as a pooling of interests, and (ii) as of the
Effective Time, a written opinion of each of KPMG LLP to the effect that the
Merger will be accounted for as a pooling-of-interests. Xxxxxxx will inform MECH
in writing within three weeks hereof if KPMG LLP has not provided the advice or
indicated such advice is not favorable for the availability of
pooling-of-interests in connection with the Merger.
7.2 CONDITIONS TO OBLIGATIONS OF XXXXXXX.
The obligation of Xxxxxxx to effect the Merger is also subject to the
satisfaction or waiver by Xxxxxxx at or prior to the Effective Time of the
following conditions:
(A) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of MECH set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date. Such determination shall be made as if there were no
materiality qualifications in such representations and warranties. Xxxxxxx shall
have received a certificate signed on behalf of MECH by each of the President
and Chief Executive Officer and the Chief Financial Officer of MECH to the
foregoing effect.
(B) PERFORMANCE OF COVENANTS AND AGREEMENTS OF MECH.
MECH shall have performed in all material respects all
covenants and agreements required to be performed by it under this Agreement at
or prior to the Closing Date. Xxxxxxx shall have received a certificate signed
on behalf of MECH by each of the President and Chief Executive Officer and the
Chief Financial Officer of MECH to such effect.
(C) CONSENTS UNDER AGREEMENTS.
(i) The consent, approval or waiver of each person (other than
the Governmental Entities referred to in Section 7.1(c) hereof) whose consent or
approval shall be required in order to permit the succession by the Surviving
Corporation pursuant to the Merger to any obligation, right or interest of MECH
under any loan or credit agreement, note, mortgage, indenture, lease, license or
other agreement or instrument shall have been obtained, except for those, the
failure of which to obtain, will not result in a Material Adverse Effect on the
Surviving Corporation.
(ii) The consent, approval or waiver of each person (other
than the Governmental Entities referred to in Section 7.1(c) hereof) whose
consent or approval shall be required in order to permit the succession by the
Surviving Bank pursuant to the Bank Merger to any obligation, right or interest
of MS Bank under any loan or credit agreement, note, mortgage, indenture, lease,
license or other agreement or instrument shall have been obtained except for
those, the failure of which to obtain, will not result in a Material Adverse
Effect on the Surviving Bank.
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(D) NO PENDING GOVERNMENTAL ACTIONS.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
(E) NO MATERIAL ADVERSE CHANGE.
There shall have been no changes, other than changes
contemplated by this Agreement, in the business, operations, condition
(financial or otherwise), assets or liabilities of MECH or its Subsidiary
(regardless of whether or not such events or changes are inconsistent with the
representations and warranties given herein) that individually or in the
aggregate has had or would have a Material Adverse Effect on MECH
(F) LEGAL OPINION.
Xxxxxxx shall have received the opinion of Tyler, Xxxxxx and
Xxxxxx, counsel to MECH, dated the Closing Date, as to matters set forth at
Exhibit E. As to any matter in such opinion which involves matters of fact, such
counsel may rely upon the certificates of officers and directors of MECH and of
public officials, reasonably acceptable to Xxxxxxx.
7.3 CONDITIONS TO OBLIGATIONS OF MECH.
The obligation of MECH to effect the Merger is also subject to the
satisfaction or waiver by MECH at or prior to the Effective Time of the
following conditions:
(A) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Xxxxxxx set forth in
this Agreement shall be true and correct in all material respects as of the date
of this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date. Such determination shall be made as if there were no
materiality qualifications in such representations and warranties. MECH shall
have received a certificate signed on behalf of Xxxxxxx by each of the President
and the Chief Financial Officer of Xxxxxxx to the foregoing effect.
(B) PERFORMANCE OF COVENANTS AND AGREEMENTS OF XXXXXXX.
Xxxxxxx shall have performed in all material respects all
covenants and agreements required to be performed by it under this Agreement at
or prior to the Closing Date. MECH shall have received a certificate signed on
behalf of Xxxxxxx by each of the President and the Chief Financial Officer of
Xxxxxxx to such effect.
(C) CONSENTS UNDER AGREEMENTS.
The consent or approval or waiver of each person (other than
the Governmental Entities referred to in Section 7.1(c)) whose consent or
approval shall be required in connection with the transactions contemplated
hereby under any loan or credit agreement, note, mortgage, indenture, lease,
license or other agreement or instrument to which Xxxxxxx is a party or is
otherwise bound shall have been obtained.
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(D) NO PENDING GOVERNMENTAL ACTIONS.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
(E) LEGAL OPINION.
MECH shall have received the opinion of Xxxxx & Xxxxxxx
L.L.P., special counsel to Xxxxxxx, dated the Closing Date, as to the
authorization, validity and non-assessibility of the Xxxxxxx Common Stock to be
issued pursuant to this Agreement. As to any matter in such opinion which
involves matters of fact, such counsel may rely upon the certificates of
officers and directors of Xxxxxxx and of public officials and opinions of local
counsel, reasonably acceptable to MECH.
(F) NO MATERIAL ADVERSE CHANGE.
There shall have been no changes, other than changes
contemplated by this Agreement, in the business, operations, condition
(financial or otherwise), assets or liabilities of Xxxxxxx or any Xxxxxxx
Subsidiary (regardless of whether or not such events or changes are inconsistent
with the representations and warranties given herein) that individually or in
the aggregate has had or would have a Material Adverse Effect on Xxxxxxx.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION.
This Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval of the matters presented in connection
with the Merger by the shareholders of MECH or Xxxxxxx, if applicable:
(a) by mutual consent of Xxxxxxx and MECH in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board;
(b) by either Xxxxxxx or MECH upon written notice to the other
party (i) 30 days after the date on which any request or application for a
Regulatory Approval shall have been denied or withdrawn at the request or
recommendation of the Governmental Entity which must grant such Regulatory
Approval, unless within the 30-day period following such denial or withdrawal
the parties agree to file, and have filed with the applicable Governmental
Entity, a petition for rehearing or an amended application, provided, however,
that no party shall have the right to terminate this Agreement pursuant to this
Section 8.1(b), if such denial or request or recommendation for withdrawal shall
be due to the failure of the party seeking to terminate this Agreement to
perform or observe the covenants and agreements of such party set forth herein;
(c) by either Xxxxxxx or MECH if the Merger shall not have
been consummated on or before August 31, 2000, unless the failure of the Closing
to occur by such date shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and agreements of
such party set forth herein;
(d) by either Xxxxxxx or MECH (provided that the terminating
party is not in breach of its obligations under Section 6.3 hereof) if the
approval of the shareholders of MECH hereto required for the consummation of the
Merger shall not have been obtained by reason of the failure to
- 39 -
obtain the required vote at a duly held meeting of shareholders or at any
adjournment or postponement thereof;
(e) by either Xxxxxxx or MECH (provided that the terminating
party is not then in breach of any representation, warranty, covenant or other
agreement contained herein that, individually or in the aggregate, would give
the other party the right to terminate this Agreement) if there shall have been
a breach of any of the representations or warranties set forth in this Agreement
on the part of the other party, if such breach, individually or in the
aggregate, has had or is likely to have a Material Adverse Effect on the
breaching party, and such breach shall not have been cured within 30 days
following receipt by the breaching party of written notice of such breach from
the other party hereto or such breach, by its nature, cannot be cured prior to
the Closing;
(f) by either Xxxxxxx or MECH (provided that the terminating
party is not then in breach of any representation, warranty, covenant or other
agreement contained herein that, individually or in the aggregate, would give
the other party the right to terminate this Agreement) if there shall have been
a material breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, and such breach shall not have been
cured within 30 days following receipt by the breaching party of written notice
of such breach from the other party hereto or such breach, by its nature, cannot
be cured prior to the Closing;
(g) by Xxxxxxx, if the management of MECH or its Board of
Directors, for any reason, (i) fails to call and hold within 40 days of the
effectiveness of the Registration Statement a meeting of MECH's shareholders to
consider and approve this Agreement and the transactions contemplated hereby,
(ii) fails to recommend to shareholders the approval of this Agreement and the
transactions contemplated hereby, (iii) fails to oppose any third party proposal
that is inconsistent with the transactions contemplated by this Agreement or
(iv) violates Section 5.1(e) of this Agreement;
(h) by the Board of Directors of MECH, upon written notice to
Xxxxxxx at any time during the ten-day period commencing two days after the
Determination Date (as defined below), if both of the following conditions are
satisfied:
(i) the Average Closing Price shall be less than the
product of 0.80 and the Starting Price; and
(ii) (A) the quotient obtained by dividing the Average
Closing Price by the Starting Price (such number being referred to herein as the
"Xxxxxxx Ratio") shall be less than (B) the quotient obtained by dividing the
Average Index Price by the Index Price on the Starting Date and subtracting 0.15
from the quotient in this clause (ii)(B) (such number being referred to herein
as the "Index Ratio");
subject, however, to the following provisions. If MECH elects to exercise its
termination right pursuant to the immediately preceding sentence, it shall give
prompt written notice to Xxxxxxx; provided, however, that such notice of
election to termination may be withdrawn at any time within the aforementioned
ten-day period. During the five-day period commencing with its receipt of such
notice, Xxxxxxx shall have the option to elect to increase the Exchange Ratio to
equal the lesser of (i) the quotient obtained by dividing (A) the product of
0.80, the Starting Price and the Exchange Ratio (as then in effect) by (B) the
Average Closing Price, and (ii) the quotient obtained by dividing (A) the
product of the Index Ratio and the Exchange Ratio (as then in effect) by (B) the
Xxxxxxx Ratio. If Xxxxxxx makes such an election within such five-day period, it
shall give prompt written notice to New England of such election and of the
revised Exchange Ratio, whereupon no termination shall have occurred pursuant to
this Section 8.1(h) and this Agreement shall remain in effect in accordance with
its terms (except as the Exchange Ratio shall have been so modified), and any
references in this Agreement to "Exchange Ratio" shall thereafter be deemed to
refer to the Exchange Ratio as adjusted pursuant to
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this Section 8.1(h) (and corresponding a corresponding modification shall be
made to the Maximum Share Amount).
For purposes of this Section 8.1(h), the following terms shall
have the meanings indicated:
"Average Closing Price" means the average of the daily last
sale prices of Xxxxxxx Common Stock as reported on Nasdaq (as reported in The
Wall Street Journal or, if not reported therein, in another mutually agreed upon
authoritative source) for the twenty consecutive full trading days in which such
shares are traded on Nasdaq ending at the close of trading on the Determination
Date.
"Average Index Price" means the average of the Index Prices
for the twenty consecutive full trading days ending at the close of trading on
the Determination Date.
"Determination Date" means the date on which the approval of
the OTS required for consummation of the Merger shall be received.
"Index Group" means the bank and savings and loan holding
companies to be mutually agreed upon, the common stocks of all of which shall be
publicly traded and as to which there shall not have been, since the Starting
Date and before the Determination Date, an announcement of a proposal for such
company to be acquired or for such company to acquire another company or
companies in transactions with a value exceeding 25% of the acquiror's market
capitalization as of the Starting Date. In the event that the common stock of
any such company ceases to be publicly traded or any such announcement is made
with respect to any such company, such company shall be removed from the Index
Group, and the weights (which have been determined based on the number of
outstanding shares of common stock) redistributed proportionately for purposes
of determining the Index Price.
"Index Price" on a given date means the weighted average
(weighted in accordance with the factors listed above) of the closing prices on
such date of the companies comprising the Index Group.
"Starting Date" means the last full day on which Nasdaq was
open for trading prior to the execution of this Agreement.
"Starting Price" shall mean the last sale price per share of
Xxxxxxx Common Stock on the Starting Date, as reported on Nasdaq (as reported in
The Wall Street Journal or, if not reported therein, in another mutually agreed
upon authoritative source).
If Xxxxxxx or any company belonging to the Index Group
declares or effects a stock dividend, reclassification, recapitalization,
split-up, combination, exchange of shares or similar transaction between the
Starting Date and the Determination Date, the prices for the common stock of
such company shall be appropriately adjusted for the purposes of applying this
Section 8.1(h).
(i) by Xxxxxxx if MECH has complied with Section 5.1(e) above,
and has given written notice to Xxxxxxx that MECH has agreed to enter into an
Acquisition Transaction other than as contemplated hereby; provided, however,
that such termination under this Section 8.1(i) shall not be effective unless
and until MECH shall have complied with the expense and breakup fee provisions
of Section 9.3 below, and shall have acknowledged in the written notice to be
provided in accordance herewith that the Option granted pursuant to the Option
Agreement shall then be exercisable in accordance with terms thereof.
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8.2 EFFECT OF TERMINATION.
In the event of termination of this Agreement by either Xxxxxxx or MECH
as provided in Section 8.1 hereof, this Agreement shall forthwith become void
and have no effect except (i) the last sentences of Sections 6.2(a) and 6.2(b)
and Sections 8.2, 9.2 and 9.3 hereof shall survive any termination of this
Agreement, and (ii) notwithstanding anything to the contrary contained in this
Agreement, no party shall be relieved or released from any liabilities or
damages arising out of its willful or intentional breach of any provision of
this Agreement.
8.3 AMENDMENT.
Subject to compliance with applicable law, this Agreement may be
amended by the parties hereto, by action taken or authorized by their respective
Board of Directors, at any time before or after approval of the matters
presented in connection with the Merger by the shareholders of MECH; provided,
however, that after any approval of the transactions contemplated by this
Agreement by MECH's shareholders, there may not be, without further approval of
such shareholders, any amendment of this Agreement which reduces the amount or
changes the form of the consideration to be delivered to MECH shareholders
hereunder other than as contemplated by this Agreement. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
8.4 EXTENSION; WAIVER.
At any time prior to the Effective Time, the parties hereto, by action
taken or authorized by their respective Boards of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party, but such extension or waiver
or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 CLOSING.
Subject to the terms and conditions of this Agreement, the closing of
the Merger (the "Closing") will take place at 10:00 a.m. at the main offices of
Xxxxxxx on (i) the fifth day after the last Requisite Regulatory Approval and
shareholder approvals are received and all applicable waiting periods have
expired, or (ii) such other date, place and time as the parties may agree (the
"Closing Date").
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations, warranties, covenants and agreements in
this Agreement or in any instrument delivered pursuant to this Agreement (other
than pursuant to the Option Agreement, which shall terminate in accordance with
its terms) shall survive the Effective Time, except for those covenants and
agreements contained herein and therein which by their terms apply in whole or
in part after the Effective Time.
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9.3 EXPENSES; BREAKUP FEE.
All costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expense, except that all filing and other fees paid to the SEC, the Connecticut
Commissioner and the OTS in connection with this Agreement shall be borne by
Xxxxxxx. Except as set forth in the next sentence, in the event that this
Agreement is terminated by either Xxxxxxx or MECH by reason of a material breach
pursuant to Sections 8.1(e) or (f) hereof or by Xxxxxxx or MECH pursuant to
Section 8.1(g) hereof, the other party shall pay all documented, reasonable
costs and expenses up to $1,500,000 incurred by the terminating party in
connection with this Agreement and the transactions contemplated hereby. In the
event that this Agreement is terminated by Xxxxxxx under Section 8.1(d) by
reason of MECH shareholders not having given any required approval and there
shall have been prior to the meeting of MECH stockholders a "Third Party Public
Event" (as defined below), MECH shall pay all documented, reasonable costs and
expenses up to $1,500,000 incurred by Xxxxxxx in connection with this Agreement
and the transactions contemplated hereby, plus a breakup fee of $3,000,000. For
purposes of this Section 9.3, a "Third Party Public Event" shall refer to any of
the following events: (i) any person (as defined at Sections 3(a)(9) and
13(d)(3) of the Exchange Act and the rules and regulations thereunder), other
than Xxxxxxx or any Xxxxxxx Subsidiary, shall have made a bona fide proposal to
MECH or, by a public announcement or written communication that is or becomes
the subject of public disclosure, to MECH's stockholders to engage in an
Acquisition Transaction (including, without limitation, any situation in which
any person other than Xxxxxxx or any Xxxxxxx Subsidiary shall have commenced (as
such term is defined in Rule 14d-2 under the Exchange Act), or shall have filed
a registration statement under the Securities Act, with respect to a tender
offer or exchange offer to purchase any shares of MECH Common Stock such that,
upon consummation of such offer, such person would have beneficial ownership of
10.0% or more of the then outstanding shares of MECH Common Stock); or (ii) any
director, officer, 5% or greater stockholder or affiliate of MECH shall have, by
any means which becomes the subject of public disclosure, communicated
opposition to this Agreement, the Merger or other transactions contemplated
hereby, or otherwise takes action to influence the vote of MECH stockholders
against this Agreement, the Merger and the transactions contemplated hereby. In
the event this Agreement is terminated by Xxxxxxx by reason of a willful
material breach pursuant to Sections 8.1(e) or (f) hereof, MECH shall pay all
documented, reasonable costs and expenses up to $1,500,000 incurred by Xxxxxxx
in connection with this Agreement and the transactions contemplated hereby, plus
a breakup fee of $3.0 million. In the event that this Agreement is terminated by
Xxxxxxx under Section 8.1(i) by reason of MECH having agreed to enter into an
Acquisition Transaction other than as contemplated hereby, MECH shall pay all
documented, reasonable costs and expenses up to $1,500,000 incurred by Xxxxxxx
in connection with this Agreement and the transactions contemplated hereby, plus
a breakup fee of $3.0 million.
9.4 NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, mailed by registered or certified
mail (return receipt requested) or delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Webster, to:
Xxxxxxx Financial Corporation
Webster Plaza
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attn.: Chief Executive Officer
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with copies (which shall not constitute notice) to:
Xxxxx & Xxxxxxx L.L.P.
Columbia Square
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000-0000
Attn.: Xxxxxx X. Xxxxx, Esq.
and
Xxxxxxx Financial Corporation
Webster Plaza
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attn.: General Counsel
and
(b) if to MECH, to:
MECH Financial, Inc.
000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn.: Chief Executive Officer
with a copy (which shall not constitute notice) to:
Xxxxx Xxxxxx & Xxxxxx, LLP
City Place, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxx, III, Esq.
9.5 INTERPRETATION.
When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of or an Exhibit or Schedule to
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
9.6 COUNTERPARTS.
This Agreement may be executed in counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
9.7 ENTIRE AGREEMENT.
This Agreement (including the disclosure schedules, documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the
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Confidentiality Agreement, the Certificate of Merger, the Option Agreement and
the MECH Stockholder Agreement.
9.8 GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the
laws of the State of Delaware, without regard to any applicable conflicts of law
rules.
9.9 ENFORCEMENT OF AGREEMENT.
The parties hereto agree that irreparable damage would occur in the
event that the provisions of this Agreement were not performed in accordance
with its specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
thereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
9.10 SEVERABILITY.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
9.11 PUBLICITY.
Except as otherwise required by law or the rules of the Nasdaq Stock
Market National Market System (or such other exchange on which the Webster
Common Stock may become listed), so long as this Agreement is in effect, neither
Webster nor MECH shall, or shall permit any of Xxxxxxx'x or MECH's Subsidiaries
to, issue or cause the publication of any press release or other public
announcement with respect to, or otherwise make any public statement concerning,
the transactions contemplated by this Agreement, the Certificate of Merger, the
Option Agreement or the MECH Stockholder Agreement without the consent of the
other party, which consent shall not be unreasonably withheld.
9.12 ASSIGNMENT; LIMITATION OF BENEFITS.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns. Except as otherwise specifically provided in Section 6.7 hereof,
this Agreement (including the documents and instruments referred to herein) is
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder, and the covenants, undertakings and agreements set out
herein shall be solely for the benefit of, and shall be enforceable only by, the
parties hereto and their permitted assigns.
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9.13 ADDITIONAL DEFINITIONS.
In addition to any other definitions contained in this Agreement, the
following words, terms and phrases shall have the following meanings when used
in this Agreement.
"Affiliated Person": any director, officer or 5% or greater
shareholder, spouse or other person living in the same household of such
director, officer or shareholder, or any company, partnership or trust in which
any of the foregoing persons is an officer, 5% or greater shareholder, general
partner or 5% or greater trust beneficiary.
"Knowledge" or "knowledge": with respect to any entity, refers to the
knowledge of such entity's directors and officers in the ordinary course of
their duties in such positions.
"Laws": any and all statutes, laws, ordinances, rules, regulations,
orders, permits, judgments, injunctions, decrees, case law and other rules of
law enacted, promulgated or issued by any Governmental Entity.
"Material Adverse Effect": with respect to Webster or MECH, as the case
may be, means a condition, event, change or occurrence that is reasonably likely
to have a material adverse effect upon (A) the financial condition, results of
operations, business or properties of Webster or MECH (other than as a result of
(i) changes in laws or regulations or accounting rules of general applicability
or interpretations thereof, or (ii) decreases in capital under Financial
Accounting Standards No. 115 attributable to general changes in interest rates),
or (B) the ability of Webster or MECH to perform its obligations under, and to
consummate the transactions contemplated by, this Agreement, the Certificate of
Merger and, in the case of MECH, the Option Agreement.
"Subsidiary" or "Subsidiaries," as applicable: with respect to any
party means any corporation, partnership or other organization, whether
incorporated or unincorporated, which is either directly or indirectly majority
owned by such party, or consolidated with such party for financial reporting
purposes.
[SIGNATURES PAGE FOLLOWS]
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IN WITNESS WHEREOF, Webster and MECH have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
XXXXXXX FINANCIAL CORPORATION
ATTEST:
By: /s/ Xxxxxxx Xxxxxxx Xxxxx By: /s/ Xxxxx X. Xxxxx
---------------------------------------------- ---------------------------------------------------
Name: Xxxxxxx Xxxxxxx Xxxxx Name: Xxxxx X. Xxxxx
Title: Senior Vice President, Title: Chairman and Chief Executive
General Counsel and Secretary Officer
MECH FINANCIAL, INC.
ATTEST:
By: /s/ Xxxxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxx
---------------------------------------------- --------------------------------------------------
Name: Xxxxxx X. Xxxx Name: Xxxxx X. Xxxxxx
Title: Executive Vice President Title: Chairman, President and Chief
Executive Officer
EXHIBITS
Exhibit A - Articles of Combination and Bank Merger Agreement - omitted
Exhibit B - Option Agreement - omitted
Exhibit C - Certificate of Merger - omitted
Exhibit D - MECH Stockholder Agreement - omitted
Exhibit E - MECH Counsel's Legal Opinion - omitted
