UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the fiscal year ended December 31, 1997 OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from ___ to __________
Commission File Number: 0-23513
WEBSTER PREFERRED CAPITAL CORPORATION
-------------------------------------
(Exact name of registrant as specified in its charter)
CONNECTICUT 06-1478208
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
145 BANK STREET, WATERBURY, CONNECTICUT 06702
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 578-2286
Securities registered pursuant to Section 12(b) of the Act:
Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Preferred Stock, $1 par value
-----------------------------
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
-
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
-
The aggregate market value of the voting stock held by non-affiliates
of the registrant is not applicable.
The number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date is: 100 shares
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WEBSTER PREFERRED CAPITAL CORPORATION
1997 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PAGE
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PART I
ITEM 1. Business....................................................... 3
General................................................... 3
Asset Quality ............................................ 3
Nonaccrual Assets......................................... 4
Residential Mortgage Loans................................ 4
Allowance for Loan Losses................................. 5
Investment Activities..................................... 5
Liquidity and Capital Resources........................... 6
Regulation................................................ 6
Taxation.................................................. 7
ITEM 2. Properties..................................................... 8
ITEM 3. Legal Proceedings.............................................. 8
ITEM 4. Submission of Matters to a Vote of Security Holders............ 8
PART II
ITEM 5. Market for the Registrant's Common Equity and
Related Stockholder Matters.................................. 9
ITEM 6. Selected Financial Data........................................ 10
ITEM 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations ............ 11
ITEM 7A. Quantitative and Qualitative Disclosures
About Market Risk .......................................... 14
ITEM 8. Financial Statements and Supplementary Data.................... 15
ITEM 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure....................... 26
PART III
ITEM 10. Directors and Executive Officers of the Registrant............. 27
ITEM 11. Executive Compensation......................................... 28
ITEM 12. Security Ownership of Certain Beneficial Owners
and Management............................................... 29
ITEM 13. Certain Relationships and Related Transactions................. 29
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K ........................................... 30
2
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PART I
ITEM 1. BUSINESS
GENERAL
Webster Preferred Capital Corporation (the "Company") is a
Connecticut corporation incorporated in March 1997. The Company was formed by
Webster Bank to provide a cost-effective means of raising funds, including
capital, on a consolidated basis for Webster Bank. The Company's strategy is to
acquire, hold and manage real estate mortgage assets ("Mortgage Assets"),
including but not limited to residential mortgage loans, mortgage-backed
securities and commercial mortgage loans. In March 1997, Webster Bank
contributed $617.0 million, net, of Mortgage Assets, as part of the formation of
the Company. In November 1997, Webster Bank contributed approximately $120.4
million in cash to the Company, which was used to purchase mortgage-backed
securities. As of December 31, 1997, the Mortgage Assets owned by the Company
were comprised of residential mortgage loans and mortgage-backed securities.
Although the Company may acquire and hold a variety of Mortgage Assets, its
present intention is to acquire only residential mortgage loans and
mortgage-backed securities. The Company intends to hold such assets primarily
for income, thereby seeking to generate net income for distribution to its
stockholders based on the spread between the interest income on the Mortgage
Assets and the cost of its capital and operations. The Company may invest up to
5% of the total value of its portfolio in assets other than residential mortgage
loans and mortgage-backed securities eligible to be held by real estate
investment trusts ("REITs"). As of December 31, 1997, approximately 35.3% of the
Company's residential mortgage loans are fixed rate loans and 64.7% are
adjustable rate loans.
All of the Company's common stock is owned by Webster Bank. Webster Bank
has indicated to the Company that, for as long as any of the Company's preferred
shares are outstanding, Webster Bank intends to maintain direct ownership of
100% of the outstanding common stock of the Company. Pursuant to the Company's
Certificate of Incorporation, the Company cannot redeem, or make any other
payments or distributions in respect of, shares of its common stock to the
extent such redemptions, payments or distributions would cause the Company's
total stockholders' equity (as determined in accordance with generally accepted
accounting principles) to be less than 250% of the aggregate liquidation value
of the issued and outstanding preferred shares. The preferred shares are not
exchangeable into capital stock or other securities of Webster Bank or Webster
Financial Corporation ("Webster"), the parent company of Webster Bank, and will
not constitute regulatory capital of either Webster Bank or Webster.
The Company elected to be treated as a REIT under the Internal Revenue Code
(the "Code"). The Company will generally not be subject to federal and
Connecticut state income tax to the extent that it distributes its earnings to
its stockholders and maintains its qualification as a REIT. Furthermore, the
Company and Webster Bank will benefit significantly from federal and state tax
treatment of dividends paid by the Company as a result of its qualification as a
REIT. The dividends payable on the preferred shares will be deductible for
federal income tax purposes as a result of the Company's qualification as a
REIT.
ASSET QUALITY
The Company maintains asset quality by acquiring residential real estate
loans that have been conservatively underwritten, aggressively managing
nonaccrual assets and maintaining adequate reserve coverage. At December 31,
1997, residential real estate loans comprised 100% of the total loan portfolio.
3
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NONACCRUAL ASSETS
The aggregate amount of nonaccrual assets was $1.3 million at December 31, 1997.
The following table details the Company's nonaccrual assets at December 31,
1997:
(In Thousands) At December 31, 1997
- --------------------------------------------------------------------------------
Nonaccrual Assets:
Residential Fixed Rate Loans $ 158
Residential Variable Rate Loans 1,145
- --------------------------------------------------------------------------------
Total $1,303
- --------------------------------------------------------------------------------
At December 31, 1997 the allowance for loan losses was $1.5 million, or 118% of
nonaccrual assets and .24% of total mortgage loans, net. Management believes
that the allowance for loan losses is adequate to cover expected losses in the
portfolio.
RESIDENTIAL MORTGAGE LOANS
A summary of the Company's carrying amount and fair market value of residential
mortgage loans at December 31, 1997 follows:
Carrying
(In Thousands) Amount
- --------------------------------------------------------------------------------
Fixed-Rate Loans:
Fixed-Rate 15 yr Loans $59,631
Fixed-Rate 20 yr Loans 1,636
Fixed-Rate 25 yr Loans 813
Fixed-Rate 30 yr Loans 161,884
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Total Fixed-Rate Loans 223,964
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Variable-Rate Loans:
Variable-Rate 15 yr Loans 4,896
Variable-Rate 20 yr Loans 4,004
Variable-Rate 25 yr Loans 8,553
Variable-Rate 30 yr Loans 393,924
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Total Variable-Rate Loans 411,377
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Total Residential Mortgage Loans $635,341
Premiums and Deferred Fees on Loans, Net 1,831
Less Allowance for Loan Losses (1,538)
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Residential Mortgage Loans, Net $635,634
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In March 1997, Webster Bank contributed approximately $617.0 million of Mortgage
Assets, net as part of the formation of the Company. The $617.0 million
consisted of $215.8 million of fixed rate loans, $401.3 million of variable rate
loans, net of premiums, deferred fees on loans and an allowance for loan losses.
4
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ALLOWANCE FOR LOAN LOSSES
An allowance for loan losses is established based upon a review of the loan
portfolio, loss experience, specific problem loans, current and anticipated
economic conditions and other pertinent factors which, in management's judgment,
deserve current recognition in estimating loan losses.
Management believes that the allowance for loan losses is adequate. While
management believes it uses the best available information to recognize losses
on loans, future additions to the allowance may be necessary based on changes in
economic conditions. In addition, various regulatory agencies, as an integral
part of their examination process of Webster Bank, periodically may review the
Company's allowance for loan losses. Such agencies may require the Company to
recognize additions to the allowance for loan losses based on judgments
different from those of management.
A detail of the change in the allowance for loan losses for the period
ending December 31, 1997 follows:
For the Period from
March 17, 1997
(Date of Inception)
(In Thousands) to December 31, 1997
- --------------------------------------------------------------------------------
Balance at Beginning of Period $ -
Allowance for Loan Losses on Acquired Loans 1,544
Provisions Charged to Operations -
Charge-offs (6)
Recoveries -
- --------------------------------------------------------------------------------
Balance at End of Period $1,538
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INVESTMENT ACTIVITIES
RESIDENTIAL MORTGAGE LOANS. The Company may from time to time acquire both
conforming and nonconforming residential mortgage loans. Conventional conforming
residential mortgage loans comply with the requirements for inclusion in a loan
guarantee program sponsored by either the Federal Home Loan Mortgage Corporation
("FHLMC") or Fannie Mae. Under current guidelines, effective January 1, 1998,
the maximum principal balance allowed on conforming residential mortgage loans
ranges from $227,150 ($340,725 for residential mortgage loans secured by
mortgaged properties located in either Alaska or Hawaii) for one-unit
residential loans to $436,600 ($654,900 for residential mortgage loans secured
by mortgaged properties located in either Alaska or Hawaii) for four- unit
residential loans. Nonconforming residential mortgage loans do not qualify in
one or more respects for purchase by Fannie Mae or FHLMC under their standard
programs. The nonconforming residential mortgage loans that the Company
purchases generally have original principal balances which exceed the limits for
FHLMC or Fannie Mae programs. The Company's nonconforming residential mortgage
loans are expected to meet the requirements for sale to national private
mortgage conduit programs or other investors in the secondary mortgage market.
At December 31, 1997, less than 1% of the Company's residential mortgage loans
were nonconforming.
Each residential mortgage loan will be evidenced by a promissory note
secured by a mortgage or deed of trust or other similar security instrument
creating a first lien on a single family (one to four unit) residential
property, including stock allocated to a dwelling unit in a residential
cooperative housing corporation. Residential real estate properties underlying
residential mortgage loans consist of individual dwelling units, individual
cooperative apartment units, individual condominium units, two- to four-family
dwelling units, planned unit developments and townhouses.
MORTGAGE-BACKED SECURITIES. The Company may from time to time acquire
fixed-rate or adjustable-rate mortgage-backed securities representing interests
in pools of residential mortgage loans. A portion of any of the mortgage-backed
securities that the Company purchases may have been originated by Webster Bank
by exchanging pools of mortgage loans for the mortgage-backed securities. The
mortgage loans underlying the mortgage-backed securities are secured by single
family residential properties located throughout the United States.
5
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The Company intends to acquire only investment-grade mortgage-backed
securities issued or guaranteed by Fannie Mae, FHLMC and Government National
Mortgage Association ("GNMA"). The Company does not intend to acquire any
interest-only, principal-only or high-risk mortgage-backed securities. Further,
the Company does not intend to acquire any residual interests in real estate
mortgage conduits or any interests, other than as a creditor, in any taxable
mortgage pools.
OTHER REAL ESTATE ASSETS. Although the Company presently intends to invest
only in residential mortgage loans and mortgage-backed securities, the Company
may invest up to 5% of the total value of its portfolio in assets other than
residential mortgage loans and mortgage-backed securities eligible to be held by
REITs. In addition to commercial mortgage loans, such assets could include cash
and cash equivalents. The Company does not intend to invest in securities or
interests of persons primarily engaged in real estate activities. At December
31, 1997 the Company did not hold any commercial mortgage loans.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal liquidity need will be to fund the acquisition of
additional Mortgage Assets to replace such assets that are repaid and to fund
dividends on outstanding capital stock. The acquisition of additional Mortgage
Assets will be funded with the proceeds of interest and principal repayments on
the Company's portfolio of Mortgage Assets. The Company does not anticipate that
it will have any other material capital expenditures. The Company believes that
cash generated from the payment of interest and principal on its Mortgage Assets
will provide sufficient funds to meet its operating requirements and to pay
dividends in accordance with the requirements to be taxed as a REIT for the
foreseeable future. To the extent that the Company accumulates cash in order to
meet its dividend requirements, it may invest such cash in short-term securities
or money market instruments.
REGULATION
Webster Bank, which owns 100% of the Company's common stock, is subject to
supervision and regulation by, among others, the Office of Thrift Supervision
(the "OTS") and the FDIC. Because the Company is a subsidiary of Webster Bank,
such federal banking regulatory authorities will have the right to examine the
Company and its activities. If Webster Bank becomes "undercapitalized" under
"prompt corrective action" initiatives of the federal bank regulators, such
regulatory authorities have the authority to require, among other things,
Webster Bank or the Company to alter, reduce or terminate any activity that the
regulator determines poses an excessive risk to Webster Bank. The Company does
not believe that its activities presently do, or in the future will, pose a risk
to Webster Bank; however there can be no assurance in that regard. The
regulators also could restrict transactions between Webster Bank and the Company
including the transfer of assets; require Webster Bank to divest or liquidate
the Company; or require that Webster Bank be sold. Webster Bank could further be
directed to take any other action that the regulatory agency determines will
better carry out the purpose of prompt corrective action. Webster Bank could be
subject to these prompt corrective action restrictions if federal regulators
determined that Webster Bank was in an unsafe or unsound condition or engaging
in an unsafe or unsound practice. In light of Webster Bank's control of the
Company, as well as the Company's dependence and reliance upon the skill and
diligence of Webster Bank officers and employees, some or all of the foregoing
actions and restrictions could have an adverse effect on the operations of the
Company, including causing the Company's failure to qualify as a REIT.
Pursuant to OTS regulations and the Company's Certificate of Incorporation,
the Company is required to maintain a separate corporate existence from Webster
Bank, notwithstanding that Webster Bank owns all of the common stock and all of
the directors and officers of the Company are Webster Bank employees. In the
event Webster Bank should be placed into receivership by federal bank
regulators, such federal bank regulators would be in control of Webster Bank.
There can be no assurance that they would not cause Webster Bank, as sole holder
of the common stock, to take action adverse to holders of preferred shares.
6
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TAXATION
The Company elected to be treated as a REIT under Sections 856 through 860
of the Code, commencing with its taxable year ended December 31, 1997. As a
REIT, the Company generally will not be subject to federal and Connecticut state
income tax on net income and capital gains that it distributes to the holders of
its common stock and preferred stock.
To maintain REIT status, an entity must meet a number of organizational and
operational requirements, including a requirement that it currently distribute
to stockholders at least 95% of its "REIT taxable income" (not including capital
gains and certain items of non-cash income). If the Company fails to qualify as
a REIT in any taxable year, it will be subject to federal and Connecticut state
income tax at regular corporate rates. Notwithstanding qualification for
taxation as a REIT, the Company may be subject to federal, state and/or local
tax, on undistributed REIT taxable income and net income from prohibited
transactions.
ADVERSE CONSEQUENCES OF FAILURE TO QUALIFY AS A REIT. The Company intends
to operate so as to qualify as a REIT under the Code, commencing with its
taxable year ended December 31, 1997. Although the Company believes that it will
be owned, organized and will operate in such a manner as to qualify as a REIT,
no assurance can be given as to the Company's ability to qualify as a REIT or
remain so qualified. Qualification as a REIT involves the application of highly
technical and complex Code provisions for which there are only limited judicial
or administrative interpretations. The determination of various factual matters
and circumstances, not entirely within the Company's control may affect the
Company's ability to qualify as a REIT. Although the Company is not aware of any
proposal in Congress to amend the tax laws in a manner that would materially and
adversely affect the Company's ability to operate as a REIT, no assurance can be
given that new legislation or new regulations, administrative interpretations or
court decisions will not significantly change the tax laws in the future with
respect to qualification as a REIT or the federal income tax consequences of
such qualification.
If in any taxable year the Company fails to qualify as a REIT, the Company
would not be allowed a deduction for distributions to stockholders in computing
its federal taxable income and would be subject to federal and Connecticut state
income tax (including any applicable alternative minimum tax) on its taxable
income at regular corporate rates. As a result, the amount available for
distribution to the Company's stockholders would be reduced for the year or
years involved. In addition, unless entitled to relief under certain statutory
provisions, the Company would also be disqualified from treatment as a REIT for
the four taxable years following the year during which qualification was lost. A
failure of the Company to qualify as a REIT would not by itself give the Company
the right to redeem the preferred shares, nor would it give the holders of the
preferred shares the right to have their shares redeemed.
Notwithstanding that the Company currently intends to operate in a manner
designed to qualify as a REIT, future economic, market, legal, tax or other
considerations may cause the Company to determine that it is in the best
interest of the Company and the holders of its common stock and preferred stock
to revoke the REIT election. The tax law prohibits the Company from electing
treatment as a REIT for the four taxable years following the year of such
revocation.
In the event that the Company has insufficient available cash on hand or is
otherwise precluded from making dividend distributions in amounts sufficient to
maintain its status as a REIT or to avoid imposition of an excise tax, the
Company may avail itself of consent dividend procedures. A consent dividend is a
hypothetical dividend, as opposed to an actual dividend, declared by the Company
and treated for U.S. federal tax purposes as though it had actually been paid to
stockholders who were the owners of shares on the last day of the year and who
executed the required consent form, and then recontributed by those stockholders
to the Company. The Company would use the consent dividend procedures only with
respect to its common stock.
7
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ITEM 2. PROPERTIES
Not Applicable.
ITEM 3. LEGAL PROCEEDINGS
At December 31, 1997, there were no legal proceedings to which the
Company was a party or to which any of its property was the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
In December 1997, the sole common shareholder of the Company, acting by
written consent dated December 17, 1997, approved the amended and restated
certificate of incorporation of the Company.
8
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
All of the Company's common stock is owned by Webster Bank, and
consequently there is no market for such securities. The 2000 shares of
preferred stock issued to Webster Bank, as part of the Company's formation were
redeemed on December 22, 1997. The Company's Series A 7.375% Cumulative
Redeemable Preferred Stock ("Series A Preferred Stock") is not listed on any
exchange or approved for quotation on the Nasdaq Stock Market. The Company's
Series B 8.625% Cumulative Redeemable Preferred Stock ("Series B Preferred
Stock") is traded over-the-counter and quoted on the Nasdaq Stock Market's
National Market Tier under the symbol "WBSTP."
Dividends declared and paid on the common stock for the year ended
1997 in December 1997 totaled $38,047,000.00. Dividends declared and paid
on the 2,000 preferred shares held by Webster Bank totaled $149,192.00 for
the period March 17, 1997 through December 22, 1997. Dividends declared on
the Series A Preferred Stock for the fourth quarter of 1997 totaled
$65,555.55 Dividends declared on Series B Preferred Stock for the fourth
quarter of 1997 totaled $19,166.67. The dividend calculation for the fourth
quarter for the Series A Preferred Stock and the Series B Preferred Stock
was based on eight days, December 24, 1997 (date of delivery of preferred
shares) through December 31, 1997.
The market price for the Series A Preferred Shares and Series B
Preferred Shares remained unchanged at $999.35 and $10, respectively, from
December 24, 1997 to December 31, 1997, the eight days of the fourth quarter for
which the stocks were outstanding.
Dividends will be declared at the discretion of the Board of Directors
after considering the Company's distributable funds, financial requirements, tax
considerations and other factors. The Company's distributable funds will consist
primarily of interest and principal payments on the Mortgage Assets held by it,
and the Company anticipates that a significant portion of such assets will bear
interest at adjustable rates. Accordingly, if there is a decline in interest
rates, the Company may experience a decrease in income available to be
distributed to its stockholders. However, the Company currently expects that
both its cash available for distribution and its "REIT taxable income" will
exceed the amount needed to pay dividends on the Preferred Shares, even in the
event of a significant decline in interest-rate levels, because (i) the
Company's Mortgage Assets are interest-bearing, (ii) the Preferred Shares are
not expected to exceed 15% of the Company's capitalization, and (iii) the
Company does not anticipate incurring any indebtedness.
The Company's Registration Statement on Form S-11, as amended (File No.
333-38685) was declared effective by the Securities and Exchange Commission (the
"SEC") on December 18, 1997, and Post-Effective Amendment No. 1 thereto was
delcared effective on December 19, 1997. The date of the Company's initial
public offering of Series A Preferred Shares and Series B Preferred Shares was
December 24, 1997. The Company registered 40,000 shares of Series A Preferred
Stock and 1,000,000 shares of Series B Preferred Stock. The offering terminated
after all such shares were sold. The managing underwriter was Merrill Lynch &
Co. The aggregate price to the public of the Series A and Series B Preferred
Shares offered was $49,974,000.
From December 19, 1997 to December 31, 1997, the amount of expenses
incurred for the Company's account in connection with the issuance and
distribution of the Series A and Series B Preferred Shares registered for
underwriting discounts was $865,000, other expenses (including legal,
accounting, printing, registration, and miscellaneous) were $600,000 and total
expenses were $1,465,000. No such payments were direct or indirect payments to
directors, officers, general partners of the Company or their associates,
persons owning 10% or more of any of the Company's classes of equity securities
or to affiliates of the Company. The net offering proceeds to the Company after
deducting the total expenses described above were $48.5 million. Approximately
$38.4 million of net proceeds of its initial public offering were used to fund
payments to Webster bank of cash dividends of the Company's 1997 net income and
the remaining net proceeds were used to fund operations and to purchase
additional Mortgage Assets.
9
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ITEM 6. SELECTED FINANCIAL DATA
The selected financial data set forth below is based upon and should be
read in conjunction with the Company's financial statements and notes thereto
appearing elsewhere herein. The Company's financial statements for the year
ended December 31, 1997 have been audited by the Company's independent
accountants.
FINANCIAL CONDITION DATA:
BALANCE SHEET DATA
(In Thousands) At December 31, 1997
- --------------------------------------------------------------------------------
Available for Sale Securities 120,090
Total Mortgage Loans, Net 635,634
Total Assets 787,561
Total Liabilities 909
Mandatorily Redeemable Preferred Stock 40,000
Total Shareholders' Equity 746,652
- --------------------------------------------------------------------------------
INCOME STATEMENT DATA: For the Period from
March 17, 1997
(Date of Inception)
(In Thousands) to December 31, 1997
- --------------------------------------------------------------------------------
Net Interest Income $ 38,065
Provision for Loan Losses -
---------------
Net Interest Income After
Provision for Loan Losses 38,065
Noninterest Expenses 220
---------------
Income Before Taxes 37,845
Income Taxes -
---------------
Net Income 37,845
Preferred Stock Dividends 168
---------------
Net Income Available to Common Shareholder $ 37,677
===============
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SIGNIFICANT STATISTICAL DATA*
- --------------------------------------------------------------------------------
Net Income per Common Share:
Basic $ 376,770.00
Diluted $ 376,770.00
Dividends Declared per Common Share $ 380,470.00
- --------------------------------------------------------------------------------
* No ratio of earnings to fixed charges is presented because the Company has no
fixed charges.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company is a subsidiary of Webster Bank and was incorporated in
March 1997 to provide a cost-effective means of raising funds, including
capital, on a consolidated basis for Webster Bank. In March 1997, Webster Bank
contributed approximately $617.0 million of mortgage assets, net as part of the
formation of the Company. In November 1997, Webster contributed approximately
$120.4 million in cash which the Company used to purchase mortgage-backed
securities. Total assets at December 31, 1997 were $787.6 million, consisting
primarily of residential mortgage loans and mortgage-backed securities.
The Company has elected to be treated as a REIT under the Code and
generally is not subject to federal income tax to the extent that it distributes
its earnings to its stockholders and maintains its qualification as a REIT. The
Company and Webster Bank will also benefit significantly from federal and state
tax treatment of dividends paid by the Company as a result of its qualification
as a REIT. The following discussion of the Company's financial condition and
results of operations should be read in conjunction with the Company's financial
statements and other financial data included elsewhere herein.
PUBLIC OFFERING
On December 24, 1997, the Company completed an offering of 40,000
shares of Series A Preferred Stock, liquidation preference $1,000 per share, and
1,000,000 shares of Series B Preferred Stock, liquidation preference $10 per
share. The total net proceeds from the offering amounted to $48.5 million.
ASSET QUALITY
The Company maintains asset quality by acquiring residential real
estate loans that have been conservatively underwritten, aggressively managing
nonaccrual assets and maintaining adequate reserve coverage. At December 31,
1997, residential real estate loans comprised the entire loan portfolio. The
Company also invests in highly rated mortgage-backed securities.
11
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NONACCRUAL ASSETS
The aggregate amount of nonaccrual assets was $1.3 million at December
31, 1997. The following table details the Company's nonaccural assets at
December 31, 1997:
NONACCRUAL ASSETS:
- --------------------------------------------------------------------------------
(In Thousands) At December 31, 1997
- --------------------------------------------------------------------------------
Loans Accounted for on a Nonaccrual Basis:
Residential Fixed-Rate Loans $ 158
Residential Variable-Rate Loans 1,145
- --------------------------------------------------------------------------------
Total $1,303
- --------------------------------------------------------------------------------
At December 31, 1997 the allowance for loan losses was $1.5 million, or
118% of nonaccrual assets. Management believes that the allowance for loan
losses is adequate to cover expected losses in the portfolio.
LIQUIDITY AND CAPITAL RESOURCES
The primary sources of liquidity for the Company are net cash flows
from operating activities, investing activities and financing activities. Net
cash flows from operating activities primarily include net income, net changes
in prepaid expenses and other assets, accrued interest receivable and
adjustments for noncash items such as amortization on deferred fees and
premiums, and mortgage-backed securities net amortization and accretion. Net
cash flows from investing activities primarily include the purchase and
repayments of residential real estate loans and mortgage backed securities that
are classified as available for sale. Net cash flows from financing activities
primarily include net changes in capital generally related to stock issuances
and dividend payments.
While scheduled loan amortization, maturing securities, short-term
investments and securities repayments are predictable sources of funds, loan and
mortgage-backed security prepayments are greatly influenced by general interest
rates, economic conditions and competition. One of the inherent risks of
investing in loans and mortgage-backed securities is the ability of such
instruments to incur prepayments of principal prior to maturity at prepayment
rates different than those estimated at the time of purchase. This generally
occurs because of changes in market interest rates. The market values of
fixed-rate loans and mortgage-backed securities are sensitive to fluctuations in
market interest rates, declining in value as interest rates rise. If interest
rates decrease, the market value of loans generally will tend to increase with
the level of prepayments also normally increasing.
Dividends on the Series A Preferred Stock are payable at the rate of
7.375% per annum (an amount equal to $73.75 per annum per share), and the
dividends on the Series B Preferred Stock are payable at the rate of 8.625% per
annum (an amount equal to $.8625 per annum per share), in all cases if, when and
as declared by the Board of Directors of the Company. Dividends on the preferred
shares are cumulative and, if declared, payable on January 15, April 15, July 15
and October 15 in each year, commencing January 15, 1998.
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ASSET/LIABILITY MANAGEMENT
The goal of the Company's asset/liability management policy is to
manage interest-rate risk so as to maximize net interest income over time in
changing interest-rate environments while maintaining acceptable levels of risk.
The Company must provide for sufficient liquidity for daily operations. The
Company prepares estimates of the level of prepayments and the effect of such
prepayments on the level of future earnings due to reinvestment of funds at
rates different than those that currently exist. The Company is unable to
predict future fluctuations in interest rates and as such the market values of
certain of the Company's financial assets are sensitive to fluctuations in
market interest rates. Changes in interest rates can affect the value of its
loans and other interest-earning assets. At December 31, 1997, 64.7% of the
Company's residential mortgage loans were variable-rate loans. The Company's
management believes these residential mortgage loans are less likely to incur
prepayments of principal.
The following table summarizes the estimated market value of the
Company's interest- sensitive assets and interest-sensitive liabilities at
December 31, 1997, and the projected change to market values if interest rates
instantaneously increase or decrease by 100 basis points.
<TABLE>
<CAPTION>
Estimated Market Value
Impact
-----------------------------
(In Thousands) Book Value Market Value -100 BP +100 BP
- ----------------------------------------------------------------------------------------------------------------
Interest Sensitive Assets:
<S> <C> <C> <C> <C>
Mortgage-Backed Securities $ 120,026 $ 120,090 $ 1,478 $(2,765)
Variable Rate Residential Loans 411,377 423,140 3,776 (5,932)
Fixed Rate Residential Loans 223,964 229,150 4,421 (8,152)
Interest Sensitive Liabilities:
Series A Preferred Stock 40,000 40,000 1,179 (2,534)
- ----- ----------------------------------------------------------------------------------------------------------
</TABLE>
RESULTS OF OPERATIONS
From March 17, 1997 (date of inception) to December 31, 1997, the
Company reported net income of $37.9 million, or $376,770 per common share on a
diluted basis. Because the Company was formed in March 1997, there are no
comparable results from previous periods. Total interest income for the period
amounted to $38.1 million, net of servicing fees. The average balance of total
mortgage loans, net for the period was $624.5 million, and the average yield was
7.52%. There were no provisions for loan losses for the period. Noninterest
expenses amounted to $220,000 and included advisory fees, dividends on Series A
Stock and amortization of start-up costs. No income tax expense was recorded for
the period.
IMPACT OF INFLATION AND CHANGING PRICES
The financial statements and related data presented herein have been
prepared in accordance with generally accepted accounting principles, which
require the measurement of financial position and operating results in terms of
historical dollars without considering changes in the relative purchasing power
of money over time due to inflation.
Unlike most industrial companies, virtually all of the assets and
liabilities of a real estate investment trust are monetary in nature. As a
result, interest rates have a more significant impact on a real estate
corporation's performance than the effects of general levels of inflation.
Interest rates do not necessarily move in the same direction or in the same
magnitude as the price of goods and services. In the current interest-rate
environment, the maturity structure of the Company's assets are critical to the
maintenance of acceptable performance levels.
13
<PAGE>
RECENT FINANCIAL ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 131, "Disclosures about
Segments of an Enterprise and Related Information." This statement establishes
standards for the method in which public business enterprises report information
about operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
reports issued to shareholders. This statement requires that public business
enterprises report quantitative and qualitative information about its reportable
segments, including profit or loss, certain specific revenue and expense items
and segment assets. This SFAS does not apply to the Company since the Company
has only one reportable operating segment.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This statement establishes standards for reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. The objective of this statement is to report a measure of
all changes in equity of an enterprise that result from transactions and other
economic events of the period other than transactions with owners. Comprehensive
income is the total of net income and all other non-owner changes in equity.
This statement is effective for fiscal years beginning after December 15, 1997
and reclassification of financial statements of earlier periods for comparative
purposes is required.
In February 1997, the FASB issued SFAS No. 129, "Disclosure of
Information about Capital Structure." This statement establishes standards for
disclosing information about an entity's capital structure. This statement is
effective for financial statements issued for periods ending after December 15,
1997.
In February 1997, the FASB issued SFAS No. 128, "Earnings per Share."
This statement simplifies the standards for computing and presenting earnings
per share previously found in APB Opinion No. 15 and makes them comparable to
international standards. It replaces the presentation of primary earnings per
share with a presentation of basic earnings per share and requires dual
presentation of basic and diluted earnings per share on the face of the income
statement for all entities with complex capital structures. This statement is
effective for financial statements issued for periods ending after December 15,
1997, including interim periods.
YEAR 2000 IMPACT
The "Year 2000" issue refers to the potential impact of the failure of
computer programs and equipment to give proper recognition of dates beyond
December 31, 1999 and other issues related to the Year 2000 century date change.
Since the Company depends on Webster Bank as Advisor and Servicer, the Company
will be reliant on Webster Bank and its parent company, Webster Financial
Corporation ("Webster"), to ensure proper date recognition.
Webster Bank reports that it has completed its assessment of Year 2000
issues and has developed and begun implementing a plan to modify or replace
software and hardware systems to ensure proper date recognition. Webster Bank is
utilizing internal and external resources for this purpose.
Webster Bank has initiated formal communications with all significant
vendors to determine the extent to which vendors will be Year 2000 compliant.
Webster Bank requires compliance as a condition of future business. Contingency
plans for vendors' failure to comply are incorporated in Webster Bank's Year
2000 plan. There can be no guarantee that the systems on which the Company
relies will be in compliance.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
14
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
Webster Preferred Capital Corporation
Waterbury, Connecticut
We have audited the accompanying statement of condition of Webster Preferred
Capital Corporation (a subsidiary of Webster Bank) as of December 31, 1997, and
the related statements of income, shareholders' equity, and cash flows for the
period March 17, 1997 (date of inception) to December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Webster Preferred Capital
Corporation as of December 31, 1997, and the results of its operations and its
cash flows for the period March 17, 1997 (date of inception) to December 31,
1997 in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
January 20, 1998
Hartford, Connecticut
15
<PAGE>
WEBSTER PREFERRED CAPITAL CORPORATION
STATEMENT OF CONDITION
<TABLE>
<CAPTION>
(Dollars in thousands, except per share data) December 31, 1997
----------------------------
ASSETS
<S> <C>
Cash $26,167
Mortgage-Backed Securities Available for Sale (Note 2) 120,090
Residential Mortgage Loans, Net (Note 3) 635,634
Accrued Interest Receivable 4,525
Prepaid Expenses and Other Assets 1,145
----------------
TOTAL ASSETS $787,561
================
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued Dividends Payable 491
Accrued Expenses and Other Liabilities 418
-----------------
TOTAL LIABILITIES 909
----------------
MANDATORILY REDEEMABLE PREFERRED STOCK (NOTE 4):
Series A 7.375% Cumulative Redeemable Preferred Stock,
liquidation preference $1,000 per share, par value $1.00 par
share; 40,000 shares authorized, issued and outstanding 40,000
SHAREHOLDERS' EQUITY (NOTE 5):
Common Stock, par value $.01 per share:
Authorized - 1,000 shares
Issued and Outstanding - 100 shares 1
Series B 8.625% Cumulative Redeemable Preferred Stock,
liquidation preference $10 per share, par value $1.00 per share;
1,000,000 shares authorized, issued and outstanding 1,000
Paid-In Capital 745,957
Distributions in Excess of Accumulated Earnings (370)
Unrealized Gains on Securities, Net 64
------------------
TOTAL SHAREHOLDERS' EQUITY 746,652
------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $787,561
==================
</TABLE>
See accompanying notes to financial statements
16
<PAGE>
WEBSTER PREFERRED CAPITAL CORPORATION
STATEMENT OF INCOME
(In Thousands, Except Share Data)
For the Period from
March 17, 1997
(Date of Inception)
to December 31,1997
----------------------------
Interest Income:
Loans (Note 6) $37,177
Securities 888
-------------
Total Interest Income 38,065
Provision For Loan Losses -
-------------
Interest Income After Provision
for Loan Losses 38,065
--------------
Noninterest Expenses:
Advisory Fee Expense Paid to Parent (Note 7) 127
Dividends on Mandatorily Redeemable Preferred Stock 66
Amortization of Start-up Costs 17
Other Noninterest Expenses 10
-------------
Total Noninterest Expenses 220
Income Before Taxes 37,845
Income Taxes (Note 8) -
-------------
NET INCOME 37,845
Preferred Stock Dividends 168
-------------
Net Income Available to Common Shareholder $37,677
=============
Net Income Per Common Share:
Basic $376,770
==============
Diluted $376,770
==============
See accompanying notes to financial statements
17
<PAGE>
WEBSTER PREFERRED CAPITAL CORPORATION
STATEMENT OF SHAREHOLDERS' EQUITY
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
Preferred Common Paid-In
Stock Stock Capital
------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance, March 17, 1997 $ - $ - $ -
Contributions by Webster Bank 2,000 1 735,382
Net Income - - -
Preferred Stock Redeemed (2,000) - 2,000
Net Proceeds from Sale of
Preferred Stock Series B 1,000 - 8,575
Dividends Paid or Accrued:
Common Stock ($380,470 per share) - - -
Preferred Stock ($74.60 per share) - - -
Preferred Stock Series B ($0.019 per share) - - -
Unrealized Gain on
Securities Available for Sale - - -
--------------------------------------------
Balance, December 31, 1997 $ 1,000 $ 1 $ 745,957
============================================
<CAPTION>
Distributions in
Excess of Unrealized
Accumulated Gains on
Earnings Securities, Net Total
----------------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
Balance, March 17, 1997 $ - $ - $ -
Contributions by Webster Bank - - 737,383
Net Income 37,845 - 37,845
Preferred Stock Redeemed - - -
Net Proceeds from Sale of
Preferred Stock Series B - - 9,575
Dividends Paid or Accrued:
Common Stock ($380,470 per share) (38,047) - (38,047)
Preferred Stock ($74.60 per share) (149) - (149)
Preferred Stock Series B ($0.019 per share) (19) - (19)
Unrealized Gain on
Securities Available for Sale - 64 64
----------------------------------------------------
Balance, December 31, 1997 $ (370) $ 64 $746,652
====================================================
See accompanying notes to financial statements
</TABLE>
18
<PAGE>
WEBSTER PREFERRED CAPITAL CORPORATION
STATEMENT OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
For the Period from
March 17, 1997
(Date of Inception)
to December 31, 1997
----------------------------
Operating Activities:
<S> <C>
Net Income $37,845
Adjustments to Reconcile Net Cash Provided (Used) by
Operating Activities:
Accretion of Securities Discount (215)
Amortization of Deferred Fees and Premiums 444
Increase in Accrued Interest Receivable (4,525)
Increase in Accrued Liabilities 909
Increase in Prepaid Expenses and Other Assets (129)
----------------
Net Cash Provided by Operating Activities 34,329
----------------
Investing Activities:
Purchase of Securities (119,971)
Principal Collected on Securities 160
Purchase of Loans (98,835)
Principal Repayments of Loans 79,776
----------------
Net Cash Used by Investing Activities (138,870)
----------------
Financing Activities:
Dividends Paid on Common and Preferred Stock (38,215)
Net Proceeds from Issuance of Preferred Stock 48,562
Contributions from Webster Bank 120,361
----------------
Net Cash Provided by Financing Activities 130,708
----------------
Increase in Cash and Cash Equivalents 26,167
Cash and Cash Equivalents at Beginning of Period -
----------------
Cash and Cash Equivalents at End of Period $26,167
================
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
SUPPLEMENTAL DISCLOSURES
(In Thousands):
<S> <C>
Income Taxes Paid $ 0
Interest Paid $ 0
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITY:
Contribution of Mortgage Assets, net by Webster Bank
in exchange for 100 shares of common stock and 2,000
shares of 10% Cumulative Non-Convertible Preferred Stock $ 617,022
On December 22, 1997 the Company redeemed from Webster Bank
2,000 shares of preferred stock; Webster Bank concurrently
contributed the proceeds to the Company as additional
paid-in capital $ 2,000
</TABLE>
See accompanying notes to financial statements
20
<PAGE>
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) BUSINESS
Webster Preferred Capital Corporation (the "Company") is a Connecticut
corporation incorporated in March 1997 and a subsidiary of Webster Bank, which
is a wholly-owned subsidiary of Webster Financial Corporation. The Company was
organized to provide a cost-effective means of raising funds, including equity
capital, on a consolidated basis for Webster Bank. The company acquires, holds
and manages real estate mortgage assets ("mortgage assets"). In March 1997,
Webster Bank contributed approximately $617.0 million, of mortgage assets, net
as part of the formation of the Company. As of December 31, 1997, the mortgage
assets owned by the Company consisted of whole loans secured by first mortgages
or deeds of trusts on single family (one- to- four unit) residential real estate
properties ("Residential Mortgage Loans"), located primarily in Connecticut and
mortgage-backed securities. Although the Company may acquire and hold a variety
of mortgage assets, its present intention is to acquire only residential
mortgage loans and certain mortgage-backed securities.
The Company has elected to be treated as a Real Estate Investment Trust ("REIT")
under the Internal Revenue Code of 1986, as amended (the "Code"), and will
generally not be subject to federal income tax to the extent that it distributes
its earnings to its stockholders and maintains its qualification as a REIT. All
of the shares of the Company's common stock, par value $0.01 per share, are
owned by Webster Bank, which is a federally-chartered and federally-insured
savings bank. Webster Bank has indicated to the Company that, for as long as any
of the Company's preferred shares are outstanding, Webster Bank intends to
maintain direct ownership of 100% of the outstanding common stock of the
Company.
B) BASIS OF FINANCIAL STATEMENT PRESENTATION
The financial statements have been prepared in conformity with generally
accepted accounting principles.
In preparing the financial statements, management is required to make estimates
and assumptions that affect the reported amount of assets and liabilities as of
the date of the balance sheets and revenues and expenses for the periods
presented. The actual results of the Company could differ from those estimates.
A material estimate that is susceptible to near-term changes includes the
determination of the allowance for loan losses.
C) ALLOWANCE FOR LOAN LOSSES
An allowance for loan losses is established based upon a review of the loan
portfolio, loss experience, specific problem loans, current and anticipated
economic conditions and other pertinent factors which, in management's judgment,
deserve current recognition in estimating loan losses.
Management believes that the allowance for loan losses is adequate. While
management believes it uses the best available information to recognize losses
on loans, future additions to the allowance may be necessary based on changes in
economic conditions. In addition, various regulatory agencies, as an integral
part of their examination process of Webster Bank, periodically may review the
Company's allowance for loan losses. Such agencies may require the Company to
recognize additions to the allowance for loan losses based on judgments
different from those of management.
D) FORECLOSED PROPERTIES
Foreclosed properties consist of properties acquired through foreclosure
proceedings or acceptance of a deed in lieu of foreclosure. Foreclosed
properties are reported at the lower of fair value less estimated selling
expenses or cost with an allowance for losses to provide for declines in value.
Operating expenses are charged to current period earnings and gains and losses
upon disposition are reflected in the statement of income when realized.
E) LOANS
Loans are stated at the principal amounts outstanding. Interest on loans is
credited to income as earned based on the rate applied to principal amounts
outstanding. Interest which is more than 90 days past due is not accrued. Such
interest ultimately collected, if any, is credited to income in the period
received. Loan origination fees, premiums and discounts on loans purchased are
recognized in interest income over the lives of the loans using a method
approximating the interest method.
21
<PAGE>
The Company's Residential Mortgage Loans are exempt from the disclosure
provisions of the Statement of Financial Accounting Standard ("SFAS") No.114,
"Accounting by Creditors for Impairment of a Loan," as amended by SFAS No.118,
since the Company's loans are comprised of large groups of smaller balance loans
which are collectively evaluated for impairment.
F) MORTGAGE-BACKED SECURITIES
Mortgage-backed securities are U.S. government agency securities and are
classified as Available for Sale. Available for Sale securities are carried at
fair value with unrealized gains and losses recorded as adjustments to
shareholders' equity. The adjustment to shareholders' equity is not tax effected
as the Company is generally not subject to federal and state income tax.
Management intends to hold these securities for indefinite periods of time as
part of its asset/liability strategy and may sell the securities in response to
changes in interest rates, changes in prepayment risk or other similar factors.
One of the risks inherent when investing in mortgage-backed securities is the
ability of such instruments to incur prepayments of principal prior to maturity.
Because of prepayments, the weighted-average yield of these securities may also
change, which could affect earnings.
G) PREPAID EXPENSES
Prepaid expenses are primarily organization costs which were incurred during the
formation of the Company. These expenses are being amortized over periods of
either 3 or 5 years.
H) STATEMENT OF CASH FLOWS
For purposes of the Statement of Cash Flows, the Company considers cash on hand
and in banks to be cash equivalents.
I) FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of securities (Note 2) is estimated based on prices published in
financial newspapers or quotations received from securities dealers or pricing
services.
In estimating the fair value of residential mortgage loans (Note 3), the
portfolio was classified into two categories, fixed-rate mortgage loans and
variable-rate mortgage loans. The categories were further segmented into 15, 20,
25, and 30 year contractual maturities. The fair value of each category is
calculated by discounting scheduled cash flows through estimated maturity using
market discount rates.
The calculation of fair value estimates of financial instruments is dependent
upon certain subjective assumptions and involves significant uncertainties,
resulting in variability in estimates with changes in assumptions. Potential
taxes and other expenses that would be incurred in an actual sale or settlement
are not reflected in the amounts disclosed. Fair value estimates are not
intended to reflect the liquidation value of the financial instruments.
NOTE 2: MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE
In November 1997, Webster Bank contributed $120.4 million in cash to the
Company, which was used to purchase Government National Mortgage Association
("GNMA") mortgage-backed securities. The following table sets forth certain
information regarding the mortgage-backed securities at December 31, 1997:
<TABLE>
<CAPTION>
Mortgage-Backed Securities
- -----------------------------------------------------------------------------------------------
Amortized Unrealized Unrealized Estimated
(In Thousands) Cost Gains Losses Fair Value
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available for Sale Portfolio: $ 120,026 $ 64 $ - $ 120,090
-----------------------------------------------------------------------------------------------
</TABLE>
All mortgage-backed securities have a contractual maturity of over 10 years. The
weighted average yield at December 31, 1997 is 6.93% and the average remaining
life is less than 11 years. Although the stated final maturity of these
obligations are long-term, the weighted average life generally is much shorter
due to prepayments. There were no sales of mortgage-backed securities from March
17, 1997 (date of inception) through the period ended December 31, 1997.
22
<PAGE>
NOTE 3: RESIDENTIAL MORTGAGE LOANS
A summary of the Company's carrying amount and fair market value of residential
mortgage loans at December 31, 1997 follows:
Carrying Fair Market
(In Thousands) Amount Value
- --------------------------------------------------------------------------------
Fixed-Rate Loans:
Fixed-Rate 15 yr Loans $ 59,631 $ 60,794
Fixed-Rate 20 yr Loans 1,636 1,679
Fixed-Rate 25 yr Loans 813 830
Fixed-Rate 30 yr Loans 161,884 165,847
- -----------------------------------------------------------------------------
Total Fixed-Rate Loans 223,964 229,150
- -----------------------------------------------------------------------------
Variable-Rate Loans:
Variable-Rate 15 yr Loans 4,896 5,011
Variable-Rate 20 yr Loans 4,004 4,102
Variable-Rate 25 yr Loans 8,553 8,750
Variable-Rate 30 yr Loans 393,924 405,277
- -----------------------------------------------------------------------------
Total Variable-Rate Loans 411,377 423,140
- -----------------------------------------------------------------------------
Total Residential Mortgage Loans $ 635,341 $ 652,290
- -----------------------------------------------------------------------------
Premiums and Deferred Fees on Loans, Net 1,831
Less Allowance for Loan Losses (1,538)
- -----------------------------------------------------------------
Residential Mortgage Loans, Net $635,634
- -----------------------------------------------------------------
In March 1997, Webster Bank contributed approximately $617.0 million, of
mortgage assets, net as part of the formation of the Company. The $617.0 million
consisted of $215.8 million of fixed rate loans, $401.3 million of variable rate
loans, net of premiums, deferred fees on loans and an allowance for loan losses.
As of December 31, 1997, approximately 35.3% of the Company's residential
mortgage loans are fixed-rate loans and approximately 64.7% are adjustable-rate
loans.
The following table sets forth certain information regarding the Company's loans
accounted for on a nonaccrual basis at December 31, 1997.
(In Thousands) At December 31, 1997
- --------------------------------------------------------------------------------
Residential mortgage loans accounted
for on a nonaccrual basis $1,303
Real estate acquired through foreclosure -
- --------------------------------------------------------------------------------
Total $1,303
- --------------------------------------------------------------------------------
23
<PAGE>
A detail of the change in the allowance for loan losses for the period ending
December 31, 1997 follows:
For the Period from March
17, 1997
(Date of Inception)
(In Thousands) to December 31, 1997
- --------------------------------------------------------------------------------
Balance at Beginning of Period $ -
Allowance for Loan Losses on Acquired Loans 1,544
Provisions Charged to Operations -
Charge-offs (6)
Recoveries -
- --------------------------------------------------------------------------------
Balance at End of Period $1,538
- --------------------------------------------------------------------------------
NOTE 4: MANDATORILY REDEEMABLE PREFERRED STOCK
On December 24, 1997, the Company raised $40 million, less expenses in a public
offering of 40,000 shares of its Series A 7.375% cumulative redeemable preferred
stock, liquidation preference $1,000 per share.
The Company is required to redeem all outstanding Series A Preferred Shares on
January 15, 2001 at a redemption price of $1,000 per share, plus accrued and
unpaid dividends.
The Series A Preferred Shares are not redeemable prior to January 15, 1999
except upon the occurrence of a tax event. A tax event can occur when a change
in existing laws and regulations results in a substantial risk that dividends
paid by the Company will no longer be fully deductible for federal income tax
purposes or that dividends paid by the Company to Webster Bank will no longer be
fully deductible for state income tax purposes. Upon the occurrence of such tax
event, during the period January 15, 1999 through January 14, 2001, the Series A
Preferred Shares may be redeemed at the option of the Company.
NOTE 5: SHAREHOLDER'S EQUITY
On March 17, 1997, the Company's date of inception, Webster Bank contributed
$617.0 million of mortgage assets, net in exchange for 100 shares of $.01 par
value common stock and 2,000 shares of $.01 par value ($1,000 stated value) 10%
cumulative nonconvertible preferred stock.
On November 24, 1997, Webster Bank contributed approximately $120.4 million in
cash to the Company, which was used by the Company to purchase GNMA
mortgage-backed securities (Note 2).
On December 15, 1997, Webster Bank redeemed all 2,000 shares of $.01 par value
($1,000 stated value) 10% cumulative nonconvertible preferred stock and
concurrently contributed the proceeds to the Company as additional paid-in
capital.
On December 24, 1997, the Company raised $10 million, less expenses in a public
offering of 1,000,000 shares of its Series B 8.625% cumulative redeemable
preferred stock, liquidation preference $10 per share.
NOTE 6: SERVICING
The mortgage loans owned by the Company are serviced by Webster Bank pursuant to
the terms of a servicing agreement. Webster Bank in its role as Servicer under
the terms of the servicing agreement is herein referred to as the "Servicer".
The Servicer will receive fees at an annual rate of (i) 8 basis points for fixed
rate loan servicing and
24
<PAGE>
collection, (ii) 8 basis points for variable rate loan servicing and collection
and (iii) 5 basis points for all other services to be provided, as needed, in
each case based on the daily outstanding balances of all the Company's loans for
which the Servicer is responsible.
The Servicer is entitled to retain any late payment charges, prepayment fees,
penalties and assumption fees collected in connection with mortgage loans
serviced by it. The Servicer receives the benefit, if any, derived from interest
earned on collected principal and interest payments between the date of
collection and the date of remittance to the Company and from interest earned on
tax and insurance impound funds with respect to mortgage loans serviced by it.
At the end of each calendar month, the Servicer is required to invoice the
Company for all fees and charges due to the Servicer.
NOTE 7: ADVISORY SERVICES
Advisory services are being provided pursuant to an agreement with Webster Bank
to provide the Company with the following types of services: administer the
day-to-day operations, monitor the credit quality of the real estate mortgage
assets, advise with respect to the acquisition, management, financing, and
disposition of real estate mortgage assets and provide the necessary executive
administration, human resource, accounting and control, technical support,
record keeping, copying, telephone, mailing and distribution, investment and
funds management services. Webster Bank is entitled to receive an annual fee of
$150,000 with respect to the advisory services provided to the Company.
Operating expenses outside the scope of the agreement are paid directly by the
Company. Such expenses include but are not limited to the following: fees for
third party consultants, attorneys, and external auditors and any other expenses
incurred that are not directly related to the advisory agreement.
NOTE 8: INCOME TAXES
The Company has elected to be treated as a REIT under Sections 856 through 860
of the Code, commencing with its taxable year ending December 31, 1997, and
believes that its organization and proposed method of operation will enable it
to meet the requirements for qualification as a REIT. As a REIT, the Company
generally will not be subject to federal income tax on net income and capital
gains that it distributes to the holders of its Common Stock and Preferred
Stock. Therefore, no provision for federal income taxes has been included in the
accompanying financial statements.
To maintain REIT status, an entity must meet a number of organizational and
operational requirements, including a requirement that it currently distributes
to stockholders at least 95% of its "REIT taxable income" (not including capital
gains and certain items of non-cash income). If the Company fails to qualify as
a REIT in any taxable year, it will be subject to federal income tax at regular
corporate rates.
25
<PAGE>
NOTE 9: SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
1997
(In Thousands, Except Share Data) First Quarter* Second Quarter Third Quarter Fourth Quarter
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Interest Income $1,852 $11,785 $11,766 $12,662
Noninterest Expense 13 45 51 45
------------------------------------------------------------------------------------
NET INCOME 1,839 11,740 11,715 12,617
Preferred Dividends 8 50 50 126
------------------------------------------------------------------------------------
Net Income for Common Shareholders $1,831 $11,690 $11,665 $12,491
------------------------------------------------------------------------------------
Earnings Per Share:
Basic $18,310 $116,900 $116,650 $124,910
------------------------------------------------------------------------------------
Diluted $18,310 $116,900 $116,650 $124,910
------------------------------------------------------------------------------------
</TABLE>
* First Quarter information is for the period of March 17, 1997
(date of inception) through March 31, 1997.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not Applicable.
26
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Company's Board of Directors currently consists of three members.
Directors are elected for a one-year term. The Company currently has three
officers. The Company has no other employees.
The persons who are current directors and executive officers of the Company
are as follows:
NAME AGE POSITION AND OFFICES HELD
- ---- --- -------------------------
John V. Brennan 45 President and Director
Ross M. Strickland 48 Director
Harriet Munrett Wolfe 44 Director
Gregory S. Madar 35 Vice President and Secretary
Peter J. Swiatek 39 Vice President and Treasurer
The following is a summary of the experience of the executive officers
and directors of the Company:
John V. Brennan is the President and a director of the Company. He is
also the Executive Vice President, Chief Financial Officer and Treasurer of
Webster and Webster Bank. Mr. Brennan, a certified public accountant, joined
Webster Bank in 1986 as Senior Vice President and Treasurer. He was elected
Chief Financial Officer in 1990 and Executive Vice President in 1991. Prior to
joining Webster Bank, he was a senior manager with the accounting firm of KPMG
Peat Marwick LLP.
Ross M. Strickland is a director of the Company. He is also the
Executive Vice President -- Mortgage Banking of Webster and Webster Bank,
positions he has held since his employment in 1991. Prior to joining Webster
Bank, he was Executive Vice President of Residential Lending with the former
Northeast Savings, F.A., Hartford, Connecticut, from 1988 to 1991. Prior to
joining Northeast Savings, he was National Sales Manager, Credit Resources
Group, for Shearson Lehman Brothers.
Harriet Munrett Wolfe is a director of the Company. She is also the
Senior Vice President, Counsel and Secretary of Webster and Webster Bank. Ms.
Wolfe joined Webster and Webster Bank in March 1997 as Senior Vice President and
Counsel, and was appointed Secretary in June 1997. Prior to joining Webster and
Webster Bank, she was in private practice. From November 1990 to January 1996,
she was Vice President and Senior Counsel of Shawmut Bank Connecticut, N.A.,
Hartford, Connecticut. Prior to joining Shawmut, she was Associate Legal Counsel
and Assistant Secretary of the former Citytrust, Bridgeport, Connecticut.
Gregory S. Madar is the Vice President and Secretary of the Company.
He is also Vice President and Tax Manager of Webster Bank. Mr. Madar, a
certified public accountant, joined Webster Bank in 1995. Prior to joining
Webster Bank, he was Controller of Millane Nurseries, Inc. from 1993 to 1995.
Prior to joining Millane Nurseries, he was a tax manager with KPMG Peat Marwick
LLP in Hartford. He was associated with KPMG from 1987 to 1993.
Peter J. Swiatek is the Vice President and Treasurer of the Company.
He is also Senior Vice President and Controller of Webster Bank and Controller
of Webster. Mr. Swiatek joined Webster in 1990 as Vice President of Accounting.
He was elected Controller in 1992 and Senior Vice President in 1993. Prior to
joining Webster Bank, Mr.Swiatek was the Controller of the former The Bank of
Hartford.
27
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and officers and persons who own more than 10%
of its Series A Preferred Stock or Series B Preferred Stock to file with the SEC
initial reports of ownership of the Company's equity securities and to file
subsequent reports when there are changes in such ownership. Based on a review
of reports submitted to the Company, the Company believes that during the fiscal
year ended Decmeber 31, 1997, all Section 16(a) filing requirements applicable
to the Company's officers, directors and more than 10% owners were compiled with
on a timely basis.
ITEM 11. EXECUTIVE COMPENSATION
The Company currently has three officers, none of whom receive separate
compensation as employees of the Company. The Company has retained an Advisor to
perform certain functions pursuant to an Advisory Agreement described below
under "The Advisor." Each officer of the Company currently is also an officer of
Webster Bank. The Company will maintain corporate records and audited financial
statements that are separate from those of Webster Bank and any of Webster
Bank's affiliates.
It is not currently anticipated that the officers, directors or
employees of the Company will have any pecuniary interest in any Mortgage Asset
to be acquired or disposed of by the Company or in any transaction in which the
Company has an interest.
The Company does not intend to pay the directors of the Company fees
for their services as directors. Although no direct compensation will be paid by
the Company, under the Advisory Services Agreement, the Company will reimburse
Webster Bank for its proportionate share of the salaries of such person for
services rendered.
THE ADVISOR
The Company has entered into an Advisory Service Agreement (the
"Advisory Agreement") with Webster Bank to administer the day-to-day operations
of the Company. Webster Bank in its role as advisor under the terms of the
Advisory Agreement is herein referred to as the "Advisor." The Advisor is
responsible for (i) monitoring the credit quality of the Mortgage Assets held by
the Company, (ii) advising the Company with respect to the acquisition,
management, financing and disposition of the Company's Mortgage Assets, and
(iii) maintaining custody of the documents related to the Company's Mortgage
Assets. The Advisor may at any time subcontract all or a portion of its
obligations under the Advisory Agreement to one or more of its affiliates
involved in the business of managing Mortgage Assets. If no affiliate of the
Advisor is engaged in the business of managing Mortgage Assets, the Advisor may,
with the approval of a majority of the Board of Directors, subcontract all or a
portion of its obligations under the Advisory Agreement to unrelated third
parties. The Advisor may assign its rights or obligations under the Advisory
Agreement to any affiliate of the Company. The Advisor will not, in connection
with the subcontracting of any of its obligations under the Advisory Agreement,
be discharged or relieved in any respect from its obligations under the Advisory
Agreement.
The Advisory Agreement has an initial term of two years, and will be
renewed automatically for additional one-year periods unless notice of
nonrenewal is delivered by either party to the other party. The Advisory
Agreement may be terminated by the Company at any time upon 90 days' prior
written notice. The Advisor will be entitled to receive an advisory fee equal to
$150,000 per year with respect to the advisory services provided by it to the
Company. The fee may be revised to reflect changes in the actual costs incurred
by the Advisor in providing services.
The Advisory Agreement provides that the liability of the Advisor to
the Company for any loss due to the Advisor's performing or failing to perform
the services under the Advisory Agreement shall be limited to those losses
sustained by the Company which are a direct result of the Advisor's negligence
or willful misconduct. It also provides that under no circumstances shall the
Advisor be liable for any consequential or special damages and that in no event
shall the Advisor's total combined liability to the Company for all claims
arising under or in connection with the Advisory Agreement be more than the
total amount of all fees payable by the Company to the Advisor under the
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Advisory Agreement during the year immediately proceeding the year in which the
first claim giving rise to such liability arises. The Advisory Agreement also
provides that to the extent that third parties make claims against the Advisor
arising out of the services provided thereunder, the Company will indemnify the
Advisor against all loss arising therefrom.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The executive officers and directors of the Company do not own any
shares of stock in the Company or Webster Bank.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is organized as a subsidiary of Webster Bank, and is
controlled by and, through advisory and servicing agreements, totally reliant on
Webster Bank. The Company's Board of Directors consists entirely of Webster Bank
employees and, through the advisory and servicing agreements, Webster Bank and
its affiliates are involved in every aspect of the Company's existence. Webster
Bank administers the day-to-day activities of the Company in its role as Advisor
under the Advisory Agreement, and acts as Servicer of the Company's Mortgage
Loans under the Servicing Agreement. In addition, all of the officers of the
Company are also officers of Webster Bank. As the holder of all of the
outstanding voting stock of the Company, Webster Bank generally will have the
right to elect all of the directors of the Company. For a description of the
fees Webster Bank is entitled to receive under the advisory and servicing
agreements, see Notes 6 and 7 to the Company's Financial Statements included as
part of Item 8.
DEPENDENCE UPON WEBSTER BANK AS ADVISOR AND SERVICER
The Company is dependent on the diligence and skill of the officers and
employees of Webster Bank as its Advisor for the selection, structuring and
monitoring of the Company's mortgage assets. In addition, the Company is
dependent upon the expertise of Webster Bank as its Servicer for the servicing
of the Mortgage Loans. The personnel deemed most essential to the Company's
operations are Webster Bank's loan servicing and administration personnel, and
the staff of its finance department. The loan servicing and administration
personnel will advise the Company in the selection of Mortgage Assets, and
provide loan servicing oversight. The finance department will assist in the
administrative operations of the Company. The Advisor may subcontract all or a
portion of its obligations under the Advisory Agreement to one or more
affiliates, and under certain conditions to non-affiliates, involved in the
business of managing Mortgage Assets. The Advisor may assign its rights or
obligations under the Advisory Agreement, and the Servicer may assign its rights
and obligations under the Servicing Agreement, to any affiliate of the Company
involved in the business of managing real estate mortgage assets. Under the
Advisory Agreement, the Advisor may subcontract its obligations to unrelated
third parties with the approval of the Board of Directors of the Company. In the
event the Advisor or the Servicer subcontracts or assigns its rights or
obligations in such a manner, the Company will be dependent upon the
subcontractor or affiliate to provide services. Although Webster Bank has
indicated to the Company that it has no plans in this regard, if Webster Bank
were to subcontract all of its loan servicing to an outside third party, it also
would do so with respect to Mortgage Assets under the Servicing Agreement. Under
such circumstances, there may be additional risks as to the costs of such
services and the ability to identify a subcontractor suitable to the Company.
The Servicer does not believe it would subcontract those duties unless it could
not perform such duties efficiently and economically itself.
29
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) The following financial statements are filed as a part of this
Report:
Statement of Condition at December 31, 1997
Statement of Income for the Period from March 17, 1997 (Date of
Inception) to December 31, 1997
Statement of Shareholders' Equity from March 17, 1997 (Date of
Inception) to December 31, 1997
Statement of Cash Flows for the Period from March 17, 1997 (Date
of Inception) to December 31, 1997
Notes to Financial Statements
Independent Auditors' Report
(a)(2) There are no financial statement schedules which are required to
be filed as part of this form.
(a)(3) See (c) below for all exhibits filed herewith and the Index to
Exhibits.
(b) Reports on Form 8-K. Not applicable.
(c) Exhibits.
The following exhibits either are filed as a part of this Report
or are incorporated herein by reference:
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
3.1 Amended and Restated Certificate of Incorporation of Webster
Preferred Capital Corporation (the "Company").
3.2 Certificate of Amendment for the Series A 7.375% Cumulative
Redeemable Preferred Stock of the Company.
3.3 Certificate of Amendment for the Series B 8.625% Cumulative
Redeemable Preferred Stock of the Company.
3.4 Amended and Restated By-Laws of the Company.
4.1 Specimen of certificate representing the Series A 7.375%
Cumulative Redeemable Preferred Stock of the Company.
4.2 Specimen of certificate representing the Series B 8.625%
Cumulative Redeemable Preferred Stock of the Company.
10.1 Mortgage Assignment Agreement, made as of March 17, 1997, by and
between Webster Bank and the Company (incorporated herein by
reference from Exhibit 10.1 to the Company's Registration
Statement on Form S-11 (File No. 333-38685) filed with the
Securities and Exchange Commission (the "SEC") on October 24,
1997).
10.2 Master Service Agreement, dated March 17, 1997, between Webster
Bank and the Company (incorporated herein by reference from
Exhibit 10.2 to the Company's Registration Statement on Form
S-11 (File No. 333-38685) filed with the SEC on October 24,
1997).
10.3 Advisory Service Agreement, made as of October 20, 1997, by and
between Webster Bank and the Company.
21 Subsidiaries of the Company.
27 Financial Data Schedule.
(d) There are no financial statements and financial statement
schedules which were excluded from this Report which are required
to be included herein.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
WEBSTER PREFERRED CAPITAL CORPORATION
Registrant
BY: /s/ John V. Brennan
------------------------------------------
John V. Brennan, President and Director
Date: March 30, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities noted as of March 30, 1998.
By: /s/ John V. Brennan
-----------------------------------------
John V. Brennan, President and
Director
Principal Executive Officer
By: /s/ Peter J. Swiatek
-----------------------------------------
Peter J. Swiatek, Vice President and Treasurer
Principal Financial Officer and Principal
Accounting Officer
By: /s/ Ross M. Strickland
-----------------------------------------
Ross M. Strickland, Director
By: /s/ Harriet Munrett Wolfe
-----------------------------------------
Harriet Munrett Wolfe,
Director
31
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INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
3.1 Amended and Restated Certificate of Incorporation of Webster
Preferred Capital Corporation (the "Company").
3.2 Certificate of Amendment for the Series A 7.375% Cumulative
Redeemable Preferred Stock of the Company.
3.3 Certificate of Amendment for the Series B 8.625% Cumulative
Redeemable Preferred Stock of the Company.
3.4 Amended and Restated By-Laws of the Company.
4.1 Specimen of certificate representing the Series A 7.375%
Cumulative Redeemable Preferred Stock of the Company.
4.2 Specimen of certificate representing the Series B 8.625%
Cumulative Redeemable Preferred Stock of the Company.
10.1 Mortgage Assignment Agreement, made as of March 17, 1997, by and
between Webster Bank and the Company (incorporated herein by
reference from Exhibit 10.1 to the Company's Registration
Statement on Form S-11 (File No. 333-38685) filed with the
Securities and Exchange Commission (the "SEC") on October 24,
1997).
10.2 Master Service Agreement, dated March 17, 1997, between Webster
Bank and the Company (incorporated herein by reference from
Exhibit 10.2 to the Company's Registration Statement on Form
S-11 (File No. 333-38685) filed with the SEC on October 24,
1997).
10.3 Advisory Service Agreement, made as of October 20, 1997, by and
between Webster Bank and the Company.
21 Subsidiaries of the Company
27 Financial Data Schedule.
32
Exhibit 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
WEBSTER PREFERRED CAPITAL CORPORATION
------------------------------
Pursuant to Section 33-801 of the
Connecticut Business Corporation Act
------------------------------------------
Webster Preferred Capital Corporation (the "Corporation"), a corporation
organized and existing under the Connecticut Business Corporation Act, as
amended, and having its principal office in the State of Connecticut at 145 Bank
Street, Waterbury, Connecticut 06702,
DOES HEREBY CERTIFY:
FIRST: The name of the Corporation is Webster Preferred Capital
Corporation. The Corporation desires to amend and restate its amended and
restated certificate of incorporation as currently in effect.
SECOND: The Corporation's Amended and Restated Certificate of
Incorporation set forth below contains amendments requiring shareholder
approval.
THIRD: This Amended and Restated Certificate of Incorporation was duly
approved in accordance with Sections 33-801 and 33-797 of the Connecticut
Business Corporation Act, as amended, by the Corporation's Board of Directors by
unanimous written consent dated December 17, 1997 and by the sole shareholder of
the Corporation by written consent dated December 17, 1997.
FOURTH: The text of the Corporation's amended and restated certificate
of incorporation as currently in effect is hereby amended and restated in its
entirety as follows:
ARTICLE I
NAME
The name of the corporation is Webster Preferred Capital Corporation (the
"Corporation").
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ARTICLE II
REGISTERED OFFICE AND AGENT; INCORPORATOR
The registered office of the Corporation shall be located at One Commercial
Plaza, Hartford, Connecticut 06103. The registered agent of the Corporation at
such address shall be CT Corporation System. The name of the Incorporator of the
Corporation is Josephina Rotman Childress and the address of the Incorporator is
53 State Street, Boston, Massachusetts 02109.
ARTICLE III
PURPOSES AND POWERS
The Corporation is being formed to engage in the real estate business and
to engage in any other lawful act or activity for which corporations may be
organized under the Connecticut Business Corporation Act, as amended (the
"Connecticut Business Corporation Act"). The foregoing purposes shall be in no
way limited or restricted by reference to, or inference from, the terms of any
other clause of this Amended and Restated Certificate of Incorporation (this
"Certificate of Incorporation"), and each shall be regarded as independent. The
foregoing purposes are also to be construed as powers of the Corporation, and
shall be in addition to and not in limitation of the general powers of
corporations under the laws of the State of Connecticut. However,
notwithstanding the foregoing and any other provision of this Certificate of
Incorporation, the Corporation may be operated solely for the purpose of
performing functions which Webster Bank is empowered to perform directly.
ARTICLE IV
CAPITAL STOCK
SECTION 4.1 AUTHORIZED SHARES.
The total number of shares which the Corporation shall have the authority
to issue is 3,001,000 shares, consisting of (i) 1,000 shares of common stock,
par value $.01 per share (the "Common Stock"), and (ii) 3,000,000 shares of
serial preferred stock, par value $1.00 per share (the "Preferred Stock").
Subject to the limitations prescribed by applicable law and this
Certificate of Incorporation, the Board of Directors, or if then constituted, a
duly authorized committee thereof, is authorized to issue, from authorized but
unissued shares of capital stock of the Corporation, Preferred Stock in such
series as the Board of Directors may establish, from time to time, and to
determine the preferences, limitations and relative rights of each series
thereof (if any).
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A certificate of amendment, which shall be effective without shareholder
action, relating to each series of Preferred Stock shall set forth the
preferences and other terms of such series, including without limitation the
following: (1) the title and stated value, if any, of such series, (2) the
number of shares of such series and the liquidation preference per share of such
series; (3) the dividend rate(s), period(s) and/or payment date(s) or method(s)
of calculation thereof applicable to such series; (4) whether such series is
cumulative or not, and if cumulative, the date from which dividends on such
series shall accumulate; (5) the provision for a sinking fund, if any, for such
series; (6) the provision for redemption, if applicable, of such series; (7) the
relative ranking and preferences of such series as to any limitations on
issuance of any series of Preferred Stock ranking senior to or on a parity with
each series of Preferred Stock as to dividend rights and rights upon
liquidation, dissolution or winding up of the affairs of the Corporation; (8)
any voting rights of such series; and (9) any other specific terms, preferences,
rights, limitations or restrictions of such series.
The terms, limitations and relative rights and preferences of each class of
shares and series thereof (if any) are as follows:
SECTION 4.2 COMMON STOCK.
4.2.1 DIVIDEND RIGHTS
Subject to Section 4.3.1 hereof, the Board of Directors may declare
dividends on the Common Stock payable out of assets of the Corporation legally
available therefor, and the holders of the Common Stock shall be entitled to
receive such dividends if, when and as declared by the Board of Directors of the
Corporation.
4.2.2 LIQUIDATION RIGHTS
In the event of any voluntary or involuntary liquidation, dissolution, or
winding up of, or any distribution of assets of the Corporation, after payment
to the holders of all series of the Preferred Stock the full preferential
amounts to which such holders are entitled, the remaining assets of the
Corporation after payment of all debts and liabilities of the Corporation, shall
be distributed to the holders of the Common Stock, according to their respective
shares.
4.2.3 VOTING RIGHTS
Unless otherwise provided by this Certificate of Incorporation or
applicable law, all right to vote and all voting power incident to the
Corporation's capital stock shall be vested exclusively in the holders of the
Common Stock, subject to the rights of the holders of any series of Preferred
Stock to elect directors under specified circumstances. Each share of Common
Stock shall have one vote on matters to be voted upon by holders of Common
Stock.
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<PAGE>
SECTION 4.3 SERIAL PREFERRED STOCK.
4.3.1 DIVIDEND RIGHTS
The holders of shares of Preferred Stock shall be entitled to receive from
the assets of the Corporation legally available therefor, if, when and as
declared by the Board of Directors of the Corporation, dividends and, if
applicable, any accrued and unpaid dividends thereon, in accordance with the
respective terms of the series creating such shares of Preferred Stock, before
any dividends shall be declared or paid (other than dividends payable in shares
of stock of the Corporation) on the Common Stock.
4.3.2 LIQUIDATION RIGHTS
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of, or any distribution of the assets of the Corporation, the holders
of Preferred Stock shall be entitled to be paid the respective liquidation
preference, and if applicable, any accrued and unpaid dividends thereon, in
accordance with the respective terms of the series creating such shares of
Preferred Stock, before any distribution is made to the holders of the Common
Stock.
4.3.3 VOTING RIGHTS
Except as otherwise specifically provided in this Certificate of
Incorporation or required by applicable law, the holders of the Preferred Stock
shall have no right to vote at any meeting of shareholders or otherwise and
shall not be entitled to notice of any such meeting, except in each case as may
be specifically required by law.
ARTICLE V
BOARD OF DIRECTORS
SECTION 5.1 BOARD OF DIRECTORS.
The Board of Directors shall consist of not less than three directors.
Subject to the rights of the holders of any series of Preferred Stock to elect
directors under specified circumstances, the number of directors shall be fixed
from time to time pursuant to resolutions adopted by the Board of Directors of
the Corporation, as provided in the By-Laws.
SECTION 5.2 LIMITATION ON LIABILITY OF DIRECTORS.
The personal liability of a director to the Corporation or the shareholders
of the Corporation for monetary damages for breach of duty as a director shall
be limited to an amount that is not less than the compensation received by the
director for serving the Corporation during the year of the violation if such
breach did not
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(A) involve a knowing and culpable violation of law by the director, (B) enable
the director or an associate, as defined in Section 33-840 of the Connecticut
Business Corporation Act, to receive an improper personal economic gain, (C)
show a lack of good faith and a conscious disregard for the duty of the director
to the Corporation under circumstances in which the director was aware that his
conduct or omission created an unjustifiable risk of serious injury to the
Corporation, (D) constitute a sustained and unexcused pattern of inattention
that amounted to an abdication of the director's duty to the Corporation, or (E)
create liability under Section 33-757 of the Connecticut Business Corporation
Act.
ARTICLE VI
COVENANTS OF THE CORPORATION
The Corporation hereby covenants as follows:
(a) The Corporation shall not file a voluntary petition of bankruptcy
without the approval of two-thirds of the Board of Directors of the Corporation.
(b) The Corporation will: (i) prepare and maintain its financial
statements, transactions, books and records, corporation documents, bank
accounts and other assets separate from those of any other person or entity;
(ii) maintain separate offices through which its business is conducted (except
that the Corporation may lease office space on the premises of Webster Bank as
may be necessary to the Corporation's operations); (iii) be adequately financed
and capitalized as a separate unit in light of the reasonably foreseeable
obligations of a business of its size and character; (iv) maintain an arms'
length relationship with affiliates and any other parties furnishing services to
it; (v) maintain its books, records, resolutions and agreements as official
records; (vi) conduct its business in its own name; (vii) pay its own
liabilities out of its own funds and other assets, (viii) observe all corporate
formalities necessary to maintain its identity as an entity separate and
distinct from Webster Bank, all other affiliates and any other person or entity,
(ix) hold appropriate meetings of its Board of Directors to authorize its
corporate actions; (x) participate in the fair and reasonable allocation of any
and all overhead expenses and other common expenses for facilities, goods or
services provided to multiple entities; (xi) use its own stationery, invoices
and checks; (xii) hold itself out to the public and identify itself as a
separate and distinct entity under its own name and not as a division or part of
any person or entity; and (xiii) hold its assets in its own name.
(c) All borrowings by the Corporation will indicate that Webster Bank
has not guaranteed the debt of the Corporation unless that is, in fact, the
case.
(d) The Company will not: (i) fail to correct any known
misunderstanding regarding its separate identity; (ii) commingle its funds or
other assets with those of any other person or entity; (iii) assume, guarantee
or became obligated for the debts
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<PAGE>
of any affiliate or other entity (other than a subsidiary) or hold out its
credit as being available to satisfy the obligations of any affiliate or other
entity (other than a subsidiary); (iv) acquire obligations or securities of its
shareholders (except for the acquisition by the Corporation of mortgage or
mortgage-related assets from Webster Bank); (v) pledge any of its assets (or
permit any of its assets to be pledged) for the benefit of any other person or
entity; (vi) identify its shareholders or any of its affiliates as a division or
part of it; (vii) engage (either as transferor or transferee) in any material
transaction with any affiliate other than for fair value and on terms similar to
those obtainable in arms' length transactions with unaffiliated parties, or
engage in any transaction with any affiliate involving any intent to hinder,
delay or defraud any person or entity; or (viii) engage in any business activity
other than as permitted by this Certificate of Incorporation.
(e) To the extent that the statements set forth in Sections (b) and (d)
above of this Article VI relate to the separate business operations of the
Corporation and Webster Bank, such statements are qualified to the extent that
Webster Bank, in its capacity as Servicer under the Master Service Agreement
between the Corporation and Webster Bank and as Advisor under the Advisory
Service Agreement between the Corporation and Webster Bank, is authorized to
take, and does take, action on behalf of the Corporation in order properly to
perform its duties and responsibilities under those agreements. Such statements
are also qualified to the extent that for accounting and reporting purposes, the
Corporation may be included in the consolidated financial statements of Webster
Bank or Webster Financial Corporation in accordance with generally accepted
accounting principles.
ARTICLE VII
LIMITATIONS ON OWNERSHIP AND TRANSFER
(a) CERTAIN DEFINITIONS.
The following terms shall have the following meanings:
(1) "Acquire" shall mean the acquisition of Beneficial Ownership of shares
of Capital Stock by any means including, without limitation, (i) a Transfer,
(ii) the acquisition of direct ownership of shares by any Person, including
through the exercise of Acquisition Rights or any other option, warrant, pledge,
other security interest or similar right to acquire shares, and (iii) the
acquisition of indirect ownership of shares (taking into account the
constructive ownership rules of Section 544 of the Code, as modified by Section
856(h)(1)(B) of the Code) by a Person who is an individual within the meaning of
Section 542(a)(2) of the Code, including, without limitation, through the
acquisition by any Person of Acquisition Rights or any option, warrant, pledge,
security interest, or similar right to acquire shares. The term "Acquisition"
shall have the correlative meaning.
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(2) "Acquisition Rights" shall mean rights to Acquire shares of Capital
Stock pursuant to: (i) exercise of any option to acquire shares of Capital Stock
or (ii) any pledge of shares of Capital Stock.
(3) "Beneficial Ownership" shall mean ownership of shares of Capital Stock
by a Person who is treated or would be treated as an owner of such Capital Stock
either directly or indirectly, or constructively through the application of
Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The
terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall
have the correlative meanings.
(4) "Capital Stock" shall mean all classes or series of capital stock of
the Corporation including without limitation, the Common Stock and Preferred
Stock.
(5) "Charitable Beneficiary" shall mean one or more beneficiaries of the
Trust as determined pursuant to Section 7(m), each of which shall be an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
(6) "Code" shall mean the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
(7) "Initial Public Offering" means the closing of the sale of shares of
Preferred Stock pursuant to the Corporation's first effective registration
statement for such Preferred Stock, filed under the Securities Act of 1933, as
amended.
(8) "Market Price" shall mean the net asset value per share of Common Stock
or Preferred Stock, as the case may be, as determined in good faith by the Board
of Directors.
(9) "Person" shall mean an individual, corporation, partnership, estate,
trust (including a trust qualified under Section 401(a) or 501(c)(17) of the
Code), a portion of a trust permanently set aside for or to be used exclusively
for the purposes described in Section 642(c) of the Code, association, private
foundation within the meaning of Section 509(a) of the Code, joint stock company
or other entity and also includes a group as that term is used for purposes of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended; but does
not include an underwriter which participates in a public offering of Capital
Stock for a period of 90 days following the purchase by such underwriter of the
Capital Stock, provided that the ownership of Capital Stock by such underwriter
would not result in the Corporation being "closely held" within the meaning of
Section 856(h) of the Code, or would otherwise result in the Corporation failing
to qualify as a REIT.
(10) "Purported Beneficial Transferee" shall mean, with respect to any
purported Transfer which would result in a violation of Section 7(b), the
purported beneficial transferee for whom the Purported Record Transferee would
have acquired shares of Capital Stock if such Transfer had not violated the
provisions of
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Section 7(b). The Purported Beneficial Transferee and the Purported Record
Transferee may be the same Person.
(11) "Purported Record Transferee" shall mean the Person who would have
been the record holder of the Capital Stock if such Transfer had not violated
the provisions of Section 7(b). The Purported Beneficial Transferee and the
Purported Record Transferee may be the same Person.
(12) "REIT" shall mean a "real estate investment trust" under Section 856
of the Code.
(13) "REIT Provisions of the Code" means Sections 856 through 860 of the
Code and any successor or other provisions of the Code relating to real estate
investment trusts (including provisions as to the attribution of ownership of
beneficial interests therein) and the regulations promulgated thereunder.
(14) "Restriction Termination Date" shall mean the first day after the date
of the closing of the Initial Public Offering on which the Corporation
determines that is no longer in the best interests of the Corporation to attempt
to, or continue to, qualify as a REIT.
(15) "Transfer" shall mean any sale, transfer, gift, assignment, devise or
other disposition of Capital Stock that results in a change in the record,
Beneficial Ownership of Capital Stock or the right to vote or receive dividends
on Capital Stock (including without limitation (i) the granting of any option or
entering into any agreement for the sale, transfer or other disposition of
Capital Stock or the right to vote or receive dividends on Capital Stock or (ii)
the sale, transfer, assignment or other disposition or grant of any Acquisition
Rights or other securities or rights convertible into or exchangeable for
Capital Stock, or the right to vote or receive dividends on Capital Stock),
whether voluntary or involuntary, whether of record, Beneficially or
constructively and whether by operation of law or otherwise.
(16) "Trust" shall mean the trust created pursuant to 7(l) hereof.
(17) "Trustee" shall mean the Person unaffiliated with the Corporation, or
the Purported Beneficial Transferee, that is appointed by the Corporation to
serve as trustee of the Trust.
(b) RESTRICTIONS.
During the period commencing on the date of the Initial Public Offering and
prior to the Restriction Termination Date:
(i) No Person shall Acquire any shares of Capital Stock if, as a
result of such Acquisition, the Capital Stock would be
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Beneficially Owned by less than 100 Persons (determined without
reference to any rules of attribution); and
(ii) No Person shall Acquire or Beneficially Own any shares of Capital
Stock if, as a result of such Acquisition or Beneficial
Ownership, the Corporation would be "closely held" within the
meaning of Section 856(h) of the Code (without regard to whether
the purported Acquisition, Transfer, or other event takes place
during the second half of a taxable year) or otherwise would
result in the corporation failing to qualify as a REIT.
(c) REMEDIES FOR BREACH.
(1) If, notwithstanding the other provisions contained in this Article VII,
there is a purported Transfer, Acquisition, change in the capital structure of
the Corporation or other event (including, without limitation, a change in the
relationship between two or more Persons that causes the application of Section
544 of the Code, as modified by Section 856(h)), that, if effective, would
result in the violation of one or more of the restrictions on ownership and
transfer described in Section 7(b), then (i) in the case of a Transfer or
Acquisition, that number of shares of Capital Stock purported to be Transferred
or Acquired that otherwise would cause such Person to violate Section 7(b)
(rounded up to the next whole share) shall be automatically transferred to a
Trust for the benefit of a Charitable Beneficiary, as described in Section 7(l)
of this Article VII, effective as of the close of business on the day
immediately prior to the date of such purported Transfer or Acquisition, and
such Person shall acquire no rights in such shares of Capital Stock; (ii) in the
case of any event other than a Transfer or Acquisition (a "Beneficial Ownership
Event"), that number of shares of Capital Stock that would be owned by Persons
(the "Affected Persons") as a result of such Beneficial Ownership Event that
otherwise would violate Section 7(b) (rounded up to the next whole share) shall
be automatically transferred to a Trust for the benefit of a Charitable
Beneficiary, as described in Section 7(l) of this Article VII, effective as of
the close of business on the day immediately prior to such Beneficial Ownership
Event, and such Affected Person or Persons shall acquire no rights (or have no
continuing rights) in such shares of Capital Stock; or (iii) if the transfer to
the Trust described in either clause (i) or clause (ii) hereof would not be
effective for any reason to prevent any Person from Beneficially Owning Stock in
violation of Section 7(b), then the Transfer, Acquisition, or other Beneficial
Ownership Event that would otherwise cause such Person to violate Section 7(b)
shall be void ab initio.
(2) Notwithstanding the other provisions hereof, any Transfer or
Acquisition of shares of Capital Stock that, if effective, would result in the
Capital Stock being beneficially owned by less than 100 Persons (determined
without
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reference to any rules of attribution) shall be void ab initio, and the intended
transferee shall acquire no rights in such shares of Capital Stock.
(3) In addition to, and without limitation by, subsections (1) and (2)
above, if the Board of Directors or its designees shall at any time determine in
good faith that a Transfer, Acquisition or other event has taken place in
violation of Section 7(b) or that a Person intends to Acquire, has attempted to
Acquire, or may Acquire direct ownership, beneficial ownership (determined
without reference to any rules of attribution) or Beneficial Ownership of any
Capital Stock in violation of Section 7(b), the Board of Directors or its
designees shall take such action as it deems advisable to refuse to give effect
to or to prevent such Transfer or other event, including, but not limited to,
causing the Corporation to refuse to give effect to such Transfer or other event
on the books of the Corporation or instituting proceedings to enjoin such
Transfer or other event; provided, however, that any Transfer or Acquisition
(or, in the case of events other than a Transfer or Acquisition, ownership or
Beneficial Ownership) in violation of Section 7(b) shall automatically result in
the transfer to the Trust described in Section 7(1), irrespective of any action
(or non-action) by the Board of Directors.
(4) Nothing contained in this Section 7(c) shall limit the authority of
the Board of Directors to take such other action as it deems necessary or
advisable to protect the Corporation and the interests of its shareholders by
preservation of the Corporation's status as a REIT.
(d) NOTICE OF RESTRICTED TRANSFER.
Any Person who Acquires or attempts or intends to Acquire shares of
Capital Stock in violation of Section 7(b) or any Person who is a transferee in
a Transfer or is otherwise affected by an event other than a Transfer that
results in a violation of Section 7(b), shall immediately give written notice to
the Corporation of such Transfer or other event and shall provide to the
Corporation such other information as the Corporation may request in order to
determine the effect, if any, of such Transfer or attempted, intended or
purported Transfer or other event on the Corporation's status as a REIT.
(e) OWNERS REQUIRED TO PROVIDE INFORMATION.
From the date of the closing of the Initial Public Offering and prior
to the Restriction Termination Date:
(1) every shareholder of record of more than 0.5% (or such lower
percentage as required by the Code or regulations promulgated thereunder) of the
number or value of any series of the outstanding Capital Stock of the
Corporation shall, within 30 days after December 31 of each year, give written
notice to the Corporation stating the name and address of such record
shareholder, the number of shares of Capital Stock Beneficially Owned by it, and
a description of how such
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shares of Capital Stock are held; provided that a shareholder of record who
holds outstanding Capital Stock of the Corporation as nominee for another
person, which other person is required to include in gross income, for U.S.
federal income tax purposes, the dividends received on such Capital Stock (an
"Actual Owner"), shall give written notice to the Corporation stating the name
and address of such Actual Owner and the number of shares of such Actual Owner
with respect to which the shareholder of record is nominee.
(2) every Actual Owner of more than 0.5% (or such lower percentage as
required by the Code or regulations promulgated thereunder) of the number or
value of any series of the outstanding Capital Stock of the Corporation who is
not a shareholder of record of the Corporation, shall within 30 days after
December 31 of each year give written notice to the Corporation stating the name
and address of such Actual Owner, the number of shares of Capital Stock
Beneficially Owned, and a description of how such shares of Capital Stock are
held.
(3) each person who is a Beneficial Owner or constructive owner of Capital
Stock and each Person (including the shareholder of record) who is holding
Capital Stock for a Beneficial Owner or constructive owner shall provide to the
Corporation such information as the Corporation may request, in good faith, in
order to determine the Corporation's compliance with the REIT provisions of the
Code.
(f) REMEDIES NOT LIMITED.
Nothing contained in this Article VII shall limit the authority of the
Board of Directors to take such other action as it deems necessary or advisable
to protect the Corporation and the interests of its shareholders in preserving
the Corporation's status as a REIT.
(g) AMBIGUITY.
In the case of an ambiguity in the application of any of the provisions of
this Article VII, including any definition contained in Section 7(a), the Board
of Directors shall have the power to determine the application of the provisions
of this Article VII with respect to any situation based on the facts known to
it.
(h) LEGEND.
Each certificate for shares of Capital Stock shall bear substantially the
following legend:
"The shares represented by this certificate are subject to
restrictions on transfer and ownership for the purpose of the
Corporation's maintenance of its status as a Real Estate Investment
Trust under the Internal Revenue Code of 1986, as amended. Subject to
certain further
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restrictions and except as expressly provided in the Corporation's
Amended and Restated Certificate of Incorporation, no Person may
Beneficially Own shares of Capital Stock of the Corporation if, as a
result of such Acquisition or Beneficial Ownership, the Capital Stock
would be held by less than 100 Persons. Any Person who Beneficially
Owns or attempts to Beneficially Own shares of Capital Stock in excess
of the above limitations must immediately notify the Corporation, any
shares of Capital Stock so held may be subject to mandatory sale in
certain events, certain purported acquisitions of shares of Capital
Stock in excess of such limitations shall be void ab initio, and any
shares of Capital Stock purported to be Acquired or Beneficially Owned
in excess of such limitation will be automatically transferred to a
Trust for the benefit of a Charitable Beneficiary. A Person who
attempts to Beneficially Own shares of Capital Stock in violation of
the ownership limitations set forth in Section 7(b) of the Amended and
Restated Certificate of Incorporation of the Corporation shall have no
claim, cause of action, or any other recourse whatsoever against a
transferor of shares. All capitalized terms in this legend have the
meanings defined in the Corporation's Amended and Restated Certificate
of Incorporation, a copy of which, including the restrictions on
transfer, will be sent without charge to each shareholder who so
requests."
(i) TERMINATION OF REIT STATUS.
The Board of Directors shall take no action to terminate the Corporation's
status as a REIT or to amend the provisions of this Article VII until such time
as (i) the Board of Directors adopts a resolution recommending that the
Corporation terminate its status as a REIT or amend this Article VII, as the
case may be, (ii) the Board of Directors presents the resolution at an annual or
special meeting of the shareholders and (iii) such resolution is approved by at
least a majority of all the votes entitled to be cast on the matter.
(j) NASDAQ SETTLEMENT.
Nothing in this Article VII shall preclude the settlement of any
transaction with respect to the shares of Capital Stock of the Corporation
entered into through the facilities of The Nasdaq Stock Market's National Market
System or such other securities exchange on which any of the Capital Stock may
then be traded. Any transferee in such a transaction shall be subject to all of
the provisions and limitations set forth in this Article VII.
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(k) SEVERABILITY.
If any provision of this Article VII or Section 7(c) or any application of
any such provision is determined to be invalid by any Federal or state court
having jurisdiction over the issue, the validity of the remaining provisions
shall not be affected and other applications of such provision shall be affected
only to the extent necessary to comply with the determination of such court.
(l) TRANSFER OF STOCK IN TRUST.
(1) Ownership in Trust; Status of Shares Held in Trust. Upon any purported
Transfer (whether or not such Transfer is the result of a transaction engaged in
through the facilities of The Nasdaq Stock Market's National Market System),
Acquisition or other event that results in the transfer of Capital Stock to a
Trust pursuant to Section 7(b) such shares of Capital Stock shall be deemed to
have been transferred to the Trustee in its capacity as Trustee for the
exclusive benefit one or more Charitable Beneficiaries. The Trustee shall be
appointed by the Corporation and shall be a Person unaffiliated with the
Corporation, any Purported Beneficial Transferee or Purported Record Transferee.
Each Charitable Beneficiary shall be designated by the Corporation as provided
in Section 7(m). Shares of Capital Stock so held in Trust shall be issued and
outstanding stock of the Corporation. The Purported Beneficial Transferee or
Purported Record Transferee shall not benefit economically from ownership of any
shares of Capital Stock held in Trust by the Trustee, shall have no rights to
dividends and shall not possess any rights to vote or other rights attributable
to the shares held in Trust. The Purported Record Transferee and the Purported
Beneficial Transferee of shares of Capital Stock in violation of Section 7(b)
shall have no claim, cause of action, or any other recourse whatsoever against
the purported transferor of such shares.
(2) Dividend Rights. The Trustee shall have all rights to dividends with
respect to shares of Capital Stock held in the Trust, which rights shall be
exercised for the exclusive benefit of the Charitable Beneficiary. Any dividend
or distribution paid prior to the discovery by the Corporation that the shares
of Capital Stock have been transferred to the Trustee with respect to such
shares shall be paid over to the Trustee by the recipient thereof upon demand,
and any dividend declared but unpaid shall be paid when due to the Trustee. Any
dividends or distributions so paid over to the Trustee shall be held in trust
for the Charitable Beneficiary.
(3) Rights upon Liquidation. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of or any distribution of the assets of
the Corporation, the Trustee shall be entitled to receive, ratably with each
other holder of Capital Stock of the class of Capital Stock that is held in the
Trust, that portion of the assets of the Corporation available for distribution
to the holders of such class (determined based upon the ratio that the number of
shares of such class of Capital Stock held by the Trustee bears to the total
number of shares of such class
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of Capital Stock then outstanding). The Trustee shall distribute any such assets
received in respect of the Capital Stock held in the Trust in any liquidation,
dissolution or winding up of, or distribution of the assets of the Corporation
in accordance with subsection (4) of this Section 7(1).
(4) Sale of Shares by Trustee. Within twenty days of receiving notice from
the Corporation that shares of Capital Stock have been transferred to the Trust,
the Trustee of the Trust shall sell the shares held in Trust to a Person,
designated by the Trustee, whose ownership of the shares of Capital Stock held
in the Trust would not violate the ownership limitations set forth in Section
7(b). Upon such sale, the interest of the Charitable Beneficiary in the shares
sold shall terminate and the Trustee shall distribute the net proceeds of the
sale to the Purported Record Transferee and to the Charitable Beneficiary as
provided in this subsection (4). The Purported Record Transferee shall receive
the lesser of (1) (x) the price per share such Purported Record Transferee paid
for the Capital Stock in the purported Transfer that resulted in the transfer of
shares of Capital Stock to the Trust, or (y) if the Transfer or other event that
resulted in the transfer of shares of Capital Stock to the Trust was not a
transaction in which the Purported Record Transferee gave full value for such
shares of Capital Stock, a price per share equal to the Market Price on the date
of the purported Transfer or other event that resulted in the transfer of such
shares of Capital Stock to the Trust and (2) the price per share received by the
Trustee from the sale or other disposition of the shares held in the Trust. Any
net sales proceeds in excess of the amount payable to the Purported Record
Transferee shall be immediately paid to the Charitable Beneficiary. If, prior to
the discovery by the Corporation that shares of Capital Stock have been
transferred to the Trustee, such shares are sold by the Purported Record
Transferee, then (i) such shares shall be deemed to have been sold on behalf of
the Trust and (ii) to the extent that the Purported Record Transferee received
an amount for such shares that exceeds the amount such Purported Record
Transferee was entitled to receive pursuant to this subsection (4), such excess
shall be paid to the Trustee upon demand. The Trustee should have the right and
power (but not the obligation) to offer any share of Capital Stock held in the
Trust for sale to the Corporation on such terms and conditions as the Trustee
shall determine appropriate.
(5) Voting and Notice Rights. The Trustee shall have all voting rights and
rights to receive any notice of any meetings, which rights shall be exercised
for the exclusive benefit of the Charitable Beneficiary. The Purported Record
Transferee shall have no voting rights with respect to shares held in Trust.
(m) DESIGNATION OF CHARITABLE BENEFICIARY.
By written notice to the Trustee, the Corporation shall designate one
or more nonprofit organizations to be the Charitable Beneficiary of the interest
in the Trust such that (i) the shares of Capital Stock held in the Trust would
not violate the
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restrictions set forth in Section 7(b) in the hands of such Charitable
Beneficiary and (ii) each Charitable Beneficiary is an organization described in
Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
ARTICLE VIII
CERTAIN BUSINESS COMBINATIONS
The "Business Combination" provisions of the Connecticut Business
Corporation Act, Sections 33-840 to 33-845, shall not apply to Webster Financial
Corporation or Webster Bank.
ARTICLE IX
INDEMNIFICATION
The Corporation shall indemnify the directors, officers, employees and
agents of the Corporation to the fullest extent permitted by applicable law,
including the Connecticut Business Corporation Act, and if applicable, 12 C.F.R.
ss. 545.121, as may be amended from time to time by the Office of Thrift
Supervision. Any such indemnification shall continue as to any person who has
ceased to be a director, officer, employee or agent and may inure to the benefit
of the heirs, executors and administrators of such a person.
The Corporation shall indemnify a director for liability, as defined in
subdivision (5) of Section 33-770 of the Connecticut Business Corporation Act,
to any person for any action taken, or any failure to take any action, as a
director, except liability (a) that involved a knowing and culpable violation of
law by the director, (b) enabled the director or an associate, as defined in
Section 33-840 of the Connecticut Business Corporation Act, to receive an
improper personal gain, (c) showed a lack of good faith and a conscious
disregard for the duty of the director to the Corporation under circumstances in
which the director was aware that his conduct or omission created an
unjustifiable risk of serious injury to the Corporation, (d) constituted a
sustained and unexcused pattern of inattention that amounted to an abdication of
the director's duty to the Corporation, or (e) created liability under Section
33-757 of the Connecticut Business Corporation Act.
ARTICLE XI
AMENDMENT OF CERTIFICATE OF INCORPORATION
This Certificate of Incorporation may be amended in accordance with the
Connecticut Business Corporation Act.
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ARTICLE XII
AMENDMENT OF BY-LAWS
The By-Laws may provide that the Board of Directors as well as the
shareholders may make, amend or repeal the By-Laws of the Corporation, except as
otherwise required by statute, by the By-Laws, or by this Certificate of
Incorporation.
IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation
has been executed on behalf of the Corporation by the undersigned, thereunto
duly authorized on this 17th day of December, 1997.
By /s/ John V. Brennan
-------------------
John V. Brennan
President
Attest: /s/ Gregory S. Madar
--------------------
Gregory S. Madar
Vice President and Secretary
Exhibit 3.2
CERTIFICATE OF AMENDMENT
RIGHTS AND PREFERENCES
OF THE
SERIES A 7.375% CUMULATIVE REDEEMABLE
PREFERRED STOCK
PAR VALUE $1.00 PER SHARE
OF
WEBSTER PREFERRED CAPITAL CORPORATION
--------------------------------------------
Pursuant to Section 33-666(d) of the
Connecticut Business Corporation Act
--------------------------------------------
WEBSTER PREFERRED CAPITAL CORPORATION (the "Corporation"), a corporation
organized and existing under the Connecticut Business Corporation Act, as
amended, DOES HEREBY CERTIFY:
FIRST: The Amended and Restated Certificate of Incorporation of the
Corporation authorizes the issuance of 3,000,000 shares of the Corporation's
preferred stock, par value $1.00 per share, in one or more series, and
authorizes the Board of Directors to fix by resolution or resolutions the
designation of each series of Preferred Stock and the powers, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof.
SECOND: The Board of Directors of the Corporation at a meeting held on
December 22, 1997, did duly adopt this Certificate of Amendment providing for
the designation, powers, preferences and rights, and the qualifications,
limitations and/or restrictions thereof, of the Series A 7.375 % Cumulative
Redeemable Preferred Stock, par value $1.00 per share, of the Corporation.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors, in accordance
with the provisions of the Amended and Restated Certificate of Incorporation of
the Corporation, hereby approves the issuance of Series A 7.375 % Cumulative
Redeemable Preferred Stock, par value $1.00 per share, of the Corporation and
hereby fixes the designation of such series and the powers, preferences, rights,
and qualifications, limitations and restrictions thereof in addition to those
set forth in said Amended and Restated Certificate of Incorporation as follows:
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1. Designation; Ranking.
(a) The designation of the series of Preferred Stock created by this
Certificate of Amendment shall be "Series A 7.375 % Cumulative Redeemable
Preferred Stock," par value $1.00 per share, of Webster Preferred Capital
Corporation (the "Corporation") (hereinafter referred to as "Series A Preferred
Shares"), and the number of shares constituting such series shall be 40,000,
which number may be increased (but not above the total number of shares of
Preferred Stock of the Corporation) or decreased (but not below the number of
shares then outstanding) from time to time by the Board of Directors.
(b) The Series A Preferred Shares shall rank prior to the common stock
of the Corporation, par value $.01 per share (the "Common Stock") as to the
payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up of the Corporation (the Common Stock, together with
any other class or series of stock of the Corporation ranking junior to the
Series A Preferred Shares as to the payment of dividends and the distribution of
assets upon liquidation, dissolution or winding up of the Corporation, being
hereinafter referred to as "Junior Stock"). The Series A Preferred Shares are on
a parity with the shares of Series B 8.625 % Cumulative Preferred Stock of the
Corporation, par value $1.00 per share (the "Series B Preferred Shares"), as to
the payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up of the Corporation (the Series B Preferred Shares,
together with any other class or series of stock of the Corporation ranking on a
parity with the Series A Preferred Shares (other than the Series A Preferred
Shares) as to the payment of dividends and the distribution of assets upon the
liquidation, dissolution or winding up of the Corporation being hereinafter
referred to as "Parity Stock").
2. Dividend Rights.
(a) The holders of Series A Preferred Shares shall be entitled to
receive, if, when and as declared by the Board of Directors of the Corporation,
out of assets of the Corporation legally available therefor, cash dividends,
accruing from the Issue Date (as defined below) at the rate of 7.375 % per annum
of the $1,000 liquidation preference (an amount equal to $73.75 per share per
annum), and no more, payable, if, when and as declared by the Board of
Directors, quarterly on January 15, April 15, July 15, and October 15 in each
year (each quarterly period ending on any such date being hereinafter referred
to as a "dividend period"), at such annual rate, commencing January 15, 1998.
Dividends in each quarterly period shall accrue from the day following the
previous dividend payment date (except that dividends payable on January 15,
1998 shall accrue from the Issue Date), whether or not declared or paid for the
prior quarterly period. Each declared dividend will be payable to holders of
record as they appear at the close of business on
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the stock register of the Corporation on such record dates, not exceeding 45
days preceding the payment dates thereof, as shall be fixed by the Board of
Directors of the Corporation. The date of original issuance of Series A
Preferred Shares is referred to herein the "Issue Date." Dividends payable on
the Series A Preferred Shares (i) for any period other than a full dividend
period, shall be computed on the basis of a 360-day year consisting of twelve
30-day months and (ii) for each full dividend period, shall be computed by
dividing the annual dividend rate by four.
(b) Dividends on Series A Preferred Shares shall be cumulative from
the Issue Date, whether or not there shall be funds legally available for the
payment of such dividends. If there shall be outstanding shares of any series of
Junior Stock or Parity Stock, no dividends shall be declared or paid or set
apart for payment on any such shares for any period unless full cumulative
dividends which are then required to have been paid have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment on the Series A Preferred Shares for
all dividend periods terminating on or prior to the date of payment of such
dividends. If dividends on the Series A Preferred Shares and on any series of
Parity Stock are in arrears, in making any dividend payment on account of such
arrears, the Corporation shall make payments ratably upon all outstanding Series
A Preferred Shares and shares of such series of Parity Stock in proportion to
the respective amounts of dividends in arrears on the Series A Preferred Shares
and on such series of Parity Stock to the date of such dividend payment. Holders
of Series A Preferred Shares shall not be entitled to any dividend, whether
payable in cash, property or stock, in excess of full cumulative dividends on
such shares. No interest, or sum of money in lieu of interest, shall be payable
in respect of any dividend payment or payments which may be in arrears.
(c) Unless full cumulative dividends on all outstanding Series A
Preferred Shares and shares of Parity Stock which are then required to have been
paid shall have been or contemporaneously are declared and paid or set aside for
payment for all past dividend periods, no dividend (other than a dividend in
Common Stock or in any other Junior Stock) shall be declared upon the Common
Stock or upon any other Junior Stock, nor shall any Common Stock or any other
Junior Stock be redeemed, purchased or otherwise acquired for any consideration
(or any moneys be paid to or made available for a sinking fund for the
redemption of any shares of any such stock) by the Corporation (except by
conversion into or exchange for Junior Stock).
3. Covenant. The Corporation shall not take any action in respect of any
Common Stock or other Junior Stock or Parity Stock if, as a result thereof, the
amount of the Corporation's shareholders' equity (as determined in accordance
with generally accepted accounting principles) would be less than 250% of the
aggregate liquidation preference of the issued and outstanding Series A
Preferred Shares and Series B Preferred Shares.
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4. Liquidation Preferences.
(a) In the event of any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, the holders of
Series A Preferred Shares shall be entitled to receive out of the assets of the
Corporation available for distribution to shareholders an amount equal to $1,000
per share plus an amount equal to all accrued and unpaid dividends, if any,
thereon to the date of such distribution, and no more (the "Liquidation
Preference"), before any distribution shall be made to the holders of Junior
Stock. After payment of the full amount of such liquidating distributions, the
holders of Series A Preferred Shares will not be entitled to any further
participation in any distribution of the remaining assets of the Corporation.
(b) In the event that the assets of the Corporation available for
distribution to shareholders upon any liquidation, dissolution or winding up of
the affairs of the Corporation, whether voluntary or involuntary, shall be
insufficient to pay in full the amounts payable with respect to the Series A
Preferred Shares and any other shares of Parity Stock, the holders of Series A
Preferred Shares and the holders of such Parity Stock shall share ratably in any
distribution of assets of the Corporation in proportion to the full respective
preferential amounts to which they would otherwise be entitled.
(c) The merger or consolidation of the Corporation with or into any
other entity, the merger or consolidation of any other entity with or into the
Corporation, or the sale, lease or conveyance of all or substantially all of the
property or business of the Corporation, shall not be deemed to constitute a
liquidation, dissolution or winding up of the affairs of the Corporation within
the meaning of this Section 3.
5. Redemption.
(a) Mandatory Redemption. The Corporation shall redeem all outstanding
Series A Preferred Shares on January 15, 2001 at a redemption price equal to the
$1,000 liquidation preference thereof plus accrued and unpaid dividends thereon
to the date of redemption.
(b) Optional Redemption. Except upon the occurrence of a Tax Event,
the Series A Preferred Shares are not redeemable prior to January 15, 1999. Upon
the occurrence of a Tax Event and at any time on or after January 15, 1999
through January 14, 2001, the Corporation, at its option, may redeem Series A
Preferred Shares, at any time or from time to time, in whole but not in part, at
the Series A Early Redemption Price.
The "Series A Early Redemption Price" shall equal the greater of (i)
the Liquidation Preference of the Series A Preferred Shares to be redeemed or
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(ii) the sum, as determined by a Quotation Agent, of the present values of (x)
the Liquidation Preference at the Applicable Par Redemption Date plus (y) the
remaining scheduled payments of dividends on such Series A Preferred Shares to
the Applicable Par Redemption Date, discounted to the redemption date on a
quarterly basis (assuming a 360-day year consisting of twelve 30-day months) at
the Adjusted Treasury Rate, plus, in the case of each of clauses (i) and (ii)
and without duplication, accrued and unpaid dividends, if any, thereon to the
date of redemption.
"Applicable Par Redemption Date" means January 15, 1999 in case of a
redemption on or prior to such date upon the occurrence of a Tax Event, and
January 15, 2001 in case of any other early redemption of the Series A Preferred
Shares.
"Tax Event" means the receipt by the Corporation of an opinion of a
nationally recognized law firm experienced in such matters to the effect that,
as a result of (i) any amendment to, clarification of, or change (including any
announced prospective change) in, the laws or treaties (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein affecting taxation or of any state, (ii) any
judicial decision, official administrative pronouncement, published or private
ruling, regulatory procedure, notice or announcement (including any notice or
announcement of intent to adopt such procedures or regulations) ("Administrative
Action") or (iii) any amendment to, clarification of, or change in the official
position or the interpretation of such Administrative Action or judicial
decision or any interpretation or pronouncement that provides for a position
with respect to such Administrative Action or judicial decision that differs
from the theretofore generally accepted position, in each case, by any
legislative body, court, governmental authority or regulatory body, irrespective
of the manner in which such amendment, clarification or change is made known,
which amendment, clarification, or change is effective or such pronouncement or
decision is announced on or after the date of issuance of the Series A Preferred
Shares, there is a substantial risk that (a) dividends paid or to be paid by the
Corporation with respect to the capital stock of the Corporation are not, or
will not be, fully deductible by the Corporation for United States federal
income tax purposes, (b) the Corporation is, or will be, subject to more than a
de minimis amount of other taxes, duties or other governmental charges or (c)
dividends received or to be received by Webster Bank from the Corporation are
not, or will not be, fully deductible by Webster Bank for Connecticut
corporation income tax purposes.
"Adjusted Treasury Rate" means, with respect to any redemption date,
the rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date plus .25%.
5
<PAGE>
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the period
from the date of redemption through the Applicable Par Redemption Date that
would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate fixed-income securities
of comparable maturity for such remaining period.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Corporation. "Reference Treasury Dealer" means a nationally-recognized U.S.
government securities dealer in New York, New York selected by the Corporation.
"Comparable Treasury Price" means, with respect to any redemption
date, (i) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on the
third Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the average
of the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Corporation obtains fewer than three such Reference Treasury Dealer
Quotations, the average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Corporation, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Corporation by such Reference Treasury Dealer at 5:00 p.m., New
York City time, on the third Business Day preceding such redemption date.
(c) If less than all the outstanding Series A Preferred Shares are to
be redeemed, the shares to be redeemed shall be selected pro rata as nearly as
practicable or by lot, or by such other method as the Board of Directors may
determine to be fair and appropriate.
(d) Notice of any redemption shall be given by first class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the date
fixed for redemption to each holder of record of the Series A Preferred Shares
to be redeemed, at their respective addresses appearing on the stock books of
the Corporation. Notice so mailed shall be conclusively presumed to have been
duly given whether or not actually received. Such notice shall state: (i) the
date fixed for redemption; (ii) the redemption price; (iii) the number of Series
A Preferred Shares to be redeemed and, if less than all the shares held by such
holder are to be re-
6
<PAGE>
deemed, the number of such shares to be so redeemed from such holder; (v) the
place where certificates for such shares are to be surrendered for payment of
the redemption price; and (vi) that after such date fixed for redemption the
shares to be redeemed shall not accrue dividends. If such notice is mailed as
aforesaid, and if on or before the date fixed for redemption funds sufficient to
redeem the shares called for redemption are set aside by the Corporation in
trust for the account of the holders of the shares to be redeemed,
notwithstanding the fact that any certificate for shares called for redemption
shall not have been surrendered for cancellation, on and after the redemption
date the shares represented thereby so called for redemption shall be deemed to
be no longer outstanding, dividends thereon shall cease to accrue, and all
rights of the holders of such shares as stockholders of the Corporation shall
cease, except the right to receive the redemption price, without interest, upon
surrender of the certificate representing such shares. Upon surrender in
accordance with the aforesaid notice of the certificate for any shares so
redeemed (duly endorsed or accompanied by appropriate instruments of transfer,
if so required by the Corporation in such notice), the holders of record of such
shares shall be entitled to receive the redemption price, without interest. In
case fewer than all the shares represented by any such certificate are redeemed,
a new certificate shall be issued representing the unredeemed shares without
cost to the holder thereof.
(e) Any provision of this Section 5 to the contrary notwithstanding,
in the event that any quarterly dividend payable on the Series A Preferred
Shares shall be in arrears and until all such dividends in arrears shall have
been paid or declared and set apart for payment, the Corporation shall not
redeem any Series A Preferred Shares unless all outstanding Series A Preferred
Shares are simultaneously redeemed and shall not purchase or otherwise acquire
any Series A Preferred Shares except in accordance with a purchase or exchange
offer made on the same terms to all holders of record of Series A Preferred
Shares for the purchase of all outstanding shares thereof.
6. Voting Rights. Other than as expressly required by applicable law, the
Series A Preferred Shares shall not have any voting powers either general or
special, except that:
(a) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the affirmative vote or consent of the
holders of at least 66-2/3% of the aggregate liquidation preference of the
Series A Preferred Shares and of the shares of any one or more series of Parity
Stock at the time outstanding, given in person or by proxy, either in writing or
by a vote at a meeting called for the purpose at which the holders of Series A
Preferred Shares and any such other series of Parity Stock shall vote together
as a separate class, shall be necessary for authorizing, effecting or validating
the amendment, alteration or repeal of any of the provisions of the Amended and
Restated Certificate of Incorporation or of any amendment or supplement
thereto(including any certificate of amendment or any similar document relating
to any series of Preferred Stock) of
7
<PAGE>
the Corporation, so as to adversely affect the powers, preferences, rights,
privileges, qualifications, limitations and restrictions of the Series A
Preferred Shares and any such other series of Parity Stock.
(b) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the affirmative vote or consent of the
holders of at least 66-2/3% of the aggregate liquidation preference of the
Series A Preferred Shares and any other series of Parity Stock at the time
outstanding, given in person or by proxy, either in writing or by a vote at a
meeting called for the purpose at which the holders of Series A Preferred Shares
and any such other series of Parity Stock shall vote together as a single class
without regard to series, shall be necessary to create, authorize or issue, or
reclassify any authorized stock of the Corporation into, or create, authorize or
issue any obligation or security convertible into or evidencing a right to
purchase, any shares of any class of stock of the Corporation ranking prior to
both the Series A Preferred Shares and any other series of Parity Stock. Subject
to the foregoing, the Corporation's Amended and Restated Certificate of
Incorporation may be amended to increase the number of authorized shares of
Preferred Stock without the vote of the holders of Preferred Stock, including
the Series A Preferred Shares.
(c) If at any time the Corporation has failed to pay or declare and
set aside for payment the full amount of any quarterly dividend then required to
be paid on the Series A Preferred Shares, the holders of the outstanding Series
A Preferred Shares shall have the exclusive right, voting separately as a class
together with holders of shares of any one or more other series of Parity Stock
and upon which like voting rights have been conferred and are exercisable, to
elect two directors of the Corporation at the Corporation's next annual meeting
of shareholders. At elections for such directors, each holder of Series A
Preferred Shares shall be entitled to one vote for each share held or, if the
holders of shares of any series of Parity Stock are entitled vote, holders shall
vote based on the respective liquidation preferences of the Series A Preferred
Shares and such series of Parity Stock. Upon the vesting of such right in the
holders of Series A Preferred Shares, the maximum authorized number of members
of the Board of Directors shall automatically be increased by two and the two
vacancies so created shall be filled by vote of the holders of the outstanding
Series A Preferred Shares (either alone or together with the holders of shares
of any one or more series of Parity Stock) as hereinafter set forth. The right
of the holders of Series A Preferred Shares, voting separately as a class to
elect (either alone or together with the holders of shares of any one or more
series of Parity Stock) members of the Board of Directors of the Corporation as
aforesaid shall continue until such time as all dividends accrued on the Series
A Preferred Shares shall have been paid in full or declared and set apart for
payment, at which time such right shall terminate, except as herein or by law
expressly provided, subject to revesting in the event of each and every
subsequent default of the character above mentioned.
8
<PAGE>
(d) Each director elected by the holders of Series A Preferred Shares
shall continue to serve as such director until the later of (i) the expiration
of the full term for which he or she shall have been elected or (ii) all accrued
and unpaid dividends on the Series A Preferred Shares shall have been paid in
full or declared and set aside for payment. If the office of any director
elected by the holders of Series A Preferred Shares voting as a class becomes
vacant by reason of death, resignation, retirement, disqualification, removal
from office, or otherwise, the remaining director elected by the holders of
Series A Preferred Shares voting as a class may choose a successor who shall
hold office for the unexpired term in respect of which such vacancy occurred.
Whenever the term of office of the directors elected by the holders and the
special voting powers vested in the holders of Series A Preferred Shares as
provided in this subsection (d) shall have expired, the number of directors
shall be such number as may be provided for in the Amended and Restated
Certificate of Incorporation or the Amended and Restated By-Laws, irrespective
of any increase made pursuant to the provisions of this subsection (d).
7. Reacquired Shares. Series A Preferred Shares redeemed, or otherwise
purchased or acquired by the Corporation shall be restored to the status of
authorized but unissued shares of Preferred Shares without designation as to
series.
8. No Sinking Fund. Series A Preferred Shares are not subject to the
operation of a sinking fund.
9. No Conversion Rights. Series A Preferred Shares are not convertible into
any other securities of the Corporation and are not exchangeable into capital
stock or any other securities of Webster Bank or Webster Financial Corporation.
10. Reporting Company. For so long as there are any Series A Preferred
Shares outstanding, the Corporation shall maintain its status as a reporting
company under the Securities Exchange Act of 1934, as amended, and will furnish
shareholders with annual reports containing audited financial statements.
FURTHER RESOLVED, that the officers of the Corporation, and each of them,
are hereby authorized, for and on behalf of and in the name of the Corporation,
to file a copy of the foregoing with the Secretary of State of the State of
Connecticut in accordance with the provisions of Sections 33-608 and 33-666 of
the Connecticut Business Corporation Act.
9
<PAGE>
IN WITNESS WHEREOF, WEBSTER PREFERRED CAPITAL CORPORATION, has caused this
Certificate of Amendment to be signed by John V. Brennan, its President and
Gregory S. Madar, its Secretary, and its Corporate Seal to be hereunder affixed
this 23rd day of December, 1997.
WEBSTER PREFERRED CAPITAL
CORPORATION
[Seal]
By
/s/ John V. Brennan
---------------------------
John V. Brennan
President
Attest:
/s/ Gregory S. Madar
- ---------------------------
Gregory S. Madar
Secretary
10
Exhibit 3.3
CERTIFICATE OF AMENDMENT
RIGHTS AND PREFERENCES
OF THE
SERIES B 8.625% CUMULATIVE REDEEMABLE PREFERRED STOCK
PAR VALUE $1.00 PER SHARE
OF
WEBSTER PREFERRED CAPITAL CORPORATION
------------------------------
Pursuant to Section 33-666(d) of the
Connecticut Business Corporation Act
------------------------------
WEBSTER PREFERRED CAPITAL CORPORATION (the "Corporation"), a
corporation organized and existing under the Connecticut Business
Corporation Act, as amended,
DOES HEREBY CERTIFY:
FIRST: The Amended and Restated Certificate of Incorporation of the
Corporation authorizes the issuance of 3,000,000 shares of the Corporation's
preferred stock, par value $1.00 per share, in one or more series, and
authorizes the Board of Directors to fix by resolution or resolutions the
designation of each series of Preferred Stock and the powers, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof.
SECOND: The Board of Directors of the Corporation at a meeting held on
December 22, 1997, did duly adopt this Certificate of Amendment providing for
the designation, powers, preferences and rights, and the qualifications,
limitations and/or restrictions thereof, of the Series B 8.625% Cumulative
Redeemable Preferred Stock, par value $1.00 per share, of the Corporation.
1
<PAGE>
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors, in accordance
with the provisions of the Amended and Restated Certificate of Incorporation of
the Corporation, hereby approves the issuance of Series B 8.625% Cumulative
Redeemable Preferred Stock, par value $1.00 per share, of the Corporation and
hereby fixes the designation of such series and the powers, preferences, rights,
and qualifications, limitations and restrictions thereof in addition to those
set forth in said Amended and Restated Certificate of Incorporation as follows:
1. Designation; Ranking.
(a) The designation of the series of Preferred Stock created by this
Certificate of Amendment shall be "Series B 8.625% Cumulative Redeemable
Preferred Stock," par value $1.00 per share, of Webster Preferred Capital
Corporation (the "Corporation") (hereinafter referred to as "Series B Preferred
Shares"), and the number of shares constituting such series shall be 1,000,000,
which number may be increased (but not above the total number of shares of
Preferred Stock of the Corporation) or decreased (but not below the number of
shares then outstanding) from time to time by the Board of Directors.
(b) The Series B Preferred Shares shall rank prior to the common stock
of the Corporation, par value $.01 per share (the "Common Stock") as to the
payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up of the Corporation (the Common Stock, together with
any other class or series of stock of the Corporation ranking junior to the
Series B Preferred Shares as to the payment of dividends and the distribution of
assets upon liquidation, dissolution or winding up of the Corporation, being
hereinafter referred to as "Junior Stock"). The Series B Preferred Shares are on
a parity with the shares of Series A 7.375% Cumulative Preferred Stock of the
Corporation, par value $1.00 per share (the "Series A Preferred Shares"), as to
the payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up of the Corporation (the Series A Preferred Shares,
together with any other class or series of stock of the Corporation ranking on a
parity with the Series B Preferred Shares (other than the Series B Preferred
Shares) as to the payment of dividends and the distribution of assets upon the
liquidation, distribution or winding up of the Corporation being hereinafter
referred to as "Parity Stock").
2. Dividend Rights.
(a) The holders of Series B Preferred Shares shall be entitled to
receive, if, when and as declared by the Board of Directors of the Corporation,
out of assets of the Corporation legally available therefor, cash dividends,
accruing from the Issue Date (as defined below) at the rate of 8.625% per annum
of the $10 liquidation preference (an amount equal to $.8625 per share per
annum), and no more, payable, if, when and as declared by the Board of
Directors, quarterly on January 15, April 15, July 15, and October 15 in each
year (each quarterly period ending on
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<PAGE>
any such date being hereinafter referred to as a "dividend period"), at such
annual rate, commencing January 15, 1998. Dividends in each quarterly period
shall accrue from the day following the previous dividend payment date (except
that dividends payable on January 15, 1998 shall accrue from the Issue Date),
whether or not declared or paid for the prior quarterly period. Each declared
dividend will be payable to holders of record as they appear at the close of
business on the stock register of the Corporation on such record dates, not
exceeding 45 days preceding the payment dates thereof, as shall be fixed by the
Board of Directors of the Corporation. The date of original issuance of Series B
Preferred Shares is referred to herein the "Issue Date." Dividends payable on
the Series B Preferred Shares (i) for any period other than a full dividend
period, shall be computed on the basis of a 360-day year consisting of twelve
30-day months and (ii) for each full dividend period, shall be computed by
dividing the annual dividend rate by four.
(b) Dividends on Series B Preferred Shares shall be cumulative from
the Issue Date, whether or not there shall be funds legally available for the
payment of such dividends. If there shall be outstanding shares of any shares of
Junior Stock or Parity Stock, no dividends shall be declared or paid or set
apart for payment on any such series for any period unless full cumulative
dividends which are then required to have been paid have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment on the Series B Preferred Shares for
all dividend periods terminating on or prior to the date of payment of such
dividends. If dividends on the Series B Preferred Shares and on any series of
Parity Stock are in arrears, in making any dividend payment on account of such
arrears, the Corporation shall make payments ratably upon all outstanding Series
B Preferred Shares and shares of such series of Parity Stock in proportion to
the respective amounts of dividends in arrears on the Series B Preferred Shares
and on such series of Parity Stock to the date of such dividend payment. Holders
of Series B Preferred Shares shall not be entitled to any dividend, whether
payable in cash, property or stock, in excess of full cumulative dividends on
such shares. No interest, or sum of money in lieu of interest, shall be payable
in respect of any dividend payment or payments which may be in arrears.
(c) Unless full cumulative dividends on all outstanding Series B
Preferred Shares and shares of Parity Stock which are then required to have been
paid shall have been or contemporaneously are declared and paid or set aside for
payment for all past dividend periods, no dividend (other than a dividend in
Common Stock or in any other Junior Stock) shall be declared upon the Common
Stock or upon any other Junior Stock, nor shall any Common Stock or any other
Junior Stock be redeemed, purchased or otherwise acquired for any consideration
(or any moneys be paid to or made available for a sinking fund for the
redemption of any shares of any such stock) by the Corporation (except by
conversion into or exchange for Junior Stock).
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<PAGE>
3. Covenant. The Corporation shall not take any action in respect of any
Common Stock or any Junior Stock or Parity Stock if, as a result thereof, the
amount of the Corporation's shareholders' equity (as determined in accordance
with generally accepted accounting principles) would be less than 250% of the
aggregate liquidation preference of the issued and outstanding Series A
Preferred Shares and Series B Preferred Shares.
4. Liquidation Preferences.
(a) In the event of any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, the holders of
Series B Preferred Shares shall be entitled to receive out of the assets of the
Corporation available for distribution to shareholders an amount equal to $10
per share plus an amount equal to all accrued and unpaid dividends, if any,
thereon to the date of such distribution, and no more (the "Liquidation
Preference"), before any distribution shall be made to the holders of Junior
Stock. After payment of the full amount of such liquidating distributions, the
holders of Series B Preferred Shares will not be entitled to any further
participation in any distribution of the remaining assets of the Corporation.
(b) In the event that the assets of the Corporation available for
distribution to shareholders upon any liquidation, dissolution or winding up of
the affairs of the Corporation, whether voluntary or involuntary, shall be
insufficient to pay in full the amounts payable with respect to the Series B
Preferred Shares and any other shares of Parity Stock, the holders of Series B
Preferred Shares and the holders of such Parity Stock shall share ratably in any
distribution of assets of the Corporation in proportion to the full respective
preferential amounts to which they would otherwise be entitled.
(c) The merger or consolidation of the Corporation with or into any
other entity, the merger or consolidation of any other entity with or into the
Corporation, or the sale, lease or conveyance of all or substantially all of the
property or business of the Corporation, shall not be deemed to constitute a
liquidation, dissolution or winding up of the affairs of the Corporation within
the meaning of this Section 3.
5. Redemption. Except upon the occurrence of a Tax Event, the Series B
Preferred Shares are not redeemable prior to January 15, 2003. Upon the
occurrence of a Tax Event, the Corporation, at its option, may redeem the Series
B Preferred Shares, at any time or from time to time, in whole but not in part,
at the Series B Early Redemption Price. On or after January 15, 2003, the
Corporation, at its option, may redeem the Series B Preferred Shares, at any
time or from time to time, in whole or in part, at a redemption price of $10 per
share plus accrued and unpaid dividends, if any, thereon, to the date of
redemption.
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<PAGE>
The "Series B Early Redemption Price" shall equal the greater of (i)
the Liquidation Preference for each Series B Preferred Share to be redeemed or
(ii) the sum, as determined by a Quotation Agent, of the present values of (x),
the Liquidation Preference at January 15, 2003 plus (y) the remaining scheduled
payments of dividends on the Series B Preferred Shares to January 15, 2003,
discounted to the redemption date on a quarterly basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus, in the
case of each of clauses (i) and (ii) and without duplication, accrued and unpaid
dividends, if any, thereon to the date of redemption.
"Tax Event" means the receipt by the Corporation of an opinion of a
nationally recognized law firm experienced in such matters to the effect that,
as a result of (i) any amendment to, clarification of, or change (including any
announced prospective change) in, the laws or treaties (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein affecting taxation or of any state, (ii) any
judicial decision, official administrative pronouncement, published or private
ruling, regulatory procedure, notice or announcement (including any notice or
announcement of intent to adopt such procedures or regulations) ("Administrative
Action") or (iii) any amendment to, clarification of, or change in the official
position or the interpretation of such Administrative Action or judicial
decision or any interpretation or pronouncement that provides for a position
with respect to such Administrative Action or judicial decision that differs
from the theretofore generally accepted position, in each case, by any
legislative body, court, governmental authority or regulatory body, irrespective
of the manner in which such amendment, clarification or change is made known,
which amendment, clarification, or change is effective or such pronouncement or
decision is announced on or after the date of issuance of the Series B Preferred
Shares, there is a substantial risk that (a) dividends paid or to be paid by the
Corporation with respect to the capital stock of the Corporation are not, or
will not be, fully deductible by the Corporation for United States federal
income tax purposes, (b) the Corporation is, or will be, subject to more than a
de minimis amount of other taxes, duties or other governmental charges or (c)
dividends received or to be received by Webster Bank from the Corporation are
not, or will not be, fully deductible by Webster Bank for Connecticut
corporation income tax purposes.
"Adjusted Treasury Rate" means, with respect to any redemption date,
the rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date plus .25%.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the period
from the date of redemption through January 15, 2003 that would be utilized, at
the time of selection and in accordance with customary financial practice, in
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<PAGE>
pricing new issues of corporate fixed-income securities of comparable maturity
for such remaining period.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Corporation.
"Reference Treasury Dealer" means a nationally-recognized U.S. government
securities dealer in New York, New York selected by the Corporation.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the average
of the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Corporation obtains fewer than three such Reference Treasury Dealer
Quotations, the average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Corporation, of the bid and asked prices for the Comparable Treasury
Issue(expressed in each case as a percentage of its principal amount) quoted in
writing to the Corporation by such Reference Treasury Dealer at 5:00 p.m., New
York City time, on the third Business Day preceding such redemption date.
(b) If less than all the outstanding Series B Preferred Shares are to be
redeemed, the shares to be redeemed shall be selected pro rata as nearly as
practicable or by lot, or by such other method as the Board of Directors may
determine to be fair and appropriate.
(c) Notice of any redemption shall be given by first class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the date fixed
for redemption to each holder of record of the Series B Preferred Shares to be
redeemed, at their respective addresses appearing on the stock books of the
Corporation. Notice so mailed shall be conclusively presumed to have been duly
given whether or not actually received. Such notice shall state: (i) the date
fixed for redemption; (ii) the redemption price; (iii) the number of Series B
Preferred Shares to be redeemed and if less than all the shares held by such
holder are to be redeemed, the number of such shares to be so redeemed from such
holder; (v) the place where certificates for such shares are to be surrendered
for payment of the
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<PAGE>
redemption price; and (vi) that after such date fixed for redemption the shares
to be redeemed shall not accrue dividends. If such notice is mailed as
aforesaid, and if on or before the date fixed for redemption funds sufficient to
redeem the shares called for redemption are set aside by the Corporation in
trust for the account of the holders of the shares to be redeemed,
notwithstanding the fact that any certificate for shares called for redemption
shall not have been surrendered for cancellation, on and after the redemption
date the shares represented thereby so called for redemption shall be deemed to
be no longer outstanding, dividends thereon shall cease to accrue, and all
rights of the holders of such shares as stockholders of the Corporation shall
cease, except the right to receive the redemption price, without interest, upon
surrender of the certificate representing such shares. Upon surrender in
accordance with the aforesaid notice of the certificate for any shares so
redeemed (duly endorsed or accompanied by appropriate instruments of transfer,
if so required by the Corporation in such notice), the holders of record of such
shares shall be entitled to receive the redemption price, without interest. In
case fewer than all the shares represented by any such certificate are redeemed,
a new certificate shall be issued representing the unredeemed shares without
cost to the holder thereof.
(d) Any provision of this Section 4 to the contrary notwithstanding,
in the event that any quarterly dividend payable on the Series B Preferred
Shares shall be in arrears and until all such dividends in arrears shall have
been paid or declared and set apart for payment, the Corporation shall not
redeem any Series B Preferred Shares unless all outstanding Series B Preferred
Shares are simultaneously redeemed and shall not purchase or otherwise acquire
any Series B Preferred Shares except in accordance with a purchase or exchange
offer made on the same terms to all holders of record of Series B Preferred
Shares for the purchase of all outstanding shares thereof.
6. Voting Rights. Other than as expressly required by applicable law, the
Series B Preferred Shares shall not have any voting powers either general or
special, except that:
(a) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the affirmative vote or consent of the
holders of at least 66-2/3% of the aggregate liquidation preference of the
Series B Preferred Shares and of the shares of any one or more series of Parity
Stock at the time outstanding, given in person or by proxy, either in writing or
by a vote at a meeting called for the purpose at which the holders of Series B
Preferred Shares and any such other series of Parity Stock shall vote together
as a separate class, shall be necessary for authorizing, effecting or validating
the amendment, alteration or repeal of any of the provisions of the Amended and
Restated Certificate of Incorporation or of any amendment or supplement thereto
(including any certificate of amendment or any similar document relating to any
series of Preferred Stock) of the Corporation, so as to adversely affect the
powers, preferences, rights, privileges,
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<PAGE>
qualifications, limitations and restrictions of the Series B Preferred Shares
and any such other series of Parity Stock.
(b) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the affirmative vote or consent of the
holders of at least 66-2/3% of the aggregate liquidation preference of the
Series B Preferred Shares and any other series of Parity Stock at the time
outstanding, given in person or by proxy, either in writing or by a vote at a
meeting called for the purpose at which the holders of Series B Preferred Shares
and any such other series of Parity Stock shall vote together as a single class
without regard to series, shall be necessary to create, authorize or issue, or
reclassify any authorized stock of the Corporation into, or create, authorize or
issue any obligation or security convertible into or evidencing a right to
purchase, any shares of any class of stock of the Corporation ranking prior to
both the Series B Preferred Shares and any other series of Parity Stock. Subject
to the foregoing, the Corporation's Amended and Restated Certificate of
Incorporation may be amended to increase the number of authorized shares of
Preferred Stock without the vote of the holders of Preferred Stock, including
the Series B Preferred Shares.
(c) If at any time the Corporation has failed to pay or declare and
set aside for payment the full amount of any quarterly dividend then required to
be paid on the Series B Preferred Shares, the holders of the outstanding Series
B Preferred Shares shall have the exclusive right, voting separately as a class
together with holders of shares of any one or more other series of Parity Stock
and upon which like voting rights have been conferred and are exercisable, to
elect two directors of the Corporation at the Corporation's next annual meeting
of shareholders. At elections for such directors, each holder of Series B
Preferred Shares shall be entitled to one vote for each share held or, if the
holders of shares of any series of Parity Stock are entitled vote, holders shall
vote based on the respective liquidation preferences of the Series B Preferred
Shares and such series of Parity Stock. Upon the vesting of such right in the
holders of Series B Preferred Shares, the maximum authorized number of members
of the Board of Directors shall automatically be increased by two and the two
vacancies so created shall be filled by vote of the holders of the outstanding
Series B Preferred Shares (either alone or together with the holders of shares
of any one or more series of Parity Stock) as hereinafter set forth. The right
of the holders of Series B Preferred Shares, voting separately as a class to
elect (either alone or together with the holders of shares of any one or more
series of Parity Stock) members of the Board of Directors of the Corporation as
aforesaid shall continue until such time as all dividends accrued on the Series
B Preferred Shares shall have been paid in full or declared and set apart for
payment, at which time such right shall terminate, except as herein or by law
expressly provided, subject to revesting in the event of each and every
subsequent default of the character above mentioned.
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(d) Each director elected by the holders of Series B Preferred Shares
shall continue to serve as such director until the later of (i) the expiration
of the full term for which he or she shall have been elected or (ii) all accrued
and unpaid dividends on the Series B Preferred Shares shall have been paid in
full or declared and set aside for payment. If the office of any director
elected by the holders of Series B Preferred Shares voting as a class becomes
vacant by reason of death, resignation, retirement, disqualification, removal
from office, or otherwise, the remaining director elected by the holders of
Series B Preferred Shares voting as a class may choose a successor who shall
hold office for the unexpired term in respect of which such vacancy occurred.
Whenever the term of office of the directors elected by the holders and the
special voting powers vested in the holders of Series B Preferred Shares as
provided in this subsection (d) shall have expired, the number of directors
shall be such number as may be provided for in the Amended and Restated
Certificate of Incorporation or the Amended and Restated By-Laws, irrespective
of any increase made pursuant to the provisions of this subsection (d).
7. Reacquired Shares. Series B Preferred Shares redeemed, or otherwise
purchased or acquired by the Corporation shall be restored to the status of
authorized but unissued shares of Preferred Shares without designation as to
series.
8. No Sinking Fund. Series B Preferred Shares are not subject to the
operation of a sinking fund or any other obligation of the Corporation to
redeem, repurchase or retire the Series B Preferred Shares.
9. No Conversion Rights. Series B Preferred Shares are not convertible into
any other securities of the Corporation and are not exchangeable into capital
stock or any other securities of Webster Bank or Webster Financial Corporation.
10. Reporting Company. For so long as there are any Series B Preferred
Shares outstanding, the Corporation shall maintain its status as a reporting
company under the Securities Exchange Act of 1934, as amended, and will furnish
shareholders with annual reports containing audited financial statements.
11. Ownership and Transfer Restrictions.
(a) During the period commencing on the date of the initial public
offering and prior to the Restriction Termination Date, no person shall
beneficially own more than 5,000 shares of Series B Preferred Stock (determined
without reference to any rules of attribution). "Beneficial Ownership" shall
mean ownership of shares of the capital stock of the Corporation by a person who
is treated or would be treated as an owner of such capital stock either directly
or indirectly or constructively through the application of Section 544 of the
Internal Revenue Code of 1986, as amended (the "Code"), as modified by Section
856(h)(1)(B)of the Code.
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<PAGE>
"Initial Public Offering" means the closing of the sale of Series B Preferred
Shares and Series A Preferred Shares pursuant to the Corporation's first
effective registration statement for such Preferred Stock, filed under the
Securities Act of 1933, as amended. "Restriction Termination Date" shall mean
the first day after the date of the closing of the Initial Public Offering on
which the Corporation determines that it is no longer in the best interest of
the Corporation to attempt to, or continue to qualify as a real estate
investment trust.
(b) Each certificate for Series B Preferred Shares shall bear
substantially the following legend: "The shares represented by this certificate
are subject to restrictions on transfer and ownership for the purpose of the
Corporation's maintenance of its status as a Real Estate Investment Trust under
the Internal Revenue Code of 1986, as amended. Subject to certain further
restrictions and except as expressly provided in the Corporation's Amended and
Restated Certificate of Incorporation, no Person may Beneficially Own shares of
Capital Stock of the Corporation if, as a result of such Acquisition or
Beneficial Ownership, (i) such Person would Beneficially Own Series B 8.625 %
Cumulative Redeemable Preferred Stock of the Corporation in excess of 5,000
shares, (ii) the Corporation would be "closely held" within the meaning of
Section 856(h) of the Code, or (iii) the Capital Stock would be held by less
than 100 Persons. Any Person who Beneficially Owns or attempts to Beneficially
Own shares of Capital Stock in excess of the above limitations must immediately
notify the Corporation, any shares of Capital Stock so held may be subject to
mandatory sale in certain events, certain purported acquisitions of shares of
Capital Stock in excess of such limitations shall be void ab inito, and any
shares of Capital Stock purported to be Acquired or Beneficially Owned in excess
of such limitation will be automatically transferred to a Trust for the benefit
of Charitable Beneficiary. A Person who attempts to Beneficially Own shares of
Capital Stock in violation of the ownership limitations set forth in Section
7(b) of the Amended and Restated Certificate of Incorporation of the Corporation
shall have no claim, cause of action, or any other recourse whatsoever against a
transferor of shares. All capitalized terms in this legend have the meanings
defined in the Corporation's Amended and Restated Certificate of Incorporation,
a copy of which, including the restrictions on transfer, will be sent without
charge to each shareholder who so requests.
FURTHER RESOLVED, that the officers of the Corporation, and each of
them, are hereby authorized, for and on behalf of and in the name of the
Corporation, to file a copy of the foregoing with the Secretary of State of the
State of Connecticut in accordance with the provisions of Sections 33-608 and
33-666 of the Connecticut Business Corporation Act.
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IN WITNESS WHEREOF, WEBSTER PREFERRED CAPITAL CORPORATION, has caused
this Certificate of Amendment to be signed by John V. Brennan, its President and
Gregory S. Madar, its Secretary, and its Corporate Seal to be hereunder affixed
this 23rd day of December, 1997.
WEBSTER PREFERRED CAPITAL
CORPORATION
[Seal]
By
/s/ John V. Brennan
---------------------------
John V. Brennan
President
Attest:
/s/ Gregory S. Madar
- --------------------------
Gregory S. Madar
Secretary
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Exhibit 3.4
AMENDED AND RESTATED BY-LAWS
OF
WEBSTER PREFERRED CAPITAL CORPORATION
I. OFFICES
1.1 Registered Office. The principal office of the Corporation shall
be located in Waterbury, Connecticut.
1.2 Other Offices. The Corporation may also have offices at such other
places, both within and without the State of Connecticut, as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
II. MEETINGS OF SHAREHOLDERS
2.1 Place of Meetings. All meetings of the shareholders for the
election of Directors shall be held in Connecticut, at such place as may be
fixed from time to time by the Board of Directors, or at such other place,
within or without the State of Connecticut, as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting or in a
duly executed waiver of notice thereof. Meetings of shareholders for any other
purpose may be held at such time and place, within or without the State of
Connecticut, as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
2.2 Annual Meetings. A meeting of shareholders for the election of
Directors and for other corporate business shall be held annually at such date
and at such time as the Board of Directors may determine. Such date and such
time shall be stated in the notice of the meeting or in a duly executed waiver
of notice thereof.
2.3 Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the Board of Directors or by the
President, and shall be called by the President upon the written request of the
holders of at least ten percent of all the votes entitled to be cast on any
issue proposed to be considered at the proposed special meeting. Such request
shall include a statement of the purpose or purposes of the proposed meeting and
notice thereof shall be given. If the President shall not, within fifteen days
after receipt of such shareholders' request, so call such meeting, such
shareholders may call such meeting.
2.4 Notice of Meetings. Written notice of the annual meeting and
special meetings, stating the place, date and hour of the meeting, shall be
given to each shareholder entitled to vote at such meetings, by leaving such
notice with him at his residence or usual place of business, or by mailing a
copy thereof addressed to
<PAGE>
him at his last known post office address as last shown on the stock records of
the Corporation, postage prepaid, not less than ten nor more than sixty days
before the date of the meeting, provided that any one or more shareholders, as
to himself or themselves, may waive such notice in writing or by attendance at
the meeting without protest. Written notice of a special meeting shall be given
to shareholders within thirty days after the date the written request by a
shareholder was delivered to the Corporation's Secretary. Written notice of a
special meeting of shareholders shall state the place, date and hour of the
meeting and the purpose or purposes for which the meeting is called. Such notice
shall be deemed given when deposited in the United States mail.
2.5 Business at Special Meetings. Business transacted at any special
meeting of shareholders shall be limited to the purposes stated in the notice.
2.6 List of Shareholders. The officer who has charge of the share
transfer books of the Corporation shall prepare and make, after the record date
for a meeting of shareholders has been fixed, a complete list of the
shareholders entitled to notice of such meeting, arranged in alphabetical order
and arranged by voting group, and within each voting group by class or series of
shares, and showing the address of each shareholder and the number of shares
registered in the name of each shareholder. Such list shall be open to the
examination of any shareholder, during ordinary business hours, beginning two
business days after notice of the meeting is given and continuing through the
meeting, either at the principal office of the Corporation or at a place
identified in the meeting in the city where the meeting will be held. The list
shall also be produced and kept open at the time and place of the meeting during
the whole time thereof, and may be inspected by any shareholder who is present,
his agent, or attorney. The share transfer book shall be the only evidence as to
who are the shareholders entitled to examine the share transfer book, the list
required by this section or the books of the Corporation, or to vote in person
or by proxy at any meeting of shareholders.
2.7 Quorum at Meetings. Except as otherwise provided by statute or by
the Certificate of Incorporation, the holders of a majority of the shares
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business, except that when specified business is to be voted on by a class or
series voting as a single class, the holders of a majority of the shares of such
class or series shall constitute a quorum for the transaction of business. If,
however, such quorum shall not be present or represented at any such meeting of
the shareholders, the shareholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting from time to
time to another time and place, without notice other than announcement at the
meeting of such other time and place. At the adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record
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date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each shareholder of record entitled to vote at the meeting.
2.8 Voting and Proxies. Unless otherwise provided in the Certificate
of Incorporation, and subject to the provisions of Section 6.4 of these By-Laws,
each shareholder shall be entitled to one vote on each matter, in person or by
proxy, for each share of the Corporation's capital stock having voting power
which is held by such shareholder. No proxy shall be voted or acted upon after
eleven months from its date, unless the proxy provides for a longer period. A
duly executed proxy shall be irrevocable if it states that it is irrevocable and
if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power.
2.9 Required Vote. When a quorum is present at any meeting of
shareholders, all matters shall be determined, adopted and approved by the vote
(which need not be by ballot) of the holders of a majority of the votes cast
with respect to the matter, including, if applicable, the majority of votes
entitled to be cast by each class or series of stock entitled to vote separately
on the matter, unless the proposed action is one upon which, by express
provision of statutes or of the Certificate of Incorporation, a different vote
is specified and required, in which case such express provision shall govern and
control the decision of such question.
2.10 Action Without a Meeting. Unless otherwise provided in the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of shareholders of the Corporation, or any action which may be
taken at any annual or special meeting of such shareholders, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, is signed by all of the persons who
would be entitled to vote upon such action at a meeting at which all shares
entitled to vote thereon were present and voted, or by their duly authorized
attorneys.
III. DIRECTORS
3.1 Powers. The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors, which may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by statute or by the Certificate of Incorporation or by these By-Laws
directed or required to be exercised or done by the shareholders.
3.2 Number and Election. The number of Directors which shall constitute
the whole Board shall be at least three. The Board of Directors may increase the
number of directorships by a concurring vote of Directors holding a majority of
the directorships prior to the vote on the increase. Subject to the rights of
the holders of any series of Preferred Stock of the Corporation to elect
additional directors under specified circumstances, only holders of the Common
Stock of the Corporation will be entitled to vote in the election of directors.
The Directors shall be elected at the annual meeting of the shareholders, except
as provided in Section
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<PAGE>
3.3 hereof, and each Director elected shall hold office until his successor is
elected and qualified or until his earlier resignation or removal. Directors
need not be shareholders.
3.3 Vacancies. Subject to the rights of the holders of any series of
the Preferred Stock of the Corporation to elect additional directors under
specified circumstances, vacancies and newly created directorships resulting
from any increase in the authorized number of Directors may be filled by a
majority of the Directors then in office, although less than a quorum, or by a
sole remaining Director, and each Director so chosen shall hold office until the
next annual election and until his successor is elected and qualified, or until
his earlier resignation or removal. If there are no Directors in office, then an
election of Directors may be held in the manner provided by statute.
3.4 Place of Meetings. The Board of Directors of the Corporation may
hold meetings, both regular and special, either within or without the State of
Connecticut.
3.5 Regular Meeting. Regular meetings of the Board of Directors may be
held without notice at such time and at such place as shall from time to time be
determined by the Board of Directors.
3.6 Special Meetings. Special meetings of the Board may be called by
the President with at least twelve hours notice to each Director, either
personally or by telephone, facsimile, mail or other equivalent means, unless
such notice has been waived. Special meetings shall be called by the President
or Secretary in like manner and on like notice on the written request of
one-third of the total number of Directors.
3.7 Quorum and Vote at Meetings. At all meetings of the Board, a
majority of the total number of Directors shall constitute a quorum for the
transaction of business. The vote of a majority of the Directors present at any
meeting at which there is a quorum shall be the act of the Board of Directors,
except as may be otherwise specifically provided by statute or by the
Certificate of Incorporation. The directors present at a duly organized meeting
may continue to transact business until adjournment, notwithstanding the
withdrawal or departure of enough directors to leave less than a quorum. If a
quorum shall not be present at any meeting of the Board of Directors, the
Directors present thereat may adjourn the meeting to another time and place,
without notice other than announcement at the meeting of such other time and
place.
3.8 Telephone Meetings. Members of the Board of Directors or any
Committee designated by the Board may participate in a meeting of such Board or
Committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and
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<PAGE>
participation in a meeting pursuant to this section shall constitute presence in
person at such meeting.
3.9 Action Without Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any Committee thereof
may be taken without a meeting, if all members of the Board or Committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board of Directors or Committee.
3.10 Committees of Directors. The Board of Directors may by resolution
passed by a majority of the whole Board, designate one or more Committees, each
Committee to consist of two or more of the Directors of the Corporation. The
Board of Directors may designate one or more Directors as alternate members of
any Committee, who may replace any absent or disqualified member at any meeting
of the Committee. Any such Committee, to the extent provided in the resolution
of the Board of Directors, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it; but no such Committee shall have the
power or authority in reference to amending the Certificate of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
shareholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the shareholders a
dissolution of the Corporation or a revocation of a dissolution, or amending the
By-Laws of the Corporation; and, unless otherwise expressly provided in the
resolution, no such Committee shall have the power or authority to declare a
dividend, to authorize the issuance of stock, or to adopt a certificate of
ownership and merger. Such Committee or Committees shall have such name or names
as may be determined from time to time by resolution adopted by the Board of
Directors. Unless otherwise specified in the resolution of the Board of
Directors designating the Committee, at all meetings of each such Committee of
directors, a majority of the total number of members of the Committee shall
constitute a quorum for the transaction of business, and the vote of a majority
of the members of the Committee present at any meeting at which there is a
quorum shall be the act of the Committee. Each Committee shall keep regular
minutes of its meetings and report the same to the Board of Directors, when
required.
3.11 Compensation of Directors. Unless otherwise restricted by the
Certificate of Incorporation, the Board of Directors shall have the authority to
fix the compensation of Directors. The Directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors and may be paid a
fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as Director. No such payment shall preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
5
<PAGE>
of special or standing Committees may be paid like compensation for attending
Committee meetings.
3.12 Removal. Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances, at
a meeting of shareholders called expressly for that purpose, any Director may be
removed with or without cause by a vote of the holders of a majority of the
shares then entitled to vote at an election of Directors.
IV. NOTICES OF MEETINGS
4.1 Waivers of Notice. Whenever the giving of any notice is required
by statute, the Certificate of Incorporation or these By-Laws, a waiver thereof,
in writing, signed by the person or persons entitled to said notice, whether
before or after the event as to which such notice is required, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the shareholders, Directors or members of a
Committee of Directors need be specified in any written waiver of notice, unless
so required by the Certificate of Incorporation, by statute or by these By-Laws.
V. OFFICERS.
5.1 Positions. The officers of the Corporation shall be a President
and a Secretary, and such other officers as the Board of Directors may appoint,
including a Chairman of the Board, a Treasurer and one or more Vice Presidents,
Assistant Secretaries and Assistant Treasurers, who shall exercise such powers
and perform such duties as shall be determined from time to time by the Board.
Any number of offices may be held by the same person, unless the Certificate of
Incorporation or these By-Laws otherwise provide; provided, however, that in no
event shall the President and the Secretary be the same person.
5.2 Appointment. The officers of the Corporation shall be chosen by
the Board of Directors at its first meeting after each annual meeting of
shareholders.
5.3 Compensation. The compensation of all officers of the Corporation
shall be fixed by the Board of Directors.
5.4 Term of Office. The officers of the Corporation shall hold office
until their successors are chosen and qualify or until their earlier resignation
or removal. Any officer may resign at any time upon written notice to the
Corporation. Any officer elected or appointed by the Board of Directors may be
removed at any time, with or without cause, by the affirmative vote of a
majority of the Board of Directors
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or by action of any authorized officer. Any vacancy occurring in any office of
the Corporation shall be filled by the Board of Directors.
5.5 Fidelity Bonds. The Corporation may secure the fidelity of any or
all of its officers or agents by bond or otherwise.
5.6 President. The President shall be the Chief Executive Officer of
the Corporation, shall be ex officio a member of all standing committees, shall
have general and active management of the business of the Corporation, shall
ensure that all orders and resolutions of the Board of Directors are carried
into effect, and, unless otherwise provided by the Board of Directors, shall
preside at all meetings of the shareholders and the Board of Directors. The
President shall execute bonds, mortgages and other contracts requiring a seal,
under the seal of the Corporation, except where required or permitted by law to
be otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the Board of Directors to some other
officer or agent of the Corporation.
5.7 Vice President. In the absence of the President or in the event of
the President's inability or refusal to act, the Vice President (or in the event
there be more than one Vice President, the Vice Presidents in the order
designated, or in the absence of any designation, then in the order of their
election) shall perform the duties of the President, and when so acting shall
have all the powers of, and be subject to all the restrictions upon, the
President. The Vice Presidents shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
5.8 Chairman of the Board. If the Directors shall appoint a Chairman
of the Board, the Chairman shall, when present, preside at all meetings of the
Board of Directors and shall perform such other duties and have such other
powers as may be vested in the Chairman by the Board of Directors.
5.9 Secretary. The Secretary shall attend all meetings of the Board of
Directors and all meetings of the shareholders, and shall record all the
proceedings of the meetings of the shareholders and of the Board of Directors in
a book to be kept for that purpose, and shall perform like duties for the
standing committees, when required. The Secretary shall give, or cause to be
given, notice of all meetings of the shareholders and special meetings of the
Board of Directors, and shall perform such other duties as may be prescribed by
the Board of Directors or by the President, under whose supervision the
Secretary shall be. The Secretary shall have custody of the corporate seal of
the Corporation, and the Secretary, or an Assistant Secretary, shall have
authority to affix the same to any instrument requiring it, and when so affixed
it may be attested by the signature of the Secretary or by the signature of such
Assistant Secretary. The Board of Directors may give general authority to any
other officer to affix the seal of the Corporation and to attest the affixing by
such officer's signature. The Secretary or an Assistant
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Secretary may also attest all instruments signed by the chairman of the board,
the President or any Vice President.
5.10 Assistant Secretary. The Assistant Secretary, or if there be more
than one, the Assistant Secretaries in the order determined by the Board of
Directors (or if there shall have been no such determination, then in the order
of their election), shall, in the absence of the Secretary or in the event of
the Secretary's inability or refusal to act, perform the duties and exercise the
powers of the Secretary, and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
5.11 Treasurer.
5.11.1 Duties. The Treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation, and shall deposit all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the Corporation as ordered by the
Board of Directors, taking proper vouchers for such disbursements, and shall
render to the President, and to the Board of Directors at its regular meetings,
or when the Board of Directors so requires, an account of all transactions as
Treasurer and of the financial condition of the Corporation.
5.11.2 Bond. If required by the Board of Directors, the Treasurer
shall give the Corporation a bond in such sum and with such surety or sureties
as shall be satisfactory to the Board of Directors for the faithful performance
of the duties of the Treasurer's office and for the restoration to the
Corporation, in case of the Treasurer's death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind, in the Treasurer's possession or under the Treasurer's control
and belonging to the Corporation.
5.12 Assistant Treasurer. The Assistant Treasurer, or if there shall
be more than one, the Assistant Treasurers in the order determined by the Board
of Directors (or if there shall have been no such determination, then in the
order of their election), shall, in the absence of the Treasurer or in the event
of the Treasurer's inability or refusal to act, perform the duties and exercise
the powers of the Treasurer, and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
VI. CAPITAL STOCK
6.1 Certificates of Stock. The shares of the Corporation shall be
represented by Certificates. Every holder of stock shall be entitled to have a
certificate signed by, or in the name of the Corporation by the Chairman or Vice
Chairman of the Board of Directors, or the President or Vice President, and by
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the Treasurer and/or Assistant Treasurer, or the Secretary or an Assistant
Secretary of such Corporation representing the number of shares registered in
certificate form. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar whose signature or
facsimile signature appears on a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if such person were such
officer, transfer agent or registrar at the date of issue.
6.2 Lost Certificates. The Board of Directors may direct a new
certificate or certificates of stock to be issued in place of any certificate or
certificates theretofore issued by the Corporation and alleged to have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming that the certificate of stock has been lost, stolen or
destroyed. When authorizing such issuance of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or such owner's legal representative, to advertise
the same in such manner as the Board shall require and/or to give the
Corporation a bond, in such sum as the Board may direct, as indemnity against
any claim that may be made against the Corporation on account of the certificate
alleged to have been lost, stolen or destroyed or on account of the issuance of
such new certificate.
6.3 Transfers. The transfer of stock and certificates that represent
the stock shall be effected in accordance with the laws of the State of
Connecticut. Any restriction on the transfer of a security imposed by the
Corporation shall be noted conspicuously or referred to on the security.
6.4 Fixing Record Date. In order that the Corporation may determine the
shareholders entitled to notice of, or to vote at, any meeting of shareholders
or any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than seventy nor less than ten days before the date of
such meeting, nor more than seventy days prior to any other action. If no record
date is fixed for the determination of shareholders entitled to notice of or to
vote at a meeting or of shareholders entitled to receive payment of a
distribution, the date on which notice of the meeting is mailed or the date on
which the resolution of the Board of Directors declaring such distribution is
adopted, as the case may be, shall be the record date for such determination of
shareholders. A determination of shareholders of record entitled to notice of,
or to vote at, a meeting of shareholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting. The Board of
9
<PAGE>
Directors shall fix a new record date if the meeting is adjourned to a date more
than 120 days after the date fixed for the original meeting.
6.5 Registered Shareholders. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, to receive notifications, to vote as such owner,
and to exercise all the rights and powers of an owner; and the Corporation shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of the
State of Connecticut.
VII. INSURANCE
The Corporation may purchase and maintain insurance on behalf of an
individual who is a director, officer, employee or agent of the Corporation, or
who, while a director, officer, employee or agent of the Corporation, serves at
the Corporation's request as a director, officer, partner, trustee, employee or
agent of another domestic or foreign corporation, partnership, joint venture,
trust, employee benefit plan or other entity, against liability asserted against
or incurred by such person in that capacity or arising from that person's status
as a director, officer, employee or agent, whether or not the Corporation would
have the power to indemnify or advance expenses to such person against the same
liability under the Connecticut Business Corporation Act, as amended.
VIII. GENERAL PROVISIONS
8.1 Dividends. Dividends upon the capital stock of the Corporation,
subject to the provisions of the Certificate of Incorporation and the laws of
the State of Connecticut, may be declared by the Board of Directors at any
regular or special meeting. Dividends may be in cash, in property, or in shares
of the Corporation's capital stock, subject to the provisions, if any, of the
Certificate of Incorporation.
8.2 Reserves. The Directors of the Corporation may set apart, out of
the funds of the Corporation available for dividends, a reserve or reserves for
any proper purpose and may abolish any such reserve.
8.3 Execution of Instruments. All checks or demands for money and
notes of the Corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time to time
designate.
8.4 Fiscal Year. The fiscal year of the Corporation shall be fixed by
resolution of the Board of Directors.
8.5 Seal. The corporate seal shall have inscribed thereon the name of
the Corporation, the year of its organization and the words "Corporate Seal,
10
<PAGE>
Connecticut." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
8.6 Execution of Instruments. All deeds, leases, transfers, contracts,
bonds, notes and other obligations to be entered into by the Corporation in the
ordinary course of its business without Board of Directors' action may be
executed on behalf of the Corporation by the Chairman of the Board, the
President, the Treasurer or any other officer, employee or agent of the
Corporation, as the Board of Directors may authorize by general or specific
vote.
8.7 Voting of Securities. The Chairman of the Board, the President,
the Treasurer or any other officer, employer or agent of the Corporation, as the
Board of Directors may authorize by general or specific vote, may waive notice
of and act on behalf of the Corporation, or appoint another person or persons to
waive notice of and act as proxy or attorney in fact for the Corporation with or
without discretionary power and/or power of substitution at any meeting of
stockholders or shareholders of any other organization, any securities of which
are held by the Corporation.
IX. AMENDMENTS
These By-Laws may be altered, amended or repealed and new by-laws may
be adopted by the vote of a majority of the Board of Directors, except as
otherwise required by statute, by the Certificate of Incorporation, or by these
By-Laws.
11
Exhibit 4.1
NUMBER SHARES
WP A-
WEBSTER PREFERRED CAPITAL CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF CONNECTICUT
SEE REVERSE SIDE FOR RESTRICTIONS
ON THE TRANSFER OF SHARES
REPRESENTED BY THIS CERTIFICATE
CUSIP 948365 40 8
This Certifies that
is the registered holder of
FULLY-PAID AND NON-ASSESSABLE SHARES OF SERIES A 7.375% CUMULATIVE REDEEMABLE
PREFERRED STOCK $1.00 PAR VALUE PER SHARE (LIQUIDATION PREFERENCE $1,000 PER
SHARE)
of the capital stock of the above named corporation, fully-paid and
non-assessable, transferable only on the books of the Corporation by the holder
hereof in person or by Attorney upon surrender of this Certificate properly
endorsed. In Witness Whereof, the said Corporation has caused this Certificate
to be signed by its duly authorized officers and its Corporate Seal to be
hereunto affixed.
Dated
[SEAL]
- ----------------------------- -----------------------------
SECRETARY PRESIDENT
COUNTERSIGNED AND REGISTERED:
THE BANK OF NEW YORK
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
<PAGE>
The shares represented by this certificate are subject to restrictions on
transfer and ownership for the purpose of the Corporation's maintenance of its
status as a Real Estate Investment Trust under the Internal Revenue Code of
1986, as amended (the "Code"). Subject to certain further restrictions and
except as expressly provided in the Corporation's Amended and Restated
Certificate of Incorporation, no Person may Beneficially Own shares of Capital
Stock of the Corporation if, as a result of such Acquisition or Beneficial
Ownership, (i) the Corporation would be "closely held" within the meaning of
Section 856(h) of the Code or (ii) the Capital Stock would be held by less than
100 Persons. Any Person who Beneficially Owns or attempts to Beneficially Own
shares of Capital Stock in excess of the above limitations must immediately
notify the Corporation, any shares of Capital Stock so held may be subject to
mandatory sale in certain events, certain purported acquisitions of shares of
Capital Stock in excess of such limitations shall be void ab initio, and any
shares of Capital Stock purported to be Acquired or Beneficially Owned in excess
of such limitation will be automatically transferred to a Trust for the benefit
of a Charitable Beneficiary. A Person who attempts to Beneficially Own shares of
Capital Stock in violation of the ownership limitations set forth in Section
7(b) of the Amended and Restated Certificate of Incorporation of the Corporation
shall have no claim, cause of action, or any other recourse whatsoever against a
transferor of shares. All capitalized terms in this legend have the meanings
defined in the Corporation's Amended and Restated Certificate of Incorporation,
a copy of which, including the restrictions on transfer, will be sent without
charge to each shareholder who so requests.
The Corporation is authorized to issue more than one class of stock. The
Corporation will furnish to each shareholder, upon written request and without
charge, a copy of the powers, designations, preferences and relative rights and
limitations of each outstanding class of stock of the Corporation.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT-__________Custodian__________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act_______________
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For Value Received, __________ hereby sell, assign and transfer unto
________________________________________________________________________________
___________________________________________________________ Shares represented
by the within Certificate, and do hereby irrevocably constitute and appoint
_________________________________________________________ Attorney to transfer
the said Shares on the books of the within named Corporation with full power of
substitution in the premises.
Dated _______________ __________
In presence of
- ---------------------------------------- --------------------------------------
NOTICE: THE SIGNATURE TO THIS
ASSIGNMENT MUST CORRESPOND WITH THE NAME
AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATEVER.
Exhibit 4.2
NUMBER SHARES
WP B-
WEBSTER PREFERRED CAPITAL CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF CONNECTICUT
SEE REVERSE SIDE FOR RESTRICTIONS
ON THE TRANSFER OF SHARES
REPRESENTED BY THIS CERTIFICATE
CUSIP 948365 50 7
This Certifies that
is the registered holder of
FULLY-PAID AND NON-ASSESSABLE SHARES OF SERIES B 8.625% CUMULATIVE REDEEMABLE
PREFERRED STOCK $1.00 PAR VALUE PER SHARE (LIQUIDATION PREFERENCE $10.00 PER
SHARE)
of the capital stock of the above named corporation, fully-paid and
non-assessable, transferable only on the books of the Corporation by the holder
hereof in person or by Attorney upon surrender of this Certificate properly
endorsed. In Witness Whereof, the said Corporation has caused this Certificate
to be signed by its duly authorized officers and its Corporate Seal to be
hereunto affixed.
Dated
[SEAL]
- ----------------------------- -----------------------------
SECRETARY PRESIDENT
COUNTERSIGNED AND REGISTERED:
THE BANK OF NEW YORK
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
<PAGE>
The shares represented by this certificate are subject to restrictions on
transfer and ownership for the purpose of the Corporation's maintenance of its
status as a Real Estate Investment Trust under the Internal Revenue Code of
1986, as amended (the "Code"). Subject to certain further restrictions and
except as expressly provided in the Corporation's Amended and Restated
Certificate of Incorporation, no Person may Beneficially Own shares of Capital
Stock of the Corporation if, as a result of such Acquisition or Beneficial
Ownership, (i) such Person would Beneficially Own Series B 8.625% Cumulative
Redeemable Preferred Stock of the Corporation in excess of 5,000 shares, (ii)
the Corporation would be "closely held" within the meaning of Section 856(h) of
the Code or (iii) the Capital Stock would be held by less than 100 Persons. Any
Person who Beneficially Owns or attempts to Beneficially Own shares of Capital
Stock in excess of the above limitations must immediately notify the
Corporation, any shares of Capital Stock so held may be subject to mandatory
sale in certain events, certain purported acquisitions of shares of Capital
Stock in excess of such limitations shall be void ab initio, and any shares of
Capital Stock purported to be Acquired or Beneficially Owned in excess of such
limitation will be automatically transferred to a Trust for the benefit of a
Charitable Beneficiary. A Person who attempts to Beneficially Own shares of
Capital Stock in violation of the ownership limitations set forth in Section
7(b) of the Amended and Restated Certificate of Incorporation of the Corporation
shall have no claim, cause of action, or any other recourse whatsoever against a
transferor of shares. All capitalized terms in this legend have the meanings
defined in the Corporation's Amended and Restated Certificate of Incorporation,
a copy of which, including the restrictions on transfer, will be sent without
charge to each shareholder who so requests.
The Corporation is authorized to issue more than one class of stock. The
Corporation will furnish to each shareholder, upon written request and without
charge, a copy of the powers, designations, preferences and relative rights and
limitations of each outstanding class of stock of the Corporation.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT-__________Custodian__________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act_______________
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For Value Received, __________ hereby sell, assign and transfer unto
________________________________________________________________________________
___________________________________________________________ Shares represented
by the within Certificate, and do hereby irrevocably constitute and appoint
_________________________________________________________ Attorney to transfer
the said Shares on the books of the within named Corporation with full power of
substitution in the premises.
Dated _______________ __________
In presence of
- --------------------------------- ----------------------------------
NOTICE: THE SIGNATURE TO THIS
ASSIGNMENT MUST CORRESPOND WITH THE NAME
AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATEVER.
Exhibit 10.3
ADVISORY SERVICE AGREEMENT
This Advisory Service Agreement ("Agreement") is made as of this 20th day
of October 1997, by and between Webster Bank (the "Advisor"), a federal savings
bank with an office located at Waterbury, CT and Webster Preferred Capital
Corporation ("WPCC"), a Connecticut corporation with an office located at
Waterbury, CT.
WITNESSETH THAT:
WHEREAS, WPCC intends to qualify as a "real estate investment trust"
("REIT") under the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, WPCC desires to obtain from the Advisor various advisory and
management services to avail itself of the experience and assistance of the
Advisor and to have the Advisor undertake, on WPCC's behalf, the duties and
responsibilities hereinafter set forth, subject to the control and supervision
of the Board of Directors of WPCC as provided for herein; and
WHEREAS, the Advisor desires to render such advisory and management
services to the Company subject to the control and supervision of the Board of
Directors of WPCC, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, the parties
hereby agree as follows:
1. TERM.
The term of this Agreement shall commence as of October 20, 1997 and shall
continue until October 19, 1999. Unless a notice to terminate this Agreement is
sent by either party to the other party at least ninety (90) days prior to
October 19, 1999, this Agreement shall be automatically renewed for a one year
period. Thereafter, the Agreement shall continue to be automatically renewed for
successive one year periods unless a termination notice is sent by either party
to the other party at least ninety (90) days prior to the end of the then
existing renewal term.
2. ADVISORY SERVICES.
The Advisor shall consult with the Board of Directors and the officers of
WPCC and shall, at the request of the Board of Directors and/or the officers of
WPCC, furnish advice and recommendations with respect to all aspects of the
business and affairs of WPCC. Subject to the control and discretion and at the
<PAGE>
request of the Board of Directors of WPCC, the Advisor shall provide the
following services (together with the services set forth in Section 6 and
Section 7 hereof, the "Services"):
(a) administer the day-to-day operations and affairs of WPCC, including
without limitation the performance or supervision of the functions
described in this Section 2;
(b) monitor the credit quality of the real estate mortgage assets held by
WPCC;
(c) advise WPCC with respect to the acquisition, management, financing and
disposition of WPCC's real estate mortgage assets;
(d) establish and provide necessary services for WPCC, including
executive, administrative, human resource, accounting and control,
technical support, secretarial, recordkeeping, copying, mailing and
distribution facilities;
(e) provide WPCC with office space pursuant to a lease, conference room
facilities, office equipment and supplies (including computers, copy
machines and fax machines) and personnel necessary for the Services to
be performed by the Advisor hereunder and to perform the daily
business of WPCC;
(f) arrange for the investment and management of any short-term
investments of WPCC and provide any investment and fund management
services in a manner consistent with Exhibit D to the Master Service
Agreement, dated March 17, 1997, between the Advisor and WPCC;
(g) monitor and supervise the performance of all parties who have
contracts to perform services for WPCC, provided that the Advisor
shall have no duty to assume the obligations or guarantee the
performance of such parties under such contracts;
(h) establish and maintain such bank accounts in the name of WPCC as may
be required by WPCC and approved by the Board of Directors of WPCC and
ensure that all funds collected by the Advisor in the name of or on
behalf of WPCC shall be held in trust and shall not be commingled with
the Advisor's own funds or accounts;
(i) arrange for the execution and delivery of such documents and
instruments by the officers of WPCC as may be required in order to
perform the functions herein described and to take any other required
action contemplated by the terms of this Agreement;
2
<PAGE>
(j) arrange for insurance for WPCC including liability insurance, errors
and omissions policies and officers and directors policies, which
shall cover and insure WPCC, members of the Board of Directors and the
officers of WPCC in amounts and with deductibles and insurers approved
by the Board of Directors of WPCC;
(k) maintain proper books and records of WPCC's affairs and furnish or
cause to be furnished to the Board of Directors such periodic reports
and accounting information as may be required from time to time by the
Board of Directors of WPCC, including, but not limited to, quarterly
reports of all income, expenses and distributions of WPCC;
(l) consult and work with legal counsel for WPCC in implementing WPCC
decisions and undertaking measures consistent with all pertinent
federal, state and local laws and rules or regulations of governmental
or quasi-governmental agencies, including, but not limited to, federal
and state securities laws, the Code as it relates to WPCC's
qualification as a REIT, and the regulations promulgated under each of
the foregoing;
(m) consult and work with independent accountants for WPCC in connection
with the preparation of financial statements, annual reports and tax
returns;
(n) prepare and distribute in consultation with the independent
accountants for WPCC, annual reports to stockholders which contain
audited financial statements;
(o) furnish reports to the Board of Directors of WPCC, which include
reports concerning WPCC's investments;
(p) maintain custody of the documents related to WPCC's mortgage assets;
and
(q) as reasonably requested by WPCC, make reports to WPCC of its
performance of the foregoing Services and furnish advice and
recommendations with respect to other aspects of the business of WPCC.
3. OPERATING EXPENSES; EXPENSES OF THE ADVISOR.
(a) "Operating Expenses" for any period means all of the operating expenses
of WPCC (with the exception of those expenses to be borne by the Advisor in
accordance with Section 3(b) hereof), including without limitation, the
following:
3
<PAGE>
(i) interest, taxes and other expenses incurred in connection with the
real estate mortgage assets of WPCC;
(ii) expenses related to the officers, directors and employees of WPCC,
including without limitation any fees or expenses of the
directors;
(iii) fees and expenses payable to accountants, appraisers, external
auditors, consultants, attorneys, collection and paying agents and
all other persons who contract with or are retained by WPCC or by
the Advisor on behalf of WPCC;
(iv) legal and other expenses incurred in connection with advice
concerning obtaining or maintaining WPCC's status as a REIT, the
determination of WPCC's taxable income, any formal or informal
administrative action or legal proceedings which involve a
challenge to the REIT status of WPCC or any claim that the
activities of WPCC, any member of the Board of Directors or any
officer of WPCC were improper;
(v) expenses relating to communications and reports to stockholders of
WPCC, including without limitation the costs of preparing,
printing, duplicating and mailing the certificates for the stock
of WPCC, proxy solicitation materials and reports to stockholders,
and the costs of arranging meetings of stockholders;
(vi) the costs of insurance described in Section 2 hereof, including
directors and officers liability insurance covering the directors
and officers of WPCC;
(vii) expenses relating to the acquisition, disposition and ownership of
real estate mortgage assets of WPCC, including, without limitation
and to the extent not paid by others, legal fees and other
expenses for professional services and fees;
(viii) expenses connected with the payments of dividends or interest or
distributions in cash or any other form made or caused to be made
by the Board of Directors to the stockholders of WPCC;
(ix) expenses connected with any office or office facilities maintained
by WPCC separate from the office of the Advisor, including without
limitation rent, telephone, utilities, office furniture and
equipment and machinery; and
(x) other miscellaneous expenses of WPCC which are not expenses of the
Advisor under Section 3(b) hereof.
4
<PAGE>
(b) Without regard to the compensation received pursuant to Section 4
hereof, the Advisor shall bear the following expenses:
(i) employment expenses of the personnel employed by the Advisor,
including without limitation salaries, wages, payroll taxes and
the cost of employee benefit plans; and
(ii) rent, telephone equipment, utilities, office furniture and
equipment and machinery and other office expenses of the Advisor
incurred in connection with the maintenance of any office
facility of the Advisor.
(c) WPCC shall reimburse the Advisor within 30 days of a written request by
the Advisor for any Operating Expenses paid or incurred by the Advisor on behalf
of WPCC.
4. FEES.
(a) An annual advisory fee of $150,000 shall be payable by WPCC to the
Advisor for Services rendered by the Advisor hereunder. Payment by WPCC is due
and payable monthly upon receipt of an invoice from the Advisor.
(b) The Advisor may revise the rate set forth in Paragraph 4(a) above to
reflect changes in the actual costs incurred by the Advisor in providing the
Services to WPCC.
5. PERFORMANCE OF SERVICES; CHANGES.
(a) In performing Services under this Agreement, the scope of work
undertaken by the Advisor and the manner of its performance shall be
substantially the same as for similar work performed by the Advisor for
transactions on its own behalf, with such modifications as may be appropriate in
order to accomplish the purposes of this Agreement.
(b) The Advisor shall give WPCC reasonable notice of all changes affecting
WPCC's activities as these changes pertain to the Services. If a change referred
to in Paragraph 5(a) above (including a revision of the annual advisory fee
pursuant to Section 4(b) hereof) is not acceptable to WPCC, WPCC may terminate
this Agreement upon thirty (30) days' notice, provided such notice is given
within ten (10) days after WPCC has received notice of the change.
6. MAINTENANCE OF RECORDS; EXAMINATIONS.
The Advisor shall at all times, establish and maintain appropriate books of
account, records and accounting practices related to the Services performed
hereunder and permit such examinations as may be required by relevant state and
5
<PAGE>
federal agencies. Such books and records shall be accessible for inspection by
the Board of Directors of WPCC and representatives of WPCC at all times. It is
understood and agreed that the performance of the Services is or might be
subject to regulation and examination by authorized representatives of state and
federal agencies, including but not limited to, the Office of Thrift Supervision
and the Federal Deposit Insurance Corporation. Each party is and shall be
authorized to submit or furnish to any such regulatory agency reports,
information, assurances and other data as may be required by or reasonably
requested of it under applicable laws and regulations, including, without
limitation, any appropriate notifications concerning the initiation or
termination of this Agreement or any of the Services provided to WPCC.
7. REIT QUALIFICATION AND COMPLIANCE.
The Advisor shall consult and work with WPCC's legal counsel in maintaining
WPCC's qualification as a REIT. Notwithstanding any other provisions of this
Agreement to the contrary, the Advisor shall refrain from any action which, in
its reasonable judgment or in the judgment of the Board of Directors of WPCC (of
which the Advisor has received written notice), would adversely affect the
qualification of WPCC as a REIT or which would violate any law, rule or
regulation of any governmental body or agency having jurisdiction over WPCC or
its securities, or which would otherwise not be permitted by the amended and
restated certificate of incorporation or by-laws of WPCC. Furthermore, the
Advisor shall take any action which, in its judgment or the judgment of the
Board of Directors of WPCC (of which the Advisor has received written notice),
may be necessary to maintain the qualification of WPCC as a REIT or prevent the
violation of any law or regulation of any governmental body or agency having
jurisdiction over WPCC or its securities.
8. SUBCONTRACTING.
The Advisor may at any time subcontract all or a portion of its obligations
under this Agreement to one or more affiliates of the Advisor that are involved
in the business of managing real estate mortgage assets without the consent of
WPCC. If no affiliate of the Advisor is engaged in the business of managing real
estate mortgage assets, the Advisor may, with the approval of a majority of the
Board of Directors of WPCC, subcontract all or a portion of its obligations
under this Agreement to unrelated third parties. Notwithstanding the foregoing,
the Advisor will not, in connection with subcontracting any of its obligations
under this Agreement, be discharged or relieved in any respect from its
obligations under this Agreement.
9. OTHER ACTIVITIES OF THE ADVISOR.
(a) Nothing herein contained shall prevent the Advisor, an affiliate of the
Advisor or an officer, director, employee or stockholder of the Advisor from
engaging
6
<PAGE>
in any activity, including without limitation originating, purchasing and
managing real estate mortgage assets, rendering of services and investment
advice with respect to real estate investment opportunities to any other person
(including other REITs) and managing other investments (including the
investments of the Advisor and its affiliates).
(b) Officers, directors, employees, stockholders and agents of the Advisor
or of any affiliate of the Advisor may serve as officers, directors, employees
or agents of WPCC, but shall receive no compensation (other than reimbursement
for expenses) from WPCC for such service.
10. LIMITATIONS OF LIABILITY.
The Advisor shall use its best efforts to provide competent personnel and
reliable equipment for the purpose of performing Services for WPCC under this
Agreement. The liability of the Advisor to WPCC for any loss due to the
Advisor's performing or failing to perform the Services shall be limited to
those losses sustained by WPCC which are a direct result of the Advisor's
negligence or willful misconduct. Because of the nature of the Services to be
performed hereunder and because of the impracticability, difficulty or
impossibility of ascertaining and measuring the Advisor's liability to WPCC or
any third party for any loss or damage by reason of any error caused by the
Advisor's negligence or otherwise, the parties hereby agree that under no
circumstances shall the Advisor be liable for any consequential or special
damages and in no event shall the Advisor's total combined liability to WPCC for
all claims arising under or in connection with this Agreement be more than the
total amount of all fees payable by WPCC to the Advisor under this Agreement
during the year immediately preceding the year in which the first claim giving
rise to any such liability arises. For purposes of this Section 10, a "year"
shall be deemed to begin on October 20th and run until October 19th of the
ensuing calendar year. If the Advisor carries insurance against the type of loss
incurred, WPCC agrees to cooperate in furnishing proof of loss in a form
satisfactory to the Advisor's insurance company and to assist the Advisor and
its insurance company in settlement of this claim.
11. FORCE MAJEURE.
Neither party shall be responsible for any resulting loss if fulfillment of
any term or provision of this Agreement is delayed or prevented by fire, flood,
earthquake, act of God, labor difficulties or by any other cause not within the
control of the party whose performance is delayed or prevented. If the foregoing
shall occur and such situations shall continue to prevent performance for a
continuous period of sixty (60) days, then either party may notify the other
party of its intention to terminate this Agreement and this Agreement shall
terminate upon receipt of such notice.
7
<PAGE>
12. DEFAULT; REMEDIES.
(a) The occurrence of any of the following shall be an event of default
("Event of Default") hereunder:
(i) the failure of WPCC to pay any fee or charge within 30 days
after its receipt of an invoice or written request for
reimbursement from the Advisor for fees or expenses reimbursable
hereunder;
(ii) the filing of a petition in bankruptcy by or against either
party or the appointment of a receiver for either party which
petition or appointment is not discharged within thirty (30)
days; or
(iii) a material breach by either party of any of its obligations
hereunder.
(b) In the event of any Event of Default, the non-breaching party shall
provide a written notice of such Event of Default and a demand that such Event
of Default be cured. In the event that the breaching party fails in good faith
to cure such Event of Default within fifteen (15) days following receipt of such
notice and demand, the non-defaulting party may terminate this Agreement by
notice to the defaulting party.
(c) In the event of a termination by either party pursuant to this Section
12(b), WPCC shall nonetheless remain liable for the payment to the Advisor of
all reasonable outstanding fees and charges as of the date of such termination.
13. INDEPENDENT CONTRACTOR.
In performing the Services, the Advisor shall be deemed to have an
independent contractual relationship with WPCC and shall not be deemed to have
any contractual or other relationship with WPCC's mortgagors. Nothing in this
Agreement shall be deemed to create a joint venture or partnership between the
parties. In no event shall any of WPCC's mortgagors be considered a third party
beneficiary of this Agreement. To the extent that third parties may make claims
against the Advisor arising out of the Services provided hereunder, WPCC agrees
to indemnify and hold harmless the Advisor from and against all loss, liability,
claim, action, demand, or suits, including attorney's fees arising therefrom.
14. RELATIONSHIP OF PARTIES; ASSIGNMENT.
Each of the parties hereto hereby acknowledges that it is an affiliate of
the other party hereto. WPCC shall not assign this Agreement nor any of its
rights or obligations hereunder without the prior written consent of the
Advisor. The Advisor may assign this Agreement and any of its rights and
obligations (including,
8
<PAGE>
without limitation, its obligation to provide Services) to any affiliate of
WPCC. In the event WPCC is no longer an affiliate of the Advisor or its
successors or assigns, this Agreement shall automatically terminate.
15. SEVERABILITY.
Whenever possible, each provision of the Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or invalid under
applicable law, such provision will be in effect only to the extent of such
prohibition or invalidity, without invalidating the remainder of the provisions
of this Agreement.
16. CONFIDENTIALITY.
The Advisor shall regard and preserve as confidential all data of a
proprietary and/or confidential nature related to the business of WPCC. The
Advisor will take the same precautions to preserve such confidential information
as it takes with respect to the Advisor's own confidential information.
17. NOTICES.
All notices to be sent under this Agreement shall be mailed by first class
mail, postage prepaid and addressed as follows:
If to the Advisor: Peter K. Mulligan
Executive Vice President
Webster Bank
Webster Plaza
145 Bank Street
Waterbury, CT 06702
If to WPCC: Gregory S. Madar
Vice President and Secretary
Webster Preferred Capital Corporation
145 Bank Street
Waterbury, CT 06702
Either party may give written notice to the other to change the place of the
mailing of such notices.
18. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement of the parties hereto. It
shall supersede any and all other previous writings and communications between
the parties.
9
<PAGE>
19. AMENDMENT.
No modification or amendment of this Agreement shall be valid unless such
modification or amendment is in writing and executed by both parties.
20. GOVERNING LAW.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Connecticut.
21. HEADINGS.
The section headings herein have been inserted for convenience of reference
only and shall not be construed to affect the meaning, construction or effect of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their authorized representatives as of the date first written above.
WEBSTER BANK
By: /s/ Peter K. Mulligan
-----------------------------------
Name: Peter K. Mulligan
Title: Executive Vice President
WEBSTER PREFERRED CAPITAL
CORPORATION
By: /s/ Gregory S. Madar
-----------------------------------
Name: Gregory S. Madar
Title: Vice President and Secretary
10
Exhibit 21
Webster Preferred Capital Corporation does not have any subsidiaries.
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> MAR-17-1997
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