As filed with the Securities and Exchange Commission on October 16, 1998
Registration Nos. 333-64639
333-64639-01
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
PRE-EFFECTIVE AMENDMENT
NO. 1
on
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<CAPTION>
<S> <C>
WEBSTER FINANCIAL CORPORATION WEBSTER CAPITAL TRUST II
(Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its charter)
Delaware Delaware
(State of incorporation) (State of incorporation)
6712 6719
(Primary Standard Industrial (Primary Standard Industrial
Classification Code Number) Classification Code Number)
06-1187536 Applied for
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
</TABLE>
Webster Plaza
Waterbury, Connecticut 06702
(Address, including zip code, and telephone number, including area code,
of registrants' principal executive offices)
------------------
<TABLE>
<CAPTION>
<S> <C>
John V. Brennan John V. Brennan
Executive Vice President, Chief Financial Officer and Treasurer Webster Capital Trust II
Webster Financial Corporation Webster Plaza
Webster Plaza Waterbury, Connecticut 06702
Waterbury, Connecticut 06702 (203) 753-2921
(203) 753-2921
</TABLE>
(Name, address, including zip code, and telephone number,
including area code, of agents for service)
------------------------
Copies to:
Stuart G. Stein, Esq.
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
(202) 637-8575
Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after this Registration Statement becomes
effective.
------------------------
The Registrants hereby amend this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a),
may determine.
<PAGE>
The information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the Registration Statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 16, 1998
PROSPECTUS
WEBSTER CAPITAL TRUST II
OFFER TO EXCHANGE ITS
10.00% EXCHANGE CAPITAL SECURITIES, SERIES B
(LIQUIDATION AMOUNT $1,000 PER EXCHANGE CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
10.00% ORIGINAL CAPITAL SECURITIES, SERIES A
(LIQUIDATION AMOUNT $1,000 PER ORIGINAL CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
WEBSTER FINANCIAL CORPORATION
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME ON NOVEMBER 20, 1998, UNLESS EXTENDED.
Webster Capital Trust II, a trust formed under the laws of the State of
Delaware (the "Trust"), hereby offers, upon the terms and subject to the
conditions set forth in this prospectus (as the same may be amended or
supplemented from time to time, the "Prospectus") and in the accompanying Letter
of Transmittal (which together constitute the "Exchange Offer"), to exchange up
to $50,000,000 aggregate Liquidation Amount of its 10.00% Exchange Capital
Securities, Series B (the "Exchange Capital Securities"), which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement of which this Prospectus constitutes a
part, for a like Liquidation Amount of its outstanding 10.00% Capital
Securities, Series A (the "Original Capital Securities"), of which $50,000,000
aggregate Liquidation Amount are issued and outstanding. Pursuant to the
Exchange Offer, Webster Financial Corporation, a Delaware corporation (the
"Corporation" or "Webster"), is also offering to exchange (i) its guarantee of
payments of cash distributions and payments on liquidation of the Trust or
redemption of the Original Capital Securities (the "Original Guarantee") for a
like guarantee in respect of the Exchange Capital Securities (the "Exchange
Guarantee") and (ii) $50,000,000 aggregate principal amount of its 10.00% Junior
Subordinated Deferrable Interest Debentures, Series A, due April 1, 2027 (the
"Original Junior Subordinated Debentures") for a
(Continued on next page)
This Prospectus and the Letter of Transmittal are first being mailed to
all holders of Original Capital Securities on or about October 20, 1998.
SEE "RISK FACTORS" BEGINNING ON PAGE _____ FOR CERTAIN INFORMATION THAT
SHOULD BE CONSIDERED BY HOLDERS IN DECIDING WHETHER TO TENDER ORIGINAL CAPITAL
SECURITIES IN THE EXCHANGE OFFER.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is October __, 1998
<PAGE>
(Continued from the previous page)
like aggregate principal amount of its 10.00% Junior Subordinated Deferrable
Interest Debentures, Series B, due April 1, 2027 (the "Exchange Junior
Subordinated Debentures"), which Exchange Guarantee and Exchange Junior
Subordinated Debentures also have been registered under the Securities Act. The
Original Capital Securities, the Original Guarantee and the Original Junior
Subordinated Debentures are collectively referred to herein as the "Original
Securities" and the Exchange Capital Securities, the Exchange Guarantee and the
Exchange Junior Subordinated Debentures are collectively referred to herein as
the "Exchange Securities."
On April 15, 1998, the Corporation acquired Eagle Financial Corp.
("Eagle") in a merger transaction (the "Merger"). As a result of the Merger, the
Corporation (i) assumed Eagle's obligations under the Indenture with respect to
the Junior Subordinated Debentures and the Guarantee Agreement with respect to
the Guarantee; and (ii) acquired total assets of $2.3 billion, net loans of $1.1
billion and deposits of $1.3 billion. Subsequent to the Merger and upon the
filing of a Certificate of Amendment to Certificate of Trust of Eagle Financial
Capital Trust I on September 28, 1998, the name of Eagle Financial Capital Trust
I was changed to Webster Capital Trust II.
The terms of the Exchange Securities are identical in all material
respects to the respective terms of the Original Securities, except that (i) the
Exchange Securities have been registered under the Securities Act and therefore
will not be subject to certain restrictions on transfer applicable to the
Original Securities, (ii) the Exchange Capital Securities will not provide for
any increase in the Distribution rate thereon, and (iii) the Exchange Junior
Subordinated Debentures will not provide for any liquidated damages thereon. See
"Description of Exchange Securities" and "Description of Original Securities."
The Exchange Capital Securities are being offered for exchange in order to
satisfy certain obligations of the Corporation and the Trust under the
Registration Rights Agreement dated April 1, 1997 (the "Registration Rights
Agreement") among Eagle, the Trust and Sandler O'Neill & Partners, L.P. (the
"Initial Purchaser"). As a result of Eagle and the Trust not having had a
registration statement as to exchange securities been declared effective by
September 28, 1997, liquidated damages have been accruing at the rate of 0.25%
per annum on the principal amount of the Original Junior Subordinated Debentures
and Distributions have been accruing at the rate of 0.25% per annum on the
Liquidation Amount of the Original Capital Securities, and shall continue to do
so until such time as this Registration Statement is declared effective. In the
event that the Exchange Offer is consummated, any Original Capital Securities
that remain outstanding after consummation of the Exchange Offer and the
Exchange Capital Securities issued in the Exchange Offer will vote together as a
single class for purposes of determining whether holders of the requisite
percentage in outstanding Liquidation Amount thereof have taken certain actions
or exercised certain rights under the Trust Agreement.
The Exchange Capital Securities and the Original Capital Securities
(together, the "Capital Securities") represent beneficial interests in the
assets of the Trust. The Corporation is the owner of all of the beneficial
interests represented by common securities of the Trust (the "Common
Securities," and together with the Capital Securities, the "Trust Securities").
Wilmington Trust Company is the Property Trustee (the "Property Trustee") of the
Trust. The Trust exists for the sole purpose of issuing the Trust Securities and
investing the proceeds thereof in the Junior Subordinated Debentures. The
Exchange Junior Subordinated Debentures will mature on April 1, 2027 (the
"Stated Maturity Date"). The Exchange Capital Securities will have a preference
over the Common Securities under certain circumstances with respect to cash
distributions and amounts payable on liquidation, redemption or otherwise. See
"Description of Exchange Securities--Description of Exchange Capital
Securities--Subordination of Common Securities."
As used herein, (i) the "Indenture" means the Indenture, dated as of
April 1, 1997, as amended and supplemented from time to time, between Eagle and
Wilmington Trust Company, as trustee (the "Debenture Trustee"), relating to the
Junior Subordinated Debentures, (ii) the "Trust Agreement" means the Amended and
Restated Declaration of Trust relating to the Trust among Eagle, as Sponsor,
Wilmington Trust Company, as Property Trustee, Wilmington Trust Company, as
Delaware Trustee (the "Delaware Trustee"), and the Administrative Trustees named
therein (collectively, with the Property Trustee and Delaware Trustee, the
"Issuer Trustees"), (iii) the "Guarantee" means the Guarantee Agreement relating
to the Original Capital Securities between Eagle and Wilmington Trust Company,
as Guarantee Trustee (the "Guarantee Trustee") and (iv) the "Common Guarantee"
means the Common Guarantee Agreement relating to the Common Securities by the
Corporation. In
ii
<PAGE>
addition, as the context may require, (i) "Junior Subordinated Debentures"
includes the Original Junior Subordinated Debentures and the Exchange Junior
Subordinated Debentures and (ii) "Guarantee" includes the Original Guarantee and
the Exchange Guarantee.
Holders of the Trust Securities will be entitled to receive cumulative
cash distributions arising from the payment of interest on the Exchange Junior
Subordinated Debentures, accumulating from April 1, 1997 and payable
semi-annually in arrears on April 1 and October 1 of each year, commencing
October 1, 1998 at the annual rate of 10.00% of the Liquidation Amount of $1,000
per Trust Security ("Distributions"). So long as no Debenture Event of Default
has occurred and is continuing, the Corporation has the right to defer payments
of interest on the Exchange Junior Subordinated Debentures for a period not
exceeding 10 consecutive semi-annual periods with respect to each deferral
period (each, an "Extension Period"), provided that an Extension Period must end
on an Interest Payment Date and may not extend beyond the Stated Maturity Date.
Such deferred Distributions to which holders of the Trust Securities are
entitled during any such Extension Period will accumulate additional
Distributions thereon at the rate per annum of 10.00% thereof, compounded
semi-annually from the relevant Distribution Date, but not exceeding the
interest rate then accruing on the Exchange Junior Subordinated Debentures. The
term "Distributions," as used herein, shall include any such additional
Distributions.
Upon the termination of any such Extension Period and the payment of all
amounts then due, the Corporation may elect to begin a new Extension Period,
subject to the requirements set forth herein. If and for so long as interest
payments on the Exchange Junior Subordinated Debentures are so deferred,
Distributions on the Trust Securities also will be deferred, and the Corporation
will not be permitted, subject to certain exceptions described herein, to
declare or pay any cash distributions with respect to the Corporation's capital
stock or to make any payment with respect to debt securities of the Corporation
that rank pari passu with or junior to the Exchange Junior Subordinated
Debentures. During an Extension Period, interest on the Exchange Junior
Subordinated Debentures will continue to accrue (and the amount of Distributions
to which holders of the Trust Securities are entitled will continue to
accumulate) at the rate of 10.00% per annum, compounded semi-annually, and
holders of Trust Securities will be required to include deferred interest income
in their gross income for U.S. federal income tax purposes prior to the receipt
of the cash attributable to such income. See "Description of Exchange
Securities--Description of Exchange Junior Subordinated Debentures--Option to
Extend Interest Payment Date" and "Certain Federal Income Tax
Consequences--IntereST Income and Original Issue Discount."
The Corporation has, through the Guarantee, the Common Guarantee, the Trust
Agreement, the Junior Subordinated Debentures and the Indenture guaranteed all
of the Trust's obligations under the Trust Securities. See "Relationship Among
the Exchange Capital Securities, the Exchange Junior Subordinated Debentures and
the Exchange Guarantee--Full and Unconditional Guarantee." The Exchange
Guarantee and the Common Guarantee will guarantee payments of Distributions and
payments upon liquidation of the Trust or redemption of the Trust Securities,
but in each case only to the extent that the Trust has funds legally available
therefor and has failed to make such payments, as described herein. See
"Description of Exchange Securities--Description of Exchange Guarantee." If the
Corporation fails to make a required payment on the Exchange Junior Subordinated
Debentures, the Trust will not have sufficient funds to make the related
payments, including Distributions, on the Trust Securities. The Exchange
Guarantee and the Common Guarantee will not cover any such payment when the
Trust does not have sufficient funds legally available therefor. In such event,
a holder of Exchange Capital Securities may institute a legal proceeding
directly against the Corporation to enforce its rights in respect of such
payment. See "Description of Exchange Securities--Description of Exchange Junior
Subordinated Debentures--Enforcement of Certain Rights by Holders of Exchange
Capital Securities." The obligations of the Corporation under the Exchange
Guarantee, the Common Guarantee, and the Exchange Junior Subordinated Debentures
will be unsecured and will rank subordinate and junior in right of payment to
all Senior Indebtedness (as defined in "Description of Exchange
Securities--Description of Exchange Junior Subordinated
Debentures--Subordination"). See "Risk Factors--Ranking OF Subordinated
Obligations under the Exchange Guarantee and the Exchange Junior Subordinated
Debentures; Limitation on Source of Funds."
iii
<PAGE>
The Trust Securities will be subject to mandatory redemption in a Like
Amount, (i) in whole but not in part, on the Stated Maturity Date upon repayment
of the Exchange Junior Subordinated Debentures at a redemption price equal to
the principal amount of, plus accrued and unpaid interest on, the Exchange
Junior Subordinated Debentures (the "Maturity Redemption Price"), (ii) in whole
but not in part, at any time prior to April 1, 2007 (the "Initial Optional
Redemption Date"), contemporaneously with the optional prepayment of the
Exchange Junior Subordinated Debentures by the Corporation, upon the occurrence
and continuation of a Special Event at a redemption price equal to the Special
Event Prepayment Price (the "Special Event Redemption Price"), and (iii) in
whole or in part, on or after the Initial Optional Redemption Date,
contemporaneously with the optional prepayment by the Corporation of all or part
of the Exchange Junior Subordinated Debentures, at a redemption price equal to
the Optional Prepayment Price (the "Optional Redemption Price"). Any of the
Maturity Redemption Price, the Special Event Redemption Price and the Optional
Redemption Price may be referred to herein as the "Redemption Price." See
"Description of Exchange Securities--Description of Exchange Capital
Securities--Redemption."
Subject to the Corporation having received any required regulatory
approvals, the Exchange Junior Subordinated Debentures will be prepayable prior
to the Stated Maturity Date at the option of the Corporation (i) on or after the
Initial Optional Redemption Date, in whole or in part, at a price (the "Optional
Prepayment Price") equal to 105% of the principal amount thereof on the Initial
Optional Redemption Date, declining ratably on each April 1, thereafter to 100%
on or after April 1, 2017, or (ii) at any time prior to the Initial Optional
Redemption Date, in whole but not in part, upon the occurrence and continuation
of a Special Event, at a prepayment price (the "Special Event Prepayment Price")
equal to the Make-Whole Amount corresponding to the principal amount of Exchange
Junior Subordinated Debentures to be prepaid. The "Make-Whole Amount" shall be
equal to the greater of (a) 100% of the principal amount to be prepaid or (b)
the sum, as determined by a Quotation Agent, of the present values of the
remaining scheduled payments of principal and interest on the Exchange Junior
Subordinated Debentures, discounted to the prepayment date on a semi-annual
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 (a) and (b),
accrued and unpaid interest thereon, including Compounded Interest and
Additional Sums, if any, to the date of prepayment. Either of the Optional
Prepayment Price or the Special Event Prepayment Price may be referred to herein
as the "Prepayment Price." See "Description of Exchange Securities--Description
of Exchange Junior Subordinated Debentures--Optional Prepayment" anD "--Special
Event Prepayment."
The Corporation has the right at any time to terminate the Trust and,
after satisfaction to liabilities of creditors of the Trust as required by
applicable law, to cause a Like Amount of the Exchange Junior Subordinated
Debentures to be distributed to the holders of the Trust Securities in
liquidation of the Trust, subject to (i) the Administrative Trustees having
received an opinion of counsel to the effect that such distribution will not
cause the holders of Exchange Capital Securities to recognize gain or loss for
federal income tax purposes and (ii) the receipt of any required regulatory
approvals. Unless the Exchange Junior Subordinated Debentures are distributed to
the holders of the Trust Securities, in the event of a liquidation of the Trust
as described herein, after satisfaction of liabilities to creditors of the Trust
as required by applicable law, the holders of the Trust Securities generally
will be entitled to receive a Liquidation Amount of $1,000 per Trust Security,
plus accumulated and unpaid Distributions thereon to the date of payment. See
"Description of Exchange Securities--Description of Exchange Capital
Securities--Liquidation of the Trust and Distribution oF Exchange Junior
Subordinated Debentures."
THE CAPITAL SECURITIES, INCLUDING THE EXCHANGE CAPITAL SECURITIES, MAY BE
TRANSFERRED ONLY IN A BLOCK HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN
$100,000 (100 CAPITAL SECURITIES). ANY TRANSFER OF EXCHANGE CAPITAL SECURITIES
IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO
BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED
NOT TO BE THE HOLDER OF SUCH EXCHANGE CAPITAL SECURITIES FOR ANY PURPOSE,
INCLUDING BUT NOT LIMITED TO THE RECEIPT OF DISTRIBUTIONS ON SUCH EXCHANGE
CAPITAL SECURITIES, AND SUCH TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST
WHATSOEVER IN SUCH EXCHANGE CAPITAL SECURITIES.
iv
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----------------------------
The Trust is making the Exchange Offer of the Exchange Capital Securities
in reliance on the position of the staff of the Division of Corporation Finance
(the "Staff") of the Securities and Exchange Commission (the "Commission") as
set forth in certain interpretive letters addressed to third parties in other
transactions. However, neither the Corporation nor the Trust has sought its own
interpretive letter and there can be no assurance that the Staff of the
Commission would make a similar determination with respect to the Exchange Offer
as it has in such interpretive letters to third parties. Based on these
interpretations by the Staff of the Commission, and subject to the two
immediately following sentences, the Corporation and the Trust believe that
Exchange Capital Securities issued pursuant to this Exchange Offer in exchange
for Original Capital Securities may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder who is a broker-dealer)
without further compliance with the Registration and prospectus delivery
requirements of the Securities Act, provided that such Exchange Capital
Securities are acquired in the ordinary course of such holder's business and
that such holder is not participating, and has no arrangement or understanding
with any person to participate, in a distribution (within the meaning of the
Securities Act) of such Exchange Capital Securities. However, any holder of
Original Capital Securities who is an "affiliate" of the Corporation or the
Trust or who intends to participate in the Exchange Offer for the purpose of
distributing Exchange Capital Securities, or any broker-dealer who purchased
Original Capital Securities from the Trust to resell pursuant to Rule 144A under
the Securities Act ("Rule 144A") or any other available exemption under the
Securities Act, (i) will not be able to rely on the interpretations of the Staff
of the Commission set forth in the above-mentioned interpretive letters, (ii)
will not be permitted or entitled to tender such Original Capital Securities in
the Exchange Offer and (iii) must comply with the Registration and prospectus
delivery requirements of the Securities Act in connection with any sale or other
transfer of such Original Capital Securities unless such sale is made pursuant
to an exemption from such requirements. In addition, as described herein, if any
broker-dealer holds Original Capital Securities acquired for its own account as
a result of market-making or other trading activities and exchanges such
Original Capital Securities for Exchange Capital Securities, then such
broker-dealer must deliver a prospectus meeting the requirements of the
Securities Act in connection with any resales of such Exchange Capital
Securities.
Each holder of Original Capital Securities who wishes to exchange
Original Capital Securities for Exchange Capital Securities in the Exchange
Offer will be required to represent that (i) it is not an "affiliate" of the
Corporation or the Trust, (ii) any Exchange Capital Securities to be received by
it are being acquired in the ordinary course of its business, (iii) it has no
arrangement or understanding with any person to participate in a distribution
(within the meaning of the Securities Act) of such Exchange Capital Securities,
and (iv) if such holder is not a broker-dealer, such holder is not engaged in,
and does not intend to engage in, a distribution (within the meaning of the
Securities Act) of such Exchange Capital Securities. In addition, the
Corporation and the Trust may require such holder, as a condition to such
holder's eligibility to participate in the Exchange Offer, to furnish to the
Corporation and the Trust (or an agent thereof) in writing information as to the
number of "beneficial owners" (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), on behalf of
whom such holder holds the Original Capital Securities to be exchanged in the
Exchange Offer. Each broker-dealer that receives Exchange Capital Securities for
its own account pursuant to the Exchange Offer must acknowledge that it acquired
the Original Capital Securities for its own account as the result of
market-making activities or other trading activities and must agree that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Capital Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. Based on the position taken by the Staff of the
Commission in the interpretive letters referred to above, the Corporation and
the Trust believe that broker-dealers who acquired Original Capital Securities
for their own accounts, as a result of market-making activities or other trading
activities ("Participating Broker-Dealers"), may fulfill their prospectus
delivery requirements with respect to the Exchange Capital Securities received
upon exchange of such Original Capital Securities (other than Original Capital
Securities which represent an unsold allotment from the initial sale of the
Original Capital Securities) with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus prepared for an exchange offer so
long as it contains a description of the plan of
v
<PAGE>
distribution with respect to the resale of such Exchange Capital Securities.
Each broker-dealer that receives Exchange Capital Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Capital Securities.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Capital Securities received in exchange
for Original Capital Securities acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Trust and the
Corporation have agreed that, ending on the close of business on the 180th day
following the Expiration Date, this Prospectus will be made available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution." However, a Participating Broker-Dealer who intends to use this
Prospectus in connection with the resale of Exchange Capital Securities received
in exchange for Original Capital Securities pursuant to the Exchange Offer must
notify the Corporation or the Trust, or cause the Corporation or the Trust to be
notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided for that purpose
in the Letter of Transmittal or may be delivered to Wilmington Trust Company
(the "Exchange Agent") at the address set forth herein under "The Exchange
Offer--Exchange Agent." Any Participating Broker-Dealer who is an "affiliate" of
the Corporation or the Trust may not rely on such interpretive letters and must
comply with the Registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. See "The Exchange
Offer--Resales of Exchange Capital Securities."
In that regard, each Participating Broker-Dealer who surrenders Original
Capital Securities pursuant to the Exchange Offer will be deemed to have agreed,
by execution of the Letter of Transmittal, that upon receipt of notice from the
Corporation or the Trust of the occurrence of any event or the discovery of any
fact that makes any statement contained or incorporated by reference in this
Prospectus untrue in any material respect or that causes this Prospectus to omit
to state a material fact necessary in order to make the statements contained or
incorporated by reference herein, in light of the circumstances under which they
were made, not misleading or of the occurrence of certain other events specified
in the Registration Rights Agreement, such Participating Broker-Dealer will
suspend the sale of Exchange Capital Securities (or the Exchange Guarantee or
the Exchange Junior Subordinated Debentures, as applicable) pursuant to this
Prospectus until the Corporation or the Trust has amended or supplemented this
Prospectus to correct such misstatement or omission and has furnished copies of
the amended or supplemented Prospectus to such Participating Broker-Dealer, or
the Corporation or the Trust has given notice that the sale of the Exchange
Capital Securities (or the Exchange Guarantee or the Exchange Junior
Subordinated Debentures, as applicable) may be resumed, as the case may be. If
the Corporation or the Trust gives such notice to suspend the sale of the
Exchange Capital Securities (or the Exchange Guarantee or the Exchange Junior
Subordinated Debentures, as applicable), it shall extend the 180-day period
referred to above during which Participating Broker-Dealers are entitled to use
this Prospectus in connection with the resale of Exchange Capital Securities by
the number of days during the period from and including the date of the giving
of such notice to and including the date when Participating Broker-Dealers shall
have received copies of the amended or supplemented Prospectus necessary to
permit resales of the Exchange Capital Securities or to and including the date
on which the Corporation or the Trust has given notice that the sale of Exchange
Capital Securities (or the Exchange Guarantee or the Exchange Junior
Subordinated Debentures, as applicable) may be resumed, as the case may be.
Prior to the Exchange Offer, there has been only a limited secondary
market and no public market for the Original Capital Securities. The Exchange
Capital Securities will be a new issue of securities for which there currently
is no market. Although the Initial Purchaser has informed the Corporation and
the Trust that it currently intends to make a market in the Exchange Capital
Securities, it is not obligated to do so, and any such market making may be
discontinued at any time without notice. Accordingly, there can be no assurance
as to the development or liquidity of any market for the Exchange Capital
Securities. The Corporation and the Trust currently do not intend to apply for
listing of the Exchange Capital Securities on any securities exchange or for
quotation through the Nasdaq Stock Market, Inc.
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<PAGE>
Any Original Capital Securities not tendered and accepted in the Exchange
Offer will remain outstanding and will be entitled to all the same rights and
will be subject to the same limitations applicable thereto under the Trust
Agreement (except for those rights which terminate upon consummation of the
Exchange Offer). Following consummation of the Exchange Offer, the holders of
Original Capital Securities will continue to be subject to all of the existing
restrictions upon transfer thereof and neither the Corporation nor the Trust
will have any further obligation to such holders (other than under certain
limited circumstances) to provide for Registration under the Securities Act of
the Original Capital Securities held by them. To the extent that Original
Capital Securities are tendered and accepted in the Exchange Offer, a holder's
ability to sell untendered Original Capital Securities could be adversely
affected. See "Risk Factors--Consequences of a Failure to Exchange Original
Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF ORIGINAL CAPITAL SECURITIES ARE URGED TO READ THIS
PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING
WHETHER TO TENDER THEIR ORIGINAL CAPITAL SECURITIES PURSUANT TO THE EXCHANGE
OFFER.
Original Capital Securities may be tendered for exchange on or prior to
5:00 p.m., New York City time, on November 20, 1998 (such time on such date
being hereinafter called the "Expiration Date"), unless the Exchange Offer is
extended by the Corporation or the Trust (in which case the term "Expiration
Date" shall mean the latest date and time to which the Exchange Offer is
extended). Tenders of Original Capital Securities may be withdrawn at any time
on or prior to the Expiration Date. The Exchange Offer is not conditioned upon
any minimum Liquidation Amount of Original Capital Securities being tendered for
exchange. However, the Exchange Offer is subject to certain events and
conditions which may be waived by the Corporation or the Trust and to the terms
and provisions of the Registration Rights Agreement. Original Capital Securities
may be tendered in whole or in part having an aggregate Liquidation Amount of
not less than $100,000 (100 Capital Securities) or any integral multiple of
$1,000 Liquidation Amount (one Capital Security) in excess thereof. The
Corporation has agreed to pay all expenses of the Exchange Offer. See "The
Exchange Offer--Fees and Expenses." Holders of the Original Capital Securities
whose Original Capital Securities are accepted for exchange will not receive
Distributions on such Original Capital Securities and will be deemed to have
waived the right to receive any Distributions on such Original Capital
Securities accumulated from and after April 1, 1997. See "The Exchange
Offer--Distributions on the Exchange Capital Securities."
Neither the Corporation nor the Trust will receive any cash proceeds from
the issuance of the Exchange Capital Securities offered hereby. No
dealer-manager is being used in connection with this Exchange Offer. See "Use of
Proceeds" and "Plan of Distribution."
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THIS EXCHANGE
OFFER AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION OR THE TRUST. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE CORPORATION OR THE TRUST SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OR A SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR ANYONE TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION.
----------------------------
viii
<PAGE>
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Exchange Act, and in accordance therewith files reports, proxy statements and
other information with the Commission. Such reports, proxy statements and other
information filed by the Corporation with the Commission may be inspected and
copied at the public reference facility maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and
the following regional offices of the Commission: New York Regional Office,
Seven World Trade Center, Suite 1300, New York, New York 10048 and Chicago
Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material also may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. The Commission also maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants such as the Corporation that file
electronically with the Commission.
The Corporation has filed a Registration Statement on Form S-4 (together
with all amendments and exhibits thereto, including documents and information
incorporated by reference, the "Form S-4 Registration Statement") with the
Commission under the Securities Act. As permitted by the rules and regulations
of the Commission, this Prospectus omits certain information set forth in the
Form S-4 Registration Statement. Statements contained in this Prospectus as to
the provisions of any document filed as an exhibit to the Form S-4 Registration
Statement or otherwise filed with the Commission are not necessarily complete
and each such statement is qualified in its entirety by reference to the copy of
such document as so filed. Copies of the Form S-4 Registration Statement and the
exhibits thereto are on file at the offices of the Commission and may be
obtained upon payment of the prescribed fee or may be examined without charge at
the public reference facilities of the Commission described above.
No separate financial statements of the Trust have been included herein.
The Corporation and the Trust do not consider that such financial statements
would be material to holders of the Exchange Capital Securities because the
Trust is a newly-formed special purpose entity, has no operating history or
independent operations and is not engaged in and does not propose to engage in
any activity other than holding as trust assets the Junior Subordinated
Debentures, issuing the Trust Securities and engaging in incidental activities.
See "Webster Capital Trust II," "Description of Exchange Securities--Description
of Exchange Capital Securities," "Description of Exchange
Securities--Description of Exchange Junior Subordinated Debentures" and
"Description of Exchange Securities--Description of Exchange Guarantee." In
addition, the CorporatioN does not expect that the Trust will file reports,
proxy statements and other information under the Exchange Act with the
Commission.
1
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or portions of documents filed by the
Corporation with the Commission are incorporated herein by reference: (a) the
Corporation's Annual Report on Form 10-K for the fiscal year ended December 31,
1997; (b) the Corporation's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1998; and (c) the Corporation's Current Reports on Form 8-K, or
Form 8-K/A, as filed with the Commission on January 26, 1998, January 26, 1998,
February 6, 1998, March 4, 1998, March 19, 1998, April 30, 1998 and July 23,
1998.
All reports and other documents filed by the Corporation with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date hereof and prior to the termination of the offering of the
Exchange Securities offered hereby shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such reports
and documents. Any statement contained in a document incorporated by reference
herein shall be deemed modified or superseded for purposes of this Prospectus to
the extent that a statement contained or incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
Upon written or oral request, the Corporation will provide or will cause
to be provided to each person to whom this Prospectus is delivered, without
charge, a copy of any or all such documents that are incorporated herein by
reference (other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into the documents that are incorporated
by reference into this Prospectus). Written or oral requests for copies should
be directed to James M. Sitro, Webster Financial Corporation, at the
Corporation's principal executive offices located at Webster Plaza, Waterbury,
Connecticut 06720, telephone number (203) 578-2399.
2
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus. Reference is made to, and
this summary is qualified in its entirety by, the more detailed information and
financial statements, including the notes thereto, contained elsewhere in this
Prospectus and in documents incorporated by reference hereto.
WEBSTER FINANCIAL CORPORATION
Unless the context otherwise requires, all references to the
Corporation include Webster Financial Corporation and its consolidated
subsidiaries.
The Corporation is a Delaware corporation and the holding company of
Webster Bank, its wholly owned federal savings bank subsidiary. Both the
Corporation and Webster Bank are headquartered in Waterbury, Connecticut.
Deposits at Webster Bank are insured by the Federal Deposit Insurance
Corporation ("FDIC"). Through Webster Bank, Webster currently serves customers
from over 100 banking offices, three commercial banking centers, six trust
offices and more than 160 ATMs located in Hartford, New Haven, Fairfield,
Litchfield and Middlesex Counties in Connecticut. The Corporation focuses on
providing financial services to individuals, families and businesses. The
Corporation emphasizes five business lines -- consumer banking, business
banking, mortgage banking, trust and investment services and insurance services
- -- each supported by centralized administration and operations. Through a number
of recent acquisitions of other financial services firms, including banks and
thrifts, a trust company and an insurance firm, the Corporation has established
a leading position in the banking and trust and investment services market in
Connecticut. The Corporation's mission is to help individuals, families and
businesses achieve their financial goals. At June 30, 1998, the Corporation had
total consolidated assets of approximately $9.2 billion, total deposits of
approximately $5.7 billion and shareholders' equity of approximately $548.4
million. The Corporation's consolidated financial data at June 30, 1998 includes
the consolidated accounts of Eagle, which was acquired on April 15, 1998 in a
merger transaction accounted for as a pooling of interests.
As a result of the acquisition of Eagle, the Corporation (i) assumed
Eagle's obligations under the Indenture with respect to the Junior Subordinated
Debentures and the Guarantee Agreement with respect to the Guarantee; and (ii)
acquired total assets of $2.3 billion, net loans of $1.1 billion and deposits of
$1.3 billion.
The Corporation is a registered savings and loan holding company
subject to regulation and examination by the Office of Thrift Supervision
("OTS"), and Webster Bank is subject to regulation and examination by the OTS
and the FDIC.
The Corporation's principal executive office is located at Webster
Plaza, Waterbury, Connecticut 06702, and its telephone number is (203) 753-2921.
WEBSTER CAPITAL TRUST II
The Trust is a statutory business trust formed under Delaware law
pursuant to (i) the Trust Agreement and (ii) the filing of a certificate of
trust with the Delaware Secretary of State on March 26, 1997. The Trust's
business and affairs are conducted by the Issuer Trustees: the Property Trustee,
the Delaware Trustee, and the two individual Administrative Trustees, who are
officers of the Corporation. The Trust exists for the exclusive purposes of (i)
issuing and selling the Trust Securities, (ii) using the proceeds from the sale
of the Trust Securities to acquire the Junior Subordinated Debentures issued by
the Corporation and (iii) engaging in only those other activities necessary,
advisable or incidental thereto. Accordingly, the Junior Subordinated Debentures
are the sole assets of the Trust and payments under the Junior Subordinated
Debentures are the sole revenue of the Trust. All of the Common Securities are
owned by the Corporation.
- --------------------------------------------------------------------------------
3
<PAGE>
THE EXCHANGE OFFER
The Exchange Offer......................... Up to and including $50,000,000
aggregate Liquidation Amount of
Exchange Capital Securities are
being offered in exchange for a like
aggregate Liquidation Amount of
Original Capital Securities.
Original Capital Securities may be
tendered for exchange in whole or in
part in a Liquidation Amount of
$100,000 (100 Capital Securities) or
any integral multiple of $1,000 (one
Capital Security) in excess thereof.
The Corporation and the Trust are
making the Exchange Offer in order
to satisfy their obligations under
the Registration Rights Agreement
relating to the Original Capital
Securities. For a description of the
procedures for tendering Original
Capital Securities, see "The
Exchange Offer--Procedures for
Tendering Original Capital
Securities."
Expiration Date ........................... 5:00 p.m., New York City time, on
November 20, 1998 unless the
Exchange Offer is extended by the
Corporation and the Trust (in which
case the Expiration Date will be the
latest date and time to which the
Exchange Offer is extended). See
"The Exchange Offer--Terms of the
Exchange Offer."
Conditions to the Exchange Offer .......... The Exchange Offer is subject to
certain conditions, which may be
waived by the Corporation and the
Trust in their sole discretion. The
Exchange Offer is not conditioned
upon any minimum Liquidation Amount
of Original Capital Securities being
tendered. See "The Exchange
Offer--Conditions to the Exchange
Offer."
Terms of the Exchange Offer ............... The Corporation and the Trust
reserve the right in their sole and
absolute discretion, subject to
applicable law, at any time and from
time to time, (i) to delay the
acceptance of the Original Capital
Securities, (ii) to terminate the
Exchange Offer if certain specified
conditions have not been satisfied,
(iii) to extend the Expiration Date
of the Exchange Offer and retain all
Original Capital Securities tendered
pursuant to the Exchange Offer,
subject, however, to the right of
holders of Original Capital
Securities to withdraw their
tendered Original Capital
Securities, or (iv) to waive any
condition or otherwise amend the
terms of the Exchange Offer in any
respect. See "The Exchange
Offer--Terms of the Exchange Offer."
Withdrawal Rights ......................... Tenders of Original Capital
Securities may be withdrawn at any
time on or prior to the Expiration
Date by delivering a written notice
of such withdrawal to the Exchange
Agent in conformity with certain
procedures as set forth herein under
"The Exchange Offer--Withdrawal
Rights."
Procedures for Tendering
Original Capital Securities................ Certain brokers, dealers, commercial
banks, trust companies and other
nominees who hold Original Capital
Securities through The Depository
Trust Company ("DTC") must effect
tenders by book-entry transfer
through DTC's Automated Tender Offer
Program ("ATOP"). Beneficial owners
of Original Capital Securities
registered in the name of a broker,
4
<PAGE>
dealer, commercial bank, trust
company or other nominee are urged
to contact such person promptly if
they wish to tender Original Capital
Securities pursuant to the Exchange
Offer. Tendering holders of Original
Capital Securities that do not use
ATOP must complete and sign a Letter
of Transmittal in accordance with
the instructions contained therein
and forward the same by mail,
facsimile transmission or hand
delivery, together with any other
required documents, to the Exchange
Agent, either with the certificates
of the Original Capital Securities
to be tendered or in compliance with
the specified procedures for
guaranteed delivery of Original
Capital Securities. Tendering
holders of Original Capital
Securities that use ATOP will, by so
doing, acknowledge that they are
bound by the terms of the Letter of
Transmittal. See "The Exchange
Offer--Procedures for Tendering
Original Capital Securities."
Letters of Transmittal and
certificates representing Original
Capital Securities should not be
sent to the Corporation or the
Trust. Such documents should only be
sent to the Exchange Agent.
Resales of Exchange
Capital Securities......................... The Corporation and the Trust are
making the Exchange Offer in
reliance on the position of the
Staff of the Commission as set forth
in certain interpretive letters
addressed to third parties in other
transactions. However, neither the
Corporation nor the Trust has sought
its own interpretive letter and
there can be no assurance that the
Staff of the Commission would make a
similar determination with respect
to the Exchange Offer as it has in
such interpretive letters to third
parties. Based on these
interpretations by the Staff of the
Commission, and subject to the two
immediately following sentences, the
Corporation and the Trust believe
that Exchange Capital Securities
issued pursuant to this Exchange
Offer in exchange for Original
Capital Securities may be offered
for resale, resold and otherwise
transferred by a holder thereof
(other than a holder who is a
broker-dealer) without further
compliance with the Registration and
prospectus delivery requirements of
the Securities Act, provided that
such Exchange Capital Securities are
acquired in the ordinary course of
such holder's business and that such
holder is not participating, and has
no arrangement or understanding with
any person to participate, in a
distribution (within the meaning of
the Securities Act) of such Exchange
Capital Securities. However, any
holder of Original Capital
Securities who is an "affiliate" of
the Corporation or the Trust or who
intends to participate in the
Exchange Offer for the purpose of
distributing the Exchange Capital
Securities, or any broker-dealer who
purchased the Original Capital
Securities from the Trust to resell
pursuant to Rule 144A or any other
available exemption under the
Securities Act, (i) will not be able
to rely on the interpretations of
the Staff of the Commission set
forth in the above-mentioned
interpretive letters, (ii) will not
be permitted or entitled to tender
such Original Capital Securities in
the
5
<PAGE>
Exchange Offer and (iii) must comply
with the Registration and prospectus
delivery requirements of the
Securities Act in connection with
any sale or other transfer of such
Original Capital Securities unless
such sale is made pursuant to an
exemption from such requirements. In
addition, as described herein, if
any broker-dealer holds Original
Capital Securities acquired for its
own account as a result of
market-making or other trading
activities and exchanges such
Original Capital Securities for
Exchange Capital Securities, then
such broker-dealer must deliver a
prospectus meeting the requirements
of the Securities Act in connection
with any resales of such Exchange
Capital Securities.
Each holder of Original Capital
Securities who wishes to exchange
Original Capital Securities for
Exchange Capital Securities in the
Exchange Offer will be required to
represent that (i) it is not an
"affiliate" of the Corporation or
the Trust, (ii) any Exchange Capital
Securities to be received by it are
being acquired in the ordinary
course of its business, (iii) it has
no arrangement or understanding with
any person to participate in a
distribution (within the meaning of
the Securities Act) of such Exchange
Capital Securities, and (iv) if such
holder is not a broker-dealer, such
holder is not engaged in, and does
not intend to engage in, a
distribution (within the meaning of
the Securities Act) of such Exchange
Capital Securities. Each
broker-dealer that receives Exchange
Capital Securities for its own
account in exchange for Original
Capital Securities, where such
Original Capital Securities were
acquired by such broker-dealer as a
result of market-making activities
or other trading activities, must
acknowledge that it will deliver a
prospectus meeting the requirements
of the Exchange Act in connection
with any resale of such Exchange
Capital Securities. See "Plan of
Distribution." The Letter of
Transmittal states that, by so
acknowledging and by delivering a
prospectus, a broker-dealer will not
be deemed to admit that it is an
"underwriter" within the meaning of
the Securities Act. Based on the
position taken by the Staff of the
Commission in the interpretive
letters referred to above, the
Corporation and the Trust believe
that Participating Broker-Dealers
who acquired Original Capital
Securities for their own accounts as
a result of market-making activities
or other trading activities may
fulfill their prospectus delivery
requirements with respect to the
Exchange Capital Securities received
upon exchange of such Original
Capital Securities (other than
Original Capital Securities that
represent an unsold allotment from
the initial sale of the Original
Capital Securities) with a
prospectus meeting the requirements
of the Securities Act, which may be
the prospectus prepared for an
exchange offer so long as it
contains a description of the plan
of distribution with respect to the
resale of such Exchange Capital
Securities. Accordingly, this
Prospectus, as it may be amended or
supplemented from time to time, may
be used by a Participating
Broker-Dealer in connection with
resales of Exchange Capital
Securities received in exchange for
Original Capital Securities where
such Original Capital Securities
6
<PAGE>
were acquired by such Participating
Broker-Dealer for its own account as
a result of market-making or other
trading activities. Subject to
certain provisions set forth in the
Registration Rights Agreement and to
the limitations described herein
under "The Exchange Offer--Resales
of Exchange Capital Securities," the
Corporation and the Trust have
agreed that this Prospectus, as it
may be amended or supplemented from
time to time, may be used by a
Participating Broker-Dealer in
connection with resales of such
Exchange Capital Securities for a
period ending 180 days after the
Expiration Date (subject to
extension under certain limited
circumstances) or, if earlier, when
all such Exchange Capital Securities
have been disposed of by such
Participating Broker-Dealer. See
"Plan of Distribution." Any
Participating Broker-Dealer who is
an "affiliate" of the Corporation or
the Trust may not rely on such
interpretive letters and must comply
with the Registration and prospectus
delivery requirements of the
Securities Act in connection with
any resale transaction. See "The
Exchange Offer--Resales of Exchange
Capital Securities."
Effect of Merger .......................... On April 15, 1998, the Corporation
acquired Eagle which had total
assets of $2.3 billion, net loans of
$1.1 billion and deposits of $1.3
billion. As a result of the Merger,
the Corporation assumed Eagle's
obligations under the Indenture with
respect to the Junior Subordinated
Debentures and the Guarantee
Agreement with respect to the
Guarantee. Subsequent to the Merger
and upon the filing of a Certificate
of Amendment to Certificate of Trust
of Eagle Financial Capital Trust I
on September 28, 1998, the name of
Eagle Financial Capital Trust I was
changed to Webster Capital Trust II.
Exchange Agent ........................... The Exchange Agent with respect to
the Exchange Offer is Wilmington
Trust Company. The address, and
telephone and facsimile number of
the Exchange Agent are set forth in
"The Exchange Offer--Exchange Agent"
and in the Letter of Transmittal.
Use of Proceeds .......................... Neither the Corporation nor the
Trust will receive any cash proceeds
from the issuance of the Exchange
Capital Securities offered hereby.
See "Use of Proceeds."
Federal Income Tax
Considerations ........................ The exchange of Original Capital
Securities for Exchange Capital
Securities will not be a taxable
exchange for federal income tax
purposes, and holders should not
recognize any taxable gain or loss
or any interest income as a result
of such exchange. See "Certain
Federal Income Tax
Consequences--Exchange of Capital
Securities."
ERISA Considerations....................... Holders of Original Capital
Securities should review the
information set forth under "ERISA
Considerations" prior to tendering
Original Capital Securities in the
Exchange Offer.
THE EXCHANGE CAPITAL SECURITIES
Securities Offered......................... Up to and including $50,000,000
aggregate Liquidation Amount of
Exchange Capital Securities
(Liquidation Amount $1,000 per
Exchange Capital Security) will have
been registered under the Securities
Act. The Exchange Capital
7
<PAGE>
Securities will be issued and the
Original Capital Securities were
issued under the Trust Agreement.
The Exchange Capital Securities and
any Original Capital Securities that
remain outstanding after
consummation of the Exchange Offer
will vote together as a single class
for purposes of determining whether
holders of the requisite percentage
in outstanding Liquidation Amount
thereof have taken certain actions
or exercised certain rights under
the Trust Agreement. See
"Description of Exchange
Securities--Description of Exchange
Capital Securities--Voting Rights;
Amendment of the Trust Agreement."
The terms of the Exchange Capital
Securities are identical in all
material respects to the terms of
the Original Capital Securities,
except that the Exchange Capital
Securities have been registered
under the Securities Act, will not
be subject to certain restrictions
on transfer applicable to the
Original Capital Securities and will
not provide for any increase in the
Distribution rate thereon. See "The
Exchange Offer--Purpose and Effect
of the Exchange Offer," "Description
of Exchange Securities" and
"Description of Original
Securities."
Distribution Dates......................... April 1 and October 1 of each year,
commencing October 1, 1998.
Extension Periods ......................... So long as no Debenture Event of
Default has occurred and is
continuing, Distributions on
Exchange Capital Securities will be
deferred for the duration of any
Extension Period elected by the
Corporation with respect to the
payment of interest on the Exchange
Junior Subordinated Debentures. No
Extension Period will exceed 10
consecutive semi-annual periods, end
on a date other than an Interest
Payment Date or extend beyond the
Stated Maturity Date. See
"Description of Exchange
Securities-- Description of Exchange
Junior Subordinated Debentures--
Option to Extend Interest Payment
Date" and "Certain Federal Income
Tax Consequences-- Interest Income
and Original Issue Discount."
Ranking.................................... The Exchange Capital Securities will
rank pari passu, and payments
thereon will be made pro rata, with
the Original Capital Securities and
the Common Securities except as
described under "Description of
Exchange Securities --Description of
Exchange Capital Securities--
Subordination of Common Securities."
The Exchange Junior Subordinated
Debentures will rank pari passu with
the Original Junior Subordinated
Debentures and all other junior
subordinated debentures (if any)
issued by the Corporation (the
"Other Debentures"), which are
issued and sold (if at all) to other
trusts to be established by the
Corporation (if any), in each case
similar to the Trust ("Other
Trusts"), and will constitute
unsecured obligations of the
Corporation and will rank
subordinate and junior in right of
payment to all Senior Indebtedness
to the extent and in the manner set
forth in the Indenture. See
"Description of Exchange
Securities--Description of Exchange
Junior Subordinated Debentures." The
Exchange Guarantee will rank pari
passu with the Original Guarantee
and all other guarantees (if any)
issued
8
<PAGE>
by the Corporation with respect to
capital securities (if any) issued
by Other Trusts ("Other Guarantees")
and will constitute an unsecured
obligation of the Corporation and
will rank subordinate and junior in
right of payment to all Senior
Indebtedness to the extent and in
the manner set forth in the
Guarantee Agreement. See
"Description of Exchange
Securities-- Description of Exchange
Guarantee." In addition, because the
Corporation is a holding company,
the Exchange Junior Subordinated
Debentures and the Exchange
Guarantee will be effectively
subordinated to all existing and
future liabilities of the
Corporation's subsidiaries,
including Webster Bank's deposit
liabilities. See "Description of
Exchange Securities-- Description of
Exchange Junior Subordinated
Debentures-- Subordination."
Redemption................................. The Trust Securities are subject to
mandatory redemption in a Like
Amount, (i) in whole but not in
part, on the Stated Maturity Date
upon repayment of the Exchange
Junior Subordinated Debentures, (ii)
in whole but not in part, at any
time prior to April 1, 2007 (the
"Initial Optional Redemption Date"),
contemporaneously with the optional
prepayment of the Exchange Junior
Subordinated Debentures by the
Corporation upon the occurrence and
continuation of a Special Event and
(iii) in whole or in part, on or
after the Initial Optional
Redemption Date, contemporaneously
with the optional prepayment by the
Corporation of all or part of the
Exchange Junior Subordinated
Debentures, in each case at the
applicable Redemption Price. See
"Description of Exchange
Securities--Description of Exchange
Capital Securities--Redemption" and
"--Description of Exchange Junior
Subordinated Debentures--Special
Event Prepayment."
Transfer Restrictions...................... The Exchange Capital Securities will
be issued, and may be transferred,
only in blocks having a Liquidation
Amount of not less than $100,000
(100 Capital Securities). See
"Description of Exchange
Securities--Description of Exchange
Capital Securities--Restrictions on
Transfer." Any such transfer of
Exchange Capital Securities in a
block having a Liquidation Amount of
less than $100,000 shall be deemed
to be void and of no legal effect
whatsoever.
ERISA Considerations....................... Prospective purchasers must
carefully consider the restrictions
on purchase set forth under "ERISA
Considerations."
Absence of Market for the
Exchange Capital Securities................ The Exchange Capital Securities will
be a new issue of securities for
which there currently is no market.
Although the Initial Purchaser has
informed the Corporation and the
Trust that it currently intends to
make a market in the Exchange
Capital Securities, the Initial
Purchaser is not obligated to do so,
and any such market making may be
discontinued at any time without
notice. Accordingly, there can be no
assurance as to the development or
liquidity of any market for the
Exchange Capital Securities. The
Trust and
9
<PAGE>
the Corporation do not intend to
apply for listing of the Exchange
Capital Securities on any securities
exchange or for quotation through
the Nasdaq Stock Market, Inc. See
"Plan of Distribution."
Risk Factors
For a discussion of the considerations relevant to an investment in the
Capital Securities or the exchange of Original Capital Securities for Exchange
Capital Securities, see "Risk Factors."
10
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data set forth below should be read
in conjunction with the financial information included in the Corporation's
restated financial statements and notes thereto incorporated by reference
herein. See "Available Information" and "Incorporation of Certain Documents by
Reference."
SELECTED CONSOLIDATED FINANCIAL DATA--WEBSTER FINANCIAL CORPORATION
(in thousands, except per share data)
<TABLE>
<CAPTION>
AT JUNE 30, AT DECEMBER 31,
----------- -----------------------------------------------------------
1998 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL CONDITION AND
OTHER DATA:
Total assets..................... $9,189,143 $9,095,887 $7,368,941 $6,479,567 $6,114,613 $5,054,572
Loans receivable, net............ 4,920,663 4,954,813 4,737,883 3,977,725 4,007,710 3,281,388
Investment securities............ 3,737,024 3,589,273 2,105,173 2,000,185 1,558,401 1,289,107
Intangible assets................ 83,550 78,493 81,936 26,720 31,093 17,944
Deposits......................... 5,736,374 5,719,030 5,826,264 5,060,822 5,044,336 4,163,757
Shareholders' equity............. 548,426 517,262 472,824 460,791 364,112 327,676
SIX MONTHS
ENDED JUNE 30, YEARS ENDED DECEMBER 31,
-------------- ------------------------------------------------------------
1998 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net interest income.............. $ 123,048 $251,050 $222,118 $188,646 $182,100 $153,428
Provision for loan losses........ 3,800 24,813 13,054 9,864 7,149 9,886
Noninterest income............... 37,136 42,264 52,009 33,316 21,378 24,052
Noninterest expenses:
Acquisition related expenses .. 17,400 29,792 500 4,271 700 - -
Other noninterest expenses..... 90,911 171,871 173,977 142,592 140,260 112,502
--------- -------- -------- -------- -------- --------
Total noninterest expenses... 108,311 201,663 174,477 146,863 140,960 112,502
--------- -------- -------- -------- -------- --------
Income before income taxes ...... 48,073 66,838 86,596 65,235 55,369 55,092
Income taxes .................... 18,952 25,725 32,602 23,868 17,958 23,672
--------- -------- -------- -------- -------- --------
Net Income before cumulative change 29,121 41,113 53,994 41,367 37,411 31,420
Cumulative effect of change in
method of accounting
for income taxes.............. - - - - - - - - 97 6,408
---------- -------- -------- -------- -------- --------
Net Income......................... 29,121 41,113 53,994 41,367 37,508 37,828
Preferred Stock Dividends........ - - - - 1,149 1,296 1,716 2,653
---------- -------- -------- -------- -------- --------
Income available to common
shareholders..................... $ 29,121 $ 41,113 $ 52,845 $ 40,071 $ 35,792 $ 35,175
========== ======== ======== ======== ======== ========
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR SIX MONTHS YEARS ENDED DECEMBER 31,
-------------------- ----------------------------------------
ENDED JUNE 30, 1998 1997 1996 1995 1994 1993
------------------- ---- ---- ---- ---- ----
(UNAUDITED)
SIGNIFICANT STATISTICAL DATA:
<S> <C> <C> <C> <C> <C> <C>
Interest rate spread........................ 2.59% 3.00% 3.12% 2.98% 3.23% 3.11%
Net interest margin......................... 2.76% 3.19% 3.24% 3.14% 3.36% 3.25%
Return on average shareholders' equity...... 11.25% 8.44% 11.32% 10.05% 10.52% 11.66%
Net income per common share: (a)
Basic ............................... $0.77 $1.10 $1.44 $1.18 $1.16 $1.02
Diluted ............................... $0.75 $1.07 $1.36 $1.12 $1.09 $0.95
Dividends declared per common share $0.21 $0.40 $0.34 $0.32 $0.26 $0.25
Noninterest expenses to average assets...... 2.29% 2.45% 2.42% 2.34% 2.45% 2.28%
Noninterest expenses (excluding foreclosed
property, acquisition related, capital
securities and preferred dividends of a
subsidiary corporation expenses) to average 1.71% 2.40% 2.35% 2.22% 2.24% 2.01%
assets
Diluted weighted average shares............. 38,679 38,473 39,560 36,797 34,533 32,161
Book value per common share................. $14.31 $13.78 $12.73 $12.24 $10.96 $10.58
Tangible book value per common share........ $12.13 $11.69 $10.48 $11.50 $9.98 $9.95
Shareholders' equity to total assets........ 5.97% 5.69% 6.42% 7.11% 5.95% 6.48%
</TABLE>
(a) Before cumulative change in the method of accounting for income taxes in
1993. After such cumulative change, basic net income per common share for
1993 was $1.25 and diluted net income per share was $1.15.
All per share data and the number of outstanding shares of common stock
have been adjusted retroactively to give effect to a stock dividend and a stock
split effected in the form of a stock dividend.
12
<PAGE>
RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information contained in this Prospectus, the following factors in connection
with the Exchange Offer and the Exchange Capital Securities offered hereby. This
Prospectus contains certain forward-looking statements and information relating
to the Corporation that are based on the beliefs of management as well as
assumptions made by and information currently available to management. The words
"believes," "expects," "may," "will," "should," "projected," "contemplates" or
"anticipates" or the negative thereof or other variations thereon or comparable
terminology, as they relate to the Corporation or the Corporation's management,
are intended to identify forward-looking statements. See, e.g.,
"Summary--Webster Financial Corporation" and "Webster Financial Corporation"
Such statements reflect the current views of the Corporation with respect to
future events and are subject to certain risks, uncertainties and assumptions,
including the risk factors described in this Prospectus. No assurance can be
given that the future results covered by the forward-looking statements will be
achieved. The following matters constitute cautionary statements identifying
important factors with respect to such forward-looking statements, including
certain risks and uncertainties, that could cause actual results to vary
materially from the future results covered in such forward-looking statements.
Other factors, such as the general state of the economy, could also cause actual
results to vary materially from the future results covered in such
forward-looking statements. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those described herein as anticipated, believed,
estimated or expected, or by other comparable terminology. The Corporation does
not intend to update these forward-looking statements.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE EXCHANGE GUARANTEE AND THE
EXCHANGE JUNIOR SUBORDINATED DEBENTURES; LIMITATIONS ON SOURCE OF FUNDS
The obligations of the Corporation under the Exchange Guarantee issued by
the Corporation for the benefit of the holders of Exchange Capital Securities,
as well as under the Exchange Junior Subordinated Debentures, are unsecured and
rank subordinate and junior in right of payment to all Senior Indebtedness to
the extent and in the manner set forth in the Exchange Guarantee and the
Indenture, respectively. No payment may be made of the principal of, or premium,
if any, or interest on the Exchange Junior Subordinated Debentures, or in
respect of any redemption, retirement, purchase or other acquisition of any of
the Exchange Junior Subordinated Debentures, at any time when (i) there shall
have occurred and be continuing a default in any payment in respect of any
Senior Indebtedness, or there has been an acceleration of the maturity thereof
because of a default, or (ii) in the event of the acceleration of the maturity
of the Exchange Junior Subordinated Debentures, until payment has been made on
all Senior Indebtedness. At June 30, 1998, the Corporation had $40.0 million of
8 3/4% Senior Notes due 2000 outstanding. Because the Corporation is a holding
company, the right of the Corporation to participate in any distribution of
assets of any subsidiary upon such subsidiary's liquidation or reorganization or
otherwise (and thus the ability of holders of the Exchange Capital Securities to
benefit indirectly from such distribution) is subject to the prior claims of
creditors of that subsidiary (including depositors, in the case of Webster
Bank), except to the extent that the Corporation may itself be recognized as a
creditor of that subsidiary. At June 30, 1998, the subsidiaries of the
Corporation had total liabilities (excluding liabilities owed to the
Corporation) of $8.4 billion. Accordingly, the Exchange Junior Subordinated
Debentures effectively will be subordinated to all existing and future
liabilities of the Corporation's subsidiaries (including Webster Bank's deposit
liabilities, which aggregated $5.7 billion at June 30, 1998) and holders of
Exchange Junior Subordinated Debentures should look only to the assets of the
Corporation for payments on the Exchange Junior Subordinated Debentures. The
Exchange Guarantee will constitute an unsecured obligation of the Corporation
and will rank subordinate and junior in right of payment to all Senior
Indebtedness in the same manner as the Exchange Junior Subordinated Debentures.
None of the Indenture, the Exchange Guarantee or the Trust Agreement places any
limitation on the amount of secured or unsecured debt, including Senior
Indebtedness, that may be incurred by the Corporation or any of its
subsidiaries. See "Description of Exchange Securities--Description of Exchange
Junior Subordinated Debentures--General," "--Subordination"
13
<PAGE>
and "Description of Exchange Securities--Description of Exchange Guarantee--
Status of the Exchange Guarantee."
The ability of the Trust to pay amounts due on the Exchange Capital
Securities is solely dependent upon the Corporation making payments on the
Exchange Junior Subordinated Debentures as and when required.
There are regulatory limitations on the payment of dividends to the
Corporation from Webster Bank. As of June 30, 1998, Webster Bank had
approximately $136 million total capital available under OTS regulations for
payment of dividends to the Corporation. The OTS has the power to prohibit the
payment of dividends under certain circumstances, including if such payment
would constitute an unsafe or unsound banking practice. See "--Sources of Funds
for Cash Dividends." In addition to restrictions on the payment of dividends,
Webster Bank is subject to certain restrictions imposed by federal law on
extensions of credit to, and certain other transactions with, the Corporation
and certain other affiliates, and on investments in stock or other securities
thereof. Such restrictions prevent the Corporation and such other affiliates
from borrowing from Webster Bank unless the loans are secured by various types
of collateral. Further, such secured loans, other transactions and investments
by Webster Bank are generally limited in amount as to the Corporation and as to
each of such other affiliates to 10.00% of Webster Bank's capital and surplus
and as to the Corporation and all of such other affiliates to an aggregate of
20% of Webster Bank's capital and surplus.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCE; MARKET PRICE
CONSEQUENCES
So long as no Debenture Event of Default has occurred and is continuing,
the Corporation has the right under the Indenture to defer payments of interest
on the Exchange Junior Subordinated Debentures for a period not exceeding 10
consecutive semi-annual periods with respect to each Extension Period, provided
that an Extension Period must end on an Interest Payment Date and may not extend
beyond the Stated Maturity Date. As a consequence of any such deferral,
semi-annual Distributions on the Trust Securities will be deferred from the
relevant payment date for such Distributions during any such Extension Period
(and the amount of Distributions to which holders of the Trust Securities are
entitled will accumulate additional Distributions thereon at the rate of 10.00%
per annum, compounded semi-annually, but not exceeding the interest rate then
accruing on the Exchange Junior Subordinated Debentures). During an Extension
Period, the Corporation generally will be prohibited from (i) declaring or
paying dividends on the Corporation's capital stock, (ii) making any payments of
principal, premium, if any, or interest on, or repaying, repurchasing or
redeeming any debt securities ranking pari passu with or junior in right of
payment to the Exchange Junior Subordinated Debentures or (iii) making any
guarantee payments with respect to debt securities of any subsidiary of the
Corporation if such guarantee ranks pari passu with or junior in right of
payment to the Exchange Junior Subordinated Debentures, subject to certain
exceptions. See "Description of Exchange Securities--Description of Exchange
Capital Securities--Distributions."
Before the end of an Extension Period, the Corporation may further extend
such Extension Period, provided that such extension does not cause such
Extension Period to exceed 10 consecutive semi-annual periods, end on a date
other than an Interest Payment Date or extend beyond the Stated Maturity Date.
Upon the termination of any Extension Period and the payment of all interest
then accrued and unpaid on the Exchange Junior Subordinated Debentures (together
with interest thereon at the annual rate of 10.00%, compounded semi-annually, to
the extent permitted by applicable law), the Corporation may begin a new
Extension Period, subject to the above requirements. There is no limitation on
the number of times that the Corporation may begin an Extension Period. See
"Description of Exchange Securities--Description of Exchange Capital
Securities--Distributions" and "--Description of Exchange Junior Subordinated
Debentures--Option to Extend Interest Payment Date."
14
<PAGE>
The Corporation has no plan to exercise its right to defer payments of
interest on the Exchange Junior Subordinated Debentures. However, should the
Corporation exercise its right to defer payments of interest on the Junior
Subordinated Debentures, each holder of Trust Securities will be required to
accrue income (as original issue discount ("OID")) in respect of the deferred
stated interest allocable to its Trust Securities for U.S. federal income tax
purposes, which will be allocated but not distributed to holders of Trust
Securities. As a result, each holder of Capital Securities will recognize income
for U.S. federal income tax purposes in advance of the receipt of cash and will
not receive the cash related to such income from the Trust if the holder
disposes of the Capital Securities prior to the record date for the payment of
Distributions thereafter. See "Certain Federal Income Tax Consequences--Interest
Income and Original Issue Discount" and "--Sales of Capital Securities."
If the Corporation exercises its right to defer payments of interest on
the Exchange Junior Subordinated Debentures, the market price of the Exchange
Capital Securities is likely to be affected. A holder that disposes of its
Exchange Capital Securities during an Extension Period, therefore, might not
receive the same return on its investment as a holder that continues to hold its
Exchange Capital Securities. In addition, the mere existence of the
Corporation's right to defer payments of interest on the Exchange Junior
Subordinated Debentures may cause the market price of the Exchange Capital
Securities to be more volatile than the market prices of other securities on
which OID accrues and that are not subject to such deferrals.
SPECIAL EVENT REDEMPTION
If a Special Event (defined as a Tax Event or a Regulatory Capital Event
(in each case as defined under "Description of Exchange Securities--Description
of Exchange Junior Subordinated Debentures--Special Event Prepayment")) occurs
before the Initial Optional Prepayment Date, the Corporation will have the right
to prepay the Exchange Junior Subordinated Debentures in whole (but not in part)
at the Special Event Prepayment Price within 90 days following the occurrence of
such Special Event and therefore cause a mandatory redemption of the Trust
Securities at the Special Event Redemption Price. The exercise of such right is
subject to the Corporation having received any required regulatory approval. See
"Description of Exchange Securities--Description of Exchange Capital
Securities--Redemption."
POSSIBLE TAX LAW CHANGES
Prospective investors should be aware that a taxpayer recently filed a
petition in the United States Tax Court contesting the proposed disallowance by
the IRS of interest deductions that a taxpayer claimed in respect of securities
issued in 1993 and 1994 that are, in some respects, similar to the Capital
Securities. (Enron Corp. v. Commissioner, Docket No. 6149-98, filed April 1,
1998). It is possible that an adverse decision by the Tax Court concerning the
deductibility of such interest could give rise to a Tax Event, which would give
the Company the right to redeem the Exchange Junior Subordinated Debentures.
PROPOSED LEGISLATIVE ELIMINATION OF THE THRIFT CHARTER
Legislation which would generally require federally chartered savings
banks, such as Webster Bank, to convert to a national or state bank charter has
been proposed in Congress. In addition, such legislation would require that all
savings and loan holdings companies, such as the Corporation and Webster,
convert to bank holding companies. It is uncertain if and to what extent
existing powers of savings banks, such as Webster Bank, and savings and loan
holding companies, such as the Corporation, would be "grandfathered." No
assurance can be given whether
15
<PAGE>
such legislation will be passed, and, if passed, the form in which it would be
passed and the effect such legislation might have on the Corporation and/or
Webster Bank. In addition, if, as a result of enactment of such legislation,
Webster Bank is required to convert to a national or state bank charter and the
Corporation is subjected to a regulatory framework similar to that for bank
holding companies, then it is possible that the Corporation could become subject
to the holding company level capital adequacy guidelines of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board") or similar
guidelines (collectively, the "Holding Company Capital Rules"). If bank
regulatory counsel experienced in such matters delivers to the Corporation and
the Trust its opinion that the Corporation is subject to the Holding Company
Capital Rules and that the Corporation is not entitled to treat the Capital
Securities as Tier 1 capital (or its then equivalent) under the Holding Company
Capital Rules, then the Corporation would be permitted to cause a redemption of
the Capital Securities at the Special Event Redemption Price by electing to
prepay the Junior Subordinated Debentures at the Special Event Prepayment Price.
See "Description of Exchange Capital Securities -- Redemption" and "Description
of Exchange Junior Subordinated Debentures -- Special Event Prepayment."
LIQUIDATION DISTRIBUTION OF EXCHANGE JUNIOR SUBORDINATED DEBENTURES
The Corporation will have the right to liquidate the Trust and cause the
Exchange Junior Subordinated Debentures to be distributed to the holders of the
Trust Securities. Under current U.S. federal income tax law, a distribution of
Junior Subordinated Debentures upon the dissolution of the Trust would not be a
taxable event to holders of the Capital Securities. Upon the occurrence of a
Special Event, however, a dissolution of the Trust in which holders of the
Capital Securities receive cash would be a taxable event to such holders. See
"Certain Federal Income Tax Considerations--Receipt of Junior Subordinated
Debentures or Cash Upon Liquidation of the Trust."
POSSIBLE ADVERSE EFFECT ON MARKET PRICES
There can be no assurance as to the market prices for Exchange Capital
Securities or the Exchange Junior Subordinated Debentures that may be
distributed in exchange for Exchange Capital Securities if a termination of the
Trust were to occur. Accordingly, the Exchange Capital Securities or the
Exchange Junior Subordinated Debentures may trade at a discount from the price
that the investor paid to purchase the Exchange Capital Securities offered
hereby. Because holders of Exchange Capital Securities may receive Exchange
Junior Subordinated Debentures in liquidation of the Trust and because
Distributions are otherwise limited to payments on the Exchange Junior
Subordinated Debentures, prospective purchasers of Exchange Capital Securities
are also making an investment decision with regard to the Exchange Junior
Subordinated Debentures and should carefully review all the information
regarding the Exchange Junior Subordinated Debentures contained herein. See
"Description of Exchange Securities--Description of Exchange Capital
Securities--Liquidation of the Trust and Distribution of Exchange Junior
Subordinated Debentures" and "--Description of Exchange Junior Subordinated
Debentures."
RIGHTS UNDER THE EXCHANGE GUARANTEE
The Exchange Guarantee guarantees to the holders of the Exchange Capital
Securities the following payments, to the extent not paid by or on behalf of the
Trust: (i) any accumulated and unpaid Distributions required to be paid on the
Exchange Capital Securities, to the extent that the Trust has funds legally
available therefor at such time, (ii) the applicable Redemption Price with
respect to the Exchange Capital Securities called for redemption, to the extent
that the Trust has funds legally available therefor at such time and (iii) upon
a voluntary or involuntary termination, winding up or liquidation of the Trust
(unless the Exchange Junior Subordinated Debentures are distributed to holders
of the Exchange Capital Securities), the lesser of (a) the aggregate of the
Liquidation Amount and all accumulated and unpaid Distributions to the date of
payment, to the extent that the Trust has funds legally available therefor at
such time and (b) the amount of assets of the Trust remaining available for
distribution to holders of the Exchange Capital Securities at such time, after
the satisfaction of liabilities to creditors of the Trust as provided by
applicable law.
16
<PAGE>
The holders of a majority in aggregate Liquidation Amount of the Exchange
Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Exchange Guarantee or to direct the exercise of any trust power
conferred upon the Guarantee Trustee under the Exchange Guarantee. Any holder of
the Exchange Capital Securities may institute a legal proceeding directly
against the Corporation to enforce its rights under the Exchange Guarantee
without first instituting a legal proceeding against the Trust, the Guarantee
Trustee or any other person or entity. If the Corporation defaults on its
obligation to pay amounts payable under the Exchange Junior Subordinated
Debentures, the Trust would not have sufficient funds for the payment of
Distributions or amounts payable on redemption of the Exchange Capital
Securities or otherwise, and, in such event, holders of the Exchange Capital
Securities would not be able to rely upon the Exchange Guarantee for payment of
such amounts. Instead, if a Debenture Event of Default has occurred and is
continuing and such event is attributable to the failure of the Corporation to
pay the principal of (or premium, if any) or interest (including Additional Sums
and Compounded Interest, if any) or Liquidated Damages, if any, on the Exchange
Junior Subordinated Debentures when such payment is due and payable, then a
holder of Exchange Capital Securities may institute a legal proceeding directly
against the Corporation for enforcement of payment to such holder of the
principal of (or premium, if any) or interest (including Additional Sums and
Compounded Interest, if any) or Liquidated Damages, if any, on such Exchange
Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Exchange Capital Securities of such holder (a "Direct
Action"). Notwithstanding any payments made to a holder of Exchange Capital
Securities by the Corporation in connection with a Direct Action, the
Corporation shall remain obligated to pay the principal of (and premium, if any)
and interest (including Additional Sums and Compounded Interest, if any) and
Liquidated Damages, if any, on the Exchange Junior Subordinated Debentures, and
the rights of the Corporation shall be subrogated to the rights of the holder of
such Exchange Capital Securities with respect to payments on the Exchange
Capital Securities to the extent of any payments made by the Corporation to such
holder in any Direct Action. Except as described herein, holders of Exchange
Capital Securities will not be able to exercise directly any other remedy
available to the holders of the Exchange Junior Subordinated Debentures or to
assert directly any other rights in respect of the Exchange Junior Subordinated
Debentures. See "Description of Exchange Securities--Description of Exchange
Junior Subordinated Debentures--Enforcement of Certain Rights by Holders of
Exchange Capital Securities," "--Debenture Events of Default" and "Description
of Exchange Securities--Description of Exchange Guarantee." The Trust Agreement
provides that each holder of Exchange Capital Securities by acceptance thereof
agrees to the provisions of the Indenture and the Exchange Guarantee. Wilmington
Trust Company will act as Guarantee Trustee under the Exchange Guarantee and
will hold the Exchange Guarantee for the benefit of the holders of the Exchange
Capital Securities. Wilmington Trust Company also acts as Property Trustee under
the Trust Agreement and as Debenture Trustee under the Indenture.
LIMITED VOTING RIGHTS
Holders of Exchange Capital Securities generally will have voting rights
relating only to the modification of the Exchange Capital Securities and the
exercise of the Trust's rights as holder of Exchange Junior Subordinated
Debentures. Holders of Exchange Capital Securities will not be entitled to vote
to appoint, remove or replace, or to increase or decrease the number of, the
Issuer Trustees, which voting rights are vested exclusively in the holder of the
Common Securities except upon the occurrence of certain events described herein.
The Property Trustee, the Administrative Trustees and the Corporation may amend
the Trust Agreement without the consent of holders of Exchange Capital
Securities to ensure that the Trust will be classified for U.S. federal income
tax purposes as a grantor trust. Holders of Exchange Capital Securities will
have no voting rights with respect to any matters submitted to a vote of the
Corporation's stockholders. See "Description of Exchange Securities--Description
of Exchange Capital Securities--Voting Rights; Amendment of the Trust Agreement"
and "--Removal of Issuer Trustees."
17
<PAGE>
TRADING CHARACTERISTICS OF THE EXCHANGE CAPITAL SECURITIES
The Exchange Capital Securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to the underlying
Exchange Junior Subordinated Debentures. A holder who uses the accrual method of
accounting for tax purposes (and a cash method holder, if the Exchange Junior
Subordinated Debentures are deemed to have been issued with OID) and who
disposes of its Exchange Capital Securities between record dates for payments of
Distributions thereon will be required to include accrued but unpaid interest on
the Exchange Junior Subordinated Debentures through the date of disposition in
income as ordinary income (i.e., interest or, possibly, OID), and to add such
amount to its adjusted tax basis in its share of the underlying Exchange Junior
Subordinated Debentures deemed disposed of. If the selling price is less than
the holder's adjusted tax basis (which will include all accrued but unpaid
interest), a holder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for U.S.
federal income tax purposes. See "Certain Federal Income Tax Considerations --
Interest Income and Original Issue Discount" and " --Sales of Exchange Capital
Securities."
CONSEQUENCES OF A FAILURE TO EXCHANGE ORIGINAL CAPITAL SECURITIES
The Original Capital Securities have not been registered under the
Securities Act or any state securities laws and therefore may not be offered,
sold or otherwise transferred except in compliance with the Registration
requirements of the Securities Act and any other applicable securities laws, or
pursuant to an exemption therefrom or in a transaction not subject thereto, and
in each case in compliance with certain other conditions and restrictions.
Original Capital Securities that remain outstanding after consummation of the
Exchange Offer will continue to bear a legend reflecting such restrictions on
transfer. In addition, upon consummation of the Exchange Offer, holders of
Original Capital Securities that remain outstanding will not be entitled to any
rights to have such Original Capital Securities registered under the Securities
Act or to any similar rights under the Registration Rights Agreement (subject to
certain limited exceptions). The Corporation and the Trust do not intend to
register under the Securities Act any Original Capital Securities that remain
outstanding after consummation of the Exchange Offer (subject to such limited
exceptions, if applicable). To the extent that Original Capital Securities are
tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Original Capital Securities could be adversely affected.
The Exchange Capital Securities and any Original Capital Securities that
remain outstanding after consummation of the Exchange Offer will vote together
as a single class for purposes of determining whether holders of the requisite
percentage in outstanding Liquidation Amount thereof have taken certain actions
or exercised certain rights under the Trust Agreement. See "Description of
Exchange Securities--Description of Exchange Capital Securities--Voting Rights;
Amendment of the Trust Agreement."
ABSENCE OF PUBLIC MARKET AND RESTRICTIONS ON RESALE
The Original Capital Securities were issued to, and the Corporation
believes such securities are currently owned by, a relatively small number of
beneficial owners. The Original Capital Securities have not been registered
under the Securities Act and will be subject to restrictions on transferability
if they are not exchanged for the Exchange Capital Securities. Although the
Exchange Capital Securities may be resold or otherwise transferred by the
holders (who are not affiliates of the Corporation or the Trust) without
compliance with the Registration requirements under the Securities Act, they
will constitute a new issue of securities with no established trading market.
Capital Securities may be transferred by the holders thereof only in blocks
having a Liquidation Amount of not less than $100,000 (100 Capital Securities).
The Corporation and the Trust have been advised by the Initial Purchaser that
the Initial Purchaser presently intends to make a market in the Exchange Capital
Securities. However, the Initial Purchaser is not obligated to do so and any
market-making activity with respect to the Exchange Capital Securities may be
discontinued at any time without notice. In addition, such market-making
activity will be subject to the limits imposed by
18
<PAGE>
the Securities Act and the Exchange Act and may be limited during the Exchange
Offer. Accordingly, no assurance can be given that an active public or other
market will develop for the Capital Securities, or as to the liquidity of or the
trading market for the Capital Securities. If an active public market does not
develop, the market price and liquidity of the Exchange Capital Securities may
be adversely affected.
If a public trading market develops for the Exchange Capital Securities,
future trading prices will depend on many factors, including, among other
things, prevailing interest rates, the financial condition of the Corporation
and the market for similar securities. Depending on these and other factors, the
Exchange Capital Securities may trade at a discount.
Notwithstanding the Registration of the Exchange Capital Securities in
the Exchange Offer, holders who are "affiliates" (as defined under Rule 405 of
the Securities Act) of the Corporation or the Trust may publicly offer for sale
or resell the Exchange Capital Securities only in compliance with the provisions
of Rule 144 under the Securities Act.
Each broker-dealer that receives Exchange Capital Securities for its own
account in exchange for Original Capital Securities, where such Original Capital
Securities were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Capital Securities.
See "Plan of Distribution."
EXCHANGE OFFER PROCEDURES
Subject to conditions set forth under "The Exchange Offer--Conditions to
the Exchange Offer," issuance of the Exchange Capital Securities in exchange for
Original Capital Securities pursuant to the Exchange Offer will be made only
after a timely receipt by the Trust (i) a book-entry confirmation evidencing the
tender of such Original Capital Securities through ATOP or (ii) certificates
representing such Original Capital Securities, a properly completed and duly
executed Letter of Transmittal, with any required signature guarantees, and all
other required documents. See "The Exchange Offer--Acceptance for Exchange and
Issuance of Exchange Capital Securities" and "--Procedures for Tendering
Original Capital Securities." Therefore, holders of the Original Capital
Securities desiring to tender such Original Capital Securities in exchange for
Exchange Capital Securities should allow sufficient time to ensure timely
delivery. Neither the Corporation nor the Trust is under any duty to give
notification of defects or irregularities with respect to the tenders of
Original Capital Securities for exchange.
LEGISLATIVE AND GENERAL REGULATORY DEVELOPMENTS
The Corporation is subject to federal oversight as a savings and loan
holding company, primarily by the OTS. Webster Bank is subject to extensive
regulation by the OTS as its primary federal regulator and also to regulation as
to certain matters by the FDIC. The OTS and the FDIC have adopted numerous
regulations and undertaken other regulatory initiatives, and further regulations
and initiatives may be adopted. Future legislation or regulatory developments
could have an adverse effect on Webster Bank.
As discussed above under "Proposed Legislative Elimination of the Thrift
Charter," if legislation with respect to the development of a common charter is
enacted, Webster Bank may be required to convert its federal savings bank
charter to either a new federal type of bank charter or to a state depository
institution charter. Future legislation also may result in the Corporation
becoming regulated at the holding company level by the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") rather than by the OTS.
Regulation by the Federal Reserve Board could subject the Corporation to capital
requirements that are not currently applicable to the Corporation as a holding
company under OTS regulation and may result in statutory limitations on the type
of business activities in which the Corporation may be engaged at the holding
company
19
<PAGE>
level, which business activities currently are not restricted. The Corporation
is unable to predict whether such legislation will be enacted.
SOURCES OF FUNDS FOR CASH DIVIDENDS
The Corporation's liquidity and ability to pay dividends to its
shareholders is primarily derived from and dependent on the ability of Webster
Bank to pay dividends to the Corporation. Under current OTS regulations, because
Webster Bank meets the OTS capital requirements it may pay the higher of 100% of
net income to date over the calendar year and 50% of surplus capital existing at
the beginning of the calendar year, or 75% of its net income over the most
recent four-quarter period, without regulatory supervisory approval. At June 30,
1998, Webster Bank had approximately $281.9 million in excess capital over the
OTS risk-based requirement, one half of which would be available for declaration
of dividends to the Corporation. The OTS regulations permit the OTS to prohibit
capital distributions under certain circumstances.
20
<PAGE>
WEBSTER FINANCIAL CORPORATION
Unless the context otherwise requires, all references to the
Corporation include Webster Financial Corporation and its consolidated
subsidiaries.
The Corporation is a Delaware corporation and the holding company of
Webster Bank ("Webster Bank"), its wholly owned federal savings bank subsidiary.
Both the Corporation and Webster Bank are headquartered in Waterbury,
Connecticut. Deposits at Webster Bank are insured by the Federal Deposit
Insurance Corporation ("FDIC"). Through Webster Bank, Webster currently serves
customers from over 100 banking offices, three commercial banking centers, six
trust offices and more than 160 ATMs located in Hartford, New Haven, Fairfield,
Litchfield and Middlesex Counties in Connecticut. The Corporation focuses on
providing financial services to individuals, families and businesses. The
Corporation emphasizes five business lines -- consumer banking, business
banking, mortgage banking, trust and investment services and insurance services
- -- each supported by centralized administration and operations. Through a number
of recent acquisitions of other financial services firms, including banks and
thrifts, a trust company and an insurance firm, the Corporation has established
a leading position in the banking and trust and investment services market in
Connecticut. The Corporation's mission is to help individuals, families and
businesses achieve their financial goals. At June 30, 1998, the Corporation had
total consolidated assets of approximately $9.2 billion, total deposits of
approximately $5.7 billion and shareholders' equity of approximately $548.4
million. The Corporation's consolidated financial data at June 30, 1998 includes
the consolidated accounts of Eagle, which was acquired in a merger transaction
accounted for as a pooling of interests in April 1998.
As a result of the acquisition of Eagle, the Corporation (i) assumed
Eagle's obligations under the Indenture with respect to the Junior Subordinated
Debentures and the Guarantee Agreement with respect to the Guarantee; and (ii)
acquired total assets of $2.3 billion, net loans of $1.1 billion and deposits of
$1.3 billion.
WEBSTER CAPITAL TRUST II
The Trust is a statutory business trust formed under Delaware law upon
the filing of a certificate of trust with the Delaware Secretary of State. The
Trust exists for the exclusive purposes of (i) issuing and selling the Trust
Securities, (ii) using the proceeds from the sale of Trust Securities to acquire
the Junior Subordinated Debentures and (iii) engaging in only those other
activities necessary, advisable or incidental thereto (such as registering the
transfer of the Trust Securities). Accordingly, the Junior Subordinated
Debentures are the sole assets of the Trust, and payments under the Junior
Subordinated Debentures are the sole revenues of the Trust. All of the Common
Securities are owned by the Corporation. The Common Securities rank pari passu,
and payments are and will be made thereon pro rata, with the Exchange Capital
Securities, except that if there is an Event of Default under the Trust
Agreement resulting from a Debenture Event of Default, the rights of the
Corporation as holder of the Common Securities to payments in respect of
Distributions and payments upon liquidation, redemption or otherwise will be
subordinated to the rights of the holders of the Exchange Capital Securities.
See "Description of Exchange Capital Securities--Subordination of Common
Securities." The Corporation acquired Common Securities in a Liquidation Amount
equal to at least 3% of the total capital of the Trust. The Trust has a term of
approximately 31 years, but may terminate earlier as provided in the Trust
Agreement. The Trust's business and affairs are conducted by the Issuer
Trustees, each appointed by the Corporation as holder of the Common Securities.
The Issuer Trustees for the Trust are Wilmington Trust Company, as the Property
Trustee, Wilmington Trust Company, as the Delaware Trustee and two
Administrative Trustees who are officers of the Corporation. Wilmington Trust
Company also acts as guarantee trustee under the Guarantee and as debenture
trustee under the Indenture. See "Description of Exchange
Securities--Description of Exchange Guarantee" and "--Description of Exchange
Junior Subordinated Debentures."
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The holder of the Common Securities or, if an Event of Default under the
Trust Agreement has occurred and is continuing, the holders of not less than a
majority in Liquidation Amount of the Capital Securities are entitled to
appoint, remove or replace the Property Trustee and/or the Delaware Trustee. In
no event will the holders of the Exchange Capital Securities have the right to
vote to appoint, remove or replace the Administrative Trustees; such voting
rights will be vested exclusively in the holder of the Common Securities. The
duties and obligations of each Issuer Trustee are governed by the Trust
Agreement. The Corporation, as issuer of the Exchange Junior Subordinated
Debentures, has and will continue pay all fees, expenses, debts and obligations
(other than the payment of principal, interest and premium, if any, on the Trust
Securities) related to the Trust and the offering of the Exchange Capital
Securities and has and will continue pay, directly or indirectly, all ongoing
costs, expenses and liabilities (other than the payment of principal, interest
and premium, if any, on the Trust Securities) of the Trust. The principal
executive office of the Trust is c/o Webster Financial Corporation, Webster
Plaza, Waterbury, Connecticut 06702.
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<PAGE>
USE OF PROCEEDS
Neither the Corporation nor the Trust will receive any cash proceeds from
the issuance of the Exchange Capital Securities and the Exchange Guarantee
offered hereby. In consideration for issuing the Exchange Capital Securities in
exchange for Original Capital Securities as described in this Prospectus, the
Trust will receive Original Capital Securities in like Liquidation Amount. The
Original Capital Securities surrendered in exchange for the Exchange Capital
Securities will be retired and canceled.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges of
the Corporation on a consolidated basis for the respective periods indicated.
<TABLE>
<CAPTION>
AT JUNE 30, YEAR ENDED DECEMBER 31,
---------- ----------------------------------------------
1998 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Fixed Charges........................... 1.57x 1.61x 2.40x 2.25x 2.47x 3.12x
</TABLE>
For purposes of computing the ratios of earnings to fixed charges,
earnings represent net income (loss) before extraordinary items and cumulative
effect of changes in accounting principles plus applicable income taxes and
fixed charges. Fixed charges, excluding interest on deposits, include gross
interest expense (other than on deposits) and the proportion deemed
representative of the interest factor of rent expense, net of income from
subleases. Fixed charges, including gross interest on deposits, include all
interest expense and the proportion deemed representative of the interest factor
of rent expense, net of income from subleases.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust is treated as a subsidiary
of the Corporation and, accordingly, the accounts of the Trust are included in
the consolidated financial statements of the Corporation. The Exchange Capital
Securities are shown in the consolidated statements of condition of the
Corporation, as "Corporation-obligated mandatorily redeemable capital securities
of subsidiary trust", and appropriate disclosures about the Exchange Capital
Securities, the Exchange Guarantee and the Exchange Junior Subordinated
Debentures are included in the notes to the consolidated financial statements of
the Corporation. For financial reporting purposes, the Corporation records
Distributions payable on the Exchange Capital Securities as a minority interest
expense in its consolidated statements of income.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Original Capital Securities, the
Corporation and the Trust entered into the Registration Rights Agreement with
the Initial Purchaser, pursuant to which the Corporation and the Trust agreed to
file and use commercially reasonable efforts to cause to become effective with
the Commission a Registration Statement relating to the exchange of the Original
Capital Securities for capital securities with terms identical in all material
respects to the terms of the Original Capital Securities. A copy of the
Registration Rights Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations
of the Corporation and the Trust under the Registration Rights Agreement. The
form and terms of the Exchange Capital Securities are the same as the form and
terms of the Original Capital Securities except that the Exchange Capital
Securities have been registered under the Securities Act and will not be subject
to certain restrictions on transfer applicable to the Original Capital
Securities, and will not provide for any increase in the Distribution rate
thereon. As a result of Eagle and the Trust not having had a registration
statement as to exchange securities been declared effective by September 28,
1997, liquidated damages have been accruing at the rate of 0.25% per annum on
the principal amount of the Original Junior Subordinated Debentures and
Distributions have been accruing at the rate of 0.25% per annum on the
Liquidation Amount of the Original Capital Securities, and shall continue to do
so until such time as this Registration Statement is declared effective. In that
regard, the Original Capital Securities provide that, if the Trust has not
exchanged Exchange Capital Securities for all Original Capital Securities
validly tendered by the 45th day after the date on which the Registration
Statement is declared effective, the Distribution rate borne by the Original
Capital Securities will increase by 0.25% per annum for the period from the
occurrence of such event until the Exchange Offer has been consummated. Upon
consummation of the Exchange Offer, holders of Original Capital Securities will
not be entitled to any increase in the Distribution rate thereon or any further
Registration rights under the Registration Rights Agreement, except under
limited circumstances. See "Risk Factors--Consequences of a Failure to Exchange
Original Capital Securities" and "Description of Original Securities."
The Exchange Offer is not being made to, nor will the Trust accept
tenders for exchange from, holders of Original Capital Securities in any
jurisdiction in which the Exchange Offer or the acceptance thereof would not be
in compliance with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Original Capital
Securities are registered on the books of the Trust or any other person who has
obtained a properly completed bond power from the registered holder, or any
person whose Original Capital Securities are held of record by DTC who desires
to deliver such Original Capital Security by book-entry transfer at DTC.
Pursuant to the Exchange Offer, the Corporation will exchange as soon as
practicable after the date hereof, the Original Guarantee for the Exchange
Guarantee and the Original Junior Subordinated Debentures, in an amount
corresponding to the Original Capital Securities accepted for exchange, for a
like aggregate principal amount of the Exchange Junior Subordinated Debentures.
The Exchange Guarantee and the Exchange Junior Subordinated Debentures have been
registered under the Securities Act.
TERMS OF THE EXCHANGE OFFER
The Trust hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $50,000,000 aggregate Liquidation Amount of
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Original Capital Securities properly tendered on or prior to the Expiration Date
and not properly withdrawn in accordance with the procedures described herein.
The Trust will issue, promptly after the Expiration Date, an aggregate
Liquidation Amount of up to $50,000,000 of Exchange Capital Securities in
exchange for a like principal amount of outstanding Original Capital Securities
tendered and accepted in connection with the Exchange Offer. Holders may tender
their Original Capital Securities in whole or in part in a Liquidation Amount of
not less than $100,000 (100 Capital Securities) or any integral multiple of
$1,000 Liquidation Amount (one Capital Security) in excess thereof.
The Exchange Offer is not conditioned upon any minimum Liquidation Amount
of Original Capital Securities being tendered. As of the date of this
Prospectus, $50,000,000 aggregate Liquidation Amount of the Original Capital
Securities is outstanding.
Holders of Original Capital Securities do not have any appraisal or
dissenters' rights in connection with the Exchange Offer. Original Capital
Securities that are not tendered for or are tendered but not accepted in
connection with the Exchange Offer will remain outstanding and be entitled to
the benefits of the Trust Agreement, but will not be entitled to any further
Registration rights under the Registration Rights Agreement, except under
limited circumstances. See "Risk Factors--Consequences of a Failure to Exchange
Original Capital Securities" and "Description of Original Securities."
If any tendered Original Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Original Capital
Securities will be returned, without expense, to the tendering holder thereof
promptly after the Expiration Date.
Holders who tender Original Capital Securities in connection with the
Exchange Offer will not be required to pay brokerage commissions or fees or,
subject to the instructions in the Letter of Transmittal, transfer taxes with
respect to the exchange of Original Capital Securities in connection with the
Exchange Offer. The Corporation will pay all charges and expenses, other than
certain applicable taxes described herein, in connection with the Exchange
Offer. See "--Fees and Expenses."
NEITHER THE CORPORATION, THE BOARD OF DIRECTORS OF THE CORPORATION NOR
ANY ISSUER TRUSTEE OF THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF ORIGINAL
CAPITAL SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY
PORTION OF THEIR ORIGINAL CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN
ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. EACH
HOLDER OF ORIGINAL CAPITAL SECURITIES MUST DECIDE WHETHER TO TENDER PURSUANT TO
THE EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF ORIGINAL CAPITAL
SECURITIES TO TENDER BASED ON SUCH HOLDER'S OWN FINANCIAL POSITION AND
REQUIREMENTS.
EXPIRATION DATE, EXTENSIONS, AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on
November 20, 1998 unless the Exchange Offer is extended by the Corporation or
the Trust (in which case the term "Expiration Date" shall mean the latest date
and time to which the Exchange Offer is extended).
The Corporation and the Trust expressly reserve the right in their sole
and absolute discretion, subject to applicable law, at any time and from time to
time, (i) to delay the acceptance of the Original Capital Securities for
exchange, (ii) to terminate the Exchange Offer (whether or not any Original
Capital Securities have theretofore been accepted for exchange) if the Trust
determines, in its sole and absolute discretion, that any of the events or
conditions referred to under "--Conditions to the Exchange Offer" have occurred
or exist or have not been satisfied, (iii) to extend the Expiration Date of the
Exchange Offer and retain all Original Capital Securities tendered pursuant to
the
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<PAGE>
Exchange Offer, subject, however, to the right of holders of Original Capital
Securities to withdraw their tendered Original Capital Securities as described
under "--Withdrawal Rights," and (iv) to waive any condition or otherwise amend
the terms of the Exchange Offer in any respect. If the Exchange Offer is amended
in a manner determined by the Corporation and the Trust to constitute a material
change, or if the Corporation and the Trust waive a material condition of the
Exchange Offer, the Corporation and the Trust will promptly disclose such
amendment by means of a prospectus supplement that will be distributed to the
holders of the Original Capital Securities, and the Corporation and the Trust
will extend the Exchange Offer to the extent required by Rule 14e-1 under the
Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
Business Day after the previously scheduled Expiration Date. Without limiting
the manner in which the Corporation and the Trust may choose to make any public
announcement and subject to applicable laws, the Corporation and the Trust shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to an appropriate news
agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF EXCHANGE CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Trust will exchange, and will issue to the Exchange Agent, Exchange Capital
Securities for Original Capital Securities validly tendered and not withdrawn
promptly after the Expiration Date.
In all cases, delivery of Exchange Capital Securities in exchange for
Original Capital Securities tendered and accepted for exchange pursuant to the
Exchange Offer will be made only after timely receipt by the Exchange Agent of
(i) the book-entry confirmation described below under "--Procedures for
Tendering Original Capital Securities--Book-Entry Transfer" or (ii) certificates
representing such Original Capital Securities, the Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and any other documents required by the Letter of
Transmittal.
Subject to the terms and conditions of the Exchange Offer, the Trust will
be deemed to have accepted for exchange, and thereby exchanged, Original Capital
Securities validly tendered and not withdrawn as, if and when the Trust gives
oral or written notice to the Exchange Agent (any such oral notice to be
promptly confirmed in writing) of the Trust's acceptance of such Original
Capital Securities for exchange pursuant to the Exchange Offer. The Exchange
Agent will act as agent for the Trust for the purpose of receiving tenders of
book-entry confirmations or certificates representing Original Capital
Securities, Letters of Transmittal and related documents, and as agent for
tendering holders for the purpose of receiving book-entry confirmations or
certificates representing Original Capital Securities, Letters of Transmittal
and related documents and transmitting Exchange Capital Securities to validly
tendered holders. Such exchange will be made promptly after the Expiration Date.
If for any reason whatsoever, acceptance for exchange or the exchange of any
Original Capital Securities tendered pursuant to the Exchange Offer is delayed
(whether before or after the Trust's acceptance for exchange of Original Capital
Securities) or the Trust extends the Exchange Offer or is unable to accept for
exchange or exchange Original Capital Securities tendered pursuant to the
Exchange Offer, then, without prejudice to the Trust's rights set forth herein,
the Exchange Agent may, nevertheless, on behalf of the Trust and subject to Rule
14e-1(c) under the Exchange Act, retain tendered Original Capital Securities and
such Original Capital Securities may not be withdrawn except to the extent
tendering holders are entitled to withdrawal rights as described under
"--Withdrawal Rights."
Pursuant to the Letter of Transmittal, a holder of Original Capital
Securities will warrant and agree that it has full power and authority to
tender, exchange, sell, assign and transfer Original Capital Securities, that
the Trust will acquire good, marketable and unencumbered title to the
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<PAGE>
tendered Original Capital Securities, free and clear of all liens, restrictions,
charges and encumbrances, and the Original Capital Securities tendered for
exchange are not subject to any adverse claims or proxies. The holder also will
warrant and agree that it will, upon request, execute and deliver any additional
documents deemed by the Trust or the Exchange Agent to be necessary or desirable
to complete the exchange, sale, assignment, and transfer of the Original Capital
Securities tendered pursuant to the Exchange Offer. Tendering holders of
Original Capital Securities that use ATOP will, by doing so, acknowledge that
they are bound by the terms of the Letter of Transmittal.
PROCEDURES FOR TENDERING ORIGINAL CAPITAL SECURITIES
Valid Tender
Except as set forth herein, in order for Original Capital Securities to
be validly tendered pursuant to the Exchange Offer, a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, must be received by the
Exchange Agent at its address set forth under "--Exchange Agent," and either (i)
tendered Original Capital Securities must be received by the Exchange Agent, or
(ii) such Original Capital Securities must be tendered pursuant to the
procedures for book-entry transfer set forth herein and a book-entry
confirmation must be received by the Exchange Agent, in each case on or prior to
the Expiration Date, or (iii) the guaranteed delivery procedures set forth
herein must be complied with.
If less than all of the Original Capital Securities are tendered, a
tendering holder should fill in the amount of Original Capital Securities being
tendered in the appropriate box on the Letter of Transmittal or so indicate in
an Agent's Message in lieu of the Letter of Transmittal. The entire amount of
Original Capital Securities delivered to the Exchange Agent will be deemed to
have been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF THE BOOK-ENTRY CONFIRMATIONS OR CERTIFICATES,
THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND
SOLE RISK OF THE TENDERING HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED
MAIL, RETURN RECEIPT REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY
SERVICE IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
Book-Entry Transfer
For purposes of the Exchange Offer, the Exchange Agent will establish an
account with respect to the Original Capital Securities at DTC within two
Business Days after the date of this Prospectus. Any tendering financial
institution that is a participant in DTC's book-entry transfer facility system
must make a book-entry delivery of the Original Capital Securities by causing
DTC to transfer such Original Capital Securities into the Exchange Agent's
account at DTC in accordance with DTC's ATOP procedures for transfers. Such
holder of Original Capital Securities using ATOP should transmit its acceptance
to DTC on or prior to the Expiration Date (or comply with the guaranteed
delivery procedures set forth below). DTC will verify such acceptance, execute a
book-entry transfer of the tendered Original Capital Securities into the
Exchange Agent's account at DTC and then send to the Exchange Agent confirmation
of such book-entry transfer, including an agent's message confirming that DTC
has received an express acknowledgment from such holder that such holder has
received and agrees to be bound by the Letter of Transmittal and that the Trust
and the Corporation may enforce the Letter of Transmittal against such holder (a
"book-entry confirmation").
A beneficial owner of Original Capital Securities that are held by or
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee or custodian is urged to contact such entity promptly if such
beneficial owner wishes to participate in the Exchange Offer.
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<PAGE>
Certificates
If the tender is not made through ATOP, certificates representing
Original Capital Securities, as well as the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, and any other required documents required by the Letter of
Transmittal, must be received by the Exchange Agent at its address set forth
under "--Exchange Agent" on or prior to the Expiration Date in order for such
tender to be effective (or the guaranteed delivery procedure set forth herein
must be complied with).
If less than all of the Original Capital Securities are tendered, a
tendering holder should fill in the amount of Original Capital Securities being
tendered in the appropriate box on the Letter of Transmittal. The entire amount
of Original Capital Securities delivered to the Exchange Agent will be deemed to
have been tendered unless otherwise indicated.
Signature Guarantees
Certificates for the Original Capital Securities need not be endorsed and
signature guarantees on the Letter of Transmittal are unnecessary unless (i) a
certificate for the Original Capital Securities is registered in a name other
than that of the person surrendering the certificate or (ii) such holder
completes the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" in the Letter of Transmittal. In the case of (i) or (ii) above,
such certificates for Original Capital Securities must be duly endorsed or
accompanied by a properly executed bond power, with the endorsement or signature
on the bond power and on the Letter of Transmittal guaranteed by a firm or other
entity identified in Rule 17Ad-15 under the Exchange Act as an "eligible
guarantor institution," including (as such terms are defined therein): (a) a
bank; (b) a broker, dealer, municipal securities broker or dealer or government
securities broker or dealer; (c) a credit union; (d) a national securities
exchange, registered securities association or clearing agency; or (e) a savings
association that is a participant in a Securities Transfer Association (an
"Eligible Institution"), unless surrendered on behalf of such Eligible
Institution. See Instruction 1 to the Letter of Transmittal.
Delivery
The method of delivery of the book-entry confirmation or certificates
representing tendered Original Capital Securities, the Letter of Transmittal,
and all other required documents is at the option and sole risk of the tendering
holder, and delivery will be deemed made only when actually received by the
Exchange Agent. If delivery is by mail, registered mail, return receipt
requested, properly insured, or an overnight delivery service is recommended. In
all cases, sufficient time should be allowed to ensure timely delivery.
Notwithstanding any other provision hereof, the delivery of Exchange
Capital Securities in exchange for Original Capital Securities tendered and
accepted for exchange pursuant to the Exchange Offer will in all cases be made
only after timely receipt by the Exchange Agent of (i) a book-entry confirmation
with respect to such Original Capital Securities or (ii) certificates
representing Original Capital Securities and a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees and any other documents required by the Letter of
Transmittal. Accordingly, the delivery of Exchange Capital Securities might not
be made to all tendering holders at the same time, and will depend upon when
book-entry confirmations with respect to Original Capital Securities or
certificates representing Original Capital Securities and other required
documents are received by the Exchange Agent.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
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Guaranteed Delivery
If a holder desires to tender Original Capital Securities pursuant to
the Exchange Offer and the certificates for such Original Capital Securities are
not immediately available or time will not permit all required documents to
reach the Exchange Agent on or prior to the Expiration Date, or the procedure
for book-entry transfer cannot be completed on a timely basis, such Original
Capital Securities may nevertheless be tendered, provided that all of the
following guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed notice to the Exchange Agent
guaranteeing delivery to the Exchange Agent of either certificates representing
Original Capital Securities or a book-entry confirmation in compliance with the
requirements set forth herein (the "Notice of Guaranteed Delivery"),
substantially in the form accompanying the Letter of Transmittal, is received by
the Exchange Agent, as provided herein, on or prior to Expiration Date; and
(iii) a book-entry confirmation or the certificates representing all
tendered Original Capital Securities, in proper form for transfer, together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and any other documents
required by the Letter of Transmittal, are, in any case, received by the
Exchange Agent within three New York Stock Exchange trading days after the date
of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or
transmitted by facsimile or mail to the Exchange Agent and must include a
guarantee by an Eligible Institution in the form set forth in such notice.
The Trust's acceptance for exchange of Original Capital Securities
tendered pursuant to any of the procedures described above will constitute a
binding agreement between the tendering holder and the Trust upon the terms and
subject to the conditions of the Exchange Offer.
Determination of Validity
All questions as to the form of documents, validity, eligibility
(including time of receipt) and acceptance for exchange of any tendered Original
Capital Securities will be determined by the Corporation and the Trust, in their
sole discretion, whose determination shall be final and binding on all parties.
The Corporation and the Trust reserve the absolute right, in their sole and
absolute discretion, to reject any and all tenders determined by them not to be
in proper form or the acceptance of which, or exchange for, may, in the opinion
of counsel to the Corporation and the Trust, be unlawful. The Corporation and
the Trust also reserve the absolute right, subject to applicable law, to waive
any of the conditions of the Exchange Offer as set forth under "--Conditions to
the Exchange Offer" or any condition or irregularity in any tender of Original
Capital Securities of any particular holder whether or not similar conditions or
irregularities are waived in the case of other holders.
The interpretation by the Corporation and the Trust of the terms and
conditions of the Exchange Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Original Capital
Securities will be deemed to have been validly made until all irregularities
with respect to such tender have been cured or waived. None of the Corporation,
the Trust, any affiliates or assigns of the Corporation or the Trust, the
Exchange Agent or any other person shall be under any duty to give any
notification of any irregularities in tenders or incur any liability for failure
to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator,
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<PAGE>
guardian, attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, such person should so indicate when
signing, and unless waived by the Corporation and the Trust, proper evidence
satisfactory to the Corporation and the Trust, in their sole discretion, of such
person's authority to so act must be submitted.
RESALES OF EXCHANGE CAPITAL SECURITIES
The Trust is making the Exchange Offer for the Exchange Capital
Securities in reliance on the position of the Staff of the Commission as set
forth in certain interpretive letters addressed to third parties in other
transactions. However, neither the Corporation nor the Trust sought its own
interpretive letter and there can be no assurance that the Staff of the
Commission would make a similar determination with respect to the Exchange Offer
as it has in such interpretive letters to third parties. Based on these
interpretations by the Staff of the Commission, and subject to the two
immediately following sentences, the Corporation and the Trust believe that
Exchange Capital Securities issued pursuant to this Exchange Offer in exchange
for Original Capital Securities may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder who is a broker-dealer)
without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such Exchange Capital
Securities are acquired in the ordinary course of such holder's business and
that such holder is not participating, and has no arrangement or understanding
with any person to participate, in a distribution (within the meaning of the
Securities Act) of such Exchange Capital Securities. However, any holder of
Original Capital Securities who is an "affiliate" of the Corporation or the
Trust or who intends to participate in the Exchange Offer for the purpose of
distributing Exchange Capital Securities, or any broker-dealer who purchased
Original Capital Securities from the Trust to resell pursuant to Rule 144A or
any other available exemption under the Securities Act, (i) will not be able to
rely on the interpretations of the Staff of the Commission set forth in the
above-mentioned interpretive letters, (ii) will not be permitted or entitled to
tender such Original Capital Securities in the Exchange Offer and (iii) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any sale or other transfer of such Original
Capital Securities unless such sale is made pursuant to an exemption from such
requirements. In addition, as described herein, if any broker-dealer holds
Original Capital Securities acquired for its own account as a result of
market-making or other trading activities and exchanges such Original Capital
Securities for Exchange Capital Securities, then such broker-dealer must deliver
a prospectus meeting the requirements of the Securities Act in connection with
any resales of such Exchange Capital Securities.
Each holder of Original Capital Securities who wishes to exchange
Original Capital Securities for Exchange Capital Securities in the Exchange
Offer will be required to represent that (i) it is not an "affiliate" of the
Corporation or the Trust, (ii) any Exchange Capital Securities to be received by
it are being acquired in the ordinary course of its business, (iii) it has no
arrangement or understanding with any person to participate in a distribution
(within the meaning of the Securities Act) of such Exchange Capital Securities,
and (iv) if such holder is not a broker-dealer, such holder is not engaged in,
and does not intend to engage in, a distribution (within the meaning of the
Securities Act) of such Exchange Capital Securities. In addition, the
Corporation and the Trust may require such holder, as a condition to such
holder's eligibility to participate in the Exchange Offer, to furnish to the
Corporation and the Trust (or an agent thereof) in writing information as to the
number of "beneficial owners" (within the meaning of Rule 13d-3 under the
Exchange Act) on behalf of whom such holder holds the Original Capital
Securities to be exchanged in the Exchange Offer. Each broker-dealer that
receives Exchange Capital Securities for its own account pursuant to the
Exchange Offer must acknowledge that it acquired the Original Capital Securities
for its own account as the result of market-making activities or other trading
activities and must agree that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
Exchange Capital Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the Staff of the Commission in the interpretive
letters referred to above, the Corporation and the Trust believe that
Participating Broker-Dealers who acquired Original Capital Securities for their
own accounts as
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a result of market-making activities or other trading activities may fulfill
their prospectus delivery requirements with respect to the Exchange Capital
Securities received upon exchange of such Original Capital Securities (other
than Original Capital Securities which represent an unsold allotment from the
initial sale of the Original Capital Securities) with a prospectus meeting the
requirements of the Securities Act, which may be the prospectus prepared for an
exchange offer so long as it contains a description of the plan of distribution
with respect to the resale of such Exchange Capital Securities. Accordingly,
this Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer during the period referred to below in
connection with resales of Exchange Capital Securities received in exchange for
Original Capital Securities where such Original Capital Securities were acquired
by such Participating Broker-Dealer for its own account as a result of
market-making or other trading activities. Subject to certain provisions set
forth in the Registration Rights Agreement, the Corporation and the Trust have
agreed that this Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer in connection with resales of
such Exchange Capital Securities for a period ending 180 days after the
Expiration Date (subject to extension under certain limited circumstances
described herein) or, if earlier, when all such Exchange Capital Securities have
been disposed of by such Participating Broker-Dealer. See "Plan of
Distribution." However, a Participating Broker-Dealer who intends to use this
Prospectus in connection with the resale of Exchange Capital Securities received
in exchange for Original Capital Securities pursuant to the Exchange Offer must
notify the Corporation or the Trust, or cause the Corporation or the Trust to be
notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided for that purpose
in the Letter of Transmittal or may be delivered to the Exchange Agent at its
address set forth herein under "--Exchange Agent." Any Participating
Broker-Dealer who is an "affiliate" of the Corporation or the Trust may not rely
on such interpretive letters and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction.
In that regard, each Participating Broker-Dealer who surrenders Original
Capital Securities pursuant to the Exchange Offer will be deemed to have agreed,
by execution of the Letter of Transmittal, that upon receipt of notice from the
Corporation or the Trust of the occurrence of any event or the discovery of (i)
any fact that makes any statement contained or incorporated by reference in this
Prospectus untrue in any material respect or (ii) any fact that causes this
Prospectus to omit to state a material fact necessary in order to make the
statements contained or incorporated by reference herein, in light of the
circumstances under which they were made, not misleading, or (iii) of the
occurrence of certain other events specified in the Registration Rights
Agreement, such Participating Broker-Dealer will suspend the sale of Exchange
Capital Securities (or the Exchange Guarantee or the Exchange Junior
Subordinated Debentures, as applicable) pursuant to this Prospectus until the
Corporation or the Trust has amended or supplemented this Prospectus to correct
such misstatement or omission and has furnished copies of the amended or
supplemented Prospectus to such Participating Broker-Dealer, or the Corporation
or the Trust has given notice that the sale of the Exchange Capital Securities
(or the Exchange Guarantee or the Exchange Junior Subordinated Debentures, as
applicable) may be resumed, as the case may be. If the Corporation or the Trust
gives such notice to suspend the sale of the Exchange Capital Securities (or the
Exchange Guarantee or the Exchange Junior Subordinated Debentures, as
applicable), it shall extend the 180-day period referred to above during which
Participating Broker-Dealers are entitled to use this Prospectus in connection
with the resale of Exchange Capital Securities by the number of days during the
period from and including the date of the giving of such notice to and including
the date when Participating Broker-Dealers shall have received copies of the
amended or supplemented Prospectus necessary to permit resales of the Exchange
Capital Securities or to and including the date on which the Corporation or the
Trust has given notice that the sale of Exchange Capital Securities (or the
Exchange Guarantee or the Exchange Junior Subordinated Debentures, as
applicable) may be resumed, as the case may be.
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WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Original Capital
Securities may be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at its address set forth under "--Exchange Agent" on or prior
to the Expiration Date. Any such notice of withdrawal must specify the name of
the person who tendered the Original Capital Securities to be withdrawn, the
aggregate principal amount of Original Capital Securities to be withdrawn, and
(if certificates for such Original Capital Securities have been tendered) the
name of the registered holder of the Original Capital Securities as set forth on
the such certificates if different from that of the person who tendered such
Original Capital Securities. If certificates representing Original Capital
Securities have been delivered or otherwise identified to the Exchange Agent,
then prior to the physical release of such certificates, the tendering holder
must submit the serial numbers shown on the particular certificates to be
withdrawn and the signature on the notice of withdrawal must be guaranteed by an
Eligible Institution, except in the case of Original Capital Securities tendered
for the account of an Eligible Institution. If Original Capital Securities have
been tendered pursuant to the procedures for book-entry transfer set forth in
"--Procedures for Tendering Original Capital Securities--Book-Entry Transfer,"
the notice of withdrawal must specify the name and number of the account at DTC
to be credited with the withdrawal of Original Capital Securities. Withdrawals
of tenders of Original Capital Securities may not be rescinded. Original Capital
Securities properly withdrawn will not be deemed validly tendered for purposes
of the Exchange Offer, but may be retendered at any subsequent time on or prior
to the Expiration Date by following any of the procedures described above under
"--Procedures for Tendering Original Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Trust, in its sole
discretion, whose determination shall be final and binding on all parties. None
of the Corporation, the Trust, any affiliates or assigns of the Corporation or
the Trust, the Exchange Agent or any other person shall be under any duty to
give any notification of any irregularities in any notice of withdrawal or incur
any liability for failure to give any such notification. Any Original Capital
Securities that have been tendered but are withdrawn will be returned to the
holder thereof promptly after withdrawal.
DISTRIBUTIONS ON THE EXCHANGE CAPITAL SECURITIES
Holders of Original Capital Securities whose Original Capital Securities
are accepted for exchange will not receive Distributions on such Original
Capital Securities and will be deemed to have waived the right to receive any
Distributions on such Original Capital Securities accumulated from and after
April 1, 1997. Accordingly, upon issuance, holders of Exchange Capital
Securities (as of the record date) for the payment of Distributions on October
1, 1998 will be entitled to receive Distributions accumulated from and after
April 1, 1997.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Corporation and the Trust will not be
required to accept for exchange, or to exchange, any Original Capital Securities
for any Exchange Capital Securities, and, as described herein, may terminate the
Exchange Offer (whether or not any Original Capital Securities have theretofore
been accepted for exchange) or may waive any conditions to or amend the Exchange
Offer, if any of the following conditions have occurred or exists or have not
been satisfied:
(i) there shall occur a change in the current interpretation by the Staff
of the Commission that permits the Exchange Capital Securities issued pursuant
to the Exchange Offer in exchange for Original Capital Securities to be offered
for resale, resold and otherwise transferred by holders thereof (other than
broker-dealers and any such holder that is an "affiliate" of the Corporation or
the
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Trust within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such Exchange Capital Securities are acquired in
the ordinary course of such holders' business and such holders have no
arrangement or understanding with any person to participate in the distribution
of such Exchange Capital Securities; or
(ii) any law, statute, rule or regulation shall have been adopted or
enacted which, in the judgment of Corporation or the Trust, would reasonably be
expected to impair its ability to proceed with the Exchange Offer; or
(iii) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration Statement,
or proceedings shall have been initiated or, to the knowledge of the Corporation
or the Trust, threatened for that purpose, or any governmental approval has not
been obtained, which approval the Corporation or the Trust shall, in its sole
discretion, deem necessary for the consummation of the Exchange Offer as
contemplated hereby; or
(iv) the Corporation determines in good faith (i) that there is a
reasonable likelihood that, or a material uncertainty exists as to whether,
consummation of the Exchange Offer would result in an adverse tax consequence to
the Trust or the Corporation and (ii) that such condition exists on the 240th
day following the Closing Date.
If the Corporation or the Trust determine in its sole and absolute
discretion that any of the foregoing events or conditions has occurred or exists
or has not been satisfied, it may, subject to applicable law, terminate the
Exchange Offer (whether or not any Original Capital Securities have theretofore
been accepted for exchange) or may waive any such condition or otherwise amend
the terms of the Exchange Offer in any respect. If such waiver or amendment
constitutes a material change to the Exchange Offer, the Corporation or the
Trust will promptly disclose such waiver or amendment by means of a prospectus
supplement that will be distributed to the registered holders of the Original
Capital Securities and will extend the Exchange Offer to the extent required by
Rule 14e-1 under the Exchange Act.
EXCHANGE AGENT
Wilmington Trust Company has been appointed as Exchange Agent for the
Exchange Offer. Delivery of the Letters of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent as follows:
BY HAND, OVERNIGHT DELIVERY, REGISTERED OR CERTIFIED MAIL:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Department
Confirm by Telephone: (302) 651-1000
Facsimile Transmissions: (302) 651-8882
(ELIGIBLE INSTITUTIONS ONLY)
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
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FEES AND EXPENSES
The Corporation has agreed to pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith. The Corporation will also pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Prospectus
and related documents to the beneficial owners of Original Capital Securities,
and in handling or tendering for their customers.
Holders who tender their Original Capital Securities for exchange will
not be obligated to pay any transfer taxes in connection therewith. If, however,
Exchange Capital Securities are to be delivered to, or are to be issued in the
name of, any person other than the registered holder of the Original Capital
Securities tendered, or if a transfer tax is imposed for any reason other than
the exchange of Original Capital Securities in connection with the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
Neither the Corporation nor the Trust will make any payment to brokers,
dealers or others soliciting acceptances of the Exchange Offer.
The Registration Rights Agreement is governed by, and construed in
accordance with, the laws of the State of New York. The summary herein of
certain provisions of the Registration Rights Agreement does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Registration Rights Agreement, a form of which is
available upon request to the Corporation. See "Incorporation of Certain
Documents by Reference." In addition, the information set forth above concerning
certain interpretations of and positions taken by the Staff of the Commission is
not intended to constitute legal advice, and prospective investors should
consult their own legal advisors with respect to such matters.
DESCRIPTION OF EXCHANGE SECURITIES
DESCRIPTION OF EXCHANGE CAPITAL SECURITIES
Pursuant to the terms of the Trust Agreement, the Issuer Trustees on
behalf of the Trust will issue the Exchange Capital Securities. The Exchange
Capital Securities will represent beneficial interests in the Trust and the
holders thereof will be entitled to a preference over the Common Securities in
certain circumstances with respect to Distributions and amounts payable on
redemption of the Trust Securities or liquidation of the Trust. See
"--Subordination of Common Securities." The Trust Agreement has been qualified
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
This summary of certain provisions of the Exchange Capital Securities, the
Common Securities and the Trust Agreement does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all the provisions
of the Trust Agreement, including the definitions therein of certain terms.
General
The Exchange Capital Securities will be limited to $50,000,000 aggregate
Liquidation Amount at any one time outstanding. The Exchange Capital Securities
will rank pari passu, and payments will be made thereon pro rata, with the
Common Securities except as described under "--Subordination of Common
Securities." Legal title to the Exchange Junior Subordinated Debentures will be
held by the Property Trustee on behalf of the Trust in trust for the benefit of
the holders of the Trust Securities. The Exchange Guarantee will not guarantee
payment of Distributions or
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amounts payable on redemption of the Exchange Capital Securities or liquidation
of the Trust when the Trust does not have funds legally available for such
payments. See "--Description of Exchange Guarantee."
Distributions
Distributions on the Exchange Capital Securities will be cumulative, will
accumulate from April 1, 1997, the date of original issuance, and will be
payable semi-annually in arrears on April 1 and October 1 of each year,
commencing October 1, 1998, at the annual rate of 10.00% of the Liquidation
Amount to the holders of the Exchange Capital Securities on the relevant record
dates. The record dates will be the 15th day of the month preceding the month in
which the relevant Distribution Date falls. The first Distribution Date for the
Exchange Capital Securities will be October 1, 1998. The amount of Distributions
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months and, for any period of less than a full calendar month, the number
of days elapsed in such month. In the event that any date on which Distributions
are payable on the Exchange Capital Securities is not a Business Day, payment of
the Distribution payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect to
any such delay), except that if such next succeeding Business Day falls in the
next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date (each date on which Distributions are payable in accordance with
the foregoing, a "Distribution Date"). A "Business Day" shall mean any day other
than a Saturday or a Sunday, or a day on which banking institutions in New York,
New York, Wilmington, Delaware or Waterbury, Connecticut are authorized or
required by law or executive order to remain closed.
So long as no Debenture Event of Default has occurred and is continuing,
the Corporation has the right under the Indenture to elect to defer the payment
of interest on the Exchange Junior Subordinated Debentures at any time or from
time to time for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period shall end on
a date other than an Interest Payment Date or extend beyond the Stated Maturity
Date. Upon any such election, semi-annual Distributions on the Trust Securities
will be deferred by the Trust during such Extension Period. Distributions to
which holders of the Trust Securities are entitled during any such Extension
Period will accumulate additional Distributions thereon at the rate per annum of
10.00% thereof, compounded semi-annually from the relevant Distribution Date,
but not exceeding the interest rate then accruing on the Exchange Junior
Subordinated Debentures. The term "Distributions," as previously defined,
includes any such additional Distributions.
Prior to the termination of any such Extension Period, the Corporation
may further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods, to end
on a date other than an Interest Payment Date or to extend beyond the Stated
Maturity Date. Upon the termination of any such Extension Period and the payment
of all amounts then due on any Interest Payment Date, the Corporation may elect
to begin a new Extension Period, subject to the above requirements. No interest
shall be due and payable during an Extension Period, except at the end thereof.
The Corporation must give the Property Trustee, the Administrative Trustees and
the Debenture Trustee notice of its election of any such Extension Period (or an
extension thereof) at least five Business Days prior to the earlier of (i) the
date the Distributions on the Exchange Capital Securities would have been
payable except for the election to begin such Extension Period and (ii) the date
the Trust is required to give notice to any automated quotation system or to
holders of such Exchange Capital Securities of the record date or the date such
Distributions are payable, but in any event not less than five Business Days
prior to such record date. There is no limitation on the number of times that
the Corporation may elect to begin an Extension Period. See "--Description of
Exchange Junior Subordinated Debentures--Option to Extend Interest Payment Date"
and "Certain Federal Income Tax Consequences--Interest Income and Original Issue
Discount."
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During any such Extension Period, the Corporation may not (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock,
(ii) make any payment of principal of, premium, if any, or interest on or repay,
repurchase or redeem any debt securities of the Corporation (including Other
Debentures) that rank pari passu with or junior in right of payment to the
Exchange Junior Subordinated Debentures or (iii) make any guarantee payments
with respect to any guarantee by the Corporation of the debt securities of any
subsidiary of the Corporation (including Other Guarantees) if such guarantee
ranks pari passu with or junior in right of payment to the Exchange Junior
Subordinated Debentures (other than (a) dividends or distributions in shares of,
or options, warrants or rights to subscribe for or purchase shares of, common
stock of the Corporation, (b) any declaration of a dividend in connection with
the implementation of a stockholders' rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under the Exchange Guarantee, (d) the
purchase of fractional shares resulting from a reclassification of the
Corporation's capital stock, (e) the purchase of fractional interests in shares
of the Corporation's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged
and (f) purchases of common stock of the Corporation related to the issuance of
such common stock or rights under any of the Corporation's benefit plans for its
directors, officers or employees or any of the Corporation's dividend
reinvestment plans).
The Corporation has no current intention to exercise its option to defer
payments of interest on the Exchange Junior Subordinated Debentures.
The revenue of the Trust available for distribution to holders of the
Capital Securities will be limited to payments under the Junior Subordinated
Debentures in which the Trust has invested the proceeds from the issuance and
sale of the Trust Securities. See "--Description of Exchange Junior Subordinated
Debentures--General." After the Exchange Offer, if the Corporation does not make
interest payments on the Exchange Junior Subordinated Debentures, the Property
Trustee will not have funds available to pay Distributions on the Exchange
Capital Securities. The payment of Distributions (if and to the extent the Trust
has funds legally available for the payment of such Distributions) will be
guaranteed by the Corporation on a limited basis as set forth herein under
"--Description of Exchange Guarantee."
Redemption
Upon the repayment on the Stated Maturity Date or prepayment in whole or
in part prior to the Stated Maturity Date of the Exchange Junior Subordinated
Debentures (other than following the distribution of the Exchange Junior
Subordinated Debentures to the holders of the Trust Securities), the proceeds
from such repayment or prepayment shall be applied by the Property Trustee to
redeem a Like Amount of the Trust Securities, upon not less than 30 nor more
than 60 days' notice of a date of redemption (the "Redemption Date"), at the
applicable Redemption Price, which shall be equal to (i) in the case of the
repayment of the Exchange Junior Subordinated Debentures on the Stated Maturity
Date, the Maturity Redemption Price (equal to the principal of, and accrued and
unpaid interest on, the Exchange Junior Subordinated Debentures), (ii) in the
case of the optional prepayment of the Exchange Junior Subordinated Debentures
before April 1, 2007 upon the occurrence and continuation of a Special Event,
the Special Event Redemption Price (equal to the Special Event Prepayment Price
in respect of the Exchange Junior Subordinated Debentures) and (iii) in the case
of the optional prepayment of the Exchange Junior Subordinated Debentures on or
after April 1, 2007, the Optional Redemption Price (equal to the Optional
Prepayment Price in respect of the Exchange Junior Subordinated Debentures). See
"--Description of Exchange Junior Subordinated Debentures--Optional Prepayment"
and "--Special Event Prepayment." If less than all of the Exchange Junior
Subordinated Debentures are to be prepaid on a Redemption Date, then the
proceeds of such prepayment shall be allocated pro rata to the Trust Securities.
"Like Amount" means (i) with respect to a redemption of the Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Exchange Junior Subordinated
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Debentures to be paid in accordance with their terms and (ii) with respect to a
distribution of Exchange Junior Subordinated Debentures upon the liquidation of
the Trust, Exchange Junior Subordinated Debentures having a principal amount
equal to the Liquidation Amount of the Trust Securities of the holder to whom
such Exchange Junior Subordinated Debentures are distributed.
The Corporation will have the option to prepay the Exchange Junior
Subordinated Debentures, (i) in whole or in part, on or after April 1, 2007, at
the applicable Optional Prepayment Price and (ii) in whole but not in part, at
any time prior to April 1, 2007, upon the occurrence of a Special Event, at the
Special Event Prepayment Price, in each case subject to the receipt of any
required regulatory approval. See "--Description of Exchange Junior Subordinated
Debentures--Optional Prepayment" and "--Special Event Prepayment."
Liquidation of the Trust and Distribution of Exchange Junior Subordinated
Debentures
The Corporation will have the right at any time to terminate the Trust
and, after satisfaction of liabilities to creditors of the Trust as required by
applicable law, to cause the Exchange Junior Subordinated Debentures to be
distributed to the holders of the Trust Securities in liquidation of the Trust.
Such right is subject to (i) the Administrative Trustees having received an
opinion of counsel to the effect that such distribution will not cause the
holders of Exchange Capital Securities to recognize gain or loss for federal
income tax purposes and (ii) the Corporation having received any required
regulatory approval.
The Trust shall automatically terminate upon the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Corporation;
(ii) the distribution of a Like Amount of the Exchange Junior Subordinated
Debentures to the holders of the Trust Securities, if the Corporation, as
Sponsor, has given written direction to the Property Trustee to terminate the
Trust (which direction is optional and, except as described above, wholly within
the discretion of the Corporation, as Sponsor); (iii) redemption of all of the
Trust Securities as described under "--Redemption;" (iv) expiration of the term
of the Trust; and (v) the entry of an order for the dissolution of the Trust by
a court of competent jurisdiction.
If a termination occurs as described in clause (i), (ii), (iv), or (v)
above, the Trust shall be liquidated by the Issuer Trustees as expeditiously as
the Issuer Trustees determine to be possible by distributing, after satisfaction
of liabilities to creditors of the Trust as provided by applicable law, to the
holders of the Trust Securities a Like Amount of the Exchange Junior
Subordinated Debentures, unless such distribution is determined by the Property
Trustee not to be practicable, in which event such holders will be entitled to
receive out of the assets of the Trust legally available for distribution to
holders, after satisfaction of liabilities to creditors of the Trust as provided
by applicable law, an amount equal to the aggregate of the Liquidation Amount
plus accumulated and unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"). If such Liquidation Distribution
can be paid only in part because the Trust has insufficient assets legally
available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on the Trust Securities shall be paid on a
pro rata basis, except that if a Debenture Event of Default has occurred and is
continuing, the Exchange Capital Securities shall have a priority over the
Common Securities. See "--Subordination of Common Securities."
After the liquidation date is fixed for any distribution of Exchange
Junior Subordinated Debentures to holders of the Trust Securities, (i) the
Exchange Capital Securities will no longer be deemed to be outstanding, (ii) DTC
or its nominee, as the record holder of the Exchange Capital Securities, will
receive a registered global certificate or certificates representing the
Exchange Junior Subordinated Debentures to be delivered upon such distribution
with respect to Exchange Capital Securities held by DTC or its nominee and (iii)
any certificates representing Exchange Capital Securities not held by DTC or its
nominee will be deemed to represent Exchange Junior Subordinated Debentures
having a principal amount equal to the Liquidation Amount of such Exchange
Capital Securities, and bearing accrued and unpaid interest in an amount equal
to the accumulated and unpaid Distributions on such Exchange Capital Securities
until such certificates
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are presented to the Corporation or its agent for cancellation, whereupon the
Corporation will issue to such holder, and the Debenture Trustee will
authenticate, a certificate representing such Exchange Junior Subordinated
Debentures.
There can be no assurance as to the market prices for the Exchange
Capital Securities or the Exchange Junior Subordinated Debentures that may be
distributed in exchange for the Trust Securities if a dissolution and
liquidation of the Trust were to occur. Accordingly, the Exchange Capital
Securities that an investor may purchase, or the Exchange Junior Subordinated
Debentures that the investor may receive on dissolution and liquidation of the
Trust, may trade at a discount to the price that the investor paid to purchase
the Exchange Capital Securities offered hereby.
Redemption Procedures
If applicable, Trust Securities shall be redeemed at the applicable
Redemption Price with the proceeds from the contemporaneous repayment or
prepayment of the Exchange Junior Subordinated Debentures. Any redemption of
Trust Securities shall be made and the applicable Redemption Price shall be
payable on the Redemption Date only to the extent that the Trust has funds
legally available for the payment of such applicable Redemption Price. See
"--Subordination of Common Securities."
If the Trust gives a notice of redemption for the Exchange Capital
Securities, then, by 12:00 noon, New York, New York time, on the Redemption
Date, to the extent funds are legally available, with respect to the Exchange
Capital Securities held in global form by DTC or its nominees, the Property
Trustee will deposit or cause the Paying Agent to deposit irrevocably with DTC
funds sufficient to pay the applicable Redemption Price. See "--Form,
Denomination, Book-Entry Procedures and Transfer." With respect to the Exchange
Capital Securities held in certificated form, the Property Trustee, to the
extent funds are legally available, will irrevocably deposit with the Paying
Agent for the Exchange Capital Securities funds sufficient to pay the applicable
Redemption Price and will give the Paying Agent irrevocable instructions and
authority to pay the applicable Redemption Price to the holders thereof upon
surrender of their certificates evidencing the Exchange Capital Securities. See
"--Payment and Paying Agency." Notwithstanding the foregoing, Distributions
payable on or prior to the Redemption Date shall be payable to the holders of
such Exchange Capital Securities on the relevant record dates for the related
Distribution Dates. If notice of redemption shall have been given and funds
deposited as required, then upon the date of such deposit, all rights of the
holders of the Exchange Capital Securities called for redemption will cease,
except the right of the holders of such Exchange Capital Securities to receive
the applicable Redemption Price, but without interest on such Redemption Price,
and such Exchange Capital Securities will cease to be outstanding. In the event
that any Redemption Date of Exchange Capital Securities is not a Business Day,
then the applicable Redemption Price payable on such date will be paid on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such next succeeding
Business Day falls in the next calendar year, such payment shall be made on the
immediately preceding Business Day. In the event that payment of the applicable
Redemption Price is improperly withheld or refused and not paid either by the
Trust or by the Corporation pursuant to the Exchange Guarantee as described
under "--Description of Exchange Guarantee," (i) Distributions on Exchange
Capital Securities will continue to accumulate at the then-applicable rate, from
the Redemption Date originally established by the Trust to the date such
applicable Redemption Price is actually paid and (ii) the actual payment date
will be the Redemption Date for purposes of calculating the applicable
Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Corporation or its subsidiaries may at any time and
from time to time purchase outstanding Exchange Capital Securities by tender, in
the open market or by private agreement.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days prior to the Redemption Date to each holder of Trust Securities at
its registered address. Unless the Corporation defaults in payment of the
applicable Redemption Price on, or in the repayment of, the Exchange
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Junior Subordinated Debentures, on and after the Redemption Date, Distributions
will cease to accrue on the Trust Securities called for redemption.
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of, the Trust
Securities, as applicable, shall be made pro rata based on the Liquidation
Amount of the Trust Securities; provided, however, that if on any Distribution
Date or Redemption Date a Debenture Event of Default shall have occurred and be
continuing, no payment of any Distribution on, or applicable Redemption Price
of, any of the Common Securities, and no other payment on account of the
redemption, liquidation or other acquisition of the Common Securities, shall be
made unless payment in full in cash of all accumulated and unpaid Distributions
on all of the outstanding Exchange Capital Securities for all Distribution
periods terminating on or prior thereto, or in the case of payment of the
applicable Redemption Price the full amount of such Redemption Price, shall have
been made or provided for, and all funds available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions on, or
Redemption Price of, the Exchange Capital Securities then due and payable.
In the case of any Event of Default under the Trust Agreement, the
Corporation as holder of the Common Securities will be deemed to have waived any
right to act with respect to such Event of Default until the effect of such
Event of Default shall have been cured, waived or otherwise eliminated. Until
any such Event of Default has been so cured, waived or otherwise eliminated, the
Property Trustee shall act solely on behalf of the holders of the Capital
Securities and not on behalf of the Corporation as holder of the Common
Securities, and only the holders of the Capital Securities will have the right
to direct the Property Trustee to act on their behalf.
Events of Default; Notice
The occurrence of a Debenture Event of Default (see "--Description of
Exchange Junior Subordinated Debentures--Debenture Events of Default")
constitutes an "Event of Default" under the Trust Agreement.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of the Exchange Capital
Securities, the Administrative Trustees and the Corporation (as
successor-in-interest to Eagle), as Sponsor, unless such Event of Default shall
have been cured or waived. The Corporation, as Sponsor, and the Administrative
Trustees are required to file annually with the Property Trustee a certificate
as to whether or not they are in compliance with all the conditions and
covenants applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the
Exchange Capital Securities shall have a preference over the Common Securities
as described under "--Liquidation of the Trust and Distribution of Exchange
Junior Subordinated Debentures" and "--Subordination of Common Securities."
Removal of Issuer Trustees
Unless a Debenture Event of Default shall have occurred and be
continuing, any Issuer Trustee may be removed at any time by the holder of the
Common Securities. If a Debenture Event of Default has occurred and is
continuing, the Property Trustee and the Delaware Trustee may be removed at such
time by the holders of a majority in Liquidation Amount of the outstanding
Capital Securities. In no event will the holders of the Exchange Capital
Securities have the right to vote to appoint, remove or replace the
Administrative Trustees, which voting rights are vested exclusively in the
Corporation as the holder of the Common Securities. No resignation or removal of
an Issuer Trustee and no appointment of a successor trustee shall be effective
until the acceptance of appointment by the successor trustee in accordance with
the provisions of the Trust Agreement.
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Co-Trustees and Separate Property Trustee
Unless a Debenture Event of Default shall have occurred and be
continuing, at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which any part
of the Trust's property may at any time be located, the Property Trustee shall
have power to appoint one or more persons either to act as a co-trustee, jointly
with the Property Trustee, of all or any part of such Trust's property, or to
act as separate trustee of any such property, in either case with such powers as
may be provided in the instrument of appointment, and to vest in such person or
persons in such capacity any property, title, right or power deemed necessary or
desirable, subject to the provisions of the Trust Agreement.
Merger or Consolidation of Issuer Trustees
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Issuer Trustee shall be a party, or
any Person succeeding to all or substantially all the corporate trust business
of such Issuer Trustee, shall be the successor of such Issuer Trustee under the
Trust Agreement, provided such Person shall be otherwise qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the Trust
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any corporation or other Person,
except as described herein or as otherwise described under "--Liquidation of the
Trust and Distribution of Exchange Junior Subordinated Debentures." The Trust
may, at the request of the Corporation, as Sponsor, with the consent of the
Administrative Trustees but without the consent of the holders of the Exchange
Capital Securities, merge with or into, consolidate, amalgamate, or be replaced
by or convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to a trust organized as such under the laws of any
state; provided, that (i) such successor entity either (a) expressly assumes all
of the obligations of the Trust with respect to the Trust Securities or (b)
substitutes for the Trust Securities other securities having substantially the
same terms as the Trust Securities (the "Successor Securities") so long as the
Successor Securities rank the same as the Trust Securities rank in priority with
respect to distributions and payments upon liquidation, redemption and
otherwise, (ii) the Corporation expressly appoints a trustee of such successor
entity possessing the same powers and duties as the Property Trustee with
respect to the Exchange Junior Subordinated Debentures, (iii) the Successor
Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or other
organization on which the Trust Securities are then listed or quoted, if any,
(iv) if the Exchange Capital Securities (including any Successor Securities) are
rated by any nationally recognized statistical rating organization prior to such
transaction, such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not cause the Exchange Capital Securities (including any
Successor Securities) or, if the Exchange Junior Subordinated Debentures are so
rated, the Exchange Junior Subordinated Debentures, to be downgraded by any such
nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Trust Securities (including any Successor Securities) in any material respect,
(vi) such successor entity has a purpose identical to that of the Trust, (vii)
prior to such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, the Corporation has received an opinion from independent
counsel to the Trust experienced in such matters to the effect that (a) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
does not adversely affect the rights, preferences and privileges of the holders
of the Trust Securities (including any Successor Securities) in any material
respect (other than any dilution of such holders' interests in the new entity)
and (b) following such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the Trust nor such successor entity will
be required to register as an investment company under the Investment
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Company Act of 1940, as amended (the "Investment Company Act"), and (viii) the
Corporation or any permitted successor or assignee owns all of the common
securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent provided
by the Exchange Guarantee and the Common Guarantee. Notwithstanding the
foregoing, the Trust shall not, except with the consent of holders of 100% in
Liquidation Amount of the Trust Securities, consolidate, amalgamate, merge with
or into, or be replaced by or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to any other entity or
permit any other entity to consolidate, amalgamate, merge with or into, or
replace it, if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Trust or the successor entity not
to be classified as a grantor trust for U.S. federal income tax purposes.
Voting Rights; Amendment of the Trust Agreement
Except as provided herein and under "--Mergers, Consolidations,
Amalgamations or Replacements of the Trust" and "--Description of Exchange
Guarantee--Amendments and Assignment" and as otherwise required by law and the
Trust Agreement, the holders of the Exchange Capital Securities will have no
voting rights.
The Trust Agreement may be amended from time to time by the Corporation,
the Property Trustee and the Administrative Trustees, without the consent of the
holders of the Trust Securities (i) to cure any ambiguity, correct or supplement
any provision in the Trust Agreement that may be inconsistent with any other
provision, or to make any other provisions with respect to matters or questions
arising under the Trust Agreement, which shall not be inconsistent with the
other provisions of the Trust Agreement, or (ii) to modify, eliminate or add to
any provisions of the Trust Agreement to such extent as shall be necessary to
ensure that the Trust will be classified for U.S. federal income tax purposes as
a grantor trust at all times that any Trust Securities are outstanding or to
ensure that the Trust will not be required to register as an "investment
company" under the Investment Company Act; provided, however, that in each such
case such action shall not adversely affect in any material respect the
interests of the holders of the Trust Securities. Any amendments of the Trust
Agreement pursuant to the foregoing shall become effective when notice thereof
is given to the holders of the Trust Securities. The Trust Agreement may be
amended by the Issuer Trustees and the Corporation (i) with the consent of
holders representing a majority (based upon Liquidation Amount) of the
outstanding Trust Securities and (ii) upon receipt by the Issuer Trustees of an
opinion of counsel experienced in such matters to the effect that such amendment
or the exercise of any power granted to the Issuer Trustees in accordance with
such amendment will not affect the Trust's status as a grantor trust for U.S.
federal income tax purposes or the Trust's exemption from status as an
"investment company" under the Investment Company Act, provided that, without
the consent of each holder of Trust Securities, the Trust Agreement may not be
amended to (i) change the amount or timing of any Distribution on the Trust
Securities or otherwise adversely affect the amount of any Distribution required
to be made in respect of the Trust Securities as of a specified date or (ii)
restrict the right of a holder of Trust Securities to institute suit for the
enforcement of any such payment on or after such date. The Exchange Capital
Securities and any Original Capital Securities that remain outstanding after
consummation of the Exchange Offer will vote together as a single class for
purposes of determining whether holders of the requisite percentage in
outstanding Liquidation Amount thereof have taken certain actions or exercised
certain rights under the Trust Agreement.
So long as any Exchange Junior Subordinated Debentures are held by the
Property Trustee, the Issuer Trustees shall not (i) direct the time, method and
place of conducting any proceeding for any remedy available to the Debenture
Trustee, or execute any trust or power conferred on the Debenture Trustee with
respect to the Exchange Junior Subordinated Debentures, (ii) waive certain past
defaults under the Indenture, (iii) exercise any right to rescind or annul a
declaration of acceleration of the maturity of the principal of the Exchange
Junior Subordinated Debentures or (iv) consent to any amendment, modification or
termination of the Indenture or the Exchange Junior Subordinated Debentures,
where such consent shall be required, without, in each case, obtaining the
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prior approval of the holders of a majority in Liquidation Amount of all
outstanding Capital Securities; provided, however, that where a consent under
the Indenture would require the consent of each holder of Exchange Junior
Subordinated Debentures affected thereby, no such consent shall be given by the
Property Trustee without the prior approval of each holder of the Exchange
Capital Securities. The Issuer Trustees shall not revoke any action previously
authorized or approved by a vote of the holders of the Exchange Capital
Securities except by subsequent vote of such holders. The Property Trustee shall
notify each holder of Exchange Capital Securities of any notice of default it
receives with respect to the Exchange Junior Subordinated Debentures. In
addition to obtaining the foregoing approvals of such holders of the Exchange
Capital Securities, prior to taking any of the foregoing actions, the Issuer
Trustees shall obtain an opinion of counsel experienced in such matters to the
effect that the Trust will not be classified as an association taxable as a
corporation for U.S. federal income tax purposes on account of such action.
Any required approval of holders of Exchange Capital Securities may be
given at a meeting of such holders convened for such purpose or pursuant to
written consent. The Property Trustee will cause a notice of any meeting at
which holders of Exchange Capital Securities are entitled to vote, or of any
matter upon which action by written consent of such holders is to be taken, to
be given to each holder of record of Exchange Capital Securities in the manner
set forth in the Trust Agreement.
No vote or consent of the holders of Exchange Capital Securities will be
required for the Trust to redeem and cancel the Exchange Capital Securities in
accordance with the Trust Agreement.
Notwithstanding that holders of the Exchange Capital Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Exchange Capital Securities that are owned by the Corporation or any
affiliate of the Corporation shall, for purposes of such vote or consent, be
treated as if they were not outstanding.
Form, Denomination, Book-Entry Procedures and Transfer
The Exchange Capital Securities initially will be represented by one or
more Exchange Capital Securities in registered, global form (collectively, the
"Global Capital Securities"). The Global Capital Securities will be deposited
upon issuance with the Property Trustee as custodian for DTC, in New York, New
York, and registered in the name of DTC or its nominee, in each case for credit
to an account of a direct or indirect participant in DTC as described herein.
In the event that Exchange Capital Securities are issued in certificated
form, the Exchange Capital Securities will be in blocks having a Liquidation
Amount of not less than $100,000 (100 Capital Securities) and may be transferred
or exchanged on in such blocks in the manner described herein.
Except as set forth herein, the Global Capital Securities may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee and only in amounts that would not cause a
holder to own less than 100 Exchange Capital Securities. Beneficial interests in
the Global Capital Securities may not be exchanged for Exchange Capital
Securities in certificated form except in the limited circumstances described
herein. See "--Exchange of Book-Entry Capital Securities for Certificated
Capital Securities."
Depository Procedures
DTC has advised the Trust and the Corporation that DTC is a
limited-purpose trust company organized under the laws of the state of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
in accounts of its Participants, thereby eliminating the need for physical
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movement of certificates. Participants include securities brokers and dealers
(including the Initial Purchaser), banks, trust companies, clearing corporations
and certain other organizations. Indirect access to DTC's system is also
available to other entities such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly (collectively, the "Indirect Participants").
Persons who are not Participants may beneficially own securities held by or on
behalf of DTC only through the Participants or the Indirect Participants. The
ownership interest and transfer of ownership interest of each actual purchaser
of each security held by or on behalf of DTC are recorded on the records of the
Participants and Indirect Participants.
DTC has also advised the Trust and the Corporation that, pursuant to
procedures established by it, (i) upon deposit of the Global Capital Securities,
DTC will credit the accounts of Participants designated by the Initial Purchaser
with portions of the principal amount of the Global Capital Securities and (ii)
ownership of such interests in the Global Capital Securities will be shown on,
and the transfer of ownership thereof will be effected only through, records
maintained by DTC (with respect to the Participants) or by the Participants and
the Indirect Participants (with respect to other owners of beneficial interests
in the Global Capital Securities).
Investors in the Global Capital Securities may hold their interests
therein directly through DTC if they are Participants, or indirectly through
organizations that are Participants. All interests in a Global Capital Security
will be subject to the procedures and requirements of DTC. The laws of some
states require that certain persons take physical delivery in certificated form
of securities that they own. Consequently, the ability to transfer beneficial
interests in a Global Capital Security to such persons will be limited to that
extent. Because DTC can act only on behalf of Participants, which in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having beneficial interests in a Global Capital Security to pledge such
interests to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interests, may be affected by the lack
of a physical certificate evidencing such interests. For certain other
restrictions on the transferability of the Exchange Capital Securities, see
"--Exchange of Book-Entry Capital Securities for Certificated Capital
Securities."
EXCEPT AS DESCRIBED HEREIN, OWNERS OF INTERESTS IN THE GLOBAL CAPITAL
SECURITIES WILL NOT HAVE EXCHANGE CAPITAL SECURITIES REGISTERED IN THEIR NAMES,
WILL NOT RECEIVE PHYSICAL DELIVERY OF EXCHANGE CAPITAL SECURITIES IN
CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR HOLDERS
THEREOF UNDER THE TRUST AGREEMENT FOR ANY PURPOSE.
Payments in respect of the Global Capital Security registered in the name
of DTC or its nominee will be payable by the Property Trustee to DTC in its
capacity as the registered holder under the Trust Agreement. Under the terms of
the Trust Agreement, the Property Trustee will treat the persons in whose names
the Exchange Capital Securities, including the Global Capital Securities, are
registered as the owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, neither the Property
Trustee nor any agent thereof has or will have any responsibility or liability
for (i) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to, or payments made on account of, beneficial
ownership interests in the Global Capital Securities, or for maintaining,
supervising or reviewing any of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in the
Global Capital Securities or (ii) any other matter relating to the actions and
practices of DTC or any of its Participants or Indirect Participants. DTC has
advised the Trust and the Corporation that its current practice, upon receipt of
any payment in respect of securities such as the Exchange Capital Securities, is
to credit the accounts of the relevant Participants with the payment on the
payment date, in amounts proportionate to their respective holdings in
Liquidation Amount of beneficial interests in the relevant security as shown on
the records of DTC unless DTC has reason to believe it will not receive payment
on such payment date. Payments by the Participants and the Indirect Participants
to the beneficial owners of Exchange Capital Securities will be governed by
standing instructions and customary practices and will be the responsibility of
the Participants or the Indirect Participants and will not be the responsibility
of
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DTC, the Property Trustee, the Trust or the Corporation. None of the Trust, the
Corporation or the Property Trustee will be liable for any delay by DTC or any
of its Participants in identifying the beneficial owners of the Exchange Capital
Securities, and the Trust, the Corporation and the Property Trustee may
conclusively rely on and will be protected in relying on instructions from DTC
or its nominee for all purposes.
Interests in the Global Capital Securities will trade in DTC's Same-Day
Funds Settlement System and secondary market trading activity in interests in
the Global Capital Securities will settle in immediately available funds,
subject in all cases to the rules and procedures of DTC and its Participants.
Transfers between Participants in DTC will be effected in accordance with DTC's
procedures, and will settle in same-day funds.
DTC has advised the Trust and the Corporation that it will take any
action permitted to be taken by a holder of Exchange Capital Securities
(including, without limitation, the presentation of Exchange Capital Securities
for exchange as described herein) only at the direction of one or more
Participants to whose account with DTC interests in the Global Capital
Securities are credited and only in respect of such portion of the aggregate
Liquidation Amount of the Exchange Capital Securities as to which such
Participant or Participants has or have given such direction. However, if there
is an Event of Default under the Trust Agreement, DTC reserves the right to
exchange the Global Capital Securities for legended Exchange Capital Securities
in certificated form and to distribute such Exchange Capital Securities to its
Participants.
So long as DTC or its nominee is the registered owner of the Global
Capital Securities, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Exchange Capital Securities represented by the
Global Capital Security for all purposes under the Trust Agreement.
Although DTC has agreed to the foregoing procedures to facilitate
transfers of interest in the Global Capital Securities among Participants in
DTC, it is under no obligation to perform or to continue to perform such
procedures, and such procedures may be discontinued at any time. None of the
Trust, the Corporation or the Property Trustee will have any responsibility for
the performance by DTC or its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing its operations.
The information in this section concerning DTC and its book-entry system
has been obtained from sources that the Trust and the Corporation believe to be
reliable, but neither the Trust nor the Corporation takes responsibility for the
accuracy thereof.
Exchange of Book-Entry Capital Securities for Certificated Capital Securities
A Global Capital Security is exchangeable for Exchange Capital Securities
in registered certificated form if (i) DTC (a) notifies the Trust that it is
unwilling or unable to continue as Depository for the Global Capital Security or
(b) has ceased to be a clearing agency registered under the Exchange Act, and
the Trust thereupon fails to appoint a successor Depository within 90 days, (ii)
the Corporation in its sole discretion elects to cause the issuance of the
Exchange Capital Securities in certificated form or (iii) there shall have
occurred and be continuing an Event of Default or any event which after notice
or lapse of time or both would be an Event of Default under the Trust Agreement.
In addition, beneficial interests in a Global Capital Security may be exchanged
by or on behalf of DTC for certificated Exchange Capital Securities upon request
by DTC, but only upon at least 20 days' prior written notice given to the
Property Trustee in accordance with DTC's customary procedures. In all cases,
certificated Exchange Capital Securities delivered in exchange for any Global
Capital Security or beneficial interests therein will be registered in the
names, and issued in any approved denominations, requested by or on behalf of
the Depository (in accordance with its customary procedures).
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Payment and Paying Agency
Payments in respect of the Exchange Capital Securities held in global
form shall be made to the Depository, which shall credit the relevant accounts
at the Depository on the applicable Distribution Dates or in respect of the
Exchange Capital Securities that are not held by the Depository, such payments
shall be made by check mailed to the address of the holder entitled thereto as
such address shall appear on the register. The paying agent (the "Paying Agent")
shall initially be the Property Trustee. The Paying Agent shall be permitted to
resign as Paying Agent upon 30 days' written notice to the Administrative
Trustees. In the event that the Property Trustee shall no longer be the Paying
Agent, the Trust shall appoint a successor (which shall be a bank or trust
company acceptable to the Administrative Trustees and the Corporation (as
successor-in-interest to Eagle)) to act as Paying Agent.
Restrictions on Transfer
The Exchange Capital Securities will be issued, and may be transferred,
only in blocks having a Liquidation Amount of not less than $100,000 (100
Capital Securities) and multiples of $1,000 in excess thereof. Any attempted
sale, transfer or other disposition of Exchange Capital Securities in a block
having a Liquidation Amount of less than $100,000 shall be deemed to be void and
of no legal effect whatsoever. Any such transferee shall be deemed not to be the
holder of such Exchange Capital Securities for any purpose, including but not
limited to the receipt of Distributions on such Exchange Capital Securities, and
such transferee shall be deemed to have no interest whatsoever in such Exchange
Capital Securities.
Registrar and Transfer Agent
The Property Trustee will act as Registrar and transfer agent for the
Exchange Capital Securities.
Registration of transfers of the Exchange Capital Securities will be
effected without charge by or on behalf of the Trust, but upon payment of any
tax or other governmental charges that may be imposed in connection with any
transfer or exchange. The Trust will not be required to register or cause to be
registered the transfer of the Exchange Capital Securities after they have been
called for redemption.
Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and continuance of
an Event of Default, undertakes to perform only such duties as are specifically
set forth in the Trust Agreement and, during the existence of an Event of
Default, must exercise the same degree of care and skill as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs. Subject to this provision, the Property Trustee is under no obligation
to exercise any of the powers vested in it by the Trust Agreement at the request
of any holder of Trust Securities unless it is offered reasonable indemnity
against the costs, expenses and liabilities that might be incurred thereby. If
no Event of Default has occurred and is continuing and the Property Trustee is
required to decide between alternative causes of action, construe ambiguous
provisions in the Trust Agreement or is unsure of the application of any
provision of the Trust Agreement, and the matter is not one on which holders of
the Exchange Capital Securities or the Common Securities are entitled under the
Trust Agreement to vote, then the Property Trustee shall take such action as is
directed by the Corporation and, if not so directed, shall take such action as
it deems advisable and in the best interests of the holders of the Trust
Securities and will have no liability except for its own bad faith, gross
negligence or willful misconduct.
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Miscellaneous
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that (i) the Trust will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act, (ii) the Trust will be classified as a grantor trust for
U.S. federal income tax purposes and (iii) the Exchange Junior Subordinated
Debentures will be treated as indebtedness of the Corporation for U.S. federal
income tax purposes. In this connection, the Corporation and the Administrative
Trustees are authorized to take any action, not inconsistent with applicable law
or the Trust Agreement, that the Administrative Trustees determine in their
discretion to be necessary or desirable for such purposes, as long as such
action does not materially adversely affect the interests of the holders of the
Trust Securities.
The Trust Agreement provides that (i) holders of the Trust Securities
have no preemptive rights to subscribe for any additional Trust Securities, and
(ii) the issuance of Exchange Capital Securities and the issuance of Common
Securities are not subject to preemptive or similar rights.
The Trust may not borrow money, issue debt, execute mortgages or pledge
any of its assets.
DESCRIPTION OF EXCHANGE JUNIOR SUBORDINATED DEBENTURES
The Original Junior Subordinated Debentures were issued and the Exchange
Junior Subordinated Debentures will be issued under the Indenture. The Indenture
has been qualified under the Trust Indenture Act. This summary of certain terms
and provisions of the Exchange Junior Subordinated Debentures and the Indenture
does not purport to be complete, and where reference is made to particular
provisions of the Indenture, such provisions, including the definitions of
certain terms, some of which are not otherwise defined herein, are qualified in
their entirety by reference to all of the provisions of the Indenture and those
terms made a part of the Indenture by the Trust Indenture Act.
General
Concurrently with the issuance of the Original Capital Securities, the
Trust invested the proceeds thereof, together with the consideration paid by the
Corporation for the Common Securities, in Original Junior Subordinated
Debentures issued by the Corporation. The Exchange Junior Subordinated
Debentures, similarly to the Original Junior Subordinated Debentures, will bear
interest at the annual rate of 10.00% of the principal amount thereof, payable
semi-annually in arrears on April 1 and October 1 of each year (each, an
"Interest Payment Date"), commencing October 1, 1998, to the person in whose
name each Exchange Junior Subordinated Debenture is registered, subject to
certain exceptions, at the close of business on the 15th day of the month
preceding the month in which the relevant payment date falls. It is anticipated
that, until the liquidation, if any, of the Trust, each Exchange Junior
Subordinated Debenture will be held in the name of the Property Trustee in trust
for the benefit of the holders of the Trust Securities. The amount of interest
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months and, for any period of less than a full calendar month, the number
of days elapsed in such month. In the event that any date on which interest is
payable on the Exchange Junior Subordinated Debentures is not a Business Day,
then payment of the interest payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), except that if such next succeeding Business Day
falls in the next succeeding calendar year, then such payment shall be made on
the immediately preceding Business Day, in each case with the same force and
effect as if made on such date. Accrued interest that is not paid on the
applicable Interest Payment Date will bear additional interest on the amount
thereof (to the extent permitted by law) at the rate per annum of 10.00%
thereof, compounded semi-annually. The term "interest," as used herein, shall
include semi-annual interest payments, interest on semi-annual interest payments
not paid on the applicable Interest Payment Date and Additional Sums , as
applicable.
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The Exchange Junior Subordinated Debentures will be issued pursuant to
the Indenture. The Exchange Junior Subordinated Debentures will mature on April
1, 2027.
The Exchange Junior Subordinated Debentures will be unsecured and will
rank pari passu with the Original Junior Subordinated Debentures and all Other
Debentures and subordinate and junior in right of payment to all Senior
Indebtedness to the extent and in the manner set forth in the Indenture. See
"--Subordination."
The Corporation is a holding company and almost all of the operating
assets of the Corporation are owned by the Corporation's Subsidiaries. The
Corporation is a legal entity separate and distinct from its Subsidiaries.
Holders of Exchange Junior Subordinated Debentures should look only to the
Corporation for payments on the Exchange Junior Subordinated Debentures. The
principal sources of the Corporation's income are dividends, interest and fees
from its Subsidiaries. The Corporation relies primarily on dividends from
Webster Bank to meet its obligations for payment of principal and interest on
its outstanding debt obligations and corporate expenses. There are regulatory
limitations on the payment of dividends to the Corporation from Webster Bank. As
of June 30, 1998, under OTS regulations, Webster Bank had approximately $136
million total capital available for payment of dividends to the Corporation. The
OTS has the power to prohibit payment of dividends under circumstances including
if such payment would constitute an unsafe or unsound banking practice. In
addition, Webster Bank is subject to certain restrictions imposed by federal law
on any extensions of credit to, and certain other transactions with, the
Corporation and certain other affiliates, and on investments in stock or other
securities thereof. Such restrictions prevent the Corporation and such other
affiliates from borrowing from Webster Bank unless the loans are secured by
various types of collateral. Further, such secured loans, other transactions and
investments by Webster Bank are generally limited in amount as to the
Corporation and as to each of such other affiliates to 10.00% of Webster Bank's
capital and surplus and as to the Corporation and all of such other affiliates
to an aggregate of 20% of Webster Bank's capital and surplus.
Because the Corporation is a holding company, the right of the
Corporation to participate in any distribution of assets of any subsidiary upon
such subsidiary's liquidation or reorganization or otherwise (and thus the
ability of holders of the Exchange Capital Securities to benefit indirectly from
such distribution), is subject to the prior claims of creditors of that
subsidiary (including depositors, in the case of Webster Bank), except to the
extent the Corporation may itself be recognized as a creditor of that
subsidiary. At June 30, 1998, the Subsidiaries of the Corporation had total
liabilities (excluding liabilities owed to the Corporation) of $8.4 billion.
Accordingly, the Exchange Junior Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of the Corporation's
Subsidiaries (including the Subsidiaries' deposit liabilities) and all
liabilities of any future subsidiaries of the Corporation. The Indenture does
not limit the incurrence or issuance of other secured or unsecured debt of the
Corporation or any subsidiary, including Senior Indebtedness . See
"--Subordination."
Form, Registration and Transfer
If the Exchange Junior Subordinated Debentures are distributed to the
holders of the Trust Securities, the Exchange Junior Subordinated Debentures may
be represented by one or more global certificates registered in the name of Cede
& Co. as the nominee of DTC. The depository arrangements for such Exchange
Junior Subordinated Debentures are expected to be substantially similar to those
in effect for the Exchange Capital Securities. For a description of DTC and the
terms of the depository arrangements relating to payments, transfers, voting
rights, redemptions and other notices and other matters, see "-- Description of
Exchange Capital Securities -- Form, Denomination, Book-Entry Procedures and
Transfer."
Payment and Paying Agents
Payment of principal of (and premium, if any) and interest on Exchange
Junior Subordinated Debentures will be made at the office of the Debenture
Trustee in Wilmington, Delaware or at the
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office of such Paying Agent or Paying Agents as the Corporation may designate
from time to time, except that at the option of the Corporation payment of any
interest may be made, except in the case of Exchange Junior Subordinated
Debentures in global form, (i) by check mailed to the address of the Person
entitled thereto as such address shall appear in the register for Exchange
Junior Subordinated Debentures or (ii) by transfer to an account maintained by
the Person entitled thereto as specified in such register, provided that proper
transfer instructions have been received by the relevant Record Date. Payment of
any interest on any Exchange Junior Subordinated Debenture will be made to the
Person in whose name such Exchange Junior Subordinated Debenture is registered
at the close of business on the Record Date for such interest, except in the
case of defaulted interest. The Corporation may at any time designate additional
Paying Agents or rescind the designation of any Paying Agent; however the
Corporation will at all times be required to maintain a Paying Agent in each
place of payment for the Exchange Junior Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any Paying Agent, or
then held by the Corporation in trust, for the payment of the principal of (and
premium, if any) or interest on any Exchange Junior Subordinated Debenture and
remaining unclaimed for two years after such principal (and premium, if any) or
interest has become due and payable shall, at the request of the Corporation, be
repaid to the Corporation and the holder of such Exchange Junior Subordinated
Debenture shall thereafter look, as a general unsecured creditor, only to the
Corporation for payment thereof.
Option to Extend Interest Payment Date
So long as no Debenture Event of Default has occurred and is continuing,
the Corporation has the right under the Indenture to defer the payment of
interest on the Exchange Junior Subordinated Debentures at any time and from
time to time for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period shall end on
a date other than an Interest Payment Date or extend beyond the Stated Maturity
Date. At the end of such Extension Period, the Corporation must pay all interest
then accrued and unpaid (together with interest thereon at the annual rate of
10.00%, compounded semi-annually, to the extent permitted by applicable law
("Compounded Interest")). During an Extension Period, interest will continue to
accrue and holders of Exchange Junior Subordinated Debentures (or holders of the
Trust Securities while Trust Securities are outstanding) will be required to
accrue such deferred interest income for U.S. federal income tax purposes prior
to the receipt of cash attributable to such income. See "Certain Federal Income
Tax Consequences--Interest Income and Original Issue Discount."
During any such Extension Period, the Corporation may not (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock,
(ii) make any payment of principal of, premium, if any, or interest on or repay,
repurchase or redeem any debt securities of the Corporation (including Other
Debentures) that rank pari passu with or junior in right of payment to the
Exchange Junior Subordinated Debentures or (iii) make any guarantee payments
with respect to any guarantee by the Corporation of the debt securities of any
subsidiary of the Corporation (including any Other Guarantees) if such guarantee
ranks pari passu with or junior in right of payment to the Exchange Junior
Subordinated Debentures (other than (a) dividends or distributions in shares of,
or options, warrants or rights to subscribe for or purchase shares of, common
stock of the Corporation, (b) any declaration of a dividend in connection with
the implementation of a stockholders' rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under the Exchange Guarantee, (d) the
purchase of fractional shares resulting from a reclassification of the
Corporation's capital stock, (e) the purchase of fractional interests in shares
of the Corporation's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged
and (f) purchases of common stock of the Corporation related to the issuance of
such common stock or rights under any of the Corporation's benefit plans for its
directors, officers or employees or any of the Corporation's dividend
reinvestment plans).
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Prior to the termination of any such Extension Period, the Corporation
may further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods, end on
a date other than an Interest Payment Date or extend beyond the Stated Maturity
Date. Upon the termination of any such Extension Period and the payment of all
amounts then due on any Interest Payment Date, the Corporation may elect to
begin a new Extension Period, subject to the above requirements. No interest
shall be due and payable during an Extension Period, except at the end thereof.
The Corporation must give the Property Trustee, the Administrative Trustees and
the Debenture Trustee notice of its election of any Extension Period (or an
extension thereof) at least five Business Days prior to the earlier of (i) the
date the Distributions on the Trust Securities would have been payable except
for the election to begin or extend such Extension Period or (ii) the date the
Trust is required to give notice to any automated quotation system or to holders
of Exchange Capital Securities of the record date or the date such Distributions
are payable, but in any event not less than five Business Days prior to such
record date. The Debenture Trustee shall give notice of the Corporation's
election to begin or extend a new Extension Period to the holders of the
Exchange Capital Securities. There is no limitation on the number of times that
the Corporation may elect to begin an Extension Period.
Optional Prepayment
The Exchange Junior Subordinated Debentures will be prepayable, in whole
or in part, at the option of the Corporation on or after April 1, 2007, subject
to the Corporation having received any required regulatory approval, at a
prepayment price (as previously defined, the "Optional Prepayment Price") equal
to the percentage of the outstanding principal amount of the Exchange Junior
Subordinated Debentures specified below, plus, in each case, accrued and unpaid
interest thereon to the date of prepayment if prepaid during the 12-month period
beginning April 1 of the years indicated below:
YEAR PERCENTAGE
---- ----------
2007 ............................................ 105.0%
2008 ............................................ 104.5%
2009 ............................................ 104.0%
2010 ............................................ 103.5%
2011 ............................................ 103.0%
2012 ............................................ 102.5%
2013 ............................................ 102.0%
2014 ............................................ 101.5%
2015 ............................................ 101.0%
2016 ............................................ 100.5%
2017 and thereafter................................ 100.0%
Special Event Prepayment
Prior to April 1, 2007, if a Special Event shall occur and be continuing,
the Corporation may, at its option and subject to receipt of any required
regulatory approval, prepay the Exchange Junior Subordinated Debentures in whole
(but not in part) at any time within 90 days of the occurrence of such Special
Event, at a prepayment price (as previously defined, the "Special Event
Prepayment Price") equal to, for each Exchange Capital Security, the Make-Whole
Amount for a corresponding $1,000 principal amount of Exchange Junior
Subordinated Debentures together with accrued Distributions to, but excluding,
the date fixed for redemption. The "Make-Whole Amount" , as previously defined,
shall be equal to the greater of (i) 100% of the principal amount to be prepaid
or (ii) the sum, as determined by a Quotation Agent , of the present values of
the remaining scheduled payments of principal and interest on the Exchange
Junior Subordinated Debentures, discounted to the prepayment date on a
semi-annual 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), accrued and
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unpaid interest thereon, including Compounded Interest and Additional Sums , if
any, to the date of prepayment.
A "Special Event" means a Tax Event or a Regulatory Capital Event, as the
case may be.
A "Tax Event" means the receipt by the Trust and the Corporation of an
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to, or change (including any announced prospective change) in,
the laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after April 1, 1997, there is
more than an insubstantial risk that (i) the Trust is, or will be, within 90
days of the date of such opinion, subject to U.S. federal income tax with
respect to income received or accrued on the Exchange Junior Subordinated
Debentures, (ii) interest payable by the Corporation on the Exchange Junior
Subordinated Debentures is not, or within 90 days of the date of such opinion,
will not be, deductible by the Corporation, in whole or in part, for U.S.
federal income tax purposes or (iii) the Trust is, or will be within 90 days of
the date of such opinion, subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
A "Regulatory Capital Event" means that the Corporation shall have
received an opinion of bank regulatory counsel experienced in such matters to
the effect that, as a result of (i) any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any rules, guidelines or policies of an applicable
regulatory authority for the Corporation or (ii) any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such pronouncement or
decision is announced on or after April 1, 1997, the Capital Securities do not
constitute, or within 90 days of the date thereof, will not constitute, Tier 1
Capital (or its then-equivalent); provided, however, that the distribution of
the Exchange Junior Subordinated Debentures in connection with the liquidation
of the Trust by the Corporation shall not in and of itself constitute a
Regulatory Capital Event unless such liquidation shall have occurred in
connection with a Tax Event.
"Adjusted Treasury Rate" means, with respect to any prepayment 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 prepayment date plus (i) 2.90% if such prepayment date
occurs on or prior to April 1, 1998 and (ii) 2.38% in all other cases.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the remaining
term of the Exchange Junior Subordinated Debentures to be prepaid that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Exchange Junior Subordinated Debentures.
"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 prepayment 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 prepayment 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 prepayment date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(b) if the Debenture
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Trustee 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 prepayment date, the average, as determined by
the Debenture Trustee, 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 Debenture Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York, New York time, on the third Business Day preceding such prepayment
date.
Notice of any prepayment will be mailed not less than 30 days but not
more than 60 days before the prepayment date to each holder of Exchange Junior
Subordinated Debentures to be prepaid at its registered address. Unless the
Corporation defaults in payment of the Prepayment Price, on and after the
prepayment date interest ceases to accrue on such Exchange Junior Subordinated
Debentures called for prepayment.
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Corporation will pay as
additional amounts on the Exchange Junior Subordinated Debentures such amounts
as shall be necessary in order that the amount of Distributions then due and
payable by the Trust on the outstanding Trust Securities shall not be reduced as
a result of any additional taxes, duties and other governmental charges to which
the Trust has become subject as a result of a Tax Event ("Additional Sums").
Certain Covenants of the Corporation
The Corporation will also covenant that it will not (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock,
(ii) make any payment of principal of, premium, if any, or interest on or repay,
repurchase or redeem any debt securities of the Corporation (including Other
Debentures) that rank pari passu with or junior in right of payment to the
Exchange Junior Subordinated Debentures or (iii) make any guarantee payments
with respect to any guarantee by the Corporation of the debt securities of any
subsidiary of the Corporation (including Other Guarantees) if such guarantee
ranks pari passu with or junior in right of payment to the Exchange Junior
Subordinated Debentures (other than (a) dividends or distributions in shares of,
or options, warrants or rights to subscribe for or purchase shares of, common
stock of the Corporation, (b) any declaration of a dividend in connection with
the implementation of a stockholders' rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under the Exchange Guarantee, (d) the
purchase of fractional shares resulting from a reclassification of the
Corporation's capital stock, (e) the purchase of fractional interests in shares
of the Corporation's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged
and (f) purchases of common stock of the Corporation related to the issuance of
such common stock or rights under any of the Corporation's benefit plans for its
directors, officers or employees or any of the Corporation's dividend
reinvestment plans), if at such time (1) there shall have occurred any event of
which the Corporation has actual knowledge that (A) is, or, with the giving of
notice or the lapse of time, or both, would constitute, a Debenture Event of
Default and (B) in respect of which the Corporation shall not have taken
reasonable steps to cure, (2) if such Exchange Junior Subordinated Debentures
are held by the Property Trustee, the Corporation shall be in default with
respect to its payment obligations under the Exchange Guarantee or (3) the
Corporation shall have given notice of its election of its right to commence an
Extension Period as provided in the Indenture and such Extension Period, or any
extension thereof, shall have commenced and be continuing.
So long as the Trust Securities remain outstanding, the Corporation also
will covenant (i) to maintain 100% direct or indirect ownership of the Common
Securities, provided, however, that any permitted successor of the Corporation
under the Indenture may succeed to the Corporation's ownership of such Common
Securities, (ii) to use commercially reasonable efforts to cause the Trust (a)
to remain a business trust, except in connection with the distribution of Junior
Subordinated
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Debentures to the holders of Trust Securities in liquidation of the Trust, the
prepayment of all the Trust Securities of the Trust, or certain mergers,
consolidations or amalgamations, each as permitted by the Trust Agreement, and
(b) to otherwise continue to be classified as a grantor trust for U.S. federal
income tax purposes and (iii) not to cause, as sponsor of the Trust, or to
permit, as Holder of the Common Securities, the dissolution, winding-up or
termination of the Trust, except in connection with a distribution of the
Exchange Junior Subordinated Debentures as provided in the Trust Agreement and
in connection with certain mergers, consolidations or amalgamations.
Modification of Indenture
From time to time the Corporation and the Debenture Trustee may, without
the consent of the holders of Exchange Junior Subordinated Debentures, amend,
waive or supplement the Indenture for specified purposes, including, among other
things, curing ambiguities, defects or inconsistencies, provided that any such
action does not materially adversely affect the interest of the holders of
Exchange Junior Subordinated Debentures, and qualifying, or maintaining the
qualification of, the Indenture under the Trust Indenture Act. The Indenture
contains provisions permitting the Corporation and the Debenture Trustee, with
the consent of the holders of a majority in principal amount of Exchange Junior
Subordinated Debentures, to modify the Indenture in a manner affecting the
rights of the holders of Exchange Junior Subordinated Debentures; provided that
no such modification may, without the consent of the holders of each outstanding
Exchange Junior Subordinated Debenture so affected, (i) change the Stated
Maturity Date, or reduce the principal amount of the Exchange Junior
Subordinated Debentures or reduce the amount payable on redemption thereof or
reduce the rate or extend the time of payment of interest thereon except
pursuant to the Corporation's right under the Indenture to defer the payment of
interest as provided therein (see "--Option to Extend Interest Payment Date") or
make the principal of, or interest or premium on, the Exchange Junior
Subordinated Debentures payable in any coin or currency other than that provided
in the Exchange Junior Subordinated Debentures, or impair or affect the right of
any holder of Exchange Junior Subordinated Debentures to institute suit for the
payment thereof, or (ii) reduce the percentage of principal amount of Exchange
Junior Subordinated Debentures, the holders of which are required to consent to
any such modification of the Indenture.
Debenture Events of Default
The Indenture provides that any one or more of the following described
events with respect to the Exchange Junior Subordinated Debentures constitutes a
"Debenture Event of Default" (whatever the reason for such Debenture Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) failure for 30 days to pay any interest (including Compounded
Interest and Additional Sums, if any) or Liquidated Damages, if any, on the
Exchange Junior Subordinated Debentures or any Other Debentures, when due
(subject to the deferral of any due date in the case of an Extension
Period); or
(ii) failure to pay any principal (or premium, if any) on the Exchange
Junior Subordinated Debentures or any Other Debentures when due whether at
maturity, upon prepayment, by declaration of acceleration of maturity or
otherwise; or
(iii) failure to observe or perform in any material respect certain
other covenants and warranties contained in the Indenture for 90 days after
written notice to the Corporation from the Debenture Trustee or the holders
of at least 25% in aggregate outstanding principal amount of the
outstanding Exchange Junior Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Corporation.
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The holders of a majority in aggregate outstanding principal amount of
the Exchange Junior Subordinated Debentures have, subject to certain exceptions,
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Debenture Trustee. The Debenture Trustee or the
holders of not less than 25% in aggregate outstanding principal amount of the
Exchange Junior Subordinated Debentures may declare the principal due and
payable immediately upon a Debenture Event of Default. The holders of a majority
in aggregate outstanding principal amount of the Exchange Junior Subordinated
Debentures may annul such declaration and waive the default if the default
(other than the non-payment of the principal of the Exchange Junior Subordinated
Debentures which has become due solely by such acceleration) has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee.
The holders of a majority in aggregate outstanding principal amount of
the Exchange Junior Subordinated Debentures affected thereby may, on behalf of
the holders of all the Exchange Junior Subordinated Debentures, waive any past
default, except a default in the payment of principal of (or premium, if any) or
interest or Liquidated Damages, if any, on the Exchange Junior Subordinated
Debentures (unless such default has been cured and a sum sufficient to pay all
matured installments of interest (and premium, if any) and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee),
or a default in respect of a covenant or provision which under the Indenture
cannot be modified or amended without the consent of the holder of each
outstanding Exchange Junior Subordinated Debenture.
The Indenture requires the annual filing by the Corporation with the
Debenture Trustee of a certificate as to the absence of certain defaults under
the Indenture.
The Indenture provides that the Debenture Trustee may withhold notice of
a Debenture Event of Default from the holders of the Exchange Junior
Subordinated Debentures if the Debenture Trustee considers it in the interest of
such holders to do so.
Enforcement of Certain Rights by Holders of Exchange Capital Securities
If a Debenture Event of Default shall have occurred and be continuing and
shall be attributable to the failure of the Corporation to pay the principal of
(or premium, if any), or interest (including Compounded Interest and Additional
Sums, if any) or Liquidated Damages, if any, on the Exchange Junior Subordinated
Debentures on the due date, a holder of Exchange Capital Securities may
institute a Direct Action. The Corporation may not amend the Indenture to remove
the foregoing right to bring a Direct Action without the prior written consent
of the holders of all of the Exchange Capital Securities. Notwithstanding any
payments made to a holder of Exchange Capital Securities by the Corporation in
connection with a Direct Action, the Corporation shall remain obligated to pay
the principal of (and premium, if any) and interest (including Compounded
Interest and Additional Sums, if any) and Liquidated Damages, if any, on the
Exchange Junior Subordinated Debentures, and the Corporation shall be subrogated
to the rights of the holder of such Exchange Capital Securities with respect to
payments on the Exchange Capital Securities to the extent of any payments made
by the Corporation to such holder in any Direct Action.
The holders of the Exchange Capital Securities will not be able to
exercise directly any remedies, other than those set forth in the preceding
paragraph, available to the holders of the Exchange Junior Subordinated
Debentures unless there shall have been an Event of Default under the Trust
Agreement. See "--Description of Exchange Capital Securities --Events of
Default; Notice."
Consolidation, Merger, Sale of Assets and Other Transactions
The Indenture provides that the Corporation shall not consolidate with or
merge into any other Person or convey, transfer or lease its properties as an
entirety or substantially as an entirety to any Person, and no Person shall
consolidate with or merge into the Corporation or convey, transfer or
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lease its properties as an entirety or substantially as an entirety to the
Corporation, unless: (i) in case the Corporation consolidates with or merges
into another Person or conveys or transfers its properties substantially as an
entirety to any Person, the successor Person is organized under the laws of the
United States or any state or the District of Columbia, and such successor
Person expressly assumes the Corporation's obligations on the Exchange Junior
Subordinated Debentures; (ii) immediately after giving effect thereto, no
Debenture Event of Default, and no event which, after notice or lapse of time or
both, would become a Debenture Event of Default, shall have occurred and be
continuing; and (iii) certain other conditions as prescribed in the Indenture
are met.
The general provisions of the Indenture do not afford holders of the
Exchange Junior Subordinated Debentures protection in the event of a highly
leveraged or other transaction involving the Corporation that may adversely
affect holders of the Exchange Junior Subordinated Debentures.
Satisfaction and Discharge
The Indenture provides that when, among other things, all Exchange Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at maturity or called for prepayment within one year, and the Corporation
deposits or causes to be deposited with the Debenture Trustee funds, in trust,
for the purpose and in an amount sufficient to pay and discharge the entire
indebtedness on the Exchange Junior Subordinated Debentures not previously
delivered to the Debenture Trustee for cancellation, for the principal (and
premium, if any) and interest to the date of the deposit or to the Stated
Maturity Date, as the case may be, then the Indenture will cease to be of
further effect (except as to the Corporation's obligations to pay all other sums
due pursuant to the Indenture and to provide the officers' certificates and
opinions of counsel described therein), and the Corporation will be deemed to
have satisfied and discharged the Indenture.
Subordination
In the Indenture, the Corporation has covenanted and agreed that the
payment by the Corporation of the principal of, premium, if any, and interest
(including Compounded Interest and Additional Sums, if any) on all Exchange
Junior Subordinated Debentures issued thereunder will be subordinate and junior
in right of payment to all Senior Indebtedness to the extent provided in the
Indenture. Upon any payment or distribution of assets to creditors upon any
dissolution, winding-up, liquidation or reorganization, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all
Senior Indebtedness must be paid in full before the holders of Exchange Junior
Subordinated Debentures will be entitled to receive or retain any payment in
respect thereof.
In the event of the acceleration of the maturity of the Exchange Junior
Subordinated Debentures, the holders of all Senior Indebtedness outstanding at
the time of such acceleration will first be entitled to receive payment in full
of such Senior Indebtedness before the holders of the Exchange Junior
Subordinated Debentures will be entitled to receive or retain any payment in
respect of the Exchange Junior Subordinated Debentures.
No payments on account of principal (or premium, if any) or interest, if
any, in respect of the Exchange Junior Subordinated Debentures may be made if
there shall have occurred and be continuing a default in any payment with
respect to Senior Indebtedness, or an event of default with respect to any
Senior Indebtedness resulting in the acceleration of the maturity thereof, or if
any judicial proceeding shall be pending with respect to any such default.
"Indebtedness" shall mean (i) every obligation of the Corporation for
money borrowed; (ii) every obligation of the Corporation evidenced by bonds,
debentures, notes or other similar instruments, including obligations incurred
in connection with the acquisition of property, assets or businesses; (iii)
every reimbursement obligation of the Corporation with respect to letters of
credit, banker's acceptances or similar facilities issued for the account of the
Corporation; (iv) every obligation of the
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Corporation issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable or accrued liabilities arising in
the ordinary course of business); (v) every capital lease obligation of the
Corporation; (vi) all indebtedness of the Corporation whether incurred on or
prior to the date of the Indenture or thereafter incurred, for claims in respect
of derivative products, including interest rate, foreign exchange rate and
commodity forward contracts, options and swaps and similar arrangements; and
(vii) every obligation of the type referred to in clauses (i) through (vi) of
another Person and all dividends of another Person the payment of which, in
either case, the Corporation has guaranteed or is responsible or liable for,
directly or indirectly, as obligor or otherwise.
"Indebtedness Ranking on a Parity with the Junior Subordinated
Debentures" shall mean (i) Indebtedness, whether outstanding on the date of
execution of the Indenture or thereafter created, assumed or incurred, to the
extent such indebtedness specifically by its terms ranks equally with and not
prior to the Junior Subordinated Debentures in the right of payment upon the
happening of the dissolution or winding-up or liquidation or reorganization of
the Corporation and (ii) all other debt securities, and guarantees in respect of
those debt securities, issued to any other trust, or a trustee of such trust,
partnership or other entity affiliated with the Corporation that is a financing
vehicle of the Corporation (a "financing entity") in connection with the
issuance by such financing entity of equity securities or other securities
guaranteed by the Corporation pursuant to an instrument that ranks pari passu
with or junior in right of payment to the Guarantee. The securing of any
Indebtedness, otherwise constituting Indebtedness Ranking on a Parity with the
Junior Subordinated Debentures, shall not be deemed to prevent such Indebtedness
from constituting Indebtedness Ranking on a Parity with the Junior Subordinated
Debentures.
"Indebtedness Ranking Junior to the Junior Subordinated Debentures" shall
mean any Indebtedness, whether outstanding on the date of execution of the
Indenture or thereafter created, assumed or incurred, to the extent such
indebtedness by its terms ranks junior to and not equally with or prior to the
Junior Subordinated Debentures (and any other Indebtedness Ranking on a Parity
with the Junior Subordinated Debentures) in right of payment upon the happening
of the dissolution or winding-up or liquidation or reorganization of the
Corporation. The securing of any Indebtedness, otherwise constituting
Indebtedness Ranking Junior to the Junior Subordinated Debentures, shall not be
deemed to prevent such Indebtedness from constituting Indebtedness Ranking
Junior to the Junior Subordinated Debentures.
"Senior Indebtedness" shall mean all Indebtedness, whether outstanding on
the date of execution of the Indenture or thereafter created, assumed or
incurred, except Indebtedness Ranking on a Parity with the Junior Subordinated
Debentures or Indebtedness Ranking Junior to the Junior Subordinated Debentures,
and any deferrals, renewals or extensions of such Senior Indebtedness.
The Corporation is a holding company and almost all of the operating
assets of the Corporation are owned by the Corporation's Subsidiaries. The
Corporation relies primarily on dividends from Webster Bank to meet its
obligations for payment of principal and interest on its outstanding debt
obligations and corporate expenses. The Corporation is a legal entity separate
and distinct from its Subsidiaries. Holders of Exchange Junior Subordinated
Debentures should look only to the Corporation for payments on the Exchange
Junior Subordinated Debentures. There are regulatory limitations on the payment
of dividends directly or indirectly to the Corporation from Webster Bank. See
"--General." In addition, Webster Bank is subject to certain restrictions
imposed by federal law on any extensions of credit to, and certain other
transactions with, the Corporation and certain other affiliates, and on
investments in stock or other securities thereof. Such restrictions prevent the
Corporation and such other affiliates from borrowing from Webster Bank unless
the loans are secured by various types of collateral. Further, such secured
loans, other transactions and investments by Webster Bank are generally limited
in amount as to the Corporation and as to each of such other affiliates to
10.00% of Webster Bank's capital and surplus and as to the Corporation and all
of such other affiliates to an aggregate of 20% of Webster Bank's capital and
surplus. Accordingly, the Exchange Junior Subordinated Debentures will be
effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries.
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Because the Corporation is a holding company, the right of the
Corporation to participate in any distribution of assets of any subsidiary upon
such subsidiary's liquidation or reorganization or otherwise (and thus the
ability of holders of the Exchange Capital Securities to benefit indirectly from
such distribution), is subject to the prior claims of creditors of that
subsidiary (including depositors, in the case of Webster Bank), except to the
extent the Corporation may itself be recognized as a creditor of that
subsidiary. At June 30, 1998, the Subsidiaries of the Corporation had total
liabilities (excluding liabilities owed to the Corporation) of $8.4 billion.
Accordingly, the Exchange Junior Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of the Corporation's
Subsidiaries (including Webster Banks' deposit liabilities) and all liabilities
of any future subsidiaries of the Corporation. The Indenture does not limit the
incurrence or issuance of other secured or unsecured debt of the Corporation or
any subsidiary, including Senior Indebtedness. See "--Subordination."
Restrictions on Transfer
The Exchange Junior Subordinated Debentures will be issued, and may be
transferred, only in blocks having an aggregate principal amount of not less
than $100,000 (100 Exchange Junior Subordinated Debentures) and multiples of
$1,000 in excess thereof. Any such transfer of Exchange Junior Subordinated
Debentures in a block having an aggregate principal amount of less than $100,000
shall be deemed to be void and of no legal effect whatsoever. Any such
transferee shall be deemed not to be the holder of such Exchange Junior
Subordinated Debentures for any purpose, including but not limited to the
receipt of payments on such Exchange Junior Subordinated Debentures, and such
transferee shall be deemed to have no interest whatsoever in such Exchange
Junior Subordinated Debentures.
Information Concerning the Debenture Trustee
Following the Exchange Offer and the qualification of the Indenture under
the Trust Indenture Act, the Debenture Trustee shall have and be subject to all
the duties and responsibilities specified with respect to an indenture trustee
under the Trust Indenture Act. Subject to such provisions, the Debenture Trustee
is under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of Exchange Junior Subordinated
Debentures, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might be incurred thereby. The Debenture
Trustee is not required to expend or risk its own funds or otherwise incur
personal financial liability in the performance of its duties if the Debenture
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
Governing Law
The Indenture and the Exchange Junior Subordinated Debentures will be
governed by and construed in accordance with the laws of the State of New York.
DESCRIPTION OF EXCHANGE GUARANTEE
The Exchange Guarantee will be executed and delivered by the Corporation
concurrently with the issuance by the Trust of the Exchange Capital Securities
for the benefit of the holders from time to time of the Exchange Capital
Securities. The terms of the Exchange Guarantee are identical in all material
respects to the terms of the Original Guarantee. Wilmington Trust Company will
act as Guarantee Trustee under the Exchange Guarantee. The Exchange Guarantee
has been qualified under the Trust Indenture Act. This summary of certain
provisions of the Exchange Guarantee does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all of the provisions
of the Exchange Guarantee, including the definitions therein of certain terms,
and the Trust Indenture Act. The Guarantee Trustee will hold the Exchange
Guarantee for the benefit of the holders of the Exchange Capital Securities.
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Status of Original Guarantee
If not all the Original Capital Securities are exchanged for Exchange
Capital Securities in the Exchange Offer, the Original Guarantee will not
terminate, but will continue to guarantee the obligations of the Corporation for
the benefit of the holders of Original Securities. The Original Guarantee will
terminate upon full payment of the applicable Redemption Price of the Original
Capital Securities, upon full payment of the Liquidation Amount payable upon
liquidation of the Trust or upon distribution of Original Junior Subordinated
Debentures to the holders of the Original Capital Securities. The Original
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of the Original Capital Securities must restore
payment of any sums paid under the Original Capital Securities or the Original
Guarantee.
General
The Corporation will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth herein, the Guarantee Payments to the holders of
the Exchange Capital Securities, as and when due, regardless of any defense,
right of set-off or counterclaim that the Trust may have or assert other than
the defense of payment. The following payments with respect to the Exchange
Capital Securities, to the extent not paid by or on behalf of the Trust (the
"Guarantee Payments"), will be subject to the Exchange Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on the Exchange Capital
Securities, to the extent that the Trust has funds legally available therefor at
such time, (ii) the applicable Redemption Price with respect to the Exchange
Capital Securities called for redemption, to the extent that the Trust has funds
legally available therefor at such time, and (iii) upon a voluntary or
involuntary dissolution, winding-up or liquidation of the Trust (other than in
connection with the distribution of the Exchange Junior Subordinated Debentures
to holders of the Exchange Capital Securities or the redemption of all Exchange
Capital Securities), the lesser of (a) the Liquidation Distribution, to the
extent the Trust has funds legally available therefor at the time, and (b) the
amount of assets of the Trust remaining available for distribution to holders of
Exchange Capital Securities after satisfaction of liabilities to creditors of
the Trust as required by applicable law. The Corporation's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Corporation to the holders of the Exchange Capital Securities or by causing
the Trust to pay such amounts to such holders.
The Corporation will, through the Exchange Guarantee, the Trust
Agreement, the Exchange Junior Subordinated Debentures and the Indenture, taken
together, fully, irrevocably and unconditionally guarantee all of the Trust's
obligations under the Exchange Capital Securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these documents
that has the effect of providing a full, irrevocable and unconditional guarantee
of the Trust's obligations under the Exchange Capital Securities. See
"Relationship Among the Exchange Capital Securities, the Exchange Junior
Subordinated Debentures and the Exchange Guarantee."
Status of the Exchange Guarantee
The Exchange Guarantee will constitute an unsecured obligation of the
Corporation and will rank subordinate and junior in right of payment to all
Senior Indebtedness in the same manner as the Exchange Junior Subordinated
Debentures. See "Description of Exchange Junior Subordinated Debentures -
Subordinated." In addition, because the Corporation is a holding company, the
right of the Corporation to participate in any distribution of assets of any
subsidiary upon such subsidiary's liquidation or reorganization or otherwise is
subject to the prior claims of creditors of that subsidiary, except to the
extent the Corporation may itself be recognized as a creditor of that
subsidiary. Accordingly, the Corporation's obligations under the Exchange
Guarantee effectively will be subordinated to all existing and future
liabilities of the Corporation's Subsidiaries (including the Corporation's
Subsidiaries' deposit liabilities), and all liabilities of any future
subsidiaries of the Corporation. Claimants should look only to the assets of the
Corporation for payments under the Exchange Guarantee. See "--Description of the
Exchange Junior Subordinated Debentures--
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General." The Exchange Guarantee will rank pari passu with the Original
Guarantee and all Other Guarantees issued by the Corporation after the Issue
Date with respect to capital securities (if any) issued by Other Trusts.
The Exchange Guarantee does not limit the incurrence or issuance of other
secured or unsecured debt of the Corporation, including Senior Indebtedness,
whether under the Indenture, any other indenture that the Corporation may enter
into in the future or otherwise.
The Exchange Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against the Corporation to enforce its rights under the Exchange Guarantee
without first instituting a legal proceeding against any other person or
entity). The Exchange Guarantee will be held for the benefit of the holders of
the Exchange Capital Securities. The Exchange Guarantee will not be discharged
except by payment of the Guarantee Payments in full to the extent not paid by
the Trust or upon distribution to the holders of the Exchange Capital Securities
of the Exchange Junior Subordinated Debentures. The Exchange Guarantee does not
place a limitation on the amount of additional Senior Indebtedness that may be
incurred by the Corporation.
Events of Default
An event of default under the Exchange Guarantee will occur upon the
failure of the Corporation to perform any of its payment or other obligations
thereunder, provided, however, that except with respect to a default in payment
of any Guarantee Payment, the Corporation shall have received notice of default
and shall not have cured such default within 60 days after receipt of such
notice. The holders of not less than a majority in Liquidation Amount of the
Exchange Capital Securities will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the Exchange Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under the Exchange
Guarantee.
Any holder of the Exchange Capital Securities may institute a legal
proceeding directly against the Corporation to enforce its rights under the
Exchange Guarantee without first instituting a legal proceeding against the
Trust, the Guarantee Trustee or any other person or entity.
The Corporation, as guarantor, will be required to file annually with the
Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the
Exchange Guarantee.
Amendments and Assignment
Except with respect to any changes that do not materially adversely
affect the rights of holders of the Exchange Capital Securities (in which case
no vote will be required), the Exchange Guarantee may not be amended without the
prior approval of the holders of a majority of the Liquidation Amount of such
outstanding Exchange Capital Securities. The manner of obtaining any such
approval will be as set forth under "--Description of Exchange Capital
Securities--Voting Rights; Amendment of the Trust Agreement." All guarantees and
agreements contained in the Exchange Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of the Corporation and shall
inure to the benefit of the holders of the Exchange Capital Securities then
outstanding.
Termination of the Exchange Guarantee
The Exchange Guarantee will terminate and be of no further force and
effect upon full payment of the applicable Redemption Price of the Exchange
Capital Securities, upon full payment of the Liquidation Amount payable upon
liquidation of the Trust or upon distribution of Exchange Junior Subordinated
Debentures to the holders of the Exchange Capital Securities. The Exchange
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Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of the Exchange Capital Securities must restore
payment of any sums paid under the Exchange Capital Securities or the Exchange
Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and continuance
of a default by the Corporation in performance of the Exchange Guarantee, will
undertake to perform only such duties as are specifically set forth in the
Exchange Guarantee and, in case a default with respect to the Exchange Guarantee
has occurred, must exercise the same degree of care and skill as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs. Subject to this provision, the Guarantee Trustee will be under
no obligation to exercise any of the powers vested in it by the Exchange
Guarantee at the request of any holder of the Exchange Capital Securities unless
it is offered reasonable indemnity against the costs, expenses and liabilities
that might be incurred thereby.
Governing Law
The Exchange Guarantee will be governed by and construed in accordance
with the laws of the State of New York.
DESCRIPTION OF ORIGINAL SECURITIES
The terms of the Original Securities are identical in all materials
respects to the Exchange Securities, except that (i) the Original Securities
have not been registered under the Securities Act, are subject to certain
restrictions on transfer and are entitled to certain rights under the applicable
Registration Rights Agreement (which rights will terminate upon consummation of
the Exchange Offer, except under limited circumstances), (ii) the Exchange
Capital Securities will not provide for any increase in the Distribution rate
thereon and (iii) the Exchange Junior Subordinated Debentures will not provide
for any liquidated damages thereon. As a result of Eagle and the Trust not
having had a registration statement as to exchange securities been declared
effective by September 28, 1997, liquidated damages have been accruing at the
rate of 0.25% per annum on the principal amount of the Original Junior
Subordinated Debentures and Distributions have been accruing at the rate of
0.25% per annum on the Liquidation Amount of the Original Capital Securities,
and shall continue to do so until such time as this Registration Statement is
declared effective. In addition, the Original Capital Securities provide that,
if the Trust has not exchanged Exchange Capital Securities for all Original
Capital Securities validly tendered by the 45th day after the date on which the
Registration Statement is declared effective, the Distribution rate borne by the
Original Capital Securities will increase by .25% per annum for the period from
the occurrence of such event until such time as the Exchange Offer has been
consummated. The Exchange Securities are not, and upon consummation of the
Exchange Offer the Original Securities will not be, entitled to any such
additional interest or Distributions. Accordingly, holders of Original Capital
Securities should review the information set forth under "Risk
Factors--Consequences of a Failure to Exchange Original Capital Securities" and
"Description of Exchange Securities."
RELATIONSHIP AMONG THE EXCHANGE CAPITAL SECURITIES, THE EXCHANGE
JUNIOR SUBORDINATED DEBENTURES AND THE EXCHANGE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Exchange Capital
Securities (to the extent the Trust has funds legally available for the payment
of such Distributions) will be irrevocably guaranteed by the Corporation as and
to the extent set forth under "Description of Exchange Securities--Description
of Exchange Guarantee." Taken together, the Corporation's obligations under the
Exchange Junior Subordinated Debentures, the Indenture, the Trust Agreement and
the Exchange Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee of
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payments of Distributions and other amounts due on the Exchange Capital
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Trust's obligations under the
Exchange Capital Securities. If and to the extent that the Corporation does not
make the required payments on the Exchange Junior Subordinated Debentures, the
Trust will not have sufficient funds to make the related payments, including
Distributions, on the Exchange Capital Securities. The Exchange Guarantee will
not cover any such payment when the Trust does not have sufficient funds legally
available therefor. In such event, the remedy of a holder of Exchange Capital
Securities is to institute a Direct Action. The obligations of the Corporation
under the Exchange Guarantee will be subordinate and junior in right of payment
to all Senior Indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on
the Exchange Junior Subordinated Debentures, such payments will be sufficient to
cover Distributions and other payments due on the Exchange Capital Securities,
primarily because: (i) the aggregate principal amount or Prepayment Price of the
Exchange Junior Subordinated Debentures will be equal to the sum of the
aggregate Liquidation Amount or Redemption Price, as applicable, of the Trust
Securities; (ii) the interest rate and interest and other payment dates on the
Exchange Junior Subordinated Debentures will match the Distribution rate and
Distribution and other payment dates for the Trust Securities; (iii) the
Corporation, as Sponsor, shall pay for all and any costs, expenses and
liabilities of the Trust except the Trust's obligations to holders of Trust
Securities under such Trust Securities; and (iv) the Trust Agreement further
provides that the Trust is not authorized to engage in any activity that is not
consistent with the limited purposes thereof.
ENFORCEMENT RIGHTS OF HOLDERS OF EXCHANGE CAPITAL SECURITIES
A holder of any Exchange Capital Security may institute a legal
proceeding directly against the Corporation to enforce its rights under the
Exchange Guarantee without first instituting a legal proceeding against the
Guarantee Trustee, the Trust or any other person or entity.
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Trust Agreement. However, in
the event of payment defaults under, or acceleration of, Senior Indebtedness,
the subordination provisions of the Indenture provide that no payments may be
made in respect of the Exchange Junior Subordinated Debentures until such Senior
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. Failure to make required payments on Exchange Junior
Subordinated Debentures would constitute an Event of Default under the Trust
Agreement.
LIMITED PURPOSE OF THE TRUST
The Exchange Capital Securities will represent beneficial interests in
the Trust, and the Trust exists for the sole purpose of issuing and selling the
Trust Securities, using the proceeds from the sale of the Trust Securities to
acquire the Original Junior Subordinated Debentures, exchanging the Original
Capital Securities and the Original Junior Subordinated Debentures in the
Exchange Offer, and engaging in only those other activities necessary, advisable
or incidental thereto.
RIGHTS UPON TERMINATION
Unless the Exchange Junior Subordinated Debentures are distributed to
holders of the Exchange Capital Securities, upon any voluntary or involuntary
termination, winding-up or liquidation of the Trust, after satisfaction of the
liabilities of creditors of the Trust as required by applicable law, the holders
of the Exchange Capital Securities will be entitled to receive, out of assets
held by the Trust, the Liquidation Distribution in cash. See "Description of
Exchange Securities--Description of Exchange Capital Securities--Liquidation of
the Trust and Distribution of Exchange
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Junior Subordinated Debentures." Upon any voluntary or involuntary liquidation
or bankruptcy of the Corporation, the Property Trustee, as holder of the
Exchange Junior Subordinated Debentures, would be a subordinated creditor of the
Corporation, subordinated in right of payment to all Senior Indebtedness as set
forth in the Indenture, but entitled to receive payment in full of principal
(and premium, if any) and interest, before any stockholders of the Corporation
receive payments or distributions.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following discussion summarizes the principal material United
States federal income tax consequences of an exchange of Original Capital
Securities for Exchange Capital Securities and of the ownership and disposition
of the Capital Securities. This summary is based on the Internal Revenue Code of
1986, as amended ( the "Code"), Treasury regulations thereunder, and
administrative and judicial interpretations thereof, each as of the date hereof,
all of which are subject to change, possible on a retroactive basis.
Hogan & Hartson L.L.P., Washington D.C., in its capacity as special
tax counsel to the Company ("Tax Counsel), has reviewed this summary and is of
the opinion that, to the extent that it constitutes matters of law or purports
to describe certain provisions of the U.S. federal income tax laws, it is a
correct summary in all material respects of the matters discussed therein. In
connection with the issuance of the Junior Subordinated Debentures and the
Capital Securities, Tax Counsel also rendered the opinion described under
"-Characterization of the Issuer Trust." The opinions of Tax Counsel are not
binding on the Internal Revenue Service (the "IRS") or the courts, either of
which could take a contrary position. Moreover, no rulings have been or will be
sought from the IRS with respect to the transactions described herein or that a
court would not sustain such a challenge.
Except as otherwise stated, this summary deals only with the Capital
Securities held as a capital asset by a beneficial owner who or which (I)
purchased the Original Capital Securities upon original issuance at their
original issuance at their original offering price and (ii) is a US Holder (as
defined below). This summary does not address all the tax consequences that may
be relevant to a US Holder (as defined below). This summary does not address all
the tax consequences that may be relevant to a US Holder, nor does it address
the tax consequences, except as stated below, to holders that are not US Holders
("Non-US Holders") or to holders that may be subject to special tax treatment
(such as banks, thrift institutions, real estate investment trusts, regulated
investment companies, insurances companies, brokers and dealers in securities or
currencies, certain securities traders, other financial institutions, tax-exempt
organizations, persons holding the Capital securities as a position in a
"straddle," or as part of a "synthetic security," "hedging," as part of a
"conversion" or other integrated investment, persons having a functional
currency other than the U.S. Dollar and certain United States expatriates).
Further, this summary does not address (a) the income tax consequences to
shareholders in, or partners or beneficiaries of, a holder of the Capital
Securities, (b) the United States federal alternative minimum tax consequences
of the purchase, ownership or disposition of the Capital Securities, or (c) any
state, local or foreign tax consequences of the purchase, ownership and
disposition of Capital Securities.
A "US Holder" generally is a holder of the Capital Securities who or
which is (I) a citizen or individual resident (or is treated as a citizen or
individual resident) of the United States for income tax purpose, (ii) a
corporation or partnership created or organized (or treated as created or
organized for income tax purposes) in or under the laws of the United States or
any political subdivision thereof, (iii) an estate the income of which is
includible in its gross income for United States federal income tax purposes
without regard to its source, or (iv) a trust if (a) a court within the United
States is able to exercise primary supervision over the administration of the
trust and (b) one or more United States persons have the authority to control
all substantial decisions of the trust.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF AN EXCHANGE OF ORIGINAL CAPITAL SECURITIES FOR EXCHANGE
CAPITAL SECURITIES AND OF THE OWNERSHIP AND DISPOSITION OF THE CAPITAL
SECURITIES, INCLUDING THE TAX CONSEQUENCES
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UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF
CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS.
Exchange of Exchange Capital Securities
The exchange of Original Capital Securities for Exchange Capital
Securities should not be a taxable event to holders for U.S. federal income tax
purposes. The exchange of Original Capital Securities for Exchange Capital
Securities pursuant to the Exchange Offer should not be treated as an "exchange"
for U.S. federal income tax purposes because the Exchange Capital Securities
should not be considered to differ materially in kind or extent from the
Original Capital Securities and because the exchange will occur by operation of
the terms of the Original Capital Securities. Accordingly, the Exchange Capital
Securities should have the same issue price as the Original Capital Securities,
and a holder should have the same adjusted tax basis and holding period in the
Exchange Capital Securities immediately after the exchange as the holder had in
the Original Capital Securities immediately before the exchange.
US HOLDERS
Characterization of the Issuer Trust. In connection with the issuance
of the Original Capital Securities, Tax Counsel rendered its opinion generally
to effect that, under then current law and based on the representations, facts
and assumptions set forth in this Prospectus, and assuming full compliance with
the terms of the Trust Agreement (and other relevant documents), and based on
certain assumptions and qualifications referenced in the opinion, the Issuer
Trust will be characterized for United States federal income tax purposes as a
grantor trust and will not be characterized as an association taxable as a
corporation. Accordingly, for United States federal income tax purposes, each
holder of the Capital Securities generally will be considered the owner of an
undivided interest in the Junior Subordinated Debentures owned by the Issuer
Trust, and each US Holder will be required to include all income or gain
recognized for United States federal income tax purposes with respect to its
allocable share of the Junior Subordinated Debentures on its own income tax
return.
Characterization of the Junior Subordinated Debentures. The Company
intends to take the position that, under current law, the Junior Subordinated
Debentures constitute indebtedness for United States federal income tax
purposes. The Company, the Issuer Trust and the holders of the Capital
Securities (by acceptance of a beneficial interest in a Capital Security) agree
to treat the Junior Subordinated Debentures as indebtedness of the Company and
the Capital Securities as evidence of a beneficial ownership interest in the
Junior Subordinated Debentures. No assurance can be given, however, that such
position will not be challenged by the IRS or, if challenged, that such
challenge will not be successful. The remainder of this discussion assumes that
the Junior Subordinated Debentures will be classified as indebtedness of the
Company for United States federal income tax purposes.
Interest Income and Original Issue Discount. Under the terms of the
Junior Subordinated Debentures, the Company has the ability to defer payments of
interest from time to time by extending the interest payment period for a period
not exceeding 10 consecutive semi-annual periods, but not beyond the Stated
Maturity. Treasury regulations under Section 1273 of the Code provide that debt
instruments like the Junior Subordinated Debentures will not be considered
issued with original issue discount ("OID") by reason of certain contingencies
such as the Company's ability to defer payments of interest.
The Company has concluded, and this discussion assumes, that, as of
the date of this Prospectus, the likelihood of deferring payments of interest
under the terms of the Junior Subordinated Debentures is "remote" within the
meaning of the applicable Treasury regulations, in part because exercising that
option would prevent the Company from declaring dividends on its stock
<PAGE>
and would prevent the Company from making any payments with respect to debt
securities that rank pari passu with or junior to the Junior Subordinated
Debentures. Therefore, the Company intends to treat the Junior Subordinated
Debentures as not issued with OID by reason of the Company's deferral option.
Under such treatment, stated interest on the Junior Subordinated Debentures will
generally be taxable to a US Holder as ordinary income when paid or accrued in
accordance with that holder's method of accounting for income tax purposes. It
should be noted, however, that these Treasury regulations have not yet been
interpreted in any rulings or any other published authorities of the IRS.
Accordingly, it is possible that the IRS could take a position contrary to the
interpretation described herein.
In the event the Company exercises its option to defer payments of
interest, the Junior Subordinated Debentures would be treated as redeemed and
reissued for OID purposes and the sum of the remaining interest payments (and
any de minimis OID) on the Junior Subordinated Debentures would thereafter be
treated as OID, which would accrue, and be includible in a US Holder's taxable
income, on an economic accrual basis (regardless of the US Holder's method of
accounting for income tax purposes) over the remaining term of the Junior
Subordinated Debentures (including any period of interest deferral), without
regard to the timing of payments under the Junior Subordinated Debentures.
(Subsequent distributions of interest on the Junior Subordinated Debentures
generally would not be taxable.) Consequently, during any period of interest
deferral, US Holders will include OID in gross income in advance of the receipt
of cash, and a US Holder that disposes of a Capital Security prior to the record
date for payment of distributions on the Junior Subordinated Debentures
following that period will be subject to income tax on OID accrued through the
date of disposition (and not previously included in income), but will not
receive cash from the Issuer Trust with respect to the OID.
If the possibility of the Company's exercise of its option to defer
payments of interest is not remote, the Junior Subordinated Debentures would be
treated as initially issued with OID in an amount equal to the aggregate stated
interest (plus any de minimis OID) over the term of the Junior Subordinated
Debentures. That OID would generally be includible in a US Holder's taxable
income, over the term of the Junior Subordinated Debentures, on an economic
accrual basis.
Characterization of Income. Because the income underlying the Capital
Securities will not be characterized as dividends for income tax purposes,
corporate holders of the Capital Securities will not be entitled to a dividends
received deduction for any income recognized with respect to the Capital
Securities.
Market Discount and Bond Premium. Under certain circumstances, holders
of the Capital Securities may be considered to have acquired their undivided
interests in the Junior Subordinated Debentures with market discount or
acquisition premium (as each phrase is defined for United States federal income
tax purposes). Such holders are advised to consult their tax advisors as to the
income tax consequences of the acquisition, ownership and disposition of the
Capital Securities.
Receipt of Junior Subordinated Debentures or Cash Upon Liquidation of
the Issuer Trust. Under certain circumstances described herein (See "Description
of the Capital Securities - Liquidation Distribution Upon Dissolution"), the
Issuer Trust may distribute the Junior Subordinated Debentures to holders in
exchange for the Capital Securities and in liquidation of the Issuer Trust.
Except as discussed below, such a distribution would not be a taxable event for
United States federal income tax purposes, and each US Holder would have an
aggregate adjusted basis in its Junior Subordinated Debentures for United States
federal income tax purposes equal to such holder's aggregate adjusted basis in
its Capital Securities. For United States federal income tax purposes, a US
Holder's holding period in the Junior Subordinated Debentures received in such a
liquidation of the Issuer Trust would include the period during which the
Capital Securities were held by the holder. A holder would accrue interest in
respect of the Junior Subordinated Debentures received from the Issuer Trust in
the manner described above under "-- Interest Income and
<PAGE>
Original Issue Discount." If, however, the relevant event is a Tax Event which
results in the Issuer Trust being treated as an association taxable as a
corporation, the distribution would likely constitute a taxable event to US
Holders of the Capital Securities for United States federal income tax purposes,
and the US Holder's holding period in the Junior Subordinated Debentures would
begin at the date such Junior Subordinated Debentures were received.
Under certain circumstances described herein (see "Description of the
Capital Securities"), the Junior Subordinated Debentures may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption of
their Capital Securities. Such a redemption would be taxable for United States
federal income tax purposes, and a US Holder would recognize gain or loss as if
it had sold the Capital Securities for cash. See "--Sales of Capital Securities"
below.
Sales of Capital Securities. A US Holder that sells Capital Securities
will recognize gain or loss equal to the difference between its adjusted basis
in the Capital Securities and the amount realized on the sale of such Capital
Securities. A US Holder's adjusted basis in the Capital Securities generally
will be its initial purchase price, increased by OID (if any) previously
included (or currently includible) in such holder's gross income to the date of
disposition, and decreased by payments received on the Capital Securities (other
than any interest received with respect to the period prior to the effective
date of the Company's first exercise of its option to defer payments of
interest). Any such gain or loss generally will be capital gain or loss, and
generally will be a long-term capital gain or loss if the Capital Securities
have been held for more than one year prior to the date of disposition. Tax
rates on capital gains received by individual US Holders vary depending on each
US Holder's income and holding period for the Capital Securities. US Holders who
are individuals should contact their own tax advisors for more information or
for the capital gains rate applicable to a specific Capital Security.
A holder who disposes of his Capital Securities between record dates
for payments of distributions thereon will be required to include accrued but
unpaid interest (or OID) on the Junior Subordinated Debentures through the date
of disposition in its taxable income for United States federal income tax
purposes (notwithstanding that the holder may receive a separate payment from
the purchaser with respect to accrued interest), and to deduct that amount from
the sales proceeds received (including the separate payment, if any, with
respect to accrued interest) for the Capital Securities (or as to OID only, to
add such amount to such holder's adjusted tax basis in its Capital Securities).
To the extent the selling price is less than the holder's adjusted tax basis
(which will include accrued but unpaid OID, if any), a holder will recognize a
capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax purposes.
PENDING TAX LITIGATION AFFECTING THE CAPITAL SECURITIES
Recently, a taxpayer filed a petition in the United States Tax Court
contesting the IRS' proposed disallowance of interest deductions that taxpayer
claimed in respect of securities issued in 1993 and 1994 that are, in some
respects, similar to the Capital Securities. (Enron Corp. v. Commissioner,
Docket No. 6149-98, filed April 1, 1998). It is possible that an adverse
decision by the Tax Court concerning the deductibility of such interest could
give rise to a Tax Event. Such a Tax Event would give the Company the right to
redeem the Junior Subordinated Debentures. See "Description of Junior
Subordinated Debentures --Redemption" and "Description of Capital Securities --
Liquidation Distribution Upon Dissolution."
NON-US HOLDERS
The following discussion applies to a Non-US Holder.
<PAGE>
Payments to a holder of a Capital Security which is a Non-US Holder
will generally not be subject to withholding of income tax, provided that (a)
the beneficial owner of the Capital Security does not (directly or indirectly,
actually or constructively) own 10% or more of the total combined voting power
of all classes of stock of the Company entitled to vote, (b) the beneficial
owner of the Capital Security is not a controlled foreign corporation that is
related to the Company through stock ownership, and (c) either (i) the
beneficial owner of the Capital Securities certifies to the Issuer Trust or its
agent, under penalties of perjury, that it is a Non-US Holder and provides its
name and address, or (ii) a securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary course of
its trade or business (a "Financial Institution"), and holds the Capital
Security in such capacity, certifies to the Issuer Trust or its agent, under
penalties of perjury, that such a statement has been received from the
beneficial owner by it or by another Financial Institution between it and the
beneficial owner in the chain of ownership, and furnishes the Issuer Trust or
its agent with a copy thereof.
A Non-US Holder of a Capital Security will generally not be subject to
withholding of income tax on any gain realized upon the sale or other
disposition of a Capital Security.
As discussed above, changes in law affecting the income tax
consequences of the Junior Subordinated Debentures are possible, and could
adversely affect the ability of the Company to deduct interest payable on the
Junior Subordinated Debentures. Such changes could also cause the Junior
Subordinated Debentures to be classified as equity (rather than indebtedness) of
the Company for United States federal income tax purposes and, thus, might cause
the income derived from the Junior Subordinated Debentures to be characterized
as dividends, generally subject to a 30% income tax (on a withholding basis)
when paid to a Non-US Holder, rather than as interest which, as discussed above,
is generally exempt from income tax in the hands of a Non-US Holder.
A Non-US Holder that holds the Capital Securities in connection with
the active conduct of a United States trade or business will be subject to
income tax on all income and gains recognized with respect to its proportionate
share of the Junior Subordinated Debentures in the same manner as if it were a
US Holder.
INFORMATION REPORTING
In general, information reporting requirements will apply to payments
made on, and proceeds from the sale of, the Capital Securities held by a
noncorporate US Holder within the United States. In addition, payments made on,
and payments of the proceeds from the sale of, the Capital Securities to or
through the United States office of a broker or through certain U.S.-related
financial intermediaries are subject to information reporting unless the holder
thereof certifies as to its Non-United States status or otherwise establishes an
exemption from information reporting and backup withholding. See "-- Backup
Withholding." Taxable income on the Capital Securities for a calendar year
should be reported to US Holders on the appropriate forms by the following
January 31st.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Capital
Securities may be subject to a "backup" withholding tax of 31% unless the holder
complies with certain identification or exemption requirements. Any amounts so
withheld will be allowed as a credit against the holder's income tax liability,
or refunded, provided the required information is provided to the IRS.
The preceding discussion is only a summary and does not address all
the consequences to a particular holder of an exchange of Original Capital
Securities for Exchange Capital Securities and of the ownership and disposition
of the Capital Securities. Potential holders of the Capital Securities are urged
to contact their own tax advisors to determine their particular tax
consequences.
<PAGE>
ERISA CONSIDERATIONS
Each of the Corporation (the obligor with respect to the Exchange Junior
Subordinated Debentures held by the Trust), and its affiliates and the Property
Trustee may be considered a "party in interest" (within the meaning of ERISA) or
a "disqualified person" (within the meaning of Section 4975 of the Code) with
respect to many Plans. The purchase and/or holding of Exchange Capital
Securities by a Plan with respect to which the Corporation, the Property Trustee
or any affiliate is a service provider (or otherwise is a party in interest or a
disqualified person) may constitute or result in a prohibited transaction under
ERISA or Section 4975 of the Code, unless such Exchange Capital Securities are
acquired pursuant to and in accordance with an applicable exemption, such as
Prohibited Transaction Class Exemption ("PTCE") 84-14 (an exemption for certain
transactions determined by an independent qualified professional asset manager),
PTCE 91-38 (an exemption for certain transactions involving bank collective
investment funds), PTCE 90-1 (an exemption for certain transactions involving
insurance company pooled separate accounts), PTCE 95-60 (an exemption for
transactions involving certain insurance company general accounts) or PTCE 96-23
(an exemption for certain transactions determined by an in-house asset manager).
In addition, a Plan fiduciary considering the purchase of Exchange Capital
Securities should be aware that the assets of the Trust may be considered "plan
assets" for ERISA purposes. In such event, the Property Trustee, as well as any
other persons exercising discretion with respect to the Exchange Junior
Subordinated Debentures, may become fiduciaries, parties in interest or
disqualified persons with respect to investing Plans. In order to avoid certain
prohibited transactions under ERISA and the Code that could thereby result, each
investing Plan, by purchasing the Exchange Capital Securities, will be deemed to
have directed the Trust to invest in the Exchange Junior Subordinated Debentures
and to have consented to the appointment of the Property Trustee. In this
regard, it should be noted that, in an Event of Default, the Corporation may not
remove the Property Trustee without the approval of a majority of the holders of
the Exchange Capital Securities.
A Plan fiduciary should consider whether the purchase of Exchange Capital
Securities could result in a delegation of fiduciary authority to the Property
Trustee, and, if so, whether such a delegation of authority is permissible under
the Plan's governing instrument or any investment management agreement with the
Plan.
65
<PAGE>
THE SALE OF INVESTMENTS TO PLANS IS IN NO RESPECT A REPRESENTATION BY THE
TRUST, THE CORPORATION, THE PROPERTY TRUSTEE, THE INITIAL PURCHASER OR ANY OTHER
PERSON ASSOCIATED WITH THE SALE OF THE EXCHANGE CAPITAL SECURITIES THAT SUCH
SECURITIES MEET RELEVANT LEGAL REQUIREMENTS WITH RESPECT TO INVESTMENTS BY PLANS
GENERALLY OR ANY PARTICULAR PLAN, OR THAT SUCH SECURITIES ARE OTHERWISE
APPROPRIATE FOR PLANS GENERALLY OR ANY PARTICULAR PLAN. ANY PURCHASER PROPOSING
TO ACQUIRE EXCHANGE CAPITAL SECURITIES WITH ASSETS OF ANY PLAN SHOULD CONSULT
WITH ITS COUNSEL.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Capital Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Capital Securities.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Capital
Securities received in exchange for Original Capital Securities where such
Original Capital Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Trust and the
Corporation have agreed that, starting on the Expiration Date and ending on the
close of business on the 180th day following the Expiration Date, it will make
this Prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, for a period of 180 days
after the Expiration Date, all dealers effecting transactions in the Exchange
Securities may be required to deliver a prospectus.
The Trust and the Corporation will not receive any proceeds from any sale
of Exchange Capital Securities by broker-dealers. Exchange Capital Securities
received by broker-dealers for their own account pursuant to the Exchange Offer
may be sold from time to time in one or more transactions, in the
over-the-counter market, in negotiated transactions, through the writing of
options on the Exchange Capital Securities or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Capital Securities. Any
broker-dealer that resells Exchange Capital Securities that were received by it
for its own account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Capital Securities may be deemed
to be an "underwriter" within the meaning of the Securities Act and any profit
of any such resale of Exchange Capital Securities and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Trust and the
Corporation will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. The Trust and the Corporation have
agreed to pay all expenses incident to the Exchange Offer (including the
expenses of one counsel for the holders of the Capital Securities) other than
commissions or concessions of any brokers or dealers and will indemnify the
holders of the Exchange Capital Securities (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act.
VALIDITY OF EXCHANGE SECURITIES
The validity of the Exchange Guarantee and the Exchange Junior
Subordinated Debentures will be passed upon for the Corporation by Hogan &
Hartson L.L.P., Washington, D.C. Certain matters of Delaware law relating to the
validity of the Exchange Capital Securities will be passed upon on behalf of the
Trust by Morris, James, Hitchens & Williams,
66
<PAGE>
special Delaware counsel to the Trust. Certain matters relating to U.S. federal
income tax considerations will be passed upon for the Corporation by Hogan &
Hartson L.L.P., Washington, D.C.
EXPERTS
The consolidated financial statements of the Corporation (as restated
to include Eagle) at December 31, 1997 and 1996, and for each of the years in
the three-year period ended December 31, 1997, have been incorporated by
reference herein and in the Registration Statement in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein and given upon the authority of said firm as experts in
accounting and auditing.
The separate consolidated financial statements of the Corporation
(excluding Eagle) at December 31, 1997 and 1996, and for each of the years in
the three-year period ended December 31, 1997, have been incorporated by
reference herein and in the Registration Statement in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein and given upon the authority of said firm as experts in
accounting and auditing.
67
<PAGE>
================================================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THIS EXCHANGE
OFFER AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION OR THE TRUST. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
AFFAIRS OF THE CORPORATION OR THE TRUST SINCE THE DATE HEREOF. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------------------------------
TABLE OF CONTENTS
PAGE
----
Available Information............................... 1
Incorporation of Certain Documents by
Reference ...................................... 2
Summary ......................................... 3
Selected Consolidated Financial Data................ 11
Risk Factors ..................................... 13
Webster Financial Corporation....................... 21
Webster Capital Trust II............................ 21
Use of Proceeds
Ratios of Earnings to Combined Fixed
Charges
Accounting Treatment................................ 23
The Exchange Offer.................................. 24
Description of Exchange Securities.................. 34
Description of Original Securities.................. 59
Relationship Among the Exchange Capital
Securities, the Exchange Junior
Subordinated Debentures and the
Exchange Guarantee............................... 59
Certain Federal Income Tax Consequences............. 61
ERISA Considerations................................ 65
Plan of Distribution................................ 66
Validity of Exchange Securities..................... 66
Experts............................................. 67
================================================================================
<PAGE>
================================================================================
$50,000,000
WEBSTER CAPITAL TRUST II
OFFER TO EXCHANGE ITS
10.00% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER EXCHANGE CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
10.00% ORIGINAL CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER ORIGINAL CAPITAL SECURITY)
UNCONDITIONALLY GUARANTEED,
AS DESCRIBED HEREIN, BY
WEBSTER FINANCIAL CORPORATION
-----------------------------------------------------------
PROSPECTUS
-----------------------------------------------------------
October __, 1998
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to the provisions of Article 6 of the Corporation's
Restated Certificate of Incorporation and the provisions of Article 9 of the
Corporation's Bylaws.
The Corporation is a Delaware corporation subject to the applicable
indemnification provisions of the General Corporation Law of the State of
Delaware (the "DGCL"). Section 145 of the DGCL provides for the indemnification,
under certain circumstances, of persons who are or were directors, officers,
employees or agents of the Corporation, or are or were serving at the request of
the Corporation in such a capacity with another business organization or entity,
against expenses, judgments, fines and amounts paid in settlement in actions,
suits or proceedings, whether civil, criminal, administrative, or investigative,
brought or threatened against or involving such persons because of such person's
service in any such capacity. In the case of actions brought by or in the right
of the Corporation, Section 145 provides for indemnification only of expenses,
and only upon a determination by the Court of Chancery or the court in which
such action or suit was brought that, in view of all the circumstances of the
case, such person is reasonably and fairly entitled to indemnity for such
expenses.
The Corporation's Bylaws provide for indemnification of officers,
directors, trustees, employees and agents of the Corporation, and for those
serving in such roles with other business organizations or entities, in the
event that such person was or is made a party to (or is threatened to be made a
party to) any civil or criminal action, suit, or proceeding by reason of the
fact that such person is or was serving in such a capacity for or on behalf of
the Corporation. The Corporation will indemnify any such person against expenses
(including attorney's' fees), judgments, fines, penalties and amounts paid in
settlement if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interest of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful, similarly, the Corporation
shall indemnify such persons for expenses reasonably incurred and settlements
reasonably paid in actions, suits, or proceedings brought by or in the right of
the Corporation, if such person acted in good faith and in a manner such person
reasonably believed to be in the best interests of the Corporation; provided,
however, that no indemnification shall be made against expenses in respect of
any claim, issue, or matter as to which such person is adjudged to be liable to
the Corporation or against amounts paid in settlement unless and only to the
extent that there is a determination made by the appropriate party set forth in
the Bylaws that the person to be indemnified is, in view of the circumstances of
the case, fairly and reasonably entitled to indemnity for such expenses or
amounts paid in settlement. In addition, the Corporation may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
trustee, employee, or agent of the Corporation or is acting in such capacity for
another business organization or entity at the Corporation's request, against
such person and incurred in such capacity, or arising out of such person's
status as such, whether or not the Corporation would have the power or
obligation to indemnify him against such liability under the provisions of
Article 9 of the Corporation's Bylaws. Article 6 of the Corporation's Restated
Certificate of Incorporation provides that no director will be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director other than liability for breach of such director's duty of
loyalty, for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, for any payment of a dividend or
approval of a stock repurchase illegal under Section 174 of the DGCL, or for any
transaction from which the director derived an improper personal benefit.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
3.1 Certificate of Trust of Eagle Financial Capital Trust I, dated March
26, 1997. *
3.2 Certificate of Amendment to Certificate of Trust of Eagle Financial
Capital Trust I, dated September 29, 1998.*
3.3 Declaration of Trust of Eagle Financial Capital Trust I, dated as of
March 26, 1997.*
3.4 Amended and Restated Declaration of Trust of Eagle Financial Capital
Trust I, dated as of April 1, 1997.*
4.1 Indenture, dated as of April 1, 1997, between Eagle Financial Corp.
and Wilmington Trust Company, as debenture trustee.*
4.2 Form of Certificate of 10.00% Junior Subordinated Deferrable Interest
Debenture, Series B.
4.3 Certificate of Trust of Eagle Financial Capital Trust I, dated March
26, 1997 (filed as Exhibit 3.1 hereto).*
4.4 Declaration of Trust of Eagle Financial Capital Trust I, dated as of
March 26, 1997 (filed as Exhibit 3.3 hereto).*
4.5 Amended and Restated Declaration of Trust of Eagle Financial Capital
Trust I, dated as of April 1, 1997 (filed as Exhibit 3.4 hereto).*
4.6 Form of Capital Security Certificate, Series B.
4.7 Registration Rights Agreement, dated April 1, 1997, among Eagle
Financial Corp., Eagle Financial Capital Trust I and Sandler O'Neill &
Partners, L.P.*
4.8 Liquidated Damages Agreement, dated April 1, 1997, among Eagle
Financial Corp., Eagle Financial Capital Trust I and Sandler O'Neill &
Partners, L.P.*
4.9 Series A Capital Securities Guarantee Agreement, dated as of April 1,
1997, executed and delivered by Eagle Financial Corp.*
4.10 Form of Series B Capital Securities Guarantee Agreement.*
5.1 Opinion of Hogan & Hartson L.L.P. as to the validity of the securities
registered hereunder (including the consent of that firm).
5.2 Opinion of Morris, James, Hitchens & Williams as to the validity of
the Exchange Capital Securities (including the consent of that firm).
8 Opinion of Hogan & Hartson L.L.P. as to certain federal income tax
matters (including the consent of that firm).
12 Computation of ratio of earnings to combined fixed charges.
21 Subsidiaries of Webster Capital Trust II.*
23.1 Consent of Hogan & Hartson L.L.P. (included as part of Exhibit 5.1 and
Exhibit 8).
23.2 Consent of Morris, James, Hitchens & Williams (included as part of
Exhibit 5.2).
23.3 Consent of KPMG Peat Marwick LLP.
24 Power Of Attorney (incorporated herein by reference from the signature
page of the Registration Statement on Form S-4 filed by Webster
Financial Corporation and Webster Capital Trust II on September 29,
1998).
25.1 Form T-1 Statement of Eligibility of Wilmington Trust Company to act
as trustee for the Exchange Capital Securities of Webster Capital
Trust II.*
25.2 Form T-1 Statement of Eligibility of Wilmington Trust Company to act
as trustee for the Exchange Junior Subordinated Debentures of Webster
Financial Corporation.*
25.3 Form T-1 Statement of Eligibility of Wilmington Trust Company to act
as trustee for the Webster Financial Corporation Guarantee with
respect to Exchange Capital Securities.*
II-2
<PAGE>
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
99.3 Form of Exchange Agent Agreement.*
99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.*
99.5 Form of Letter to Clients.*
- ----------------
* Previously filed.
II-3
<PAGE>
ITEM 22. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted as to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, indemnification agreements
entered into between the registrants and their respective officers, directors,
trustees, or otherwise, each of the registrants has been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than payment by a registrant
of expenses incurred or paid by a director, officer, trustee or controlling
person of such registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, each registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
Each of the undersigned registrants hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Items 3 and 21 of this Registration Statement, within one business
day of receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
Each of the undersigned registrants hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this Registration Statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrants have
duly caused this registration statement to be signed on their behalf by the
undersigned, thereunto duly authorized, in the Waterbury, Connecticut, on
October 15, 1998.
WEBSTER FINANCIAL CORPORATION
By:/s/ John V. Brennan
-----------------------------------------
John V. Brennan
Executive Vice President, Chief Financial
Officer and Treasurer
WEBSTER CAPITAL TRUST II
By: /s/ John V. Brennan
-----------------------------------------
John V. Brennan
Administrative Trustee
By: /s/ Peter J. Swiatek
-----------------------------------------
Peter J. Swiatek
Administrative Trustee
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities indicated
on October 15, 1998.
<TABLE>
<CAPTION>
Name: Title:
----- ------
<S> <C>
By: /s/ James C. Smith Chairman and Chief Executive Officer,
------------------------------- Principal Executive Officer
James C. Smith
By: /s/ John V. Brennan Executive Vice President, Chief Financial
------------------------------- Officer and Treasurer, Principal Financial
John V. Brennan Officer, Principal Accounting Officer
</TABLE>
II-5
<PAGE>
By: Richard H. Alden* Director
-------------------------------
Richard H. Alden
By: Achille A. Apicella* Director
-------------------------------
Achille A. Apicella
By: Joel S. Becker* Director
-------------------------------
Joel S. Becker
By: O. Joseph Bizzozero, Jr.*
-------------------------------
O. Joseph Bizzozero, Jr. Director
By: George T. Carpenter*
-------------------------------
George T. Carpenter Director
By: John J. Crawford*
-------------------------------
John J. Crawford Director
By: Harry P. DiAdamo, Jr.*
-------------------------------
Harry P. DiAdamo, Jr. Director
By: Robert A. Finkenzeller*
-------------------------------
Robert A. Finkenzeller Director
By: Walter R. Griffin*
-------------------------------
Walter R. Griffin Director
By: J. Gregory Hickey*
-------------------------------
J. Gregory Hickey Director
By: C. Michael Jacobi*
-------------------------------
C. Michael Jacobi Director
By: John F. McCarthy*
-------------------------------
John F. McCarthy Director
By:
-------------------------------
Marguerite F. Waite Director
By: /s/John V. Brennan
-------------------------------
* By Power of Attorney
John V. Brennan
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibits Page No.
- ----------- -------- --------
<S> <C> <C>
3.1 Certificate of Trust of Eagle Financial Capital Trust I, dated March
26, 1997.*
3.2 Certificate of Amendment to Certificate of Trust of Eagle Financial
Capital Trust I, dated September 29, 1998.*
3.3 Declaration of Trust of Eagle Financial Capital Trust I, dated as of
March 26, 1997. *
3.4 Amended and Restated Declaration of Trust of Eagle Financial Capital
Trust I, dated as of April 1, 1997.*
4.1 Indenture, dated as of April 1, 1997, between Eagle Financial Corp.
and Wilmington Trust Company, as debenture trustee.*
4.2 Form of Certificate of 10.00% Junior Subordinated Deferrable Interest
Debenture, Series B.
4.3 Certificate of Trust of Eagle Financial Capital Trust I, dated March
26, 1997 (filed as Exhibit 3.1 hereto).*
4.4 Declaration of Trust of Eagle Financial Capital Trust I, dated as of
March 26, 1997 (filed as Exhibit 3.3 hereto).*
4.5 Amended and Restated Declaration of Trust of Eagle Financial Capital
Trust I, dated as of April 1, 1997 (filed as Exhibit 3.4 hereto).*
4.6 Form of Capital Security Certificate, Series B.
4.7 Registration Rights Agreement, dated April 1, 1997, among Eagle
Financial Corp., Eagle Financial Capital Trust I and Sandler O'Neill &
Partners, L.P.*
4.8 Liquidated Damages Agreement, dated April 1, 1997, among Eagle
Financial Corp., Eagle Financial Capital Trust I and Sandler O'Neill &
Partners, L.P.*
4.9 Series A Capital Securities Guarantee Agreement, dated as of April 1,
1997, executed and delivered by Eagle Financial Corp.*
4.10 Form of Series B Capital Securities Guarantee Agreement.*
5.1 Opinion of Hogan & Hartson L.L.P. as to the validity of the securities
registered hereunder (including the consent of that firm).
5.2 Opinion of Morris, James, Hitchens & Williams as to the validity
of the Exchange Capital Securities (including the consent of
that firm).
8 Opinion of Hogan & Hartson L.L.P. as to certain federal income tax
matters (including the consent of that firm).
12 Computation of ratio of earnings to combined fixed charges.
21 Subsidiaries of Webster Capital Trust II.*
23.1 Consent of Hogan & Hartson L.L.P. (included as part of Exhibit 5.1 and
Exhibit 8).
23.2 Consent of Morris, James, Hitchens & Williams (included as part of
Exhibit 5.2).
23.3 Consent of KPMG Peat Marwick LLP.
24 Power of Attorney (incorporated by reference from the signature page
of the Registration Statement on Form S-4 filed by Webster Financial
Corporation and Webster Capital Trust II on September 29, 1998).
25.1 Form T-1 Statement of Eligibility of Wilmington Trust Company to act
as trustee for the Exchange Capital Securities of Webster Capital
Trust II.*
<PAGE>
25.2 Form T-1 Statement of Eligibility of Wilmington Trust Company to act
as trustee for the Exchange Junior Subordinated Debentures of Webster
Financial Corporation.*
25.3 Form T-1 Statement of Eligibility of Wilmington Trust Company to act
as trustee for the Webster Financial Corporation Guarantee with
respect to Exchange Capital Securities.*
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
99.3 Form of Exchange Agent Agreement.*
99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.*
99.5 Form of Letter to Clients.*
- ----------------
* Previously filed.
</TABLE>
EXHIBIT 4.2
WEBSTER FINANCIAL CORPORATION
FORM OF SERIES B 10% JUNIOR SUBORDINATED
DEFERRABLE INTEREST DEBENTURE
DUE APRIL 1, 2027
Webster Financial Corporation, a Delaware corporation (the
"Corporation", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
______________________________ or registered assigns, the principal sum of
$___________ Dollars on April 1, 2027 (the "Maturity Date"), unless previously
prepaid, and to pay interest on the outstanding principal amount hereof from
April 1, 1999, or from the most recent interest payment date (each such date, an
"Interest Payment Date") to which interest has been paid or duly provided for,
semi-annually (subject to deferral as set forth herein) in arrears on April 1
and October 1 of each year, commencing April 1, 1999, at the rate of 10% per
annum until the principal hereof shall have become due and payable, and on any
overdue principal and premium, if any, and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at the same rate per annum compounded
semi-annually. The amount of interest payable on any Interest Payment Date shall
be computed on the basis of a 360-day year of twelve 30-day months and, for any
period less than a full calendar month, the number of days elapsed in such
month. In the event that any date on which the principal of (or premium, if any)
or interest on this Security is payable is not a Business Day, then the payment
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that if such next succeeding Business Day falls in the next calendar
year, then such payment shall be made on the immediately preceding Business Day,
in each case with the same force and effect as if made on such date. Pursuant to
the Indenture, in certain circumstances the Corporation will be required to pay
Additional Sums and Compounded Interest (each as defined in the Indenture) with
respect to this Security. Pursuant to the Registration Rights Agreement, in
certain limited circumstances the Corporation will be required to pay Liquidated
Damages (as defined in the Registration Rights Agreement) with respect to this
Security.
The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities, as defined in said Indenture) is registered at the close of business
on the regular record date for such interest installment, which shall be at the
close of
A-1
<PAGE>
business on the 15th day of the month preceding the month in which the relevant
interest payment date falls. Any such interest installment not punctually paid
or duly provided for shall forthwith cease to be payable to the holders on such
regular record date and may be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on a special record date to be fixed by the Debenture Trustee for the payment of
such defaulted interest, notice whereof shall be given to the holders of
Securities not less than 10 days prior to such special record date, or may be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture.
The principal of (and premium, if any) and interest (including
Compounded Interest and Additional Sums, if any) and Liquidated Damages, if any,
on this Security shall be payable at the office or agency of the Debenture
Trustee maintained for that purpose in any coin or currency of the United States
of America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that, payment of interest may be made at the
option of the Corporation by (i) check mailed to the holder at such address as
shall appear in the Security Register or (ii) by transfer to an account
maintained by the Person entitled thereto, provided that proper written transfer
instructions have been received by the relevant record date. Notwithstanding the
foregoing, so long as the Holder of this Security is the Property Trustee, the
payment of the principal of (and premium, if any) and interest (including
Compounded Interest and Additional Sums, if any) and Liquidated Damages, if any,
on this Security will be made at such place and to such account as may be
designated by the Property Trustee.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness, and this Security is issued subject
to the provisions of the Indenture with respect thereto. Each holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Debenture Trustee on his or her
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination so provided and (c) appoints the Debenture Trustee
his or her attorney-in-fact for any and all such purposes. Each holder hereof,
by his or her acceptance hereof, hereby waives all notice of the acceptance of
the subordination provisions contained herein and in the Indenture by each
holder of Senior Indebtedness, whether now outstanding or hereafter incurred,
and waives reliance by each such holder upon said provisions.
This Security shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Debenture Trustee.
A-2
<PAGE>
The provisions of this Security are continued on the reverse side
hereof and such provisions shall for all purposes have the same effect as though
fully set forth at this place.
IN WITNESS WHEREOF, the Corporation has caused this instrument to be
duly executed and sealed this _____ day of ____________, 1998.
WEBSTER FINANCIAL CORPORATION
By:
-----------------------------------------
Name:
Title:
Attest:
By:
---------------------------------------
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Debenture Trustee
By:
-----------------------------------------
Authorized Signatory
A-3
<PAGE>
(FORM OF REVERSE OF SECURITY)
This Security is one of the Securities of the Corporation (herein
sometimes referred to as the "Securities"), specified in the Indenture, all
issued or to be issued under and pursuant to an Indenture, dated as of April 1,
1997 (the "Indenture"), duly executed and delivered between Eagle Financial
Corp. and Wilmington Trust Company, as Debenture Trustee (the "Debenture
Trustee"), to which Indenture reference is hereby made for a description of the
rights, limitations of rights, obligations, duties and immunities thereunder of
the Debenture Trustee, the Corporation and the holders of the Securities.
Upon the occurrence and continuation of a Special Event prior to March
15, 2007 (the "Initial Optional Prepayment Date"), the Corporation shall have
the right, at any time within 90 days following the occurrence of such Special
Event, to prepay this Security in whole (but not in part) at the Special Event
Prepayment Price. "Special Event Prepayment Price" shall mean, with respect to
any prepayment of the Securities following a Special Event, an amount in cash
equal to the Make Whole Amount. The "Make Whole Amount" shall mean an amount
equal to the greater of (i) 100% of the principal amount to be prepaid or (ii)
the sum, as determined by a Quotation Agent, of the present values of remaining
scheduled payments of principal and interest on the Securities, discounted to
the prepayment date on a semi-annual 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), any accrued and unpaid interest thereon (including
Compounded Interest and Additional Sums, if any) and Liquidated Damages, if any,
to the date of such prepayment.
In addition, the Corporation shall have the right to prepay this
Security, in whole or in part, at any time on or after the Initial Optional
Prepayment Date (an "Optional Prepayment"), upon not less than 30 days and not
more than 60 days' notice, at the prepayment prices set forth below plus, in
each case, accrued and unpaid interest thereon (including Additional Sums and
Compounded Interest, if any) and Liquidated Damages, if any, to the applicable
date of prepayment (the "Optional Prepayment Price") if prepaid during the
12-month period beginning April 1 of the years indicated below.
A-4
<PAGE>
Percentage
Year of Principal
---- ------------
2007 105.0%
2008 104.5%
2009 104.0%
2010 103.5%
2011 103.0%
2012 102.5%
2013 102.0%
2014 101.5%
2015 101.0%
2016 100.5%
2017 and thereafter 100.0%
The Optional Prepayment Price or the Special Event Prepayment Price,
as the case requires, shall be paid prior to 12:00 noon, New York time, on the
date of such prepayment or at such earlier time as the Corporation determines,
provided, that the Corporation shall deposit with the Debenture Trustee an
amount sufficient to pay the applicable Prepayment Price by 10:00 a.m. New York
time on the date such Prepayment Price is to be paid. Any prepayment pursuant to
this paragraph will be made upon not less than 30 days nor more than 60 days
notice. If the Securities are only partially prepaid by the Corporation pursuant
to an Optional Prepayment, the particular Securities to be prepaid shall be
selected on a pro rata basis not more than 60 days prior to the date fixed for
prepayment from the outstanding Securities not previously called for prepayment,
provided, however, that with respect to Securityholders that would be required
to hold Securities with an aggregate principal amount of less than $100,000 but
more than an aggregate principal amount of zero as a result of such pro rata
prepayment, the Corporation shall prepay Securities of each such Securityholder
so that after such prepayment such Securityholder shall hold Securities either
with an aggregate principal amount of at least $100,000 or such Securityholder
no longer holds any Securities and shall use such method (including, without
limitation, by lot) as the Corporation shall deem fair and appropriate,
provided, further, that any such proration may be made on the basis of the
aggregate principal amount of Securities held by each Securityholder thereof and
may be made by making such adjustments as the Corporation deems fair and
appropriate in order that only Securities in denominations of $1,000 or integral
multiples thereof shall be prepaid.
In the event of prepayment of this Security in part only, a new
Security or Securities for the portion hereof that has not been prepaid will be
issued in the name of the holder hereof upon the cancellation hereof.
A-5
<PAGE>
Notwithstanding the foregoing, any prepayment of Securities by the
Corporation shall be subject to the prior approval of the Board of Governors of
the Federal Reserve System (the "Federal Reserve"), if such approval is then
required under applicable capital guidelines or policies of the Federal Reserve,
and the receipt of any other required regulatory approvals.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Securities may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Corporation and the
Debenture Trustee, with the consent of the holders of a majority in aggregate
principal amount of the Securities at the time outstanding, as defined in the
Indenture, to execute supplemental indentures for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of modifying in any manner the rights of the holders of the
Securities; provided, however, that no such supplemental indenture shall,
without the consent of each holder of Securities then outstanding and affected
thereby, (i) change the Maturity Date of any Security, or reduce the rate or
extend the time of payment of interest thereon (subject to Article XVI of the
Indenture), or reduce the principal amount thereof, or reduce any amount payable
on prepayment thereof, or make the principal thereof or any interest or premium
thereon payable in any coin or currency other than that provided in the
Securities, or impair or affect the right of any holder of Securities to
institute suit for payment thereof, or (ii) reduce the aforesaid percentage of
Securities, the holders of which are required to consent to any such
supplemental indenture. The Indenture also contains provisions permitting the
holders of a majority in aggregate principal amount of the Securities at the
time outstanding affected thereby, on behalf of all of the holders of the
Securities, to waive any past default in the performance of any of the covenants
contained in the Indenture, or established pursuant to the Indenture, and its
consequences, except a default in the payment of the principal of or premium, if
any, or interest on any of the Securities or a default in respect of any
covenant or provision under which the Indenture cannot be modified or amended
without the consent of each holder of Securities then outstanding. Any such
consent or waiver by the holder of this Security (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such Holder and upon all
future holders and owners of this Security and of any Security issued in
exchange herefor or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Corporation,
which is absolute and unconditional, to pay the principal of (and premium, if
any) and interest (including Compounded Interest and Additional Sums, if any)
and Liquidated
A-6
<PAGE>
Damages, if any, on this Security at the time and place and at the rate and in
the money herein prescribed.
So long as no Event of Default shall have occurred and be continuing,
the Corporation shall have the right, at any time and from time to time during
the term of the Securities, to defer payments of interest by extending the
interest payment period of such Securities for a period not exceeding 10
consecutive semi-annual periods, including the first such semi-annual period
during such extension period, and not extending beyond the Maturity Date of the
Securities (an "Extended Interest Payment Period") or ending on a date other
than an Interest Payment Date, at the end of which period the Corporation shall
pay all interest then accrued and unpaid (together with interest thereon at the
rate specified for the Securities to the extent that payment of such interest is
enforceable under applicable law). Before the termination of any such Extended
Interest Payment Period, the Corporation may further defer payments of interest
by further extending such Extended Interest Payment Period, provided that such
Extended Interest Payment Period, together with all such previous and further
extensions within such Extended Interest Payment Period, (i) shall not exceed 10
consecutive semi-annual periods, including the first semi-annual period during
such Extended Interest Payment Period, (ii) shall not end on any date other than
an Interest Payment Date, and (iii) shall not extend beyond the Maturity Date of
the Securities. Upon the termination of any such Extended Interest Payment
Period and the payment of all accrued and unpaid interest and any additional
amounts then due, the Corporation may commence a new Extended Interest Payment
Period, subject to the foregoing requirements.
The Corporation has agreed that it will not (i) declare or pay any
dividends or distributions on, or prepay, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock,
(ii) make any payment of principal, interest or premium, if any, on or repay or
repurchase or redeem any debt securities of the Corporation that rank pari passu
with or junior in right of payment to the Securities or (iii) make any guarantee
payments with respect to any guarantee by the Corporation of the debt securities
of any Subsidiary of the Corporation (including Other Guarantees) if such
guarantee ranks pari passu with or junior in right of payment to the Securities
(other than (a) dividends or distributions in shares of, or options, warrants or
rights to subscribe for or purchase shares of, Common Stock of the Corporation,
(b) any declaration of a dividend in connection with the implementation of a
stockholder's rights plan, or the issuance of stock under any such plan in the
future, or the prepayment or repurchase of any such rights pursuant thereto, (c)
payments under the Capital Securities Guarantee, (d) the purchase of fractional
shares resulting from a reclassification of the Corporation's capital stock, (e)
the purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, and (f) purchases of Common Stock related
to the issuance of Common Stock or rights under any of the Corporation's benefit
plans for its directors, officers or employees or any of the Corporation's
A-7
<PAGE>
dividend reinvestment plans), if at such time (1) there shall have occurred any
event of which the Corporation has actual knowledge that (a) is, or with the
giving of notice or the lapse of time, or both, would constitute, an Event of
Default and (b) in respect of which the Corporation shall not have taken
reasonable steps to cure, (2) if such Securities are held by the Property
Trustee, the Corporation shall be in default with respect to its payment
obligations under the Capital Securities Guarantee or (3) the Corporation shall
have given notice of its election of the exercise of its right to extend the
interest payment period and any such extension shall be continuing.
Subject to (i) the receipt of any required regulatory approval, and
(ii) the receipt by the Corporation of an opinion of counsel to the effect that
such distribution will not be a taxable event to holders of Capital Securities,
the Corporation will have the right at any time to liquidate the Trust and cause
the Securities to be distributed to the holders of the Trust Securities in
liquidation of the Trust.
The Securities are issuable only in registered form without coupons in
minimum denominations of $100,000 and multiples of $1,000 in excess thereof. As
provided in the Indenture and subject to the transfer restrictions limitations
as may be contained herein and therein from time to time, this Security is
transferable by the holder hereof on the Security Register of the Corporation,
upon surrender of this Security for registration of transfer at the office or
agency of the Corporation in New York, New York accompanied by a written
instrument or instruments of transfer in form satisfactory to the Corporation or
the Debenture Trustee duly executed by the holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of authorized
denominations and for the same aggregate principal amount and series will be
issued to the designated transferee or transferees. No service charge will be
made for any such registration of transfer, but the Corporation may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in relation thereto.
Prior to due presentment for registration of transfer of this
Security, the Corporation, the Debenture Trustee, any authenticating agent, any
paying agent, any transfer agent and the registrar may deem and treat the holder
hereof as the absolute owner hereof (whether or not this Security shall be
overdue and notwithstanding any notice of ownership or writing hereon made by
anyone other than the security registrar for the Securities) for the purpose of
receiving payment of or on account of the principal hereof and premium, if any,
and (subject to the Indenture) interest due hereon and for all other purposes,
and neither the Corporation nor the Debenture Trustee nor any authenticating
agent nor any paying agent nor any transfer agent nor any registrar shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or
premium, if any, or interest on this Security, or for any claim based hereon, or
otherwise in
A-8
<PAGE>
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Corporation or of any predecessor or successor Person, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
All terms used in this Security that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAW PROVISIONS THEREOF.
A-9
EXHIBIT 4.10
FORM OF SERIES B CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
THIS SERIES B CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE
MEANING OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
OF THE DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF THE
CLEARING AGENCY. THIS SERIES B CAPITAL SECURITY IS EXCHANGEABLE FOR SERIES B
CAPITAL SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE CLEARING
AGENCY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
DECLARATION AND NO TRANSFER OF THIS SERIES B CAPITAL SECURITY (OTHER THAN A
TRANSFER OF THIS SERIES B CAPITAL SECURITY AS A WHOLE BY THE CLEARING AGENCY TO
A NOMINEE OF THE CLEARING AGENCY OR BY A NOMINEE OF THE CLEARING AGENCY TO THE
CLEARING AGENCY OR ANOTHER NOMINEE OF THE CLEARING AGENCY) MAY BE REGISTERED
EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS SERIES B CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE CLEARING AGENCY TO THE TRUST OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SERIES B CAPITAL SECURITY ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE CLEARING AGENCY AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
THE SERIES B CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED
ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 (100 SERIES
B CAPITAL SECURITIES). ANY ATTEMPTED TRANSFER OF SERIES B CAPITAL SECURITIES IN
A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE
VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE
DEEMED NOT TO BE THE HOLDER OF SUCH SERIES B CAPITAL SECURITIES FOR ANY PURPOSE,
INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON SUCH SERIES B
CAPITAL SECURITIES, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO
INTEREST WHATSOEVER IN SUCH SERIES B CAPITAL SECURITIES.
A2-1
<PAGE>
Certificate Number Aggregate Liquidation Amount:
----------- ----------------
CUSIP NO._____________
Certificate Evidencing Series B Capital Securities
of
Webster Capital Trust II
Series B 10% Capital Securities
(liquidation amount $1,000 per Capital Security)
Webster Capital Trust II, a statutory business trust created under the
laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of [$_________ in
aggregate liquidation amount of Capital Securities of the Trust]1 [the aggregate
liquidation amount of Capital Securities of the Trust specified in Schedule A
hereto]2 representing undivided beneficial interests in the assets of the Trust
designated the Series B 10% Capital Securities (liquidation amount $1,000 per
Capital Security) (the "Capital Securities"). The Capital Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities represented
hereby are issued and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of April 1,
1997, as the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Capital Securities as set forth in
Annex I to the Declaration. Capitalized terms used but not defined herein shall
have the meaning given them in the Declaration. The Sponsor will provide a copy
of the Declaration, the Capital Securities Guarantee, the Common Securities
Guarantee (as may be appropriate), and the Indenture (including any supplemental
indenture) to a Holder without charge upon written request to the Trust at its
principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Capital Securities Guarantee to the extent provided therein.
- ----------------------
1 Insert in Definitive Capital Securities only.
2 Insert in Global Capital Securities only.
A2-2
<PAGE>
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Capital Securities
as evidence of indirect beneficial ownership in the Debentures.
A2-3
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this _____
day of __________, 1998.
WEBSTER CAPITAL TRUST II
By:
----------------------------------
Name:
Title: Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
withinmentioned Declaration.
Dated: 1998
------------ ---,
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Property Trustee
By:
-------------------------------
Authorized Signatory
A2-4
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a rate
per annum of 10% (the "Coupon Rate") of the liquidation amount of $1,000 per
Capital Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than one
semiannual period will bear interest thereon compounded semiannually at the
Coupon Rate (to the extent permitted by applicable law). Pursuant to the
Registration Rights Agreement, in certain limited circumstances the Debenture
Issuer will be required to pay Liquidated Damages (as defined in the
Registration Rights Agreement) with respect to the Debentures. The term
"Distributions", as used herein, includes such cash distributions and any such
interest and such Liquidated Damages payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds on hand legally available therefor.
Distributions on the Capital Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or,
if no Distributions have been paid, from April 1, 1997 and will be payable
semiannually in arrears, on April 1 and October 1 of each year, commencing on
April 1, 1999, except as otherwise described below. Distributions will be
computed on the basis of a 360-day year consisting of twelve 30-day months and,
for any period less than a full calendar month, the number of days elapsed in
such month. As long as no Event of Default has occurred and is continuing under
the Indenture, the Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period at any time and
from time to time on the Debentures for a period not exceeding 10 consecutive
calendar semiannual periods, including the first such semiannual period during
such extension period (each an "Extension Period"), provided, that no Extension
Period shall end on a date other than an Interest Payment Date for the
Debentures or extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions will also be deferred. Despite such
deferral, semiannual Distributions will continue to accumulate with interest
thereon (to the extent permitted by applicable law, but not at a rate exceeding
the rate of interest then accruing on the Debentures) at the Coupon Rate
compounded semiannually during any such Extension
A2-5
<PAGE>
Period. Prior to the termination of any such Extension Period, the Debenture
Issuer may further defer payments of interest by further extending such
Extension Period; provided that such Extension Period, together with all such
previous and further extensions within such Extension Period, may not exceed 10
consecutive semiannual periods, including the first semiannual period during
such Extension Period, end on a date other than an Interest Payment Date for the
Debentures or extend beyond the Maturity Date of the Debentures. Payments of
accumulated Distributions will be payable to Holders as they appear on the books
and records of the Trust on the first record date after the end of the Extension
Period. Upon the termination of any Extension Period and the payment of all
amounts then due, the Debenture Issuer may commence a new Extension Period,
subject to the above requirements.
Subject to receipt by the Sponsor of any required regulatory approvals
and to certain other conditions set forth in the Declaration and the Indenture,
the Property Trustee may, at the direction of the Sponsor, at any time liquidate
the Trust and cause the Debentures to be distributed to the holders of the
Securities in liquidation of the Trust or, simultaneously with any redemption of
the Debentures, cause a Like Amount of the Securities to be redeemed by the
Trust.
The Capital Securities shall be redeemable as provided in the
Declaration.
A2-6
<PAGE>
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital Security
Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ---------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ---------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ------------------------------------------------------------agent to transfer
this Capital Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date:
-----------------------
Signature:
------------------
(Sign exactly as your name appears on the other side of this Capital Security
Certificate)
Signature Guarantee: 3
--------------------------------- -
- --------------------------
3 Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities and Exchange Act of 1934, as amended.
A2-7
EXHIBIT 5.1
HOGAN & HARTSON L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
(202) 637-5600
October 16, 1998
Board of Directors
Webster Financial Corporation
Webster Plaza
Waterbury, Connecticut 06702
Ladies and Gentlemen:
We are acting as special counsel to Webster Financial Corporation, a
Delaware corporation (the "Corporation"), and holder of all of the Common
Securities of Webster Capital Trust II, a Delaware statutory business trust (the
"Trust"), in connection with the registration statement on Form S-4, as amended
(File Nos. 333-64639 and 333-64639-01, and hereinafter referred to as the
"Registration Statement"), filed with the Securities and Exchange Commission,
relating to (i) the issuance by the Trust of up to and including $50.0 million
aggregate Liquidation Amount of 10.00% Exchange Capital Securities (the
"Exchange Capital Securities"), in exchange for up to and including $50.0
million aggregate Liquidation Amount of its outstanding 10.00% Capital
Securities (the "Original Capital Securities"); (ii) the issuance by the
Corporation to the Trust, in an aggregate principal amount corresponding to the
aggregate Liquidation Amount of the Exchange Capital Securities, of the
Corporation's 10.00% Exchange Junior Subordinated Deferrable Interest Debentures
due April 1, 2027 (the "Exchange Junior Subordinated Debentures"), in exchange
for a comparable aggregate principal amount of the Corporation's outstanding
10.00% Junior Subordinated Deferrable Interest Debentures due April 1, 2027 (the
"Original Junior Subordinated Debentures"); and (iii) the guarantee by the
Corporation (the "Exchange Guarantee") in connection with the 10.00% Exchange
Capital Securities. This opinion letter is furnished to you at your request to
enable you to fulfill the requirements of Item 601(b)(5) of Regulation S-K, 17
C.F.R. ss. 229.601(b)(5), in connection with the Registration Statement.
For purposes of this opinion letter, we have examined copies of the
following documents:
1. An executed copy of the Registration Statement.
2. The Certificate of Incorporation of the Corporation, with
amendments thereto, as certified by the Secretary of the
Corporation on the date hereof as then being complete, accurate
and in effect.
3. The Bylaws of the Corporation, as certified by the Secretary of
the Corporation on the date hereof as then being complete,
accurate and in effect.
4. An executed copy of the Junior Subordinated Indenture (the
"Indenture"), dated as of April 1, 1997, between Eagle Financial
Corp. ("Eagle") and the Wilmington Trust Company ("WTC"),
pursuant to which the Exchange Junior Subordinated Debentures
will be issued.
5. An executed copy of the Amended and Restated Declaration of
Trust, dated as of April 1, 1997, between Eagle, WTC, and the
Administrative Trustees
<PAGE>
Board of Directors
Webster Financial Corporation
October 16, 1998
Page 2
named therein, pursuant to which the Exchange Capital Securities
will be issued.
6. The form of Exchange Guarantee Agreement.
7. The form of Exchange Capital Security.
8. The form of Exchange Junior Subordinated Debenture.
9. The Registration Rights Agreement, dated as of April 1, 1997,
among Eagle, Eagle Financial Capital Trust I and Sandler O'Neill
& Partners, L.P.
10. Resolutions of the Board of Directors of Eagle adopted on March
25, 1997, and Resolutions adopted by the Pricing Committee of the
Board of Directors of Eagle on March 26, 1997, both as certified
by the Secretary of the Corporation on the date hereof as then
being complete, accurate and in effect, relating to, among other
things, the Exchange Offering.
In our examination of the aforesaid documents, we have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity, accuracy and completeness of all documents submitted to us, and
the conformity with the original documents of all documents submitted to us as
certified, telecopied, photostatic, or reproduced copies. This opinion letter is
given, and all statements herein are made, in the context of the foregoing.
This opinion letter is based as to matters of law solely on the
General Corporation Law of the State of Delaware and the contract law of the
State of New York (but not including any statutes, ordinances, administrative
decisions, rules or regulations of any political subdivision of the State of New
York). We express no opinion herein as to any other laws, statutes, regulations,
or ordinances.
Based upon, subject to, and limited by the foregoing, we are of the
opinion that:
(i) following effectiveness of the Registration Statement and when executed
and authenticated in the manner provided for in the Indenture and delivered
against surrender and cancellation of a like aggregate principal amount of
Original Junior Subordinated Debentures as contemplated in the Registration
Rights Agreement, the Exchange Junior Subordinated Debentures will
constitute valid and binding obligations of the Corporation enforceable in
accordance with their terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors'
rights (including, without limitation, the effect of statutory and other
law regarding fraudulent conveyances, fraudulent transfers and preferential
transfers) and as may be limited by the exercise of judicial discretion and
the application of principles of equity including, without limitation,
requirements of good faith, fair dealing, conscionability and materiality
(regardless of whether the
<PAGE>
Board of Directors
Webster Financial Corporation
October 16, 1998
Page 3
Exchange Junior Subordinated Debentures are considered in a proceeding in
equity or at law); and
(ii) following effectiveness of the Registration Statement and when
executed by the Corporation and WTC, as Guarantee Trustee, and delivered as
contemplated in the Registration Rights Agreement, the Exchange Guarantee
will constitute a valid and binding obligation of the Corporation
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights (including, without limitation, the effect of statutory
and other law regarding fraudulent conveyances, fraudulent transfers and
preferential transfers) and as may be limited by the exercise of judicial
discretion and the application of principles of equity including, without
limitation, requirements of good faith, fair dealing, conscionability and
materiality (regardless of whether the Exchange Guarantee is considered in
a proceeding in equity or at law).
The above opinions shall be understood to mean only that if there is a
default in performance of an obligation, (i) if a failure to pay or other damage
can be shown and (ii) if the defaulting party can be brought into a court which
will hear the case and apply the governing law, then, subject to the
availability of defenses, and to the exceptions set forth above, the court will
provide a money damage (or perhaps injunctive or specific performance) remedy.
We assume no obligation to advise you of any changes in the foregoing
subsequent to the delivery of this opinion letter. This opinion letter has been
prepared solely for your use in connection with the filing of the Registration
Statement on the date of this opinion letter and should not be quoted in whole
or in part or otherwise be referred to, nor filed with or furnished to any
governmental agency or other person or entity, without the prior written consent
of this firm.
We hereby consent to the filing of this opinion letter as Exhibit 5.1
to the Registration Statement and to the reference to this firm under the
caption "Validity of the Exchange Securities" in the prospectus constituting a
part of the Registration Statement. In giving this consent, we do not thereby
admit that we are an "expert" within the meaning of the Securities Act of 1933,
as amended.
Very truly yours,
HOGAN & HARTSON L.L.P.
EXHIBIT 5.2
Morris, James, Hitchens & Williams
222 Delaware Avenue
P.O. Box 2306
Wilmington, Delaware 19899
(302) 888-6800
October 16, 1998
Webster Capital Trust II
Webster Plaza
Waterbury, Connecticut 06702
Re: Webster Capital Trust II
Ladies and Gentlemen:
We have acted as special Delaware counsel for Webster Capital
Trust II, a Delaware business trust (the "Trust"), for purposes of giving the
opinions set forth herein.
For purposes of giving the opinions set forth below, our
examination of documents has been limited to the examination of originals or
copies furnished to us of the following:
(a) The Declaration of Trust of the Trust, dated as of March
26, 1997, between Eagle Financial Corp., a Delaware corporation (the "Company"),
and the trustees of the Trust named therein;
(b) The Certificate of Trust of the Trust, as filed in the
office of the Secretary of State of the State of Delaware (the "Secretary of
State") on March 26, 1997 (the "Original Certificate");
(c) The Amended and Restated Declaration of Trust of the
Trust, dated as of April 1, 1997 (the "Declaration"), among the Company, as
Sponsor, the trustees of the Trust named therein (the "Trustees") and the
holders, from time to time, of undivided beneficial interests in the assets of
the Trust;
(d) The Letter of Notification re: Name Change, executed and
delivered pursuant to Section 3.1 of the Amended and Restated Declaration of
Trust of the Trust, dated as of September 28, 1998;
<PAGE>
(e) The Certificate of Amendment to Certificate of Trust of
the Trust, as filed in the Office of the Secretary of State on September 29,
1998 (the "Certificate Amendment")(the Original Certificate as amended by the
Certificate Amendment is herein referred to as the "Certificate");
(f) The Registration Statement on Form S-4 (Registration Nos.
333-64639 and 333-64639-01) (the "Registration Statement"), including a
prospectus (the "Prospectus"), relating to the 10.00% Exchange Capital
Securities, Series B (Liquidation Amount $1,000 per Exchange Capital Security)
of the Trust representing undivided beneficial interests in the assets of the
Trust (each, an "Exchange Capital Security" and collectively, the "Exchange
Capital Securities"), as filed with the Securities and Exchange Commission on or
about September 29, 1998; and
(g) A Certificate of Good Standing for the Trust, dated
October 16, 1998, obtained from the Secretary of State.
Unless otherwise defined herein, all capitalized terms used in
this opinion letter shall have the respective meanings provided in the
Declaration, except that reference herein to any document shall mean such
document as in effect on the date hereof.
For the purposes of this opinion letter, we have not reviewed
any documents other than the documents listed in paragraphs (a) through (g)
above. In particular, we have not reviewed any document (other than the
documents listed in paragraphs (a) through (g) above) that is referred to in or
incorporated by reference into the documents reviewed by us. We have assumed
that there exists no provision in any document that we have not reviewed that
bears upon or is inconsistent with or contrary to the opinions stated herein. We
have conducted no factual investigation of our own but rather have relied solely
upon the foregoing documents, the statements and information set forth therein
and the additional matters recited or assumed herein, all of which we have
assumed to be true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed
(i) the authenticity of all documents submitted to us as authentic originals,
(ii) the conformity with the originals of all documents submitted to us as
copies or forms, and (iii) the genuineness of all signatures.
For purposes of this opinion letter, we have assumed (i) that
the Declaration constitutes the entire agreement among the parties thereto with
<PAGE>
respect to the subject matter thereof, including with respect to the creation,
operation, and termination of the Trust, and that the Declaration and the
Certificate are in full force and effect and have not been amended, (ii) except
to the extent provided in paragraph 1 below, the due creation, due formation or
due organization, as the case may be, and valid existence in good standing of
each party to the documents examined by us under the laws of the jurisdiction
governing its creation, formation or organization, (iii) the legal capacity of
each natural person who is a party to the documents examined by us, (iv) that
each of the parties to the documents examined by us has all requisite power and
authority to execute and deliver, and to perform its obligations under, such
documents, (v) that each of the parties to the documents examined by us has duly
authorized, executed and delivered such documents, (vi) the receipt by each
Person to whom an Exchange Capital Security is to be issued by the Trust (the
"Exchange Capital Security Holders") of an appropriate certificate for such
Exchange Capital Security and the exchange by such Exchange Capital Security
Holder of its validly issued Series A Capital Securities accepted for exchange
for the Exchange Capital Securities to be issued to it, in accordance with the
Declaration and the Registration Statement, and (vii) that the Exchange Capital
Securities are duly exchanged for Series A Capital Securities and are issued to
the Exchange Capital Securities Holders in accordance with the Declaration and
the Registration Statement. We have not participated in the preparation of the
Registration Statement and assume no responsibility for its contents.
The opinions in this letter are limited to the laws of the
State of Delaware (other than the securities laws of the State of Delaware) and
we have not considered and express no opinion on the effect of or concerning
matters involving the laws of any other jurisdiction, or rules, regulations,
orders and judicial and administrative decisions relating to such laws,
including, without limitation, the federal laws of the United States of America.
Based upon the foregoing, and subject to the assumptions,
qualifications, limitations and exceptions set forth herein, we are of the
opinion that:
1. The Trust has been duly formed and is validly existing in
good standing as a business trust under the Delaware Business Trust Act, 12 Del.
C. ss.ss. 3801, et seq.
2. The Exchange Capital Securities will represent valid and,
subject to the qualifications set forth in paragraph 3 below, fully paid and
nonassessable undivided beneficial interests in the assets of the Trust.
<PAGE>
3. The Exchange Capital Security Holders, as beneficial owners
of the Trust, will be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware. We note that the Exchange
Capital Security Holders may be obligated to make payments and provide indemnity
and/or security as set forth in the Declaration.
We consent to the filing of this opinion letter with the
Securities and Exchange Commission as an exhibit to the Registration Statement.
In giving the foregoing consent, we do not thereby admit that we come within the
category of Persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations of the Securities and
Exchange Commission thereunder. Except as stated above, without our prior
written consent, this opinion letter may not be furnished or quoted to, or
relied upon by, any other Person for any purpose.
Very truly yours,
RLS/jmw
EXHIBIT 8
HOGAN & HARTSON L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
(202) 637-5600
October 16, 1998
Webster Financial Corporation
Webster Plaza
Waterbury, Connecticut 06702
RE: WEBSTER CAPITAL TRUST II
10.00% EXCHANGE CAPITAL SECURITIES
----------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Webster Financial Corporation, a
Delaware corporation (the "Corporation") and sponsor of Webster Capital Trust
II, a statutory business trust organized under the Delaware Business Trust Act,
12 Del. C. ss. 3801 et seq (the "Trust"), in connection with a registration
statement on Form S-4, as amended (File Nos. 333-64639 and 333-64639-01, and
hereinafter referred to as the "Registration Statement"), filed with the
Securities and Exchange Commission relating to (i) the exchange of up to
$50,000,000.00 aggregate liquidation amount of the Trust's 10.00% Exchange
Capital Securities, Series B (the "Exchange Capital Securities") for a like
liquidation amount of the Trust's 10.00% Capital Securities, Series A (the
"Original Capital Securities") (the "Exchange Offer"). Pursuant to the Exchange
Offer, the Corporation is also offering to exchange (i) up to $50,000,000.00
aggregate principal amount of its 10.00% Exchange Junior Subordinated Deferrable
Interest Debentures, Series B (the "Exchange Junior Subordinated Debentures")
for a like aggregate principal amount of its 10.00% Junior Subordinated
Deferrable Interest Debentures, Series A (the "Original Junior Subordinated
Debentures"), and (ii) its guarantee of payments of cash distributions and
payments on liquidation of the Trust or redemption of the Exchange Capital
Securities (the "Exchange Guarantee") for a like guarantee in respect of the
Original Capital Securities (the "Original Guarantee"). Capitalized terms used
in this letter and not otherwise defined herein shall have the meaning set forth
in the prospectus (the "Prospectus") included as part of the Registration
Statement.
The opinion set forth in this letter is based on relevant current
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury
<PAGE>
Webster Financial Corporation
October 16, 1998
Page 2
Regulations thereunder (including proposed and temporary Treasury Regulations),
and interpretations of the foregoing as expressed in court decisions,
administrative determinations (including administrative explanations of proposed
and final Treasury Regulations), and legislative history as of the date hereof.
These provisions and interpretations are subject to changes, which may or may
not be retroactive in effect, that might result in material modifications of our
opinion.
In rendering the following opinion, we have examined such statutes,
regulations, records, certificates and other documents as we have considered
necessary or appropriate as a basis for such opinions, including the following:
(i) the Trust Agreement; (ii) the Registration Statement; (iii) the form of the
Capital Securities; (iv) the Indenture; and (v) other documents we have deemed
necessary to render the opinion set forth in this letter.
In our review, we have assumed that all of the representations and
statements set forth in such documents are true and correct, and all of the
obligations imposed by any such documents on the parties thereto have been and
will continue to be performed or satisfied in accordance with their terms. We
also have assumed the genuineness of all signatures, the proper execution of all
documents, the authenticity of all documents submitted to us as originals, the
conformity to originals of documents submitted to us as copies, and the
authenticity of the originals from which any copies were made.
For purposes of rendering our opinion, we have not made an independent
investigation of the facts set forth in any of the above-referenced documents,
including the Prospectus and the Trust Agreement. We have consequently relied
upon representations and information presented in such documents.
Based upon, and subject to, the foregoing, we are of the opinion that
the information in the Prospectus under the caption "Certain Federal Income Tax
Consequences," to the extent that such information constitutes matters of law or
legal conclusions or purports to describe certain provisions of the U.S. federal
income tax laws, has been reviewed by us and is a correct summary in all
material respects of the matters discussed therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Certain
Federal Income Tax Consequences" in the Prospectus. In giving such consent, we
<PAGE>
Webster Financial Corporation
October 16, 1998
Page 3
do not admit that we are in the category of person whose consent is required
under Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
Hogan & Hartson L.L.P.
EXHIBIT 12
<TABLE>
<CAPTION>
RATIO OF EARNINGS TO FIXED CHARGES
1998 1997 1996 1995 1994 1993
Earnings 6 Mo. Ended Dec Dec Dec Dec Dec
- -------- June 30
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Income before taxes 48,073 66,838 86,596 65,235 55,369 55,092
Plus: Fixed Charges 84,306 108,964 61,168 51,127 36,594 24,791
Less: Interest captialized 0 0 0 0 0 0
Less: Pref. Stock Div Requirement -1,149 -1,296 -1,716 -2,653
------------ ------------ ------------ ------------ ------------ ------------
Total Earnings 132,379 175,802 146,615 115,066 90,247 77,230
Fixed Charges
- -------------
Interest on Borrowings 82,086 104,325 55,686 47,042 31,956 19,723
Plus: ESOP Int. Exp 19 55 77 73 84 99
Plus: Amort. of Debt Expense 0 0 0 0 0 0
Plus: Rental Expense 2,201 4,584 4,256 2,716 2,838 2,316
Plus: Preferred Stock Div Req's 1,149 1,296 1,716 2,653
------------ ------------ ------------ ------------ ------------ ------------
Total Fixed Charges 84,306 108,964 61,168 51,127 36,594 24,791
Earnings in Excess (Deficit) of
Fixed Charges 48,073 66,838 85,447 63,939 53,653 52,439
Ratio of Earnings/Fixed Charges 1.57x 1.61x 2.40x 2.25x 2.47x 3.12x
</TABLE>
EXHIBIT 23.3
INDEPENDENT AUDITORS CONSENT
The Board of Directors
Webster Financial Corporation:
We consent to the use of our reports incorporated herein by reference and to the
references to our firm under the heading "Experts" in the Prospectus.
Hartford, Connecticut
October 16, 1998
