AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 11, 1998
REGISTRATION NO. 333-___
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
WEBSTER FINANCIAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 6712 06-1187536
(State of (Primary Standard (I.R.S. Employer
Incorporation) Industrial Identification No.)
Classification Code Number)
--------------------
WEBSTER PLAZA
WATERBURY, CONNECTICUT 06702
(203) 753-2921
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
--------------------
JOHN V. BRENNAN
EXECUTIVE VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND TREASURER
WEBSTER FINANCIAL CORPORATION
WEBSTER PLAZA
WATERBURY, CONNECTICUT 06702
(203) 578-2335
(Name, address, including zip code, and telephone number,
including area code, of registrant's agent for service)
--------------------
COPIES TO:
CRAIG M. WASSERMAN WILLIAM S. RUBENSTEIN
WACHTELL, LIPTON, ROSEN & KATZ SKADDEN, ARPS, SLATE, MEAGHER &
51 WEST 52ND STREET FLOM LLP
NEW YORK, NEW YORK 10019 919 THIRD AVENUE
(212) 403-1000 NEW YORK, NEW YORK 10022
(212) 735-3000
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
--------------------
If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. |_|
================================================================================
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF REGIS-
SECURITIES TO BE REGISTERED(1) REGISTERED(2) SHARE(3) PRICE(3) TRATION FEE (4)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock.................... 5,880,000 $52.53 $367,710,000 $36,457
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(1) Also includes associated Rights to purchase shares of the Registrant's
Series C Participating Preferred Stock, which Rights are not currently
separable from shares of Common Stock and are not currently exercisable.
See "DESCRIPTION OF WEBSTER CAPITAL STOCK AND COMPARISON OF STOCKHOLDER
RIGHTS."
(2) Based upon the maximum number of shares that may be issued upon
consummation of the merger described herein, and upon exercise of
securities exercisable for shares of common stock, par value $0.01 per
share, of Webster Financial Corporation ("Webster Common Stock").
(3) Pursuant to Rule 457(f) of the Securities Act, and solely for the purpose
of calculating the registration fee, the proposed maximum offering price is
based upon the average of the high and the low sale prices of the common
stock, par value $0.01 per share, of Eagle Financial Corp. on the NASDAQ
National Market on February 9, 1998 and the number of shares of Webster
Financial Corporation Common Stock being registered.
(4) In accordance with Rule 457(b) of the Securities Act of 1933, as amended
(the "Securities Act"), the filing fee of $74,970 paid pursuant to Section
14(g) of the Securities Exchange Act of 1934, as amended, and Rule 0-11
thereunder at the time of the filing of the Joint Proxy
Statement/Prospectus contained in this Registration Statement as
preliminary proxy materials of Webster Financial Corporation and Eagle
Financial Corp. has been credited to offset the $111,427 registration
fee that would otherwise be payable.
--------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
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>
WEBSTER FINANCIAL CORPORATION
WEBSTER PLAZA
WATERBURY, CONNECTICUT 06702
FEBRUARY 11, 1998
TO THE STOCKHOLDERS OF
WEBSTER FINANCIAL CORPORATION:
You are cordially invited to attend a special meeting of stockholders (the
"Special Meeting") of Webster Financial Corporation ("Webster") to be held on
April 2, 1998, at 2:00 p.m. at the Sheraton Four Points Hotel, 3580 East Main
Street, Waterbury, Connecticut 06705.
As described in the enclosed Joint Proxy Statement/Prospectus, at the
Special Meeting you will be asked to approve the Agreement and Plan of Merger,
dated as of October 26, 1997 (the "Merger Agreement"), by and between Webster
and Eagle Financial Corp. ("Eagle") and the merger (the "Merger") provided for
therein. Pursuant to the Merger, Eagle will merge with and into Webster, with
Webster as the surviving corporation. In addition, you will be asked to approve,
in a separate vote, an amendment to the Restated Certificate of Incorporation of
Webster to increase the number of authorized shares of Webster common stock from
30 million to 50 million (the "Certificate Amendment"). Approval of the
Certificate Amendment is not a condition to Webster's or to Eagle's obligation
to consummate the Merger.
The Merger -- which is expected to positively impact Webster's earnings per
share beginning in the first year -- will enable Webster to provide customers
with greater convenience and access to banking services and will create a
combined institution with assets of $8.8 billion, deposits of $5.6 billion,
shareholders' equity of $481 million and more than 110 branches and 130 ATMs.
Upon consummation of the Merger, each outstanding share of Eagle common
stock (other than certain shares held by Webster, Eagle or their subsidiaries)
will be converted into the right to receive 0.84 shares of Webster common stock,
subject to adjustment under certain circumstances, plus cash to be paid in lieu
of fractional shares. The exchange of Eagle common stock for Webster common
stock is intended to qualify as tax free to Webster, Eagle and holders of Eagle
common stock for federal income tax purposes.
Each share of Webster common stock will entitle its holder to one vote at
the Special Meeting. Consummation of the Merger is subject to certain
conditions, including approval of the Merger Agreement by the holders of at
least a majority of the issued and outstanding shares of Webster and Eagle
common stock and the receipt of certain regulatory approvals.
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"),
financial advisor to Webster in connection with the Merger, has delivered its
opinion to the Board of Directors of Webster that the exchange ratio in the
Merger is fair from a financial point of view to Webster. Merrill Lynch's
opinion is reproduced in full as Appendix A to the accompanying Joint Proxy
Statement/Prospectus.
YOUR BOARD OF DIRECTORS HAS APPROVED THE MERGER AGREEMENT, THE MERGER AND
THE CERTIFICATE AMENDMENT AND RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THESE
MATTERS.
THE REQUIRED PERCENTAGE VOTE OF THE WEBSTER STOCKHOLDERS WITH RESPECT TO
THE MERGER AGREEMENT AND THE AMENDMENT IS BASED UPON THE TOTAL NUMBER OF
OUTSTANDING SHARES OF WEBSTER COMMON STOCK AND NOT UPON THE NUMBER OF SHARES
ACTUALLY VOTED. FAILURE TO SUBMIT A PROXY CARD OR VOTE IN PERSON AT THE SPECIAL
MEETING OR ABSTENTION FROM VOTING BY A STOCKHOLDER WILL HAVE THE SAME EFFECT AS
A VOTE "AGAINST" THESE MATTERS.
You are urged to read carefully the Joint Proxy Statement/Prospectus, which
describes the Certificate Amendment and the terms of the Merger. A copy of the
Merger Agreement (including each of the exhibits thereto) and the other
documents described in the accompanying Joint Proxy Statement/
<PAGE>
Prospectus will be provided without charge upon oral or written request to John
Benjamin, Webster Financial Corporation, Webster Plaza, Waterbury, Connecticut
06702, telephone (203) 578-2213. IT IS VERY IMPORTANT THAT YOUR SHARES BE
REPRESENTED AT THE SPECIAL MEETING. REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE
SPECIAL MEETING, YOU ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
FAILURE TO RETURN A PROPERLY EXECUTED PROXY CARD OR TO VOTE AT THE SPECIAL
MEETING WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER AGREEMENT AND THE
CERTIFICATE AMENDMENT.
Sincerely,
/s/ James C. Smith
----------------------------------------
JAMES C. SMITH
Chairman and Chief Executive Officer
<PAGE>
WEBSTER FINANCIAL CORPORATION
WEBSTER PLAZA
WATERBURY, CONNECTICUT 06702
------------------
NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS TO BE HELD ON
APRIL 2, 1998
------------------
NOTICE IS HEREBY GIVEN that a special meeting of stockholders (the "Special
Meeting") of Webster Financial Corporation ("Webster") will be held on April 2,
1998, at 2:00 p.m. at the Sheraton Four Points Hotel, 3580 East Main Street,
Waterbury, Connecticut 06705, for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger, dated as of October 26, 1997 (the
"Merger Agreement"), by and between Webster and Eagle Financial Corp.
("Eagle") and the merger of Eagle with and into Webster (the "Merger")
provided for therein. The Merger is more fully described in the
accompanying Joint Proxy Statement/Prospectus. In the Merger, each
outstanding share of Eagle common stock (other than certain shares
held by Webster, Eagle or their subsidiaries) will be converted into
the right to receive 0.84 shares of Webster common stock (subject to
adjustment in certain instances), plus cash to be paid in lieu of
fractional shares;
2. To consider and vote upon a proposal to approve and adopt the
amendment to the Restated Certificate of Incorporation of Webster to
increase the number of authorized shares of Webster common stock from
30 million to 50 million; and
3. To transact such other business as may properly come before the
Special Meeting, or any adjournments or postponements thereof,
including, without limitation, a motion to adjourn the Special Meeting
to another time and/or place for the purpose of soliciting additional
proxies in order to approve the Merger Agreement and the Merger.
The Board of Directors of Webster has fixed the close of business on
February 11, 1998 as the record date for the determination of holders of Webster
entitled to notice of and to vote at the Special Meeting. Only holders of record
of Webster common stock at the close of business on that date will be entitled
to notice of and to vote at the Special Meeting or any adjournments or
postponements thereof.
By Order of the Board of Directors
/s/ James C. Smith
----------------------------------------
JAMES C. SMITH
Chairman and Chief Executive Officer
Waterbury, Connecticut
February 11, 1998
WE URGE YOU TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN
IT AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE, WHETHER OR NOT YOU
PLAN TO ATTEND THE SPECIAL MEETING IN PERSON. YOUR PROXY MAY BE REVOKED IN THE
MANNER DESCRIBED IN THE ACCOMPANYING JOINT PROXY STATEMENT/PROSPECTUS AT ANY
TIME BEFORE IT IS VOTED AT THE SPECIAL MEETING.
<PAGE>
EAGLE FINANCIAL CORP.
222 MAIN STREET
BRISTOL, CONNECTICUT 06010
FEBRUARY 11, 1998
TO THE STOCKHOLDERS OF
EAGLE FINANCIAL CORP.:
You are cordially invited to attend a special meeting of stockholders (the
"Special Meeting") of Eagle Financial Corp. ("Eagle") to be held on April 2,
1998, at 10 a.m. at Cornucopia Banquet Hall, 371 Pinewoods Road, Torrington,
Connecticut 06790.
As described in the enclosed Joint Proxy Statement/Prospectus, at the
Special Meeting you will be asked to consider and vote upon a proposal to
approve the Agreement and Plan of Merger, dated as of October 26, 1997 (the
"Merger Agreement"), by and between Webster Financial Corporation, a Delaware
corporation ("Webster"), and Eagle, and the merger (the "Merger") provided for
by the Merger Agreement. Pursuant to the Merger Agreement, Eagle will merge with
and into Webster with Webster as the surviving corporation.
The Merger -- which is expected to positively impact Webster's earnings per
share beginning in the first year -- will enable Webster to provide customers
with greater convenience and access to banking services and will create a
combined institution with assets of $8.8 billion, deposits of $5.6 billion,
shareholders' equity of $481 million and more than 110 branches and 130 ATMs.
Upon consummation of the Merger, each outstanding share of Eagle common
stock (other than certain shares held by Eagle, Webster or their respective
subsidiaries) will be converted into the right to receive 0.84 shares of Webster
common stock, subject to adjustment under certain circumstances, plus cash to be
paid in lieu of fractional shares. The exchange of Eagle common stock for
Webster common stock is intended to qualify as tax free to Webster, Eagle and
holders of Eagle common stock for federal income tax purposes.
Each share of Eagle common stock will entitle its holder to one vote at the
Special Meeting. Consummation of the Merger is subject to certain conditions,
including approval of the Merger Agreement by the holders of at least a majority
of the issued and outstanding shares of Eagle and Webster common stock and the
receipt of certain regulatory approvals.
Sandler O'Neill & Partners, L.P., financial advisor to Eagle in connection
with the Merger, has delivered its opinion to the Board of Directors of Eagle
that the exchange ratio in the Merger is fair from a financial point of view to
the holders of Eagle common stock. Sandler O'Neill's opinion is reproduced in
full as Appendix B to the accompanying Joint Proxy Statement/Prospectus.
YOUR BOARD OF DIRECTORS HAS APPROVED THE MERGER AGREEMENT AND THE MERGER
AND RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT AND THE
MERGER.
THE REQUIRED PERCENTAGE VOTE OF EAGLE STOCKHOLDERS WITH RESPECT TO THE
MERGER AGREEMENT IS BASED UPON THE TOTAL NUMBER OF OUTSTANDING SHARES OF EAGLE
COMMON STOCK AND NOT UPON THE NUMBER OF SHARES ACTUALLY VOTED. FAILURE TO SUBMIT
A PROXY CARD OR TO VOTE IN PERSON AT THE SPECIAL MEETING OR ABSTENTION FROM
VOTING BY A STOCKHOLDER WILL HAVE THE SAME EFFECT AS A VOTE "AGAINST" THE MERGER
AGREEMENT AND THE MERGER.
You are urged to carefully read the Joint Proxy Statement/Prospectus, which
describes the terms of the Merger. A copy of the Merger Agreement (including
each of the exhibits thereto) and the other documents described in the
accompanying Joint Proxy Statement/Prospectus will be provided without charge
upon oral or written request to Mark J. Blum, Eagle Financial Corp., 222 Main
Street, Bristol,
<PAGE>
Connecticut 06010, telephone (860) 314-6400. IT IS VERY IMPORTANT THAT YOUR
SHARES BE REPRESENTED AT THE SPECIAL MEETING. REGARDLESS OF WHETHER YOU PLAN TO
ATTEND THE SPECIAL MEETING, YOU ARE REQUESTED TO COMPLETE, DATE AND SIGN THE
ENCLOSED PROXY CARD AND RETURN IT AS SOON AS POSSIBLE IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. FAILURE TO RETURN A PROPERLY EXECUTED PROXY CARD OR TO
VOTE AT THE SPECIAL MEETING WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE
MERGER AGREEMENT.
Sincerely,
/s/ Robert J. Britton
----------------------------------------
ROBERT J. BRITTON
President and Chief Executive Officer
<PAGE>
EAGLE FINANCIAL CORP.
222 MAIN STREET
BRISTOL, CONNECTICUT 06010
------------------
NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS TO BE HELD ON
APRIL 2, 1998
------------------
NOTICE IS HEREBY GIVEN that a special meeting of stockholders (the "Special
Meeting") of Eagle Financial Corp. ("Eagle") will be held on April 2, 1998, at
10:00 a.m. at Cornucopia Banquet Hall, 371 Pinewoods Road, Torrington,
Connecticut 06790, for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger, dated as of October 26, 1997 (the
"Merger Agreement"), by and between Webster Financial Corporation
("Webster") and Eagle and the merger of Eagle with and into Webster
(the "Merger") provided for therein. The Merger is more fully
described in the accompanying Joint Proxy Statement/Prospectus. In the
Merger, each outstanding share of Eagle common stock (other than
certain shares held by Webster, Eagle or their subsidiaries) will be
converted into the right to receive 0.84 shares of Webster common
stock (subject to adjustment in certain instances), plus cash to be
paid in lieu of fractional shares; and
2. To transact such other business as may properly come before the
Special Meeting, or any adjournments or postponements thereof,
including, without limitation, a motion to adjourn the Special Meeting
to another time and/or place for the purpose of soliciting additional
proxies in order to approve the Merger Agreement and the Merger.
The Board of Directors of Eagle has fixed the close of business on February
11, 1998 as the record date for the determination of holders of Eagle common
stock entitled to notice of and to vote at the Special Meeting. Only holders of
record of Eagle common stock at the close of business on that date will be
entitled to notice of and to vote at the Special Meeting or any adjournments or
postponements thereof.
By Order of the Board of Directors
/s/ Robert J. Britton
----------------------------------------
ROBERT J. BRITTON
President and Chief Executive Officer
Bristol, Connecticut
February 11, 1998
WE URGE YOU TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN
IT AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE, WHETHER OR NOT YOU
PLAN TO ATTEND THE SPECIAL MEETING IN PERSON. YOUR PROXY MAY BE REVOKED IN THE
MANNER DESCRIBED IN THE ACCOMPANYING JOINT PROXY STATEMENT/PROSPECTUS AT ANY
TIME BEFORE IT IS VOTED AT THE SPECIAL MEETING.
<PAGE>
WEBSTER FINANCIAL CORPORATION EAGLE FINANCIAL CORP.
Webster Plaza 222 Main Street
Waterbury, Connecticut 06702 Bristol, Connecticut 06010
WEBSTER FINANCIAL CORPORATION
EAGLE FINANCIAL CORP.
JOINT PROXY STATEMENT
------------------
WEBSTER FINANCIAL CORPORATION
PROSPECTUS
------------------
This Joint Proxy Statement/Prospectus is being furnished to holders (the
"Eagle Stockholders") of the common stock, par value $.01 per share (together
with the associated preferred stock purchase rights, the "Eagle Common Stock")
of Eagle Financial Corp. ("Eagle") as of February 11, 1998 (the "Record Date");
it relates to the special meeting of Eagle Stockholders to be held on April 2,
1998, at 10:00 a.m. at Cornucopia Banquet Hall, Torrington, Connecticut, and to
any adjournments or postponements thereof (the "Eagle Special Meeting"). This
Joint Proxy Statement/Prospectus is first being mailed to Eagle Stockholders on
or about February 13, 1998.
This Joint Proxy Statement/Prospectus is additionally being furnished to
holders (the "Webster Stockholders") of the common stock, par value $.01 per
share (together with the associated preferred stock purchase rights, the
"Webster Common Stock") of Webster Financial Corporation ("Webster") as of the
Record Date; it relates to the special meeting of Webster Stockholders to be
held on April 2, 1998, at 2:00 p.m. at the Sheraton Four Points Hotel,
Waterbury, Connecticut, and to any adjournments or postponements thereof (the
"Webster Special Meeting" and, together with the Eagle Special Meeting, the
"Special Meetings"). This Joint Proxy Statement/Prospectus is first being mailed
to Webster Stockholders on or about February 13, 1998.
At each of the Special Meetings, the principal item of business will be to
consider and vote upon the approval and adoption of the Agreement and Plan of
Merger, dated as of October 26, 1997, by and between Webster and Eagle (the
"Merger Agreement"), and the merger of Eagle with and into Webster provided for
therein (the "Merger"). In addition, at the Webster Special Meeting the Webster
Stockholders will be asked to approve, in a separate vote, an amendment to the
Restated Certificate of Incorporation of Webster that would increase the maximum
number of authorized shares of Webster Common Stock from 30 million to 50
million (the "Certificate Amendment"). Approval of the Certificate Amendment is
not a condition to Webster's or to Eagle's obligation to consummate the Merger.
As part of the Merger and except as described herein, each issued and
outstanding share of Eagle Common Stock (excluding shares held by Eagle or
Webster or their respective subsidiaries, in each case other than shares held in
a fiduciary capacity or as a result of debts previously contracted) will be
converted into the right to receive 0.84 shares of Webster Common Stock (the
"Exchange Ratio"). Cash will be paid in lieu of fractional shares. Because the
market price of Webster Common Stock is subject to fluctuation and the Exchange
Ratio in the Merger is fixed, the value of the shares of Webster Common Stock
that Eagle Stockholders will receive in the Merger may materially increase or
decrease prior to the Merger. The last sale price of Webster Common Stock quoted
on the Nasdaq National Market ("Nasdaq") on February 9 , 1998, was $64.00 per
share, corresponding to a market value of $53.76 per 0.84 shares of Webster
Common Stock as of such date. No assurance can be given as to the market price
of Webster Common Stock at the time of the Merger. See "MARKET PRICES AND
DIVIDENDS."
In connection with the Merger Agreement and pursuant to the Stock Option
Agreement, dated as of October 26, 1997, by and between Eagle and Webster (the
"Stock Option Agreement"), Eagle has granted Webster an irrevocable option (the
"Option") to purchase up to 1,256,991 newly issued shares of Eagle Common Stock
("Eagle Option Shares") at a purchase price of $41.25 per Option Share, subject
to adjustment upon the occurrence of certain events.
The Merger is subject to various conditions, including approvals of
applicable regulatory authorities. Eagle and Webster expect that the Merger will
be consummated in the second quarter of 1998, or as
<PAGE>
soon as possible after the receipt of all regulatory and stockholder approvals
and the expiration of all regulatory waiting periods. For a more detailed
description of the Merger and the Option, see "THE MERGER."
This Joint Proxy Statement/Prospectus also constitutes a prospectus of
Webster with respect to the approximately 5,880,000 shares of Webster Common
Stock subject to issuance in connection with the Merger.
THE WEBSTER COMMON STOCK OFFERED HEREBY HAS NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION ("SEC" OR THE
"COMMISSION"), ANY STATE SECURITIES COMMISSION, THE OFFICE OF THRIFT SUPERVISION
("OTS") OR THE FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC"), NOR HAS THE SEC,
ANY STATE SECURITIES COMMISSION, THE OTS OR THE FDIC PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS JOINT PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. THE SHARES OF WEBSTER COMMON STOCK OFFERED
HEREBY ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS AND ARE NOT INSURED BY THE
FDIC, THE BANK INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND (THE
"SAIF") OR ANY OTHER GOVERNMENTAL AGENCY.
The information set forth in this Joint Proxy Statement/Prospectus
concerning Eagle has been furnished by Eagle. The information concerning Webster
and pro forma financial information has been furnished by Webster. The
descriptions of the Merger Agreement, the Stock Option Agreement and the other
documents in this Joint Proxy Statement/Prospectus are qualified by reference to
the text of those documents, which are incorporated herein by reference, and
copies of which will be provided without charge upon written or oral request
addressed to John Benjamin, Webster Financial Corporation, Webster Plaza,
Waterbury, Connecticut 06702, telephone (203) 578-2213.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS, OR
INCORPORATED BY REFERENCE HEREIN, IN CONNECTION WITH THE SOLICITATION OF PROXIES
BY WEBSTER OR EAGLE OR THE OFFERING OF WEBSTER COMMON STOCK MADE HEREBY, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY EAGLE OR WEBSTER. THIS JOINT PROXY STATEMENT/
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO PURCHASE, ANY WEBSTER COMMON STOCK OFFERED BY THIS JOINT PROXY
STATEMENT/PROSPECTUS, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION TO OR
FROM ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER, OR SOLICITATION OF AN
OFFER, OR PROXY SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
JOINT PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF THE WEBSTER COMMON
STOCK OFFERED PURSUANT TO THIS JOINT PROXY STATEMENT/PROSPECTUS SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF EAGLE OR WEBSTER OR THE INFORMATION HEREIN OR THE DOCUMENTS OR
REPORTS INCORPORATED BY REFERENCE HEREIN SINCE THE DATE OF THIS JOINT PROXY
STATEMENT/PROSPECTUS.
------------------
The date of this Joint Proxy Statement/Prospectus is February 11, 1998.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
-----
<S> <C>
AVAILABLE INFORMATION ...................................................... 1
INFORMATION INCORPORATED BY REFERENCE ....................................... 1
FORWARD-LOOKING INFORMATION ................................................ 2
MERGER SUMMARY ............................................................ 3
The Parties ............................................................... 3
The Merger ............................................................... 3
The Special Meetings ...................................................... 4
Opinion of Webster's Financial Advisor .................................... 5
Opinion of Eagle's Financial Advisor ....................................... 6
Regulatory Approvals ...................................................... 6
Accounting Treatment ...................................................... 6
Federal Income Tax Consequences .......................................... 6
Absence of Dissenters' Appraisal Rights .................................... 6
Effective Time ............................................................ 6
Termination ............................................................... 7
Exchange of Eagle Common Stock Certificates .............................. 7
Eagle Stock Option Agreement ............................................. 7
Description of Webster Capital Stock and Comparison of Stockholder Rights 8
Market Prices of Common Stock ............................................. 8
Comparative Per Share Data ................................................ 9
SUMMARY FINANCIAL AND OTHER DATA .......................................... 10
THE WEBSTER SPECIAL MEETING ................................................ 17
General .................................................................. 17
Matters to be Considered ................................................... 17
Proxies .................................................................. 17
Record Date and Voting Rights ............................................. 17
Recommendation of Webster Board .......................................... 18
THE EAGLE SPECIAL MEETING ................................................... 19
General .................................................................. 19
Matters to be Considered ................................................... 19
Proxies .................................................................. 19
Record Date and Voting Rights ............................................. 20
Recommendation of the Eagle Board .......................................... 20
THE MERGER .................................................................. 21
The Parties ............................................................... 21
Background of the Merger ................................................... 21
Recommendation of the Webster Board of Directors and Reasons for the Merger 23
Recommendation of the Eagle Board of Directors and Reasons for the Merger 24
Opinion of Webster's Financial Advisor .................................... 25
Opinion of Eagle's Financial Advisor ....................................... 31
Structure .................................................................. 35
Exchange Ratio ............................................................ 36
Conversion of Eagle Stock Options .......................................... 37
Regulatory Approvals ...................................................... 38
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Conditions to the Merger ............................................. 39
Conduct of Business Pending the Merger .............................. 40
Expenses ............................................................ 42
Representations and Warranties ....................................... 42
Compensation and Benefits ............................................. 42
Other Agreements ...................................................... 43
Termination and Amendment of the Merger Agreement ..................... 43
Certain Federal Income Tax Consequences .............................. 45
Accounting Treatment ................................................ 47
Resales of Webster Common Stock Received in the Merger ............... 47
Absence of Dissenters' Appraisal Rights .............................. 48
Interests of Certain Persons in the Merger ........................... 48
Stock Option Agreement ................................................ 50
MANAGEMENT AND OPERATIONS AFTER THE MERGER ........................... 53
MARKET PRICES AND DIVIDENDS .......................................... 54
Webster Common Stock ................................................ 54
Eagle Common Stock ................................................... 54
COMPARISON OF STOCKHOLDER RIGHTS ....................................... 55
Directors ............................................................ 55
Special Meetings ...................................................... 56
Stockholder Action without a Meeting ................................. 56
Approvals for Acquisitions of Control and Offers to Acquire Control ... 56
Procedures for Certain Business Combinations ........................ 56
Limitation on Liability and Indemnification of Directors ............ 57
Cumulative Voting ................................................... 58
Notice of Special Meetings .......................................... 58
Notice of Business to be Conducted at Special Meetings ............... 58
Quorum ............................................................... 58
Action of Stockholders ................................................ 58
Record Date ......................................................... 58
Anti-Greenmail ...................................................... 58
Criteria for Evaluating Certain Offers .............................. 59
Amendment to Certificate of Incorporation and Bylaws .................. 59
Shareholder Rights Agreement .......................................... 59
STOCKHOLDER PROPOSALS ................................................ 63
OTHER MATTERS ......................................................... 63
EXPERTS ............................................................... 63
LEGAL MATTERS ......................................................... 63
PRO FORMA COMBINED FINANCIAL STATEMENTS .............................. 64
AMENDMENT TO THE WEBSTER CERTIFICATE ................................. 72
Opinion of Merrill Lynch ............................................. A-1
Opinion of Sandler O'Neill ............................................. B-1
</TABLE>
ii
<PAGE>
AVAILABLE INFORMATION
Eagle and Webster are both subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations thereunder, and, in accordance therewith, file reports, proxy
statements and other information with the SEC. Such reports, proxy statements
and other information can be obtained at prescribed rates by writing to the
Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C.
20549. In addition, such reports, proxy statements and other information filed
by Eagle and Webster may be inspected and copied at the public reference
facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the SEC's regional offices located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New York 10048.
The SEC maintains a world wide web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC. The address of the SEC's world wide web site is
http://www.sec.gov. Webster Common Stock and Eagle Common Stock are traded on
the Nasdaq National Market ("Nasdaq"). Reports, proxy statements and other
information concerning Webster and Eagle can be inspected at the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
Webster has filed with the SEC a Registration Statement on Form S-4
(together with all amendments and exhibits thereto, including documents and
information incorporated by reference, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
Webster Common Stock to be issued to Eagle Stockholders in connection with the
Merger. As permitted by the rules and regulations of the SEC, this Joint Proxy
Statement/Prospectus does not contain all the information set forth in the
Registration Statement. Such additional information may be obtained from the
SEC's principal office in Washington, D.C. as set forth above and at the SEC's
world wide web site. Statements contained in this Joint Proxy
Statement/Prospectus or in any document incorporated by reference herein as to
the contents of any document are not necessarily complete and, in each instance
where such document is filed as an exhibit to the Registration Statement,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by Webster with the SEC (File No. 0-15213)
under the Exchange Act are hereby incorporated in this Joint Proxy
Statement/Prospectus by reference: (i) Webster's Annual Report on Form 10-K for
the year ended December 31, 1996; (ii) Webster's Quarterly Reports on Form 10-Q
for the quarters ended March 31, June 30 and September 30, 1997; (iii) Webster's
Current Reports on Form 8-K dated January 31, February 20, April 4, May 20, July
31, October 26, October 27, and November 17 (as amended by Amendments No. 1, No.
2 and No. 3 thereto filed on January 26, January 26, and February 6, 1998,
respectively), 1997; and (iv) the description of the Webster Common Stock and of
the associated Webster Rights (as defined herein) set forth in registration
statements filed by Webster pursuant to Section 12 of the Exchange Act,
including any amendment or report filed for purposes of updating any such
description.
The following documents filed by Eagle with the SEC (File No. 0-18162)
under the Exchange Act are hereby incorporated in this Joint Proxy
Statement/Prospectus by reference: (i) the Annual Report on Form 10-K of Eagle
for the year ended September 30, 1997; (ii) the Current Reports on Form 8-K of
Eagle dated October 26, 1997 (as amended by Form 8-K/A filed November 25, 1997),
November 6, 1997, December 29, 1997 (filed December 29, 1997) and December 29,
1997 (filed December 31, 1997); and (iii) the description of the Eagle Common
Stock and of the associated Eagle Rights (as defined herein) set forth in
registration statements filed by Eagle pursuant to Section 12 of the Exchange
Act, including any amendment or report filed for purposes of updating any such
description.
All documents filed by Eagle or Webster pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Joint Proxy
Statement/Prospectus and prior to the date of the Special Meetings shall be
deemed to be incorporated by reference in this Joint Proxy Statement/
1
<PAGE>
Prospectus. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Joint Proxy Statement/Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be 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 Joint
Proxy Statement/Prospectus. Webster will provide without charge to each person,
including any beneficial owner, to whom a copy of this Joint Proxy Statement/
Prospectus is delivered, upon written or oral request of such person, a copy of
any or all of the documents incorporated herein by reference and not delivered
herewith (not including exhibits to the information incorporated by reference
unless such exhibits are specifically incorporated by reference into the text of
such documents).
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS RELATING TO
WEBSTER ARE AVAILABLE UPON REQUEST FROM: JOHN BENJAMIN, WEBSTER FINANCIAL
CORPORATION, WEBSTER PLAZA, WATERBURY, CONNECTICUT 06702; TELEPHONE (203)
578-2213. SUCH DOCUMENTS RELATING TO EAGLE ARE AVAILABLE UPON REQUEST FROM: MARK
J. BLUM, EAGLE FINANCIAL CORP., 222 MAIN STREET, BRISTOL, CT 06010. IN ORDER TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE AS SOON AS
POSSIBLE, BUT NO LATER THAN MARCH 25, 1998.
CAUTIONARY STATEMENTS FOR PURPOSES OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
THIS JOINT PROXY STATEMENT/PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING
STATEMENTS WITH RESPECT TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND
BUSINESS OF WEBSTER, EAGLE AND THE COMBINED COMPANY FOLLOWING THE CONSUMMATION
OF THE MERGER, INCLUDING STATEMENTS RELATING TO THE COST SAVINGS AND OTHER
BUSINESS ENHANCEMENTS THAT ARE EXPECTED TO BE REALIZED FROM THE MERGER AND THE
EXPECTED IMPACT OF THE MERGER ON WEBSTER'S FINANCIAL PERFORMANCE (SEE "THE
MERGER -- RECOMMENDATION OF THE WEBSTER BOARD OF DIRECTORS AND REASONS FOR THE
MERGER" AND "-- RECOMMENDATION OF THE EAGLE BOARD OF DIRECTORS AND REASONS FOR
THE MERGER," "-- OPINION OF WEBSTER'S FINANCIAL ADVISOR," "-- OPINION OF EAGLE'S
FINANCIAL ADVISOR" AND "MANAGEMENT AND OPERATIONS AFTER THE MERGER." THESE
FORWARD-LOOKING STATEMENTS INVOLVE CERTAIN RISKS AND UNCERTAINTIES THAT MAY
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE SET FORTH HEREIN. FACTORS
THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY
SUCH FORWARD-LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE FOLLOWING
POSSIBILITIES: (1) EXPECTED COST SAVINGS FROM THE MERGER CANNOT BE FULLY
REALIZED OR REALIZED WITHIN THE EXPECTED TIME FRAME; (2) REVENUES FOLLOWING THE
MERGER ARE LOWER THAN EXPECTED; (3) COMPETITIVE PRESSURES AMONG DEPOSITORY
INSTITUTIONS INCREASE SIGNIFICANTLY; (4) COSTS DIFFICULTIES RELATED TO THE
INTEGRATION OF THE BUSINESSES OF WEBSTER AND EAGLE ARE GREATER THAN EXPECTED;
(5) CHANGES IN THE INTEREST RATE ENVIRONMENT REDUCE INTEREST MARGINS; (6)
GENERAL ECONOMIC AND CREDIT CONDITIONS, EITHER NATIONALLY OR IN THE REGION IN
WHICH THE COMBINED COMPANY WILL BE DOING BUSINESS, ARE LESS FAVORABLE THAN
EXPECTED; AND (7) LEGISLATION OR REGULATORY CHANGES ADVERSELY AFFECT THE
BUSINESS IN WHICH THE COMBINED COMPANY WOULD BE ENGAGED.
2
<PAGE>
MERGER SUMMARY
The following is a brief summary of certain information contained elsewhere
in this Joint Proxy Statement/Prospectus. This summary is not intended to be a
complete description and is qualified in its entirety by reference to the more
detailed information contained elsewhere in this Joint Proxy
Statement/Prospectus. STOCKHOLDERS OF WEBSTER AND EAGLE ARE URGED BEFORE VOTING
TO GIVE CAREFUL CONSIDERATION TO ALL OF THE INFORMATION CONTAINED IN OR
INCORPORATED BY REFERENCE INTO THIS JOINT PROXY STATEMENT/PROSPECTUS.
THE PARTIES
Webster. Webster is a Delaware corporation and the holding company of
Webster Bank ("Webster Bank"), its wholly-owned federal savings bank subsidiary.
Both Webster and Webster Bank are headquartered in Waterbury, Connecticut.
Deposits at Webster Bank are insured by the FDIC. Through Webster Bank, Webster
currently serves customers from 84 banking offices, three commercial banking
centers, six trust offices and more than 100 ATMs located in New Haven,
Fairfield, Litchfield, Hartford and Middlesex Counties in Connecticut. Webster's
focus is on providing financial services to individuals, families and
businesses. Webster emphasizes four business lines: consumer banking, business
banking, mortgage banking and trust and investment management services, each
supported by centralized administration, marketing, finance and operations.
Through its recent acquisitions of People's Savings Financial Corp. and Sachem
Trust National Association, Webster has established a leading position in the
trust and investment management services market in Connecticut and is able to
offer its customers a greater variety of financial services. Webster Bank's goal
is to provide banking services that are fairly priced, reliable and convenient.
At September 30, 1997, Webster had total consolidated assets of $6.8
billion, total deposits of $4.2 billion and stockholders' equity of $363
million. Webster Common Stock is quoted on Nasdaq under the symbol "WBST." The
address of Webster's principal executive offices is Webster Financial
Corporation, Webster Plaza, Waterbury, Connecticut 06702, and its telephone
number is (203) 753-2921. See "THE MERGER -- The Parties."
Eagle. Eagle is the holding company of Eagle Bank. As a community oriented
savings bank, Eagle Bank focuses on the financial needs of its customers in its
local markets, seeking to develop long-term deposit and lending relationships.
Through Eagle Bank, Eagle provides consumer banking services through 26
traditional banking offices and four in-store supermarket branch offices in
Connecticut, serving the Torrington, Bristol and Hartford markets. Deposit
accounts at Eagle Bank are insured by the FDIC.
At September 30, 1997, Eagle had total assets of $2.1 billion, deposits of
$1.4 billion and shareholders' equity of $144.7 million. Eagle Common Stock is
quoted on Nasdaq under the symbol "EGFC." Eagle's principal executive office is
located at 222 Main Street, Bristol, Connecticut 06010 and its telephone number
is (860) 314-6400. See "THE MERGER -- The Parties."
THE MERGER
General. The Merger Agreement provides for the Merger of Eagle with and
into Webster, with Webster as the surviving corporation (the "Surviving
Corporation"). Immediately after the consummation of the Merger, Webster intends
that Eagle Bank will be merged into Webster Bank (the "Bank Merger"), with
Webster Bank as the surviving federal savings bank. Webster Bank will remain
headquartered in Waterbury, Connecticut as an FDIC-insured, federally chartered
savings bank.
At the Effective Time (as defined herein) of the Merger, except as
discussed herein, each outstanding share of Eagle Common Stock will be converted
into the right to receive 0.84 shares of Webster Common Stock (subject to
adjustment in certain instances), the Exchange Ratio, plus cash to be paid in
lieu of fractional shares. Shares of Eagle Common Stock held as treasury stock
3
<PAGE>
or held, directly or indirectly, by Webster, Eagle or any of their subsidiaries
(other than shares held in a fiduciary capacity ("Trust Account Shares") or in
respect of a debt previously contracted ("DPC Shares")) will be canceled. See
"THE MERGER -- Exchange Ratio."
Eagle and Webster expect that the Merger will be consummated in the second
quarter of 1998, or as soon as possible after the receipt of the Requisite
Regulatory Approval (as defined herein) and stockholder approvals. "THE MERGER
- -- Structure."
Exchange Ratio. At the Effective Time, except as discussed herein, each
issued and outstanding share of Eagle Common Stock will be converted
automatically at the Exchange Ratio into the right to receive shares of Webster
Common Stock. Cash will be paid in lieu of fractional shares. Shares of Eagle
Common Stock held as treasury stock or held directly or indirectly by Eagle,
Webster or any of their subsidiaries (other than Trust Account Shares or DPC
Shares) shall be canceled. The Exchange Ratio is subject to customary
antidilution adjustments and may be adjusted at Webster's option in connection
with the exercise by Eagle of certain termination rights under specified
circumstances. See "THE MERGER -- Termination and Amendment of the Merger
Agreement." Because the market price of Webster Common Stock is subject to
fluctuation and the Exchange Ratio is fixed, the market value of the shares of
Webster Common Stock that Eagle Stockholders will receive in the Merger may
materially increase or decrease prior to the Merger. No assurance can be given
as to the market price of Webster Common Stock at the time of the Merger. See
"MARKET PRICES AND DIVIDENDS" and "THE MERGER -- Exchange Ratio."
Options. As of the Eagle Record Date, there were outstanding Eagle Options
(as defined herein) to purchase 303,416 shares of Eagle Common Stock, at an
average exercise price of $19.41 per share. Under the Merger Agreement, shares
of Eagle Common Stock issued prior to consummation of the Merger upon the
exercise of outstanding Eagle Options held by directors, officers and other
employees of Eagle will be converted into Webster Common Stock at the Exchange
Ratio, and each Eagle Option that is outstanding and unexercised immediately
prior to the Effective Time will be converted automatically into an option to
purchase shares of Webster Common Stock, with adjustment in the number of shares
subject to such Eagle Option and exercise price therefor to reflect the Exchange
Ratio. See "THE MERGER -- Options."
THE SPECIAL MEETINGS
Eagle. The Eagle Special Meeting will be held on April 2, 1998 at 10:00
a.m. at Cornucopia Banquet Hall, Torrington, Connecticut, at which time the
Eagle Stockholders of record at the close of business on the Eagle Record Date
will be asked to consider and vote upon (i) a proposal to approve and adopt the
Merger Agreement and the Merger, and (ii) such other matters as may properly be
brought before the Eagle Special Meeting. The affirmative vote of the holders of
a majority of the issued and outstanding shares of Eagle Common Stock entitled
to vote at the Eagle Special Meeting is required to approve and adopt the Merger
Agreement and the Merger.
Directors and executive officers of Eagle beneficially owned as of the
Record Date an aggregate of 322,158 shares of Eagle Common Stock, or
approximately 4.9% of the shares of Eagle Common Stock entitled to vote at the
Eagle Special Meeting. It is expected that each such director and executive
officer of Eagle will vote his or her shares of Eagle Common Stock for approval
of the Merger Agreement. In addition, as of the Record Date, Webster
beneficially owned 231,570 shares of Eagle Common Stock (excluding shares of
Eagle Common Stock subject to the Option), or approximately 3.5% of the shares
of Eagle Common Stock entitled to vote at the Eagle Special Meeting, and as of
such date directors and executive officers of Webster beneficially owned no
shares of Eagle Common Stock. Also as of the Record Date, the banking and trust
affiliates of Webster held less than one percent of the outstanding shares of
Eagle Common Stock in a fiduciary capacity. See "THE EAGLE SPECIAL MEETING."
4
<PAGE>
Webster. The Webster Special Meeting will be held on April 2, 1998 at 2:00
p.m. at the Sheraton Four Points Hotel, Waterbury, Connecticut, at which time
Webster Stockholders of record at the close of business on the Webster Record
Date will be asked to consider and vote upon: (i) a proposal to approve and
adopt the Merger Agreement and the Merger provided for therein, (ii) a proposal
to approve and adopt the Certificate Amendment and (iii) such other matters as
may properly be brought before the Webster Special Meeting. Approval of the
Certificate Amendment by Webster Stockholders is not a condition to Webster's or
Eagle's obligation to consummate the Merger. The affirmative vote of the holders
of a majority of the issued and outstanding shares of Webster Common Stock
entitled to vote at the Webster Special Meeting is required to approve and adopt
the Merger Agreement and the Certificate Amendment.
Directors and executive officers of Webster beneficially owned as of the
Record Date an aggregate of 581,152 shares of Webster Common Stock, or
approximately 4.3% of the shares of Webster Common Stock entitled to vote at the
Webster Special Meeting. It is expected that each such director and executive
officer of Webster will vote his or her shares of Webster Common Stock for
approval of the Merger Agreement and the Certificate Amendment. In addition, as
of the Record Date, Eagle did not beneficially own any shares of Webster Common
Stock and as of such date directors and executive officers of Eagle beneficially
owned an aggregate of 1,105 shares of Webster Common Stock, or significantly
less than 1% of the shares of Webster Common Stock entitled to vote at the
Webster Special Meeting. Also as of the Record Date, the banking and trust
affiliates of Eagle held less than one percent of the outstanding shares of
Webster Common Stock in a fiduciary capacity. See "WEBSTER SPECIAL MEETING."
The Board of Directors of each of Webster and Eagle believes that the terms
of the Merger Agreement are fair to, and in the best interests of, Webster and
its stockholders and Eagle and its stockholders, respectively. THE BOARD OF
DIRECTORS OF EACH OF WEBSTER AND EAGLE HAS APPROVED THE MERGER AGREEMENT AND THE
MERGER AND RECOMMENDS THAT HOLDERS OF WEBSTER COMMON STOCK AND EAGLE COMMON
STOCK, RESPECTIVELY, VOTE "FOR" APPROVAL AND ADOPTION OF THE MERGER AGREEMENT
AND THE MERGER. IN ADDITION, THE BOARD OF DIRECTORS OF WEBSTER HAS APPROVED THE
CERTIFICATE AMENDMENT AND RECOMMENDS THAT HOLDERS OF WEBSTER COMMON STOCK VOTE
"FOR" APPROVAL OF THE CERTIFICATE AMENDMENT. For a discussion of the factors
considered by the Boards of Directors of Webster and Eagle in reaching their
respective decisions with respect to the Merger, see "THE MERGER -- Background
of the Merger," "-- Recommendation of the Webster Board of Directors and Reasons
for the Merger" and "-- Recommendation of the Eagle Board of Directors and
Reasons for the Merger."
OPINION OF WEBSTER'S FINANCIAL ADVISOR
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), which
has served as financial advisor to Webster in connection with the Merger, has
rendered its opinion to the Board of Directors of Webster (the "Webster Board")
that the Exchange Ratio pursuant to the Merger Agreement is fair to Webster from
a financial point of view. Merrill Lynch's opinion was delivered orally to the
Webster Board at its meeting of October 24, 1997 (and later confirmed in
writing) and again in writing on the date of this Joint Proxy
Statement/Prospectus. A copy of the opinion delivered by Merrill Lynch on the
date hereof is attached to this Joint Proxy Statement/Prospectus as Appendix A,
and should be read in its entirety with respect to assumptions made, matters
considered and limitations of the review undertaken by Merrill Lynch in
rendering each such opinion. See "THE MERGER -- Opinion of Webster's Financial
Advisor."
5
<PAGE>
OPINION OF EAGLE'S FINANCIAL ADVISOR
Sandler O'Neill & Partners, L.P. ("Sandler O'Neill"), which has served as
financial advisor to Eagle in connection with the Merger, has rendered its
opinion to the Board of Directors of Eagle (the "Eagle Board") that the Exchange
Ratio pursuant to the Merger Agreement is fair to the Eagle Stockholders from a
financial point of view. Such opinion was delivered orally to the Eagle Board at
its meeting of October 26, 1997 (and subsequently confirmed in writing) and
again in writing on the date of this Joint Proxy Statement/Prospectus. A copy of
the opinion delivered by Sandler O'Neill on the date hereof is attached to this
Joint Proxy Statement/Prospectus as Appendix B, and should be read in its
entirety with respect to assumptions made, matters considered and qualifications
and limitations on the review undertaken by Sandler O'Neill in rendering such
opinion. See "THE MERGER -- Opinion of Eagle's Financial Advisor."
REGULATORY APPROVALS
Consummation of the Merger and the Bank Merger is conditioned upon receipt
of required approval of the OTS. An application as to such approval of the OTS
has been filed. No other regulatory approvals are required to effect the Merger
pursuant to the Merger Agreement. In addition, the United States Department of
Justice ("DOJ") has the authority to challenge the Merger on antitrust grounds
until the expiration of a certain period following OTS approval. "Requisite
Regulatory Approval" shall refer to the receipt of all regulatory approvals
required to consummate the transactions contemplated by the Merger Agreement and
the expiration of all statutory waiting periods in respect thereof. Neither
Eagle nor Webster is aware of any reason why the Requisite Regulatory Approval
should not be obtained. See "THE MERGER -- Regulatory Approvals."
ACCOUNTING TREATMENT
The Merger is intended to qualify as a "pooling-of-interests" for
accounting and financial reporting purposes. The obligation of each of Webster
and Eagle to consummate the Merger is conditioned upon receipt by Webster of a
letter of its independent public accountants stating their opinion that the
Merger so qualifies. See "THE MERGER -- Accounting Treatment."
FEDERAL INCOME TAX CONSEQUENCES
It is intended that the Merger qualify as a tax-free reorganization for
federal income tax purposes, and that, except with respect to cash received in
lieu of fractional shares of Webster Common Stock, Eagle Stockholders who
exchange their shares of Eagle Common Stock solely for shares of Webster Common
Stock in the Merger generally should not recognize gain or loss for federal
income tax purposes as a result of such exchange. See "THE MERGER -- Certain
Federal Income Tax Consequences."
ABSENCE OF DISSENTERS' APPRAISAL RIGHTS
Neither Webster Stockholders nor Eagle Stockholders will have dissenters'
appraisal rights in connection with the Merger. See "THE MERGER -- Absence of
Dissenter's Appraisal Rights."
EFFECTIVE TIME
The Merger will become effective on the date and time set forth in the
certificate of merger to be filed with the Secretary of State of the State of
Delaware in accordance with applicable law (the "Effective Time"). The
certificate of merger will be filed on the 15th day after the Requisite
Regulatory Approval is received and all applicable waiting periods have expired,
or at such other time as the parties may agree. Eagle and Webster expect that
the Merger will be consummated in the first quarter of 1998, or as soon as
possible pursuant to the Merger Agreement after the receipt of the Requisite
Regulatory Approval, required stockholder approvals and the expiration of all
regulatory waiting periods.
6
<PAGE>
TERMINATION
The Merger Agreement may be terminated at any time prior to the Effective
Time by the mutual consent of Eagle and Webster and by action of the Board of
either company under certain specified circumstances, including, but not limited
to (i) if the Merger is not consummated by September 30, 1998, unless the
failure to consummate by such date is due to the failure of the party seeking to
terminate this Merger Agreement to perform or observe the covenants and
agreements of such party under the Merger Agreement and (ii) by the Eagle Board,
in the event that the average market price of Webster Common Stock during a
10-day period ending shortly before the receipt of the Requisite Regulatory
Approval is less than $52.80 and such average price, when divided by $66.00 (the
closing market price of a share of Webster Common Stock on October 24, 1997),
yields a ratio less than the ratio of the average price during such 10-day
period of a selected weighted index of thrift holding companies to the price of
such index on October 24, 1997, minus 0.15, unless Webster elects to make a
compensating adjustment to the Exchange Ratio. See "THE MERGER -- Termination
and Amendment of the Merger Agreement."
EXCHANGE OF EAGLE COMMON STOCK CERTIFICATES
Upon the Effective Time, each holder of a certificate representing Eagle
Common Stock issued and outstanding immediately prior to the Merger will, upon
the surrender thereof (duly endorsed, if required) to the Exchange Agent (as
defined herein), be entitled to receive a certificate representing the number of
whole shares of Webster Common Stock into which such Eagle Common Stock will
have been automatically converted as part of the Merger. The Exchange Agent will
mail a letter of transmittal with instructions to all Eagle Stockholders of
record immediately after the Effective Time for use in surrendering their
certificates for Eagle Common Stock in exchange for new certificates
representing Webster Common Stock and cash in lieu of fractional shares.
CERTIFICATES SHOULD NOT BE SURRENDERED BY EAGLE STOCKHOLDERS UNTIL THE LETTER OF
TRANSMITTAL AND INSTRUCTIONS ARE RECEIVED. See "THE MERGER -- Exchange Ratio."
EAGLE STOCK OPTION AGREEMENT
As an inducement to Webster to enter into the Merger Agreement, Eagle (as
issuer) and Webster (as grantee) entered into the Stock Option Agreement,
pursuant to which Eagle granted Webster the Option to purchase from Eagle up to
1,256,991 shares of Eagle Common Stock (subject to adjustment in certain
circumstances, but in no event to exceed 19.9% of the shares of Eagle Common
Stock outstanding upon exercise thereof), at a price of $41.25 per share.
Webster may exercise the Option only under certain limited and specifically
defined circumstances (none of which, to the best knowledge of Webster and
Eagle, has occurred as of the date of this Joint Proxy Statement/Prospectus). At
the request of the holder of the Option, under certain circumstances, Eagle will
repurchase for a formula price the Option and any Eagle Option Shares purchased
upon the exercise of the Option and beneficially owned by such holder at that
time. The purchase by Webster of any shares of Eagle Common Stock pursuant to
the Option and the repurchase by Eagle of the Option or Option Shares are
subject to compliance with applicable law and other requirements, including
receipt of any required stockholder or regulatory approvals. See "THE MERGER --
Regulatory Approval" and "-- Stock Option Agreement."
Certain aspects of the Stock Option Agreement may have the effect of
discouraging persons who might now, or prior to the Effective Time, be
interested in acquiring all of or a significant interest in Eagle from
considering or proposing such an acquisition, even if such persons were prepared
to offer to pay consideration to Eagle Stockholders that had a higher current
market price than the consideration to be received in exchange for each share of
Eagle Common Stock pursuant to the Merger Agreement.
7
<PAGE>
In the event that the stockholders of Eagle or Webster fail to approve the
Merger Agreement, either Webster or Eagle may terminate the Merger Agreement.
See "THE MERGER -- Termination and Amendment of the Merger Agreement." If such
termination occurs prior to the occurrence of an Initial Triggering Event (as
defined herein) under the Stock Option Agreement, the Stock Option Agreement
will automatically terminate at such time. If an Initial Triggering Event occurs
under the Stock Option Agreement prior to the termination of the Merger
Agreement, however, Webster will generally be entitled to exercise the Option in
accordance with its terms upon the occurrence of a Subsequent Triggering Event
(as defined herein) under the Stock Option Agreement within the 12 months after
the termination of the Merger Agreement. See "THE MERGER -- Stock Option
Agreement."
Interests of Certain Persons in the Merger
Certain members of Eagle's management of and of the Eagle Board may be
deemed to have certain interests in the Merger that are in addition to their
interests generally as Eagle Stockholders. Certain directors of Eagle will be
directors of the combined company following the Merger, and certain other
directors of Eagle will serve on an advisory board to the combined company for a
period not less than 24 months following the Merger. Certain executive officers
of Eagle have entered into consulting and/or employment agreements with Webster
in connection with the Merger, which agreements will become effective at the
Effective Time. Directors and executive officers of Eagle will receive certain
benefits pursuant to existing employment and compensation agreements, plans and
arrangements of Eagle in connection with the Merger. Directors and officers of
Eagle hold Eagle Options which will be converted into options to acquire Webster
Common Stock in connection with the Merger. Webster also has agreed to
indemnify, and maintain directors' and officers' liability insurance covering,
Eagle directors and officers for specified periods following the Merger.
The Eagle Board was aware of these interests and considered them, among
other matters, in approving the Merger Agreement and the transactions
contemplated thereby.
See "THE MERGER -- Interests Of Certain Persons In The Merger" and
"MANAGEMENT AND OPERATIONS AFTER THE MERGER."
DESCRIPTION OF WEBSTER CAPITAL STOCK AND COMPARISON OF STOCKHOLDER RIGHTS
Upon consummation of the Merger, Eagle Stockholders will become Webster
Stockholders. There are certain differences between the rights of Webster
Stockholders and Eagle Stockholders. For a summary of such differences in
stockholder rights, see "COMPARISON OF STOCKHOLDER RIGHTS."
MARKET PRICES OF COMMON STOCK
Both Webster Common Stock and Eagle Common Stock are traded on Nasdaq. The
symbol for Webster Common Stock is "WBST." The symbol for Eagle Common Stock is
"EGFC."
The following table sets forth per share closing prices of the Webster
Common Stock and the Eagle Common Stock on Nasdaq as of the dates specified and
the pro forma equivalent market value of Eagle Common Stock giving effect to the
Merger. See "MARKET PRICES AND DIVIDENDS."
CLOSING SALES PRICE
-------------------------------
WEBSTER EAGLE PRO FORMA
DATE COMMON STOCK COMMON STOCK EQUIVALENTS (A)
- ------------------------- -------------- -------------- ----------------
October 24, 1997 ...... $66.00 $43.00 $55.44
February 9, 1998 ...... $64.00 $52.75 $53.76
- -----------
(a) Pro forma equivalent value per share of Eagle Common Stock represents the
closing sales prices of Webster Common Stock, as reported in The Wall Street
Journal, on each specified date, multiplied by 0.84, the Exchange Ratio.
8
<PAGE>
Stockholders are advised to obtain current market quotations for Webster
Common Stock. The market price of Webster Common Stock will fluctuate between
the date of this Joint Proxy Statement/Prospectus and the date on which the
Merger is consummated. Because the market price of Webster Common Stock is
subject to fluctuation and the Exchange Ratio is fixed, the market value of the
shares of Webster Common Stock that holders of Eagle Common Stock will receive
in the Merger may materially increase or decrease prior to the Merger. No
assurance can be given as to the market price of Webster Common Stock at the
time of the Merger. See "MARKET PRICES AND DIVIDENDS" and "THE MERGER --
Exchange Ratio."
COMPARATIVE PER SHARE DATA
Following are certain comparative selected historical per share data of
Webster and of Eagle, pro forma combined per share data of Webster and Eagle and
equivalent pro forma per share data of Eagle. The financial data is based on,
and should be read in conjunction with, the historical consolidated financial
statements and the notes thereto of Webster and of Eagle and the pro forma
combined financial statements and the notes thereto appearing in or incorporated
by reference elsewhere into this Joint Proxy Statement/Prospectus. All per share
data of Webster, Eagle and pro forma data are presented on a fully diluted basis
and have been adjusted to give effect to stock dividends. The pro forma data is
not necessarily indicative of results which will be obtained on a combined
basis. The pro forma data has not been adjusted to reflect any of the
improvements in operating efficiencies that Webster anticipates may occur in the
future due to the Merger.
AT OR FOR AT OR FOR THE FISCAL
THE NINE PERIOD
MONTHS ENDED (A) ENDED
SEPTEMBER 30, --------------------------
1997 1996 1995 1994
-------------- --------- -------- -------
Net Income (Loss) per Fully Diluted Common Share:
Webster - Historical (a) ......... $ 1.35 $ 2.66 $ 2.22 $ 2.17
Eagle - Historical (a) ............ 0.44 2.42 1.92 1.83
Pro Forma Combined (b)(c) ......... 1.12 2.72 2.24 2.17
Eagle Equivalent Pro Forma (d) ... 0.94 2.28 1.88 1.82
Cash Dividends per Common Share:
Webster - Historical (a) ......... $ 0.58 $ 0.68 $ 0.64 $ 0.52
Eagle - Historical (a) ............ 0.69 0.92 0.82 0.69
Pro Forma Combined (b)(c) ......... 0.60 0.68 0.64 0.52
Eagle Equivalent Pro Forma (d) ... 0.50 0.57 0.54 0.44
Book Value per Common Share:
Webster - Historical (a) ......... $ 26.83 $ 25.18
Eagle - Historical (a) ............ 22.02 21.94
Pro Forma Combined (b)(c) ......... 25.80 25.45
Eagle Equivalent Pro Forma (d) ... 21.67 21.38
- -----------
(a) Webster's fiscal year ends December 31 and Eagle's fiscal year ends
September 30.
(b) The unaudited pro forma comparative per share data combines the financial
information of Webster (as restated to include DS Bancor Inc. and Peoples
Savings Financial Corp.) as of and for the fiscal years ended December 31,
1996, 1995 and 1994 with the financial information of Eagle (as restated to
include MidConn Bank) as of and for the fiscal years ended September 30,
1996, 1995 and 1994, respectively, and combines the financial information of
Webster at and for the nine months ended September 30, 1997 with the
financial information of Eagle at and for the nine months ended June 30,
1997.
(c) Pro forma combined amounts shown above reflect the proposed acquisition of
Eagle on a "pooling-of-interests" basis for each period shown as if the
Merger had occurred at the beginning of such period.
(d) Eagle equivalent pro forma per share amounts are calculated by multiplying
the pro forma combined amounts by the Exchange Ratio. See "THE MERGER --
Exchange Ratio."
9
<PAGE>
SUMMARY FINANCIAL AND OTHER DATA
The following tables present summary historical financial and other data
for Webster and Eagle as of the dates and for the periods indicated. This
summary data is based upon, and should be read in conjunction with, the
historical and pro forma consolidated financial statements and notes thereto of
Webster and Eagle incorporated by reference herein. As to historical
information, see "INFORMATION INCORPORATED BY REFERENCE." For pro forma
information, see "-- Comparative Per Share Data" and "PRO FORMA COMBINED
FINANCIAL STATEMENTS." All adjustments necessary for a fair presentation of
financial position and results of operations of interim periods have been
included. Webster's fiscal year ends December 31 and Eagle's fiscal year ends
September 30. The unaudited pro forma combined financial data combines the
financial information of Webster (as restated to include DS Bancor Inc. and
Peoples Savings Financial Corp.) at and for the fiscal years ended December 31,
1996, 1995, 1994, 1993 and 1992 with the financial information of Eagle (as
restated to include MidConn Bank) for the fiscal years ended September 30, 1996,
1995, 1994, 1993 and 1992, respectively, and combines the financial information
of Webster (as restated to include DS Bancor Inc. and Peoples Savings Financial
Corp.) at and for the nine months ended September 30, 1997 and 1996 with the
financial information of Eagle (as restated to include MidConn Bank) at and for
the nine months ended June 30, 1997 and 1996. The pro forma amounts are not
necessarily indicative of results which will be obtained on a combined basis.
The pro forma data has not been adjusted to reflect any of the improvements in
operating efficiencies that Webster anticipates may occur in the future due to
the Merger.
10
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA -- WEBSTER
FINANCIAL CONDITION, OTHER DATA AND OPERATING DATA--WEBSTER
<TABLE>
<CAPTION>
AT OR FOR THE NINE MONTHS AT OR FOR THE YEAR
ENDED SEPTEMBER 30, ENDED DECEMBER 31,
--------------------------- -----------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------------- ------------ ------------ ------------ ------------ -------------- -----------
(DOLLARS IN THOUSANDS)
FINANCIAL CONDITION
AND OTHER DATA
<S> <C> <C> <C> <C> <C> <C> <C>
Total Assets .................. $6,811,014 $5,698,036 $5,607,210 $4,883,402 $4,677,859 $4,032,451 $3,893,825
Loans Receivable, Net ......... 3,732,498 3,581,649 3,642,522 3,005,014 2,934,967 2,459,395 2,461,472
Securities ..................... 2,617,842 1,667,767 1,577,702 1,505,919 1,300,793 1,135,168 788,953
Segregated Assets, Net ......... 44,784 82,905 75,670 104,839 137,096 176,998 223,907
Intangible Assets (a) ......... 50,525 50,997 49,448 10,865 12,806 16,083 20,426
Deposits ........................ 4,265,011 4,407,074 4,457,561 3,797,712 3,781,393 3,272,262 3,273,505
Federal Home Loan Bank
Advances and Other Borrowings... 2,011,466 868,045 726,007 668,940 558,970 426,503 323,726
Shareholders' Equity ............ 363,584 342,344 336,832 334,580 264,404 235,151 228,055
Number of Banking Offices ...... 84 87 87 76 75 68 67
OPERATING DATA
Interest Income ............... $ 326,429 $ 286,564 $ 386,458 $ 332,922 $ 293,164 $ 253,070 $ 190,531
Interest Expense ............... 182,859 161,539 217,421 197,591 152,552 135,285 105,642
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Interest Income ............ 143,570 125,025 169,037 135,331 140,612 117,785 84,889
Provision for Loan Losses ...... 13,460 6,204 9,788 5,726 5,609 8,082 8,204
Noninterest Income ............ 25,730 22,668 32,179 27,902 17,467 20,024 12,412
Noninterest Expenses:
Merger and Acquisition Ex-
penses......................... 27,058 500 500 4,271 700 -- --
Foreclosed Property Expenses,
Net ........................... 1,716 2,644 3,507 6,254 10,106 10,413 10,595
Other noninterest expenses ..... 97,316 94,726 126,548 102,211 102,493 78,588 50,729
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Noninterest Expenses..... 126,090 97,870 130,555 112,736 113,299 89,001 61,324
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before Income Taxes ...... 29,750 43,619 60,873 44,771 39,171 40,726 27,773
Income Taxes .................. 10,757 15,747 22,372 15,450 11,211 17,033 13,223
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Income before Cumulative
Change ........................ 18,993 27,872 38,501 29,321 27,960 23,693 14,550
Cumulative Change (b) ......... -- -- -- -- -- 6,408 --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Income ..................... 18,993 27,872 38,501 29,321 27,960 30,101 14,550
Preferred Stock Dividends ...... -- 928 1,149 1,296 1,716 2,653 581
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Income Available to Common
Shareholders .................. $ 18,993 $ 26,944 $ 37,352 $ 28,025 $ 26,244 $ 27,448 $ 13,969
========== ========== ========== ========== ========== ========== ==========
Loan Originations During Period $ 667,377 $ 587,483 $ 817,579 $ 607,309 $1,065,820 $ 740,016 $ 599,113
Net Increase (Decrease) in De-
posits.......................... (192,550) 609,362 659,849 16,319 509,131 (1,243) 1,510,503
Loans Serviced for Others ...... 1,168,783 922,698 1,214,682 966,986 1,146,472 572,344 896,725
Capitalized Mortgage Loan Ser-
vicing Rights .................. 5,518 2,326 5,384 2,999 4,807 1,955 3,163
</TABLE>
11
<PAGE>
SIGNIFICANT STATISTICAL DATA -- WEBSTER
<TABLE>
<CAPTION>
AT OR FOR THE NINE
MONTHS ENDED
SEPTEMBER 30,
-----------------------
1997 1996
----------- -----------
<S> <C> <C>
Net Income per Common Share:
Primary ................................. $ 1.37 $ 1.99
Fully Diluted ........................... $ 1.35 $ 1.90
Cash Dividends Paid per Common Share $ 0.58 0.50
Return on Average Assets .................. 0.41% 0.69%
Return on Average Shareholders' Equity 7.44% 10.86%
Average Shareholders' Equity to
Average Assets ........................... 5.51% 6.31%
Interest Rate Spread ..................... 3.10% 3.08%
Net Yield on Average Earning Assets ...... 3.26% 3.22%
Noninterest Expenses to Average Assets ..... 2.72% 2.41%
Noninterest Expenses (Excluding Fore-
closed Property Expenses and Provi-
sions) to Average Assets................... 2.68% 2.34%
Ratio of Earnings to Fixed Charges ......... 1.51x 2.23x
At End of Period:
Book Value per Common Share ............... $26.83 $25.20
Tangible Book Value per Common Share ....... $23.10 $21.51
Common Shares Outstanding (000's) ......... 13,554 12,987
Shareholders' Equity to Total Assets ...... 5.34% 6.01%
Nonaccrual Assets to Total Assets ......... 0.72% 0.99%
Allowance for Loan Losses to Nonac-
crual Loans................................ 136.60% 108.62%
Allowances for Nonaccrual Assets to
Nonaccrual Assets ........................ 106.07% 77.29%
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
Net Income per Common Share:
Primary ................................. $ 2.77 $ 2.30 $ 2.28 $2.04(c) $ 1.36
Fully Diluted ........................... $ 2.66 $ 2.22 $ 2.17 $1.94(c) $ 1.35
Cash Dividends Paid per Common Share $ 0.68 $ 0.64 $ 0.52 $0.50 $ 0.48
Return on Average Assets .................. 0.70% 0.62% 0.61% 0.60%(c) 0.57%
Return on Average Shareholders' Equity 11.20% 10.08% 10.76% 10.17%(c) 7.66%
Average Shareholders' Equity to
Average Assets ........................... 6.27% 6.11% 5.67% 5.93% 7.49%
Interest Rate Spread ..................... 3.11% 2.80% 3.18% 3.03% 3.32%
Net Yield on Average Earning Assets ...... 3.23% 2.96% 3.27% 3.14% 3.52%
Noninterest Expenses to Average Assets...... 2.38% 2.37% 2.47% 2.27% 2.42%
Noninterest Expenses (Excluding Fore-
closed Property Expenses and Provi-
sions) to Average Assets .................. 2.32% 2.24% 2.25% 2.00% 2.00%
Ratio of Earnings to Fixed Charges ......... 2.35x 1.97x 2.08x 2.47x 2.89x
At End of Period:
Book Value per Common Share ............... $25.18 $24.41 $21.37 $20.74 $18.48
Tangible Book Value per Common Share ....... $21.37 $23.57 $20.26 $19.16 $16.44
Common Shares Outstanding (000's) ......... 12,986 13,005 11,568 10,129 9,999
Shareholders' Equity to Total Assets ...... 6.01% 6.85% 5.65% 5.83% 5.86%
Nonaccrual Assets to Total Assets ......... 0.98% 1.53% 1.86% 2.29% 2.81%
Allowance for Loan Losses to Nonac-
crual Loans ............................... 103.80% 96.08% 108.06% 97.94% 85.46%
Allowances for Nonaccrual Assets to
Nonaccrual Assets ........................ 79.06% 69.02% 66.90% 61.24% 61.96%
</TABLE>
- ----------
(a) The increase in intangible assets in 1996 is a result of certain assets and
liabilities purchased from Shawmut Bank Connecticut, N.A. (the "Shamut
Acquisition").
(b) Reflects cumulative change in method of accounting for income taxes adopted
by Webster in 1993 in accordance with Financial Standards Accounting Board
Statement of Financial Accounting Standards No. 109 ("FASB 109").
(c) Does not give effect to $6.4 million of additional income in 1993 resulting
from the cumulative change of Webster's adoption of FASB 109. Giving effect
to such cumulative change (i) net income per common share for 1993 was $2.42
on a primary basis and $2.30 on a fully diluted basis; (ii) return on
average assets for 1993 was .77%; and (iii) return on average shareholders'
equity for 1993 was 12.92%.
12
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA -- EAGLE
FINANCIAL CONDITION, OTHER DATA AND OPERATING DATA -- EAGLE
<TABLE>
<CAPTION>
AT OR FOR THE NINE
MONTHS ENDED JUNE 30,
-------------------------
1997 1996
------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
FINANCIAL CONDITION
AND OTHER DATA
Total Assets .................................... $2,013,359 $1,769,688
Loans Receivable, Net ........................... 1,130,304 1,065,372
Securities .................................... 736,722 577,897
Intangible Assets .............................. 30,304 33,205
Deposits ....................................... 1,385,431 1,385,146
Federal Home Loan Bank
Advances and Other Borrowings .................. 410,809 219,875
Shareholders' Equity ........................... 138,245 137,271
Number of Banking Offices ..................... 31 30
OPERATING DATA
Interest Income ................................. $ 97,241 $ 89,877
Interest Expense .............................. 53,768 50,381
---------- ----------
Net Interest Income ........................... 43,473 39,496
Provision for Loan Losses ..................... 8,678 2,541
Noninterest Income:
Non-recurring Income (b) ..................... -- 15,904
Other Income ................................. 5,259 2,364
---------- ----------
Total Noninterest Income ..................... 5,259 18,268
---------- ----------
Noninterest Expenses:
Merger and Acquisition Expenses ............... 3,499 --
Foreclosed Property Expenses, Net ............ 1,687 1,524
Other Noninterest Expenses ..................... 28,963 27,523
---------- ----------
Total Noninterest Expenses .................. 34,149 29,047
---------- ----------
Income before Income Taxes ..................... 5,905 26,176
Income Taxes .................................... 3,057 10,388
---------- ----------
Net Income before Cumulative Change ............ 2,848 15,788
Cumulative Change .............................. -- --
---------- ----------
Net Income Available to Common Shareholders ..... $ 2,848 $ 15,788
========== ==========
Loan Originations During Period ............... $ 187,731 $ 214,075
Net Increase in Deposits ........................ 16,728 105,593
Loans Serviced for Others ..................... 250,033 245,448
Capitalized Mortgage Loan Servicing Rights ...... 561 623
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE YEAR
ENDED SEPTEMBER 30,
------------------------------------------------------------------
1996 1995 1994 1993 1992
----------------- ------------ ------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
FINANCIAL CONDITION
AND OTHER DATA
Total Assets .................................... $1,761,731 $1,596,165 $1,436,754 $1,022,121 $976,918
Loans Receivable, Net ........................... 1,095,361 972,711 1,072,743 821,993 728,777
Securities .................................... 527,471 494,266 257,608 153,939 187,299
Intangible Assets .............................. 32,488 (a) 15,855 18,287 1,861 2,138
Deposits ....................................... 1,368,703 1,263,110 1,262,943 891,495 859,845
Federal Home Loan Bank
Advances and Other Borrowings .................. 231,828 165,617 54,821 26,252 17,926
Shareholders' Equity ........................... 135,992 126,211 99,708 92,525 85,974
Number of Banking Offices ..................... 33 33 33 23 23
OPERATING DATA
Interest Income ................................. $ 120,568 $ 106,730 $ 77,406 $ 70,876 $ 69,819
Interest Expense .............................. 67,487 53,415 35,918 35,233 39,103
------------ ---------- ---------- ---------- --------
Net Interest Income ........................... 53,081 53,315 41,488 35,643 30,716
Provision for Loan Losses ..................... 3,266 4,138 1,540 1,804 2,186
Noninterest Income:
Non-recurring Income (b) ..................... 15,904 -- -- -- --
Other Income ................................. 3,926 5,414 3,911 4,028 3,357
------------ ---------- ---------- ---------- --------
Total Noninterest Income ..................... 19,830 5,414 3,911 4,028 3,357
------------ ---------- ---------- ---------- --------
Noninterest Expenses:
Merger and Acquisition Expenses ............... 746 -- -- -- --
Foreclosed Property Expenses, Net ............ 1,651 1,381 2,007 2,741 2,835
Other Noninterest Expenses ..................... 41,525 32,746 25,654 20,760 17,436
------------ ---------- ---------- ---------- --------
Total Noninterest Expenses .................. 43,922 34,127 27,661 23,501 20,271
------------ ---------- ---------- ---------- --------
Income before Income Taxes ..................... 25,723 20,464 16,198 14,366 11,616
Income Taxes .................................... 10,230 8,418 6,747 6,639 5,644
------------ ---------- ---------- ---------- --------
Net Income before Cumulative Change ............ 15,493 12,046 9,451 7,727 5,972
Cumulative Change .............................. -- -- 97 -- --
------------ ---------- ---------- ---------- --------
Net Income Available to Common
Shareholders ................................. $ 15,493 $ 12,046 $ 9,548 $ 7,727 $ 5,972
============ ========== ========== ========== ========
Loan Originations During Period ............... $ 301,482 $ 186,298 $ 264,642 $ 295,158 $224,652
Net Increase in Deposits ........................ 103,593 167 371,448 31,650 234,508
Loans Serviced for Others ..................... 261,400 256,100 117,900 36,896 31,430
Capitalized Mortgage Loan Servicing Rights ...... 592 716 839 -- --
</TABLE>
13
<PAGE>
SIGNIFICANT STATISTICAL DATA -- EAGLE
<TABLE>
<CAPTION>
AT OR FOR THE NINE
MONTHS ENDED JUNE 30, AT OR FOR THE YEAR ENDED SEPTEMBER 30,
----------------------- -----------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
For the Period:(b) ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Income per Common Share:
Primary .................................... $ 0.44 $ 2.49 $ 2.44 $ 1.94 $ 1.84 $ 1.53 $ 1.21
Fully Diluted .............................. $ 0.44 $ 2.47 $ 2.42 $ 1.92 $ 1.83 $ 1.52 $ 1.20
Cash Dividends Paid per
Common Share .............................. $ 0.69 $ 0.69 $ 0.92 $ 0.82 $ 0.69 $ 0.57 $ 0.50
Return on Average Assets .................. 0.21% 1.23% 0.90% 0.80% 0.81% 0.77% 0.69%
Return on Average
Shareholders' Equity ..................... 2.73% 15.96% 11.62% 9.98% 9.95% 8.68% 7.15%
Average Shareholders' Equity
to Average Assets ........................ 7.56% 7.68% 7.72% 7.97% 8.18% 8.83% 9.59%
Interest Rate Spread ........................ 2.89% 2.99% 2.96% 3.43% 3.43% 3.42% 3.35%
Net Yield on Average
Earning Assets ........................... 3.30% 3.25% 3.26% 3.72% 3.70% 3.69% 3.71%
Noninterest Expenses to
Average Assets ........................... 2.47% 2.25% 2.54% 2.25% 2.36% 2.33% 2.33%
Noninterest Expenses
(Excluding Foreclosed Property Expenses and
Provisions) to Average Assets ............ 2.35% 2.14% 2.45% 2.16% 2.19% 2.06% 2.00%
Ratio of Earnings to
Fixed Charges .............................. 1.45x 3.74x 2.97x 3.60x 6.88x 11.08x 7.66x
At End of Period:
Book Value per Common Share ............... $ 22.02 $ 22.29 $ 21.94 $ 20.71 $ 19.66 $ 18.60 $ 17.67
Tangible Book Value per
Common Share ............................. $ 17.19 $ 16.90 $ 16.70 $ 18.11 $ 16.06 $ 18.23 $ 17.23
Common Shares Outstanding (000's) ......... 6,279 6,159 6,199 6,093 4,758 4,669 4,301
Shareholders' Equity to Total
Assets .................................... 6.87% 7.76% 7.72% 7.91% 6.94% 9.05% 8.80%
Nonaccrual Assets to Total Assets ......... 0.44% 1.03% 0.98% 1.23% 1.57% 1.73% 2.26%
Allowance for Loan Losses to Nonaccrual Loans 233.14% 86.61% 88.52% 71.03% 82.14% 76.44% 79.72%
Allowances for Nonaccrual Assets to Nonac-
crual Assets ............................... 109.93% 58.43% 61.07% 49.66% 46.96% 34.80% 23.44%
</TABLE>
- ----------
(a) The increase in intangible assets in 1996 and in 1994 are results of certain
assets and liabilities purchased in the Shawmut Acquisition and in the Bank
of Hartford acquisition, respectively.
(b) Includes non-recurring income of $15.9 million related to a gain recorded on
the sale of branches for the nine months ended June 30, 1996, and for the
year ended September 30, 1996.
14
<PAGE>
PRO FORMA COMBINED FINANCIAL DATA
FINANCIAL CONDITION,
OTHER DATA AND OPERATING DATA -- PRO FORMA
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS
ENDED SEPTEMBER 30,
---------------------------
1997 1996
-------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
FINANCIAL CONDITION
AND OTHER DATA
Total Assets .................................... $8,808,860 $7,466,076
Loans Receivable, Net ........................... 4,861,302 4,647,021
Securities .................................... 3,340,301 2,245,664
Segregated Assets, Net ........................ 44,784 82,905
Intangible Assets .............................. 80,829 84,202
Deposits ....................................... 5,650,442 5,792,220
Federal Home Loan Bank Advances and Other
Borrowings .................................... 2,422,275 1,087,920
Shareholders' Equity ........................... 480,816 479,614
Number of Banking Offices ..................... 115 117
OPERATING DATA
Interest Income ................................. $ 423,670 $ 376,441
Interest Expense .............................. 236,627 211,920
---------- ----------
Net Interest Income ........................... 187,043 164,521
Provision for Loan Losses ..................... 22,138 8,745
Noninterest Income:
Non-recurring Income ........................... -- 15,904
Other Income ................................. 30,989 25,032
Total Noninterest Income ..................... 30,989 40,936
Noninterest Expenses:
Merger and Acquisition Expenses ............... 30,557 500
Foreclosed Property Expenses, Net ............ 3,403 4,168
Other Noninterest Expenses ..................... 126,279 122,249
---------- ----------
Total Noninterest Expenses .................. 160,239 126,917
---------- ----------
Income before Income Taxes ..................... 35,655 69,795
Income Taxes .................................... 13,814 26,135
---------- ----------
Net Income before Cumulative Change ............ 21,841 43,660
Cumulative Change .............................. -- --
---------- ----------
Net Income .................................... 21,841 43,660
Preferred Stock Dividends ..................... -- 928
---------- ----------
Net Income Available to Common
Shareholders ................................. $ 21,841 $ 42,732
========== ==========
Loan Originations During Period ............... $ 855,108 $ 801,558
Net Increase (Decrease) in Deposits ............ (175,822) 731,398
Loans Serviced for Others ..................... 1,418,816 1,168,146
Capitalized Mortgage Loan Servicing Rights ...... 6,079 2,949
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
FINANCIAL CONDITION
AND OTHER DATA
Total Assets .................................... $7,368,941 $6,479,567 $6,114,613 $5,054,572 $4,870,743
Loans Receivable, Net ........................... 4,737,883 3,977,725 4,007,710 3,281,388 3,190,249
Securities .................................... 2,105,173 2,000,185 1,558,401 1,289,107 976,252
Segregated Assets, Net ........................ 75,670 104,839 137,096 176,998 223,907
Intangible Assets .............................. 81,936 26,720 31,093 17,944 22,564
Deposits ....................................... 5,826,264 5,060,822 5,044,336 4,163,757 4,133,350
Federal Home Loan Bank Advances and Other
Borrowings .................................... 957,835 834,557 613,791 452,755 341,652
Shareholders' Equity ........................... 472,824 460,791 364,112 327,676 314,029
Number of Banking Offices ..................... 120 109 108 91 90
OPERATING DATA
Interest Income ................................. $ 507,026 $ 439,652 $ 370,570 $ 323,946 $ 260,350
Interest Expense .............................. 284,908 251,006 188,470 170,518 144,745
---------- ---------- ---------- ---------- ----------
Net Interest Income ........................... 222,118 188,646 182,100 153,428 115,605
Provision for Loan Losses ..................... 13,054 9,864 7,149 9,886 10,390
Noninterest Income:
Non-recurring Income ........................... 15,904 -- -- -- --
Other Income ................................. 36,105 33,316 21,378 24,052 15,769
Total Noninterest Income ..................... 52,009 33,316 21,378 24,052 15,769
Noninterest Expenses:
Merger and Acquisition Expenses ............... 1,246 4,271 700 -- --
Foreclosed Property Expenses, Net ............ 5,158 7,635 12,113 13,154 13,430
Other Noninterest Expenses ..................... 168,073 134,957 128,147 99,348 68,165
---------- ---------- ---------- ---------- ----------
Total Noninterest Expenses .................. 174,477 146,863 140,960 112,502 81,595
---------- ---------- ---------- ---------- ----------
Income before Income Taxes ..................... 86,596 65,235 55,369 55,092 39,389
Income Taxes .................................... 32,602 23,868 17,958 23,672 18,867
---------- ---------- ---------- ---------- ----------
Net Income before Cumulative Change ............ 53,994 41,367 37,411 31,420 20,522
Cumulative Change .............................. -- -- 97 6,408 --
---------- ---------- ---------- ---------- ----------
Net Income .................................... 53,994 41,367 37,508 37,828 20,522
Preferred Stock Dividends ..................... 1,149 1,296 1,716 2,653 581
---------- ---------- ---------- ---------- ----------
Net Income Available to Common
Shareholders ................................. $ 52,845 $ 40,071 $ 35,792 $ 35,175 $ 19,941
========== ========== ========== ========== ==========
Loan Originations During Period ............... $1,119,061 $ 793,607 $1,330,462 $1,035,174 $ 823,765
Net Increase (Decrease) in Deposits ............ 765,442 16,486 880,579 30,407 1,745,011
Loans Serviced for Others ..................... 1,476,082 1,223,086 1,264,372 609,240 928,155
Capitalized Mortgage Loan Servicing Rights ...... 5,976 3,715 5,646 1,955 3,163
</TABLE>
15
<PAGE>
PRO FORMA COMBINED FINANCIAL DATA
SIGNIFICANT STATISTICAL DATA
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS
ENDED SEPTEMBER 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
----------------------- -----------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
For the Period: ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Income per Common Share:
Primary ................................. $ 1.13 $ 2.26 $ 2.81 $ 2.30 $ 2.25 $ 2.42 $ 1.38
Fully Diluted ........................... $ 1.12 $ 2.18 $ 2.72 $ 2.24 $ 2.17 $ 2.30 $ 1.38
Cash Dividends Paid per Common Share ....... $ 0.58 $ 0.50 $ 0.68 $ 0.64 $ 0.52 $ 0.50 $ 0.48
Return on Average Assets .................. 0.36% 0.82% 0.75% 0.66% 0.65% 0.64% 0.60%
Return on Average Shareholders' Equity ..... 6.07% 12.28% 11.32% 10.05% 10.52% 11.66% 7.51%
Average Shareholders' Equity to
Average Assets ........................... 5.98% 6.64% 6.62% 6.56% 6.18% 6.53% 8.03%
Interest Rate Spread ..................... 3.06% 3.08% 3.09% 2.94% 3.23% 3.11% 3.33%
Net Yield on Average Earning Assets ........ 3.25% 3.23% 3.26% 3.12% 3.36% 3.25% 3.57%
Noninterest Expenses to Average Assets 2.66% 2.37% 2.42% 2.34% 2.45% 2.28% 2.40%
Noninterest Expenses (Excluding Fore-
closed Property Expenses and Provi-
sions) to Average Assets .................. 2.61% 2.29% 2.35% 2.22% 2.24% 2.01% 2.00%
Ratio of Earnings to Fixed Charges ......... 1.50x 2.56x 2.45x 2.25x 2.44x 3.09x 3.41x
At End of Period:
Book Value per Common Share ............... $ 25.80 $ 26.41 $ 25.45 $ 24.48 $ 21.92 $ 21.15 $ 19.22
Tangible Book Value per Common Share ....... $ 21.47 $ 21.77 $ 20.95 $ 23.00 $ 19.95 $ 19.90 $ 17.62
Common Shares Outstanding (000's) ......... 18,634 19,991 18,193 18,123 15,827 14,308 14,086
Shareholders' Equity to Total Assets ...... 5.46% 6.42% 6.42% 7.11% 5.95% 6.48% 6.45%
Nonaccrual Assets to Total Assets ......... 0.66% 1.00% 0.98% 1.46% 1.80% 2.18% 2.70%
Allowance for Loan Losses to Nonac-
crual Loans ............................... 149.73% 103.46% 100.40% 90.93% 102.96% 95.22% 85.02%
Allowances for Nonaccrual Assets to
Nonaccrual Assets ........................ 109.22% 72.71% 74.78% 64.94% 62.72% 56.97% 55.49%
</TABLE>
----------
16
<PAGE>
THE WEBSTER SPECIAL MEETING
GENERAL
This Joint Proxy Statement/Prospectus is first being mailed to Webster
Stockholders on or about February 13, 1998 and is accompanied by the Notice of
Special Meeting and a form of proxy that is solicited by the Webster Board for
use at the Webster Special Meeting to be held on April 2, 1998, at 2:00 p.m.,
local time, at the Sheraton Four Points Hotel, Waterbury, Connecticut.
MATTERS TO BE CONSIDERED
At the Webster Special Meeting, Webster Stockholders will be asked, in
accordance with the requirements of the Delaware General Corporation Law (the
"DGCL"), to consider and vote upon the adoption and approval of the Merger
Agreement, the Merger and, in a separate vote, the Certificate Amendment.
Approval of the Certificate Amendment by Webster Stockholders is not a condition
to Webster's or Eagle's obligation to consummate the Merger. The Webster
Stockholders may also be asked to vote upon a proposal to adjourn or postpone
the Webster Special Meeting, which adjournment or postponement could be used for
the purpose, among others, of allowing additional time for the soliciting of
additional votes in connection with obtaining approval of the Merger Agreement
or the Certificate Amendment.
PROXIES
The accompanying form of proxy is for use at the meeting if a Webster
Stockholder is unable to attend in person. The proxy may be revoked by the
Webster Stockholder at any time before it is exercised by submitting to the
Corporate Secretary of Webster written notice of revocation, a properly executed
proxy of a later date or by attending the meeting and electing to vote in
person. Written notices of revocation and other communications with respect to
the revocation of Webster proxies should be addressed to Webster Financial
Corporation, Webster Plaza, Waterbury, Connecticut 06720, Attention: Corporate
Secretary. All shares represented by valid proxies received pursuant to this
solicitation, and not revoked before they are exercised, will be voted in the
manner specified therein. If no specification is made, the proxies will be voted
in favor of approval of the Merger Agreement and the Certificate Amendment;
provided that no proxy that is voted against approval of the Merger Agreement or
the Amendment will be voted in favor of any adjournment or postponement of the
Webster Special Meeting for the purpose of soliciting additional proxies in
connection with obtaining approval of the Merger Agreement or the Certificate
Amendment, respectively.
The entire cost of soliciting the proxies from the Webster Stockholders
will be borne by Webster, except that Eagle and Webster have each agreed to pay
one-half of any SEC filing fees and printing costs of this Joint Proxy
Statement/Prospectus and related materials. In addition to the solicitation of
the proxies by mail, Webster will request banks, brokers and other record
holders to send proxies and proxy material to the beneficial owners of Webster
Common Stock and secure their voting instructions, if necessary. Webster will
reimburse such record holders for their reasonable expenses in so doing. Webster
has also made arrangements with D.F. King & Co., Inc. to assist it in soliciting
proxies from banks, brokers and nominees and has agreed to pay $8,000 plus
expenses for such services. If necessary, Webster may also use several of its
regular employees, who will not be specially compensated, to solicit proxies
from Webster Stockholders, either personally or by telephone, telegram,
facsimile or special delivery letter.
RECORD DATE AND VOTING RIGHTS
Pursuant to the provisions of the DGCL, February 11, 1998 has been fixed as
the Record Date for determination of Webster Stockholders entitled to notice of
and to vote at the Webster Special Meeting. Accordingly, only holders of shares
of record at the close of business on the Record Date of Webster Common Stock
will be entitled to notice of and to vote at the Webster Special Meeting. The
number of shares of Webster Common Stock entitled to vote at the Webster Special
Meeting is
17
<PAGE>
13,657,236. Abstentions from voting will be counted for purposes of determining
whether a quorum exists at the Webster Special Meeting. Furthermore, shares
represented by proxies returned by a broker holding such shares in nominee or
"street" name will be counted for purposes of determining whether a quorum
exists, even if such shares are not voted in matters where discretionary voting
by the broker is not allowed ("broker non-votes"). In addition, abstentions from
voting and broker non-votes will not be deemed to have been cast either "for" or
"against" the proposals considered at the Webster Special Meeting, and, since
adoption and approval of the Merger Agreement and the Certificate Amendment
requires the affirmative vote of holders of a majority of outstanding shares of
Webster Common Stock entitled to vote at the Webster Special Meeting, will have
the same effect as a vote against adoption and approval of the Merger Agreement
and the Certificate Amendment. ACCORDINGLY, THE WEBSTER BOARD URGES WEBSTER
STOCKHOLDERS TO COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
Each share of Webster Common Stock entitles its holder to one vote. The
affirmative vote of a majority of the outstanding shares of Webster Common Stock
entitled to vote at the Webster Special Meeting is required for approval of the
Merger Agreement and the Certificate Amendment. As of the Record Date, 581,152
shares of Webster Common Stock, or 4.3% of the shares of Webster stock entitled
to vote at the Webster Special Meeting, were beneficially owned by directors and
executive officers of Webster. It is currently expected that each such director
and executive officer of Webster will vote the shares of Webster stock
beneficially owned by him or her for approval of the Merger Agreement and the
Certificate Amendment. In addition, as of the Record Date, Eagle did not
beneficially own any shares of Webster Common Stock. As of the Record Date,
directors and executive officers of Eagle beneficially owned 1,105 shares of
Webster Common Stock, or significantly less than 1% of the shares of Webster
stock entitled to vote at the Webster Special Meeting. Also as of the Record
Date, the banking and trust affiliates of Eagle held less than one percent of
the outstanding shares of Webster Common Stock in a fiduciary capacity.
Additional information with respect to beneficial ownership of Webster
Common Stock by individuals and entities owning more than 5% of such stock and
more detailed information with respect to beneficial ownership of Webster Common
Stock by directors and executive officers of Webster is incorporated by
reference to the 1996 Annual Report on Form 10-K of Webster. See "INFORMATION
INCORPORATED BY REFERENCE."
RECOMMENDATION OF WEBSTER BOARD
The Webster Board has unanimously approved the Certificate Amendment, the
Merger Agreement and the transactions contemplated thereby. The Webster Board
believes that the Certificate Amendment, the Merger Agreement and the
transactions contemplated thereby are fair to and in the best interests of
Webster and Webster Stockholders and recommends that the Webster Stockholders
vote "FOR" adoption and approval of the Certificate Amendment, the Merger
Agreement and the transactions contemplated thereby, including the Merger. See
"THE MERGER -- Recommendation of the Webster Board of Directors and Reasons for
the Merger."
18
<PAGE>
THE EAGLE SPECIAL MEETING
GENERAL
This Joint Proxy Statement/Prospectus is first being mailed to Eagle
Stockholders on or about February 13, 1998, and is accompanied by the Notice of
Special Meeting and a form of proxy that is solicited by the Eagle Board for use
at the Eagle Special Meeting to be held on April 2, 1998, at 10:00 a.m., local
time, at Cornucopia Banquet Hall, Torrington, Connecticut.
MATTERS TO BE CONSIDERED
The purpose of the Eagle Special Meeting is to take action with respect to
the approval and adoption of the Merger Agreement and the transactions
contemplated thereby. Eagle Stockholders may also be asked to vote upon a
proposal to adjourn or postpone the Eagle Special Meeting, which adjournment or
postponement could be used for the purpose, among others, of allowing additional
time for the soliciting of additional votes to approve the Merger Agreement.
PROXIES
An Eagle Stockholder may use the accompanying proxy if such Eagle
Stockholder is unable to attend the Eagle Special Meeting in person or wishes to
have such Eagle Stockholder's shares voted by proxy even if such Stockholder
does attend the meeting. An Eagle Stockholder may revoke any proxy given
pursuant to this solicitation by delivering to the Corporate Secretary of Eagle,
prior to or at the Eagle Special Meeting, a written notice revoking the proxy,
or a duly executed proxy relating to the same shares bearing a later date;
however, attendance at the Eagle Special Meeting will not in and of itself
constitute a revocation of a proxy. All written notices of revocation and other
communications with respect to the revocation of Eagle proxies should be
addressed to Eagle Financial Corp., 222 Main Street, Bristol, Connecticut 06010,
Attention: Corporate Secretary. For such notice of revocation or later proxy to
be valid, however, it must actually be received by Eagle prior to the vote of
the Eagle Stockholders at the Eagle Special Meeting. All shares represented by
valid proxies received pursuant to this solicitation, and not revoked before
they are exercised, will be voted in the manner specified therein. If no
specification is made, the proxies will be voted in favor of approval of the
Merger Agreement and in the discretion of the proxyholder as to any other matter
which may come properly before the Special Meeting. If necessary, the
proxyholder may vote in favor of a proposal to adjourn or postpone the Special
Meeting in order to permit further solicitations of proxies in the event there
are not sufficient votes to approve the Merger Agreement at the time of the
Special Meeting. However, no proxyholder will vote any proxies voted against
approval of the Merger Agreement for a proposal to adjourn or postpone the Eagle
Special Meeting for the purpose of soliciting additional proxies.
Eagle intends to count shares of Eagle Common Stock present in person at
the Eagle Special Meeting but not voting, and shares of Eagle Common Stock for
which it has received proxies but with respect to which holders of such shares
have abstained, as present at the Eagle Special Meeting for purposes of
determining the presence or absence of a quorum for the transaction of business.
In addition, brokers who hold shares of Eagle Common Stock in "street name" for
customers who are the beneficial owners of such shares are prohibited from
giving a proxy to vote shares held for such customers with respect to the
matters to be considered and voted upon at the Eagle Special Meeting without
specific instructions from such customers.
Solicitation of proxies may be made in person or by mail, telephone or
facsimile, by directors, officers and employees of Eagle, who will not be
specially compensated for such solicitation. Nominees, fiduciaries and other
custodians will be requested to forward solicitation materials to beneficial
owners and to secure their voting instructions, if necessary, and will be
reimbursed for the expenses incurred in sending proxy materials to beneficial
owners. In addition, D.F. King & Co., Inc. has been engaged to assist in the
solicitation of proxies, the cost of which will be borne by Webster.
All costs of solicitation of proxies from Eagle Stockholders will be borne
by Eagle, except that Webster and Eagle have each agreed to pay one-half of any
SEC filing fees and printing costs of this Joint Proxy Statement/Prospectus and
related materials.
19
<PAGE>
RECORD DATE AND VOTING RIGHTS
The Eagle Board has fixed February 11, 1998 as the Record Date for the
determination of the Eagle Stockholders entitled to receive notice of and to
vote at the Eagle Special Meeting. At the close of business on the Record Date,
there were 6,530,944 shares of Eagle Common Stock outstanding held by
approximately 2,755 holders of record. Each share of Eagle Common Stock
outstanding on the Record Date entitles its holder to one vote as to the
approval of the Merger Agreement and the transactions contemplated thereby and
any other proposal that may properly come before the Eagle Special Meeting.
Under the DGCL, approval of the Merger Agreement requires the affirmative
vote of the holders of a majority of the outstanding shares entitled to vote on
the Merger Agreement at the Eagle Special Meeting. As of the Record Date,
approximately 322,158 shares of Eagle Common Stock, or approximately 4.9% of the
shares entitled to vote at the Eagle Special Meeting, were beneficially owned by
directors and executive officers of Eagle. It is currently expected that each
such director and executive officer of Eagle will vote the shares of Eagle stock
beneficially owned by him or her for approval of the Merger Agreement and the
transactions contemplated thereby. As of the Record Date, Webster beneficially
owned 231,570 shares of Eagle Common Stock, or 3.5% of the shares entitled to
vote at the Eagle Special Meeting, and the banking and trust subsidiaries of
Webster, as fiduciaries, custodians and agents, held less than one percent of
the shares entitled to vote at the Eagle Special Meeting. Also, as of the Record
Date, directors and executive officers of Webster did not beneficially own any
shares of Eagle Common Stock.
Additional information with respect to beneficial ownership of Eagle Common
Stock by persons and entities owning more than 5% of such stock and more
detailed information with respect to beneficial ownership of Eagle Common Stock
by directors and executive officers of Eagle is incorporated by reference to the
1997 Annual Report on Form 10-K of Eagle. See "INFORMATION INCORPORATED BY
REFERENCE."
BECAUSE APPROVAL OF THE MERGER AGREEMENT REQUIRES THE AFFIRMATIVE VOTE OF
THE HOLDERS OF A MAJORITY OF OUTSTANDING SHARES OF EAGLE COMMON STOCK ENTITLED
TO VOTE THEREON, ABSTENTIONS AND BROKER NON-VOTES WILL HAVE THE SAME EFFECT AS
VOTES AGAINST APPROVAL OF THE MERGER AGREEMENT. ACCORDINGLY, THE EAGLE BOARD
URGES EAGLE STOCKHOLDERS TO COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE.
RECOMMENDATION OF THE EAGLE BOARD
The Eagle Board has (with one director absent) approved the Merger
Agreement and the transactions contemplated thereby. The Eagle Board believes
that the Merger is fair to and in the best interests of Eagle and Eagle
Stockholders and recommends that Eagle Stockholders vote "FOR" approval and
adoption of the Merger Agreement and the Merger. See "THE MERGER --
Recommendation of the Eagle Board of Directors and Reasons for the Merger."
20
<PAGE>
THE MERGER
The information in this section, which describes the material provisions of
the Merger Agreement and the Stock Option Agreement, is qualified in its
entirety by reference to the full text of the Merger Agreement and the Stock
Option Agreement, each of which is set forth as an exhibit to Webster's Current
Report on Form 8-K filed with the SEC on November 24, 1997 and each of which is
incorporated herein by reference. A copy of the Merger Agreement (including each
of the exhibits thereto) and the other documents described in this Joint Proxy
Statement/Prospectus will be provided promptly without charge upon oral or
written request made as described herein. See "AVAILABLE INFORMATION."
THE PARTIES
The Merger Agreement was entered into between Webster and Eagle. The Merger
Agreement provides for, among other things, the merger of Eagle into Webster.
Webster. Webster is a Delaware corporation and the holding company of
Webster Bank, its wholly-owned federal savings bank subsidiary. Both Webster and
Webster Bank are headquartered in Waterbury, Connecticut. Deposits at Webster
Bank are insured by the FDIC. Through Webster Bank, Webster currently serves
customers from 84 banking offices, three commercial banking centers, six trust
offices and more than 100 ATMs located in New Haven, Fairfield, Litchfield,
Hartford and Middlesex Counties in Connecticut. Webster's focus is on providing
financial services to individuals, families and businesses. Webster emphasizes
four business lines: consumer banking, business banking, mortgage banking, and
trust and investment management services, each supported by centralized
administration, marketing, finance and operations. Through its recent
acquisitions of People's Savings Financial Corp. and Sachem Trust National
Association and the resulting formation of its subsidiary Webster Trust Company,
National Association, Webster has established a leading position in the trust
and investment management services market in Connecticut and is able to offer
its customers a greater variety of financial services. Webster's goal is to
provide banking services that are fairly priced, reliable and convenient.
At September 30, 1997, Webster had total consolidated assets of $6.8
billion, total deposits of $4.2 billion, and shareholders' equity of $363
million. Webster Common Stock is quoted on Nasdaq under the symbol "WBST." The
address of Webster's principal executive offices is Webster Financial
Corporation, Webster Plaza, Waterbury, Connecticut 06702, and its telephone
number is (203) 753-2921.
Webster, as a federal savings bank holding company, is regulated by the
OTS. Webster Bank, as a federal savings bank, also is regulated by the OTS, and,
as to certain matters, by the FDIC.
Eagle. Eagle is the holding company of Eagle Bank. As a community oriented
savings bank, Eagle Bank focuses on the financial needs of its customers in its
local markets, seeking to develop long-term deposit and lending relationships.
Through Eagle Bank, Eagle provides consumer banking services through 26
traditional banking offices and four in-store supermarket branch offices in
Connecticut, serving the Torrington, Bristol and Hartford markets. Deposit
accounts at Eagle Bank are insured by the FDIC.
At September 30, 1997, Eagle had total assets of $2.1 billion, deposits of
$1.4 billion and shareholders' equity of $144.7 million. Eagle Common Stock is
quoted on Nasdaq under the symbol "EGFC." The address of Eagle's principal
executive office is Eagle Financial Corp., 222 Main Street, Bristol, Connecticut
06010 and its telephone number is (860) 314-6400.
Eagle, as a federal savings bank holding company, is regulated by the OTS.
Eagle Bank, as a federal savings bank, also is regulated by the OTS and, as to
certain matters, by the FDIC.
BACKGROUND OF THE MERGER
The managements of Webster and Eagle have been familiar with each other for
several years. In 1989, Webster and Eagle announced an agreement to merge, which
agreement was terminated by mutual consent in 1990 due to the prevailing
environment in the banking and financial services industry. After that time and
from time to time, James C. Smith, Chairman and Chief Executive Officer of
21
<PAGE>
Webster, and Robert J. Britton, President and Chief Executive Officer of Eagle,
met and had general discussions concerning the banking and financial services
industry generally and the banking environment in Connecticut in particular.
Mr. Smith and Mr. Britton began a series of discussions in late September
1997 regarding the possibility of a strategic business combination involving
Webster and Eagle. Although no specific terms were discussed at these meetings,
Messrs. Smith and Britton agreed that, in view of the competitive environment in
the banking and financial services industries in Connecticut and generally, and
in view of the trend toward consolidation taking place, a strategic business
combination between the two companies could have benefits for both companies. On
October 6, 1997, management of Webster and management of Eagle met with members
of the Eagle Board to discuss generally the terms of a possible business
combination between Webster and Eagle. From late September 1997 to the date of
the Merger Agreement, Eagle did not receive other offers or solicitations
relating to a potential business combination.
On October 15, 1997, the Eagle Board met with the management of Eagle to
discuss a number of strategic alternatives available to Eagle, including a
possible business combination with a larger institution such as Webster. At this
meeting, the Eagle Board authorized Mr. Britton to retain a financial advisor
with respect to the exploration of such strategic alternatives.
On October 21, 1997, the Eagle Board met with the management of Eagle and
Eagle's financial advisor, Sandler O'Neill. At that meeting, the Eagle Board
reviewed with Eagle management and Sandler O'Neill Eagle's business and
operations and prospects, and Sandler O'Neill discussed a number of strategic
alternatives available to Eagle, including Eagle's strategy of expanding through
internal growth and targeted acquisitions as well as the possibility of a
business combination with a larger institution such as Webster. Following this
meeting, the Eagle Board authorized Mr. Britton to continue to engage in
discussions with Mr. Smith regarding a potential business combination with
Webster.
Later on October 21, 1997, Mr. Smith and Mr. Britton met again and Mr.
Smith indicated that the Executive Committee of the Webster Board had authorized
him to negotiate the terms of a business combination in which Eagle would merge
with and into Webster. Over the next several days, discussions continued between
Mr. Smith and Mr. Britton, other members of Webster and Eagle management and
advisors to each of Webster and Eagle. Also on October 21, 1997, Webster
retained Merrill Lynch as its financial advisor in connection with a possible
business combination with Eagle. As a result of the foregoing discussions, the
financial terms of the Merger, including the Exchange Ratio and the Option with
respect to up to 19.9% of the outstanding shares of Eagle Common Stock issued by
Eagle to Webster, were negotiated and agreed upon by the managements of Webster
and Eagle, subject to approval by their respective Boards of Directors.
Following agreement on the basic financial terms of a business combination,
each of the companies commenced a due diligence review of the other and their
legal representatives commenced negotiation of the terms of a definitive
agreement and plan of merger and a stock option agreement.
At a meeting of the Webster Board on October 24, 1997, senior management of
Webster, together with its legal and financial advisors, reviewed for the
Webster Board the discussions and contacts with Eagle to date, the previous
discussions with and actions of the Executive Committee of the Webster Board and
of Webster management, the financial terms of the proposed Merger and the other
terms of the Merger Agreement. Merrill Lynch reviewed the financial terms of the
Merger and the expected financial and business impact of the Merger on Webster
and rendered its opinion to the Webster Board as to the fairness, from a
financial point of view, of the Exchange Ratio to Webster. Webster's legal
counsel reviewed for the Webster Board its fiduciary obligations under Delaware
law in connection with its consideration of the Merger Agreement and the Merger
and also reviewed the terms of the Merger Agreement and the Stock Option
Agreement. Following discussion among and questions by the members of the
Webster Board to Webster management and its financial and legal representatives,
the members of the Webster Board voted unanimously to approve the Merger
Agreement and the transactions contemplated thereby, including, without
limitation, the Stock Option Agreement.
At a meeting of the Eagle Board on October 26, 1997, senior management of
Eagle, together with its legal and financial advisors, reviewed for the Eagle
Board the discussions and contacts with Webster to date, the previous
discussions with and actions of Eagle management, the financial terms of the
22
<PAGE>
proposed Merger and the other terms of the Merger Agreement. Sandler O'Neill
reviewed the financial terms of the Merger and the expected financial and
business impact of the Merger on the combined company and rendered its opinion
to the Eagle Board as to the fairness, from a financial point of view, of the
Exchange Ratio to Eagle Stockholders. Eagle's legal counsel reviewed for the
Eagle Board its fiduciary obligations under Delaware law in connection with its
consideration of the Merger Agreement and the Merger and also reviewed the terms
of the Merger Agreement and the Stock Option Agreement. Following discussion
among and questions by the members of the Eagle Board to Eagle management and
its financial and legal representatives, the members of the Eagle Board voted
unanimously, with one director absent, to approve the Merger Agreement and the
transactions contemplated thereby, including, without limitation, the Stock
Option Agreement.
RECOMMENDATION OF THE WEBSTER BOARD OF DIRECTORS AND REASONS FOR THE MERGER
The Webster Board has approved the Merger Agreement and has determined that
the Merger is fair to, and in the best interests of, Webster and its
stockholders. THE WEBSTER BOARD RECOMMENDS THAT WEBSTER STOCKHOLDERS VOTE "FOR"
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY. In reaching its decision to approve the Merger Agreement, the Webster
Board consulted with its outside counsel regarding the legal terms of the Merger
and the Webster Board's fiduciary obligations in its consideration of the
Merger, its financial advisor, Merrill Lynch, regarding the financial aspects
and fairness, from a financial point of view, of the proposed Merger Agreement,
as well as with management of Webster, and considered the following:
(i) The Webster Board's familiarity with, and review of, the
business, financial condition, results of operations and
prospects of Webster, including, but not limited to, its
potential growth, development, productivity and profitability and
the business risks associated therewith;
(ii) The current and prospective environment in which Webster
operates, including national and local economic conditions, the
highly competitive environment for financial institutions
generally, the changing regulatory environment and the trend
toward consolidation in the financial services industry;
(iii) Information (including the results of its due diligence review of
Eagle) concerning the business, financial condition, results of
operations, asset quality and prospects of Eagle, including the
Eagle franchise, the future prospects of Eagle's business, the
business potential and strategic market positioning of the
combined company following the proposed Merger, and the potential
cost savings and synergies expected from the Merger and the
business risks associated therewith;
(iv) The premium to the market price of Eagle Common Stock at the
announcement of the Merger represented by the Exchange Ratio and
the financial impact of the Merger on Webster's financial
condition and results of operation, including the fact that the
Merger is expected to be dilutive to book value and tangible book
value per share and accretive to Webster's earnings per share in
the fiscal year in which the Merger is consummated and thereafter
(although the Webster Board considered that the combined
company's ability to achieve such results depends upon various
factors, a number of which will be beyond its control, including
the regulatory environment, economic conditions, unanticipated
changes in business conditions, interest rates and inflation, and
that there can be no assurances in this regard) and that, based
upon the closing price of Webster Common Stock on October 21,
1997, the per share price represented by the Exchange Ratio
represented multiples to Eagle's book value, tangible book value
and projected next fiscal year earnings per share, and an implied
deposit premium, that were higher than corresponding mean figures
for the Comparable Transactions (as defined herein) reviewed in
the Merrill Lynch Report (as defined herein) as a group (see "--
Opinion of Webster's Financial Advisor);
23
<PAGE>
(v) The terms of the Merger Agreement, the Stock Option Agreement and
the transactions and agreements contemplated thereby, including,
without limitation, the fact that the fixed Exchange Ratio
generally provides certainty with respect to the maximum number
of shares of Webster Common Stock that Webster will be required
to issue in connection with the Merger and that the proposed
Merger is expected to qualify as a "reorganization" for purposes
of Section 368 of the Internal Revenue Code of 1986, as amended
(the "Code") and as a pooling-of-interests" for accounting and
financial reporting purposes;
(vi) The fact that three directors of Eagle are expected to become
members of the Webster Board in connection with the Merger, and
that the other nonemployee directors of Eagle will serve on an
advisory board to Webster following consummation of the Merger;
(vii) The opinion of Merrill Lynch that the Exchange Ratio pursuant to
the Merger Agreement is fair to Webster from a financial point of
view (see "-- Opinion of Webster's Financial Advisor");
(viii) The likelihood of receipt of the Requisite Regulatory Approval;
and
(ix) The compatibility with respect to businesses and management
philosophies of Eagle and Webster.
The foregoing discussion of the information and factors considered by the
Webster Board is not intended to be exhaustive but is believed to include all
material factors considered by the Webster Board. In reaching its determination
to approve and recommend the Merger, the Webster Board did not assign any
relative or specific weights to the factors considered, and individual directors
may have given differing weights to different factors. After deliberating with
respect to the Merger and the other transactions contemplated by the Merger
Agreement, considering, among other things, the matters discussed above and the
opinion of Merrill Lynch referred to above, the Webster Board unanimously
approved and adopted the Merger Agreement and the transactions contemplated
thereby, including the Stock Option Agreement, as being fair to, and in the best
interests of, Webster and its stockholders.
RECOMMENDATION OF THE EAGLE BOARD OF DIRECTORS AND REASONS FOR THE MERGER
The Eagle Board has approved the Merger Agreement and has determined that
the Merger is fair to, and in the best interests of, Eagle and the Eagle
Stockholders. THE EAGLE BOARD RECOMMENDS THAT EAGLE STOCKHOLDERS VOTE "FOR"
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY. In reaching its decision to approve the Merger Agreement, the Eagle
Board consulted with its outside counsel regarding the legal terms of the Merger
and the Eagle Board's fiduciary obligations in its consideration of the Merger,
its financial advisor, Sandler O'Neill, regarding the financial aspects and
fairness, from a financial point of view, of the proposed Exchange Ratio, as
well as with management of Eagle, and considered the following:
(i) The Eagle Board's familiarity with, and review of, the business,
financial condition, results of operations and prospects of
Eagle, including, but not limited to, its potential growth,
development, productivity and profitability and the business
risks associated therewith;
(ii) The current and prospective environment in which Eagle operates,
including national and local economic conditions, the highly
competitive environment for financial institutions generally, the
changing regulatory environment, and the trend toward
consolidation in the financial services industry;
(iii) The potential appreciation in market and book value of Eagle
Common Stock on both a short- and long-term basis, as a
stand-alone entity;
(iv) Information (including the results of its due diligence review of
Webster) concerning the business, financial condition, results of
operations, asset quality and prospects of Webster, including the
long-term growth potential of Webster Common Stock, the future
growth prospects of Webster combined with Eagle following the
proposed Merger, and the potential cost savings and synergies
expected from the Merger and the business risks associated
therewith;
24
<PAGE>
(v) The terms of the Merger Agreement, the Stock Option Agreement and
the transactions and agreements contemplated thereby, including,
without limitation, the fact that Webster's offer of Webster
Common Stock in exchange for Eagle Common Stock can be effected
on a tax-free basis for Eagle Stockholders, the proposed
arrangements with respect to the board of directors and
management of the combined company after the Merger and the fact
that directors and executive officers of Eagle could be deemed to
have certain interests in the Merger other than their interests
as Eagle Stockholders (see "--Interests of Certain Persons in the
Merger" and "MANAGEMENT AND OPERATIONS AFTER THE MERGER");
(vi) The potential for appreciation and growth for the market and book
value of Webster Common Stock following the proposed Merger;
(vii) The opinion of Sandler O'Neill that the Exchange Ratio pursuant
to the Merger Agreement is fair to Eagle Stockholders from a
financial point of view (see "-- Opinion of Eagle's Financial
Advisor");
(viii) The advantages and disadvantages of Eagle remaining as an
independent institution or affiliating with a larger institution;
(ix) The Stock Option Agreement, including the possibility that the
existence of the Stock Option or Agreement could discourage third
parties from offering to acquire Eagle by increasing the
financial cost of such an acquisition, and recognizing that
Eagle's entering into the Stock Option Agreement was a condition
to Webster's willingness to enter into the Merger Agreement (see
"-- Stock Option Agreement");
(x) The likelihood of the Requisite Regulatory Approval;
(xi) The short- and long-term interests of Eagle and the Eagle
Stockholders, the interests of the employees, customers,
creditors and suppliers of Eagle, and the interests of the Eagle
community that may be served to advantage by an appropriate
affiliation with a larger institution with increased economies of
scale and with a greater capacity to serve all of the banking
needs of the community; and
(xii) The compatibility with respect to businesses and management
philosophies of Eagle and Webster, and Webster's strong
commitment to the communities it serves.
The foregoing discussion of the information and factors considered by the
Eagle Board is not intended to be exhaustive but is believed to include all
material factors considered by the Eagle Board. In reaching its determination to
approve and recommend the Merger, the Eagle Board did not assign any relative or
specific weights to the factors considered, and individual directors may have
given differing weights to different factors. After deliberating with respect to
the Merger and the other transactions contemplated by the Merger Agreement,
considering, among other things, the matters discussed above and the opinion of
Sandler O'Neill referred to above, the Eagle Board unanimously (with one
director absent) approved and adopted the Merger Agreement and the transactions
contemplated thereby, including the Stock Option Agreement, as being fair to and
in the best interests of Eagle and Eagle Stockholders.
OPINION OF WEBSTER'S FINANCIAL ADVISOR
On October 21, 1997, Webster engaged Merrill Lynch to act as its exclusive
financial advisor in connection with the Merger. Pursuant to the terms of its
engagement, Merrill Lynch agreed to assist Webster in analyzing, structuring,
negotiating and effecting a transaction with Eagle.
Representatives of Merrill Lynch were present at the meeting of the Webster
Board of Directors held on October 24, 1997 at which the Webster Board
considered and approved the Merger Agreement. At that meeting, Merrill Lynch
rendered its oral opinion (the "Merrill Lynch Opinion") that, as of such
25
<PAGE>
date, the Exchange Ratio (see "-- Exchange Ratio") was fair to the holders of
shares of Webster common stock from a financial point of view. Such opinion was
confirmed in writing on October 26, 1997 and again as of the date of this Proxy
Statement.
The full text of Merrill Lynch's written opinion dated as of the date of
this Proxy Statement is attached as Appendix A to this Proxy Statement and is
incorporated herein by reference. The description of the Merrill Lynch Opinion
set forth herein is qualified in its entirety by reference to the full text of
such opinion set forth in Appendix A. Webster shareholders are urged to read the
Merrill Lynch Opinion in its entirety for a description of the procedures
followed, assumptions made, matters considered, and qualifications and
limitations on the review undertaken, by Merrill Lynch in connection therewith.
THE MERRILL LYNCH OPINION IS DIRECTED TO THE WEBSTER BOARD AND ADDRESSES
ONLY THE EXCHANGE RATIO. IT DOES NOT ADDRESS THE UNDERLYING BUSINESS DECISION OF
WEBSTER TO ENGAGE IN THE MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY
WEBSTER STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD VOTE AT THE WEBSTER
MEETING WITH RESPECT TO THE MERGER OR ANY OTHER MATTER IN CONNECTION THEREWITH.
In connection with rendering its opinion dated October 26, 1997, Merrill
Lynch performed a variety of financial analyses, including those summarized
below. The summary set forth below does not purport to be a complete description
of the analyses performed by Merrill Lynch underlying the Merrill Lynch Opinion.
The preparation of a fairness opinion involves various determinations as to the
most appropriate and relevant methods of financial analysis and the application
of these methods to the particular circumstances and, therefore, such an opinion
is not readily susceptible to a partial analysis or summary description.
Accordingly, notwithstanding the separate factors summarized below, Merrill
Lynch believes that its analyses must be considered as a whole and that
selecting portions of its analyses and factors considered by it, without
considering all analyses and factors, or attempting to ascribe relative weights
to some or all such analyses and factors, could create an incomplete view of the
evaluation process underlying the Merrill Lynch Opinion.
In performing its analyses, Merrill Lynch made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Webster, Eagle and
Merrill Lynch. The analyses performed by Merrill Lynch are not necessarily
indicative of actual values or actual future results, which may be significantly
more or less favorable than suggested by such analyses. With respect to the
comparison of selected companies analysis and the analysis of selected bank
merger transactions summarized below, no public company utilized as a comparison
is identical to Webster or Eagle. Accordingly, an analysis of publicly-traded
comparable companies and comparable business combinations is not mathematical;
rather it involves complex considerations and judgments concerning the
differences in financial and operating characteristics of the companies and
other factors that could affect the public trading values of the companies
concerned. The analyses do not purport to be appraisals or to reflect the prices
at which Webster or Eagle might actually be sold or the prices at which any
securities may trade at the present time or at any time in the future. Merrill
Lynch was not asked to consider, and the Merrill Lynch Opinion does not in any
manner address, the price at which shares of Webster Common Stock will actually
trade following consummation of the Merger. In addition, as described below, the
Merrill Lynch Opinion was among many factors taken into consideration by the
Webster Board in making its determination to approve the Merger Agreement (see
"-- Recommendation of the Board and Reasons for the Merger"). Consequently, the
Merrill Lynch analyses described below should not be viewed as determinative of
the decision of the Webster Board or Webster's management with respect to the
Merger.
In arriving at its opinion, Merrill Lynch, among other things, reviewed
certain publicly available business and financial information relating to
Webster and Eagle, as well as a draft of the Merger Agreement. Merrill Lynch
also reviewed certain other information, including financial forecasts for
Webster and Eagle, as well as information regarding cost savings and related
expenses expected to result from the Merger (the "Expected Synergies") provided
to it by Webster, and met with members of senior management of Webster to
discuss the businesses and prospects of Webster and Eagle, before and after
giving effect to the Merger, and the Expected Synergies.
26
<PAGE>
Merrill Lynch reviewed certain financial and stock market data for Webster
and Eagle and compared that data with similar data for other publicly-held
companies that Merrill Lynch deemed to be relevant. In addition, Merrill Lynch
considered the financial terms of certain other transactions which Merrill Lynch
deemed relevant. Merrill Lynch also considered the pro forma impact of the
Merger. Merrill Lynch reviewed such other financial studies and analyses and
performed such other investigations and took into account such other matters as
it deemed necessary, including its assessment of general economic, market and
monetary conditions.
In preparing its opinion, Merrill Lynch relied on the accuracy and
completeness of all financial and other information supplied or otherwise made
available to Merrill Lynch, discussed with or reviewed by or for Merrill Lynch,
or publicly available. Merrill Lynch has not assumed responsibility for
independently verifying such information, has not undertaken an independent
evaluation or appraisal of the assets or liabilities, contingent or otherwise,
of Webster or Eagle or any of their subsidiaries and was not furnished with any
such evaluation or appraisal. Merrill Lynch is not an expert in the evaluation
of allowances for loan losses and has not made an independent evaluation of the
adequacy of the allowances for loan losses of each of Webster or Eagle, nor has
Merrill Lynch reviewed any individual credit files relating to Webster or Eagle,
and Merrill Lynch has assumed that the aggregate allowance for loan losses for
each of Webster and Eagle is adequate to cover such losses and will be adequate
on a pro forma basis for the combined entity. In addition, Merrill Lynch has not
assumed any obligation to conduct, nor has it conducted any physical inspection
of the properties or facilities of Webster or Eagle. Merrill Lynch also assumed
and relied upon the senior management of Webster and Eagle as to the
reasonableness and achievability of the financial forecasts (and the assumptions
and bases therefore) provided to, and discussed with, Merrill Lynch. In that
regard, Merrill Lynch has assumed with Webster's consent that such forecasts,
including, without limitation, financial forecasts, evaluations of contingencies
and projections regarding under-performing and non-performing assets, net
charge-offs, adequacy of reserves, future economic conditions, results of
operations, and the Expected Synergies furnished to or discussed with Merrill
Lynch by Webster reflect the best currently available estimates, allocations and
judgment of Webster's senior management as to the expected future financial
performance of Webster, Eagle and the combined entity, as the case may be.
Merrill Lynch expressed no opinion as to such financial forecast information or
the Expected Synergies or the assumptions on which they were based. In addition,
Merrill Lynch assumed that the Merger will be accounted for as a
pooling-of-interests under generally accepted accounting principles and that it
will qualify as a tax-free reorganization for United States Federal income tax
purposes.
The Merrill Lynch Opinion was necessarily based upon market, economic and
other conditions as they existed on, and could be evaluated as of, the date of
such opinion. For purposes of rendering its opinion Merrill Lynch assumed, in
all respects material to its analysis, that the representations and warranties
of each party to the Merger Agreement and all related documents and instruments
(collectively, the "Documents") contained therein are true and correct, that
each party to the Documents will perform all of the covenants and agreements
required to be performed by such party under such Documents and that all
conditions to the consummation of the Merger will be satisfied without waiver
thereof. Merrill Lynch also assumed that in the course of obtaining the
necessary regulatory or other consents or approvals (contractual or otherwise)
for the Merger, no restrictions, including any divestiture requirements or
amendments or modifications, will be imposed that will have a material adverse
effect on the contemplated benefits of the Merger.
The projections furnished to Merrill Lynch and used by it in certain of its
analyses were prepared by the senior management of Webster. Webster does not
publicly disclose internal management projections of the type provided to
Merrill Lynch in connection with its review of the merger, and as a result, such
projections were not prepared with a view towards public disclosure. The
projections were based on numerous variables and assumptions which are
inherently uncertain, including, without limitation, factors related to general
economic and competitive conditions, and accordingly, actual results could vary
significantly from those set forth in such projections.
The following is a summary of the material analyses presented by Merrill
Lynch to the Webster Board of Directors on October 24, 1997 (the "Merrill Lynch
Report"), in connection with its fairness opinion.
27
<PAGE>
Summary of Proposal. Merrill Lynch reviewed the terms of the proposed
transaction, including the Exchange Ratio and the implied aggregate transaction
value. Based on Webster's closing stock price of $65.25 on October 21, 1997,
Merrill Lynch calculated an implied transaction value per share of Eagle of
$54.81, and an implied total transaction value of approximately $358 million.
Merrill Lynch calculated the price to market, price to book, price to tangible
book, implied deposit premium (defined as the transaction value minus the
tangible book value divided by total deposits), price to projected 1998 and 1999
earnings multiples, projected 1998 cash earnings multiple and projected 1998
cash earnings multiples including fully phased-in expected synergies after-tax
for Eagle in the Merger based on such implied total transaction value. This
analysis yielded a price to market multiple of 1.30x , a price to book value
multiple of 2.45x, a price to tangible book value multiple of 3.08x, an implied
deposit premium of 17.92%, a price to projected 1998 earnings multiple of 18.76x
(assuming reported average earnings estimates based on data from First Call), a
price to projected 1998 cash earnings multiple of 16.25x and a price to
projected 1998 cash earnings multiple including fully phased-in expected
synergies after-tax of 11.51x.
Pro Forma Merger Analysis. Based on projections provided by Webster,
including the assumption of after-tax fully-phased-in expected synergies of
approximately $14.3 million in 1999 and after-tax reorganization charges of
approximately $13.3 million, Merrill Lynch analyzed certain pro forma effects of
the Merger. This analysis indicated that the transaction would be accretive to
projected earnings per share of Webster Common Stock in 1998 and thereafter, and
that the Merger would be dilutive to Webster's book value and tangible book
value per share at the assumed closing of the Merger on March 31, 1998. In this
analysis, Merrill Lynch assumed that Webster performed in accordance with the
earnings forecasts and Expected Synergies provided to Merrill Lynch by Webster's
senior management.
Discounted Dividend Stream Analysis. Using a discounted dividend stream
analysis, Merrill Lynch estimated the present value of the future streams of
after-tax cash flows that Eagle could produce and distribute to shareholders
("dividendable net income") assuming an after-tax expected synergies of $14.3
million in 1999 and an after-tax restructuring charge of $13.3 million in 1997.
Merrill Lynch assumed that Eagle performed in accordance with earnings forecasts
provided to Merrill Lynch by Webster's senior management and that Eagle's
tangible common equity to tangible asset ratio would be maintained at a minimum
5% level. Merrill Lynch estimated the terminal values for the Eagle common stock
at 12.00 to 14.00 times Eagle's 2003 estimated operating income (defined as net
income before amortization of intangibles). The dividendable net income streams
and terminal values were then discounted to present values using different
discount rates (ranging from 12.0% to 14.0%) chosen to reflect different
assumptions regarding required rates of return of holders or prospective buyers
of Eagle Common Stock. This discounted dividend stream analysis indicated a
reference range of $53.29 to $64.62 per share for Eagle Common Stock. As
indicated above, this analysis was based on Eagle management estimates and is
not necessarily indicative of actual values or actual future results and does
not purport to reflect the prices at which any securities may trade at the
present or at any time in the future. Merrill Lynch noted that the discounted
dividend stream analysis is a widely used valuation methodology, but the results
of such methodology are highly dependent upon the numerous assumptions that must
be made, including earnings growth rates, dividend payout rates, terminal values
and discount rates.
Analysis of Selected Thrift Merger Transactions. Merrill Lynch reviewed
publicly available information regarding 17 thrift merger transactions with a
value greater than $100 million and less than $900 million which had occurred in
the United States since January 1, 1997 that it deemed to be relevant (the
"Comparable Transactions"). Merrill Lynch compared the price to market, price to
book value, price to tangible book value, price to projected earnings and the
implied deposit premium paid in the Merger to the corresponding ratios for the
Comparable Transactions. This analysis yielded a range of (i) price to market
multiples of 1.03x to 1.73x with a mean of 1.33x and an upper quartile mean of
1.61 (compared with multiple of 1.30x for Eagle in the Merger), (ii) price to
book value multiples of 1.51x to 4.80x with a mean of 2.20x and an upper
quartile mean of 3.24x (compared with a multiple of 2.45x for Eagle in the
Merger), (iii) price to tangible book value multiples of 1.51x to 4.80x with a
mean of 2.27x and an upper quartile mean of 3.33x (compared with a multiple of
3.08x for Eagle in the Merger), (iv) price to projected earnings multiples of
12.14x to 24.02x with a mean of 16.79x and an upper quartile mean of 20.78x
(compared with a multiple of 18.76x for Eagle in the merger), and (v) implied
deposit premiums
28
<PAGE>
paid of 7.56% to 43.83% with a mean of 18.11% and an upper quartile mean of
30.99% (compared with an implied deposit premium of 17.92% for Eagle in the
Merger).
No company or transaction used in the above analysis as a comparison is
identical to Eagle or the Merger respectively. Accordingly, an analysis of the
results of the foregoing necessarily involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies and other factors that could affect the public trading values or
announced merger transaction values as the case may be, of Eagle and the
companies to which they are being compared.
Comparison of Selected Comparable Companies -- Eagle. In connection with
the Merrill Lynch Opinion, Merrill Lynch compared selected operating and stock
market results of Eagle to the publicly available corresponding data of certain
other companies which Merrill Lynch deemed to be relevant, including Andover
Bancorp Inc., Bancorp Connecticut, Inc., CFX Corp., Dime Financial Corp., First
Essex Bancorp Inc., FirstFed America Bancorp Inc., First Federal of East
Hartford, Mechanics Savings Bank, Medford Savings Bank, SIS Bancorp Inc., and
Warren Bancorp Inc. (collectively the "Eagle Composite"). This comparison
showed, among other things, that as for the latest quarter ended September 30,
1997 (i) Eagle's ratio of noninterest expense to average assets was 1.82%
compared to a mean of 1.70% and a median of 1.72% for the Eagle Composite, (ii)
Eagle's ratio of noninterest income to average assets was 0.36% compared to a
mean of 0.45% and a median of 0.32% for the Eagle Composite, (iii) Eagle's net
interest margin was 3.31% compared with a mean 3.54% and a median of 3.44% for
the Eagle Composite, (iv) Eagle's efficiency ratio (defined as noninterest
expenses divided by the sum of noninterest income and net interest income before
provision for loan losses) was 49.32% compared with a mean of 55.82% and a
median of 57.13% for the Eagle Composite, (v) Eagle's return on average assets
was 0.84% compared to a mean of 1.14% and a median of 1.06% for the Eagle
Composite, and (vi) Eagle's return on average common equity was 12.18% compared
to a mean of 13.07% and a median of 12.42% for the Eagle Composite. This
comparison also indicated that (i) at September 30, 1997, (A) Eagle's tangible
common equity to tangible asset ratio was 5.57% compared to a mean of 8.86% and
a median of 8.42% for the Eagle Composite, (B) Eagle's ratio of equity to assets
was 6.90% compared with a mean of 9.03% and a median of 8.71% for the Eagle
Composite, (C) Eagle's Tier 1 leverage ratio was 16.86% compared with a mean of
15.39% and a median of 14.85% for the Eagle Composite, (D) Eagle's ratio of
nonperforming loans to total loans was 0.39% compared with a mean of 0.87% and a
median of 0.81% for the Eagle Composite, (E) Eagle's ratio of nonperforming
assets to total assets was 0.39% compared with a mean of 0.62% and a median of
0.58% for the Eagle Composite, (F) Eagle's ratio of loan loss reserves to
nonperforming assets was 118.62% compared with a mean of 196.11% and a median of
152.02% for the Eagle Composite, (G) Eagle's ratio of loan loss reserves to
nonperforming loans was 218.07% compared with a mean of 227.11% and a median of
181.81% for the Eagle Composite, (ii) as of October 21, 1997 (H) the ratio of
Eagle's market price to estimated earnings for the twelve- month period ending
December 31, 1997 was 16.13x compared to a mean of 15.75x and a median of 15.21x
for the Eagle Composite (assuming reported average earnings estimates based on
data from First Call, for both Eagle and the Eagle Composite), (I) the ratio of
Eagle's market price to estimated cash earnings for the twelve-month period
ending December 31, 1997 was 13.68x compared to a mean of 15.43x and a median of
14.07x for the Eagle Composite, (J) the ratio of Eagle's market price to
estimated earnings for the twelve-month period ending December 31, 1998 was
14.50x compared to a mean of 15.08x and a median of 14.49x for the Eagle
Composite, (K) the ratio of Eagle's market price to estimated cash earnings for
the twelve-month period ending December 31, 1998 was 12.49x compared to a mean
of 14.77x and a median of 14.12x for the Eagle Composite, (L) the ratio of
Eagle's market price to book value per share at September 30, 1997 was 1.82x
compared to a mean of 1.78x and a median of 1.76x for the Eagle Composite, (M)
the ratio of Eagle's market price to tangible book value per share at September
30, 1997 was 2.28x compared to a mean of 1.82x and a median of 1.83x for the
Eagle Composite, and (N) Eagle's dividend yield was 2.40% compared to a mean of
1.84% and a median of 2.01% for the Eagle Composite.
Discounted Dividend Stream Analysis -- Webster. Using a discounted dividend
stream analysis, Merrill Lynch estimated the dividendable net income of Webster
on a stand-alone basis from 1997 through 2002. Merrill Lynch assumed that
Webster performed in accordance with the earnings forecasts provided to Merrill
Lynch by Webster's senior management and that Webster's tangible common equity
29
<PAGE>
to tangible asset ratio would be maintained at a minimum 5% level. Merrill Lynch
estimated the terminal values for the Webster common stock at 12.00 and 14.00
times Webster's 2003 estimated operating income (defined as net income before
amortization of intangibles). The dividendable net income streams and terminal
values were then discounted to present values using different discount rates
(ranging from 12.0% to 14.0%) chosen to reflect different assumptions regarding
required rates of return of holders or prospective buyers of Webster Common
Stock. This discounted dividend stream analysis indicated a median reference
value of $60.94 per share for Webster Common Stock. As indicated above, this
analysis is not necessarily indicative of actual values or actual future results
and does not purport to reflect the prices at which any securities may trade at
the present or at any time in the future. Merrill Lynch noted that the
discounted dividend stream analysis is a widely used valuation methodology, but
the results of such methodology are highly dependent upon the numerous
assumptions that must be made, including earnings growth rates, dividend payout
rates, terminal values and discount rates.
Comparison of Selected Comparable Companies -- Webster. Merrill Lynch
compared selected operating and stock market results of Webster to the publicly
available corresponding data of certain other companies which Merrill Lynch
deemed to be relevant, including Affiliated Community Bancorp, ALBANK Financial
Corp., Andover Bancorp Inc., CFX Corp., First Essex Bancorp Inc., Peoples
Heritage Financial Group, SIS Bancorp Inc., ONBANCorp Inc. (collectively the
"Webster Composite"). This comparison showed, among other things, that as for
the latest quarter ended September 30, 1997 (i) Webster's ratio of noninterest
expense to average assets was 1.33% compared to a mean of 1.69% and a median of
1.66% for the Webster Composite, (ii) Webster's ratio of noninterest income to
average assets was 0.51% compared to a mean of 0.53% and a median of 0.49% for
the Webster Composite, (iii) Webster's net interest margin was 3.17% compared
with a mean 3.63% and a median of 3.50% for the Webster Composite, (iv)
Webster's efficiency ratio (defined as noninterest expenses divided by the sum
of noninterest income and net interest income before provision for loan losses)
was 51.86% compared with a mean of 55.40% and a median of 52.83% for the Webster
Composite, (v) Webster's return on average assets was 0.90% compared to a mean
of 0.98% and a median of 0.98% for the Webster Composite, and (vi) Webster's
return on average common equity was 16.72% compared to a mean of 12.62% and a
median of 12.24% for the Webster Composite. This comparison also indicated that
(i) at September 30, 1997, (A) Webster's tangible common equity to tangible
asset ratio was 4.63% compared to a mean of 7.55% and a median of 7.74% for the
Webster Composite, (B) Webster's ratio of equity to assets was 5.34% compared
with a mean of 7.99% and a median of 7.78% for the Webster Composite, (C)
Webster's Tier 1 leverage ratio was 12.39% compared with a mean of 12.91% and a
median of 12.57% for the Webster Composite, (D) Webster's ratio of nonperforming
loans to total loans was 1.01% compared with a mean of 0.83% and a median of
0.85% for the Webster Composite, (E) Webster's ratio of nonperforming assets to
total assets was 0.72% compared with a mean of 0.59% and a median of 0.57% for
the Webster Composite, (F) Webster's ratio of loan loss reserves to
nonperforming assets was 106.07% compared with a mean of 166.29% and a median of
137.83% for the Webster Composite, (G) Webster's ratio of loan loss reserves to
nonperforming loans was 136.60% compared with a mean of 191.85% and a median of
169.60% for the Webster Composite, (ii) as of October 21, 1997 (H) the ratio of
Webster's market price to estimated earnings for the twelve-month period ending
December 31, 1997 was 17.04x compared to a mean of 16.40x and a median of 16.52x
for the Webster Composite (assuming reported average earnings estimates based on
data from First Call, for both Webster and the Webster Composite), (I) the ratio
of Webster's market price to estimated cash earnings for the twelve-month period
ending December 31, 1997 was 15.32x compared to a mean of 15.61x and a median of
15.40x for the Webster Composite, (J) the ratio of Webster's market price to
estimated earnings for the twelve- month period ending December 31, 1998 was
15.35x compared to a mean of 14.77x and a median of 14.49x for the Webster
Composite, (K) the ratio of Webster's market price to estimated cash earnings
for the twelve-month period ending December 31, 1998 was 13.94x compared to a
mean of 14.12x and a median of 13.83x for the Webster Composite, (L) the ratio
of Webster's market price to book value per share at September 30, 1997 was
2.43x compared to a mean of 2.00x and a median of 1.83x for the Webster
Composite, (M) the ratio of Webster's market price to tangible book value per
share at September 30, 1997 was 2.82x compared to a mean of 2.14x and a median
of 1.90x for the Webster Composite, and (N) Webster's dividend yield was 1.28%
compared to a mean of 2.18% and a median of 2.07% for the Webster Composite.
30
<PAGE>
In connection with its opinion dated as of the date of this Proxy
Statement, Merrill Lynch performed procedures to update, as necessary, certain
of the analyses described above and reviewed the assumptions on which such
analyses described above were based and the factors considered in connection
therewith. Merrill Lynch did not perform any analyses in addition to those
described above in updating its October 24, 1997 opinion.
Merrill Lynch was retained by the Webster Board as an independent
contractor to act as financial advisor to Webster in connection with the Merger.
Webster retained Merrill Lynch based upon Merrill Lynch's experience and
expertise. Merrill Lynch is an internationally recognized investment banking and
advisory firm. Merrill Lynch, as part of its investment banking business, is
continuously engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes. Merrill Lynch has, in the past,
provided financial advisory and financing services to Webster and may continue
to do so and has received, and may receive, fees for the rendering of such
services. In the ordinary course of its business, Merrill Lynch and its
affiliates may actively trade the debt and/or equity securities of Webster and
Eagle and their respective affiliates for their own account and for the accounts
of customers and, accordingly, may at any time hold a long or short position in
such securities.
Webster and Merrill Lynch have entered into a letter agreement dated
October 21, 1997 relating to the services to be provided by Merrill Lynch in
connection with the Merger. Webster has agreed to pay Merrill Lynch fees as
follows: (i) a cash fee of $50,000, which was paid upon the execution of the
letter agreement, (ii) a cash fee of $150,000, which was paid upon execution of
the Merger Agreement; and (iii) a cash fee of $1,050,000, payable at the Closing
of the Merger. In such letter, the Company also agreed to reimburse Merrill
Lynch for its reasonable out-of-pocket expenses incurred in connection with its
advisory work, including the reasonable fees and disbursements of its legal
counsel, and to indemnify Merrill Lynch against certain liabilities relating to
or arising out of the Merger, including liabilities under the United States
securities laws.
OPINION OF EAGLE'S FINANCIAL ADVISOR
Pursuant to an engagement letter dated as of October 20, 1997 (the "Sandler
O'Neill Agreement"), Eagle retained Sandler O'Neill as an independent financial
advisor in connection with Eagle's consideration of a possible business
combination with Webster. Sandler O'Neill is a nationally-recognized investment
banking firm whose principal business specialty is banks and savings
institutions. As part of its investment banking business, Sandler O'Neill is
regularly engaged in the valuation of such businesses and their securities in
connection with mergers and acquisitions and other corporate transactions.
Pursuant to the terms of the Sandler O'Neill Agreement, Sandler O'Neill
acted as financial advisor to Eagle in connection with the Merger. In connection
therewith, the Eagle Board requested Sandler O'Neill to render its opinion as to
the fairness, from a financial point of view, of the Exchange Ratio to the
holders of shares of Eagle Common Stock. At the October 26, 1997 meeting at
which the Eagle Board approved and adopted the Merger Agreement, Sandler O'Neill
delivered to the Eagle Board its oral opinion, subsequently confirmed in
writing, that, as of such date, the Exchange Ratio was fair, from a financial
point of view, to such stockholders. Sandler O'Neill also delivered to the Eagle
Board a written opinion (the "Sandler O'Neill Fairness Opinion"), dated the date
of this Proxy Statement, which states that the Exchange Ratio is fair, from a
financial point of view, to such stockholders and is substantially identical to
the October 26, 1997 opinion. THE FULL TEXT OF THE SANDLER O'NEILL FAIRNESS
OPINION, WHICH SETS FORTH THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS
CONSIDERED AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN, IS
ATTACHED AS APPENDIX B TO THIS PROXY STATEMENT AND IS INCORPORATED HEREIN BY
REFERENCE. THE DESCRIPTION OF SUCH OPINION SET FORTH HEREIN IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO APPENDIX B. HOLDERS OF SHARES OF EAGLE COMMON STOCK ARE
URGED TO READ THE SANDLER O'NEILL FAIRNESS OPINION IN ITS ENTIRETY IN CONNECTION
WITH THEIR CONSIDERATION OF THE PROPOSED MERGER.
THE SANDLER O'NEILL FAIRNESS OPINION WAS PROVIDED TO THE EAGLE BOARD FOR
ITS INFORMATION AND IS DIRECTED ONLY TO THE FAIRNESS, FROM A FINANCIAL POINT OF
VIEW, OF THE EXCHANGE RATIO TO HOLDERS OF SHARES OF EAGLE COMMON STOCK. IT DOES
NOT ADDRESS THE UNDERLYING BUSINESS DECISION OF EAGLE TO ENGAGE IN THE MERGER
31
<PAGE>
OR ANY OTHER ASPECT OF THE MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION TO
ANY HOLDER OF SHARES OF EAGLE COMMON STOCK AS TO HOW SUCH STOCKHOLDER SHOULD
VOTE AT THE SPECIAL MEETING WITH RESPECT TO THE MERGER AGREEMENT OR ANY OTHER
MATTER RELATED THERETO.
In connection with rendering its opinion on October 26, 1997, Sandler
O'Neill performed a variety of financial analyses. The following is a summary of
such analyses, but does not purport to be a complete description of Sandler
O'Neill's analyses. The preparation of a fairness opinion is a complex process
involving subjective judgments and is not necessarily susceptible to a partial
analysis or summary description. Sandler O'Neill believes that its analyses must
be considered as a whole and that selecting portions of such analyses and the
factors considered therein, without considering all factors and analyses, could
create an incomplete view of the analyses and processes underlying its opinion.
In performing its analyses, Sandler O'Neill made numerous assumptions with
respect to industry performance, business and economic conditions, and various
other matters, many of which cannot be predicted and are beyond the control of
Eagle, Webster, and Sandler O'Neill. Any estimates contained in Sandler
O'Neill's analyses are not necessarily indicative of future results or values,
which may be significantly more or less favorable than such estimates. Estimates
on the values of companies do not purport to be appraisals or necessarily
reflect the prices at which companies or their securities may actually be sold.
Because such estimates are inherently subject to uncertainty, none of Eagle,
Webster, or Sandler O'Neill assumes responsibility for their accuracy.
Stock Trading History. Sandler O'Neill reviewed the history of the reported
trading prices and volume of Eagle Common Stock and Webster Common Stock, and
the relationship between the movements in the prices of Eagle Common Stock and
Webster Common Stock, respectively, to movements in the following stock indices:
the Standard & Poor's 500 Index, the Nasdaq Banking Index, and composite groups
of publicly-traded savings institutions selected by Sandler O'Neill.
Analysis of Selected Publicly-Traded Companies. Sandler O'Neill used
publicly available information to compare selected financial and market trading
information, including balance sheet composition, asset quality ratios, loan
loss reserve levels, profitability, capital adequacy, dividends and trading
multiples, for Eagle and two different groups of selected savings institutions.
The first group consisted of Eagle, Webster and the following 12 publicly-traded
regional savings institutions (the "Regional Group"): Astoria Financial Corp.;
Long Island Bancorp Inc.; ALBANK Financial Corp.; TR Financial Corp.; Roslyn
Bancorp Inc.; CFX Corp.; Reliance Bancorp Inc.; Haven Bancorp Inc.; Queens
County Bancorp Inc.; JSB Financial Inc.; SIS Bancorp Inc.; and Ocean Financial
Corp. Sandler O'Neill also compared Eagle to a group of 12 publicly-traded
savings institutions which had a return on average equity (based on last quarter
annualized earnings) of 14% or greater and a price to tangible book value of
greater than 210% (the "Eagle Highly-Valued Group"). The Eagle Highly-Valued
Group was comprised of: Peoples Heritage Financial Group; Washington Federal
Inc.; TR Financial Corp.; MAF Bancorp Inc.; BankAtlantic Bancorp Inc.; Ocwen
Financial Corp.; Anchor BanCorp Wisconsin; InterWest Bancorp Inc.; D&N Financial
Corp.; First Financial Holdings Inc.; First Federal Capital Corp.; and WSFS
Financial Corp. The analysis compared publicly available financial information
for Eagle and each of the groups as of and for each of the years ended December
31, 1992 through December 31, 1996 and as of and for the twelve months ended
September 30, 1997 (although in the case of certain institutions included in the
composite groups, the information was as of or for the twelve months ended June
30, 1997).
Sandler O'Neill also used publicly available information to perform a
similar comparison of selected financial and market trading information for
Webster and two different groups of savings institutions. The first group
consisted of Webster and the following 8 publicly-traded savings institutions
(the "Peer Group"): Dime Bancorp Inc.; GreenPoint Financial Corp.; Astoria
Financial Corp.; People's Bank; Peoples Heritage Financial Group; Long Island
Bancorp Inc.; ALBANK Financial Corp.; and TR Financial Corp. Sandler O'Neill
also compared Webster to a group of 6 publicly-traded savings institutions which
had a return on average equity (based on last quarter annualized earnings) of
14% or greater and a price to tangible book value of greater than 210% (the
"Webster Highly-Valued Group"). The Webster Highly-Valued Group was comprised
of: Charter One Financial; Commercial Federal Corp.; Peoples Heritage Financial
Group; Washington Federal Inc.; TR Financial Corp.; and MAF Bancorp Inc. The
analysis compared publicly available financial information for Webster and each
of the groups as of and
32
<PAGE>
for each of the years ended December 31, 1992 through December 31, 1996 and as
of or for the twelve months ended September 30, 1997.
Analysis of Selected Merger Transactions. Sandler O'Neill reviewed 45
transactions announced from January 1, 1997 to October 15, 1997 (the "Analysis
Period") involving public savings institutions nationwide as acquired
institutions with transaction values over $15 million ("All Transactions"), 13
transactions announced during the Analysis Period involving public savings
institutions in the Mid-Atlantic (Connecticut, New Hampshire, New Jersey and New
York) Region ("Regional Transactions"), and two transactions announced since
October 8, 1996 in which Webster was the acquiror ("Webster Transactions").
Sandler O'Neill reviewed the ratios of price to last twelve months earnings
per share, price to tangible book value, price to book value, tangible book
premium to core deposits, price to total assets, and price to total deposits in
each transaction and computed high, low, mean, and median ratios and premiums
for the respective groups of transactions. These multiples were applied to
Eagle's financial information as of and for the three months (annualized) and
the twelve months ended September 30, 1997. Based upon the median multiples for
All Transactions, Sandler O'Neill derived an imputed range of values per share
of Eagle Common Stock of $33.38 to $61.06. Based upon the median multiples for
Regional Transactions, Sandler O'Neill derived an imputed range of values per
share of Eagle Common Stock of $35.87 to $51.93. Based upon the median multiples
for Webster Transactions, Sandler O'Neill derived an imputed range of values per
share of the Eagle Common Stock of $27.33 to $48.70.
Discounted Dividend Stream and Terminal Value Analysis. Sandler O'Neill
also performed an analysis which estimated the future stream of after-tax
dividend flows of Eagle through 2002 under various circumstances, assuming that
Eagle performed in accordance with the earnings forecasts of its management. To
approximate the terminal value of Eagle Common Stock at the end of the five-year
period, Sandler O'Neill applied price to earnings multiples ranging from 11x to
23x and applied multiples of tangible book value ranging from 150% to 400%. The
dividend income streams and terminal values were then discounted to present
values using different discount rates (ranging from 10% to 18%) chosen to
reflect different assumptions regarding required rates of return of holders or
prospective buyers of Eagle Common Stock. This analysis, assuming the current
dividend payout ratio, indicated an imputed range of values per share of Eagle
Common Stock of between $20.81 and $56.58 when applying the price to earnings
multiples, and an imputed range of values per share of Eagle Common Stock of
between $23.16 and $80.03 when applying multiples of tangible book value. In
connection with its analysis, Sandler O'Neill extensively used sensitivity
analyses to illustrate the effects changes in the underlying assumptions
(including variations with respect to the growth rate of assets, net interest
spread, non-interest income, non-interest expenses and dividend payout ratio)
would have on the resulting present value, and discussed these changes with the
Eagle Board.
Pro Forma Merger Analysis. Sandler O'Neill performed pro forma merger
analyses that combined Webster's and Eagle's current and estimated income
statements and balance sheets based on projections provided by management of
Webster and management of Eagle. Assumptions and analyses of the economic
environment, accounting treatment, acquisition adjustments, operating
efficiencies, balance sheet enhancements, and other adjustments were used to
arrive at a base case pro forma analysis to determine the pro forma effect of
the Merger on Webster. Sandler O'Neill used an exchange ratio of .84 shares of
Webster Common Stock for each share of Eagle Common Stock in analyzing the
projections of Webster's pro forma earnings per share and tangible book value
per share. This analysis indicated that the Merger would be accretive to
Webster's earnings per share in each of the years ended September 30, 1998
through 2002, and slightly dilutive to tangible book value per share for all
periods analyzed, approaching zero dilution by 2002. Based upon the same
assumptions, this analysis indicated that the Merger would be accretive to an
Eagle shareholder's earnings per share and tangible book value per share and
dilutive to dividends per share when compared to Eagle's stand-alone
projections. This analysis was based on estimates of expected cost savings and
other consolidation efficiencies to be achieved following the Merger, and
numerous other assumptions, including assumptions with respect to the
anticipated expenses and non-recurring charges to be incurred by Webster in
connection with the Merger. The actual results achieved by the combined company
will vary from the estimated results and the variations may be material.
33
<PAGE>
Contribution Analysis. Sandler O'Neill reviewed the relative contributions
to, among other things, total assets, net loans, total deposits, total
liabilities, total equity, projected net income for the year ended September 30,
1998 and market capitalization to be made by Eagle and Webster to the combined
institution based on data at and for the twelve months ended September 30, 1997.
This analysis indicated that Eagle's implied contribution was 23.6% of total
assets, 23.0% of net loans, 24.1% of total deposits, 23.2% of total liabilities,
28.6% of total equity, 23.6% of projected net income for the year ended
September 30, 1998 and 23.3% of market capitalization. Based upon an Exchange
Ratio of 0.84, holders of Eagle Common Stock would own approximately 28.3% of
the outstanding shares of the combined company.
In connection with rendering its October 26, 1997 opinion, Sandler O'Neill
reviewed, among other things: (i) the Merger Agreement and exhibits thereto;
(ii) the Stock Option Agreement; (iii) Webster's audited consolidated financial
statements and management's discussion and analysis of financial condition and
results of operations contained in its Annual Report on Form 10-K for the year
ended December 31, 1996; (iv) Eagle's audited consolidated financial statements
and management's discussion and analysis of financial condition and results of
operations contained in its Annual Report on Form 10-K for the fiscal year ended
September 30, 1996; (v) Webster's unaudited consolidated financial statements
and management's discussion and analysis of the financial condition and results
of operations contained in its Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1997 and June 30, 1997; (vi) Eagle's unaudited consolidated
financial statements and management's discussion and analysis of financial
condition and results of operations contained in its Quarterly Reports on Form
10-Q for the quarters ended December 31, 1996, March 31, 1997 and June 30, 1997;
(vii) preliminary financial information prepared by the senior management of
Eagle concerning Eagle's financial condition and results of operations for the
three months and the fiscal year ended September 30, 1997; (viii) preliminary
financial information prepared by the senior management of Webster concerning
Webster's financial condition and results of operations for the three months and
nine months ended September 30, 1997; (ix) certain financial analyses and
forecasts of Eagle prepared by and reviewed with management of Eagle and the
views of senior management of Eagle regarding Eagle's past and current business
operations, results thereof, financial condition and future prospects; (x)
certain financial analyses and forecasts of Webster prepared by and reviewed
with management of Webster and the views of senior management of Webster
regarding Webster's past and current business operations, results thereof,
financial condition, and future prospects; (xi) the pro forma impact of the
Merger; (xii) the publicly reported historical price and trading activity for
Webster Common Stock and Eagle Common Stock, including a comparison of certain
financial and stock market information for Webster and Eagle with similar
publicly available information for certain other companies the securities of
which are publicly traded; (xiii) the financial terms of recent business
combinations in the savings institution industry, to the extent publicly
available; (xiv) the current market environment generally and the banking
environment in particular; and (xv) such other information, financial studies,
analyses and investigations, and financial, economic, and market criteria as
Sandler O'Neill considered relevant. Sandler O'Neill was not asked to, and did
not, solicit indications of interest in a potential transaction from other third
parties.
In connection with rendering the Sandler O'Neill Fairness Opinion, Sandler
O'Neill confirmed the appropriateness of its reliance on the analyses used to
render its October 26, 1997 opinion by performing procedures to update certain
of such analyses and by reviewing the assumptions upon which such analyses were
based and the factors considered in connection therewith.
In performing its reviews, Sandler O'Neill assumed and relied upon, without
independent verification, the accuracy and completeness of all the financial
information, analyses and other information that was publicly available or
otherwise furnished to, reviewed by or discussed with it, and Sandler O'Neill
does not assume any responsibility or liability therefor. Sandler O'Neill did
not make an independent evaluation or appraisal of the specific assets, the
collateral securing assets, or the liabilities of Eagle or Webster or any of
their respective subsidiaries, or the collectibility of any such assets, nor was
it furnished with any such evaluations or appraisals (relying, where relevant,
on the analyses and estimates of Eagle and Webster). With respect to the
information regarding potential future financial performance provided by each
company's management, Sandler O'Neill assumed that they have been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the respective
34
<PAGE>
managements of the respective future financial performances of Eagle and Webster
and that such performances will be achieved. Sandler O'Neill also assumed that
there has been no material change in Eagle's and Webster's assets, financial
condition, results of operations, business, or prospects since the date of the
last financial statements noted above. Sandler O'Neill assumed that the Merger
will qualify for pooling-of-interests accounting treatment and has further
assumed that Eagle and Webster will remain as going concerns for all periods
relevant to its analyses and that the conditions precedent in the Agreement are
not waived.
Under the Sandler O'Neill Agreement, Eagle will pay Sandler O'Neill a
transaction fee in connection with the Merger, a substantial portion of which is
contingent upon the consummation of the Merger. Under the terms of the Sandler
O'Neill Agreement, Eagle will pay Sandler O'Neill a transaction fee equal to
0.40% of the aggregate purchase price paid in the transaction, which will be
based on the average closing price of Webster Common Stock for the five trading
days preceding the Effective Date. By way of example only, if the Effective Date
had been February 10, 1998, Eagle would pay Sandler O'Neill a transaction fee of
approximately $1,455,000. Eagle has already paid Sandler O'Neill approximately
$374,000, and the balance of the transaction fee will be paid if the Merger is
consummated. Eagle has also paid Sandler O'Neill a fee of $150,000 for rendering
its fairness opinion, all of which amount will be credited towards the fee
payable to Sandler O'Neill upon consummation of the Merger. Eagle has also
agreed to reimburse Sandler O'Neill for its reasonable out-of-pocket expenses
incurred in connection with its engagement and to indemnify Sandler O'Neill and
its affiliates and their respective partners, directors, officers, employees,
agents, and controlling persons against certain expenses and liabilities,
including liabilities under securities laws.
Sandler O'Neill has in the past provided certain other investment banking
services to Eagle and has received its customary compensation for such services.
In the ordinary course of its business, Sandler O'Neill may actively trade the
debt and/or equity securities of Eagle and Webster and their respective
affiliates for its own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
STRUCTURE
The Merger will be effected by merging Eagle with and into Webster, with
Webster as the Surviving Corporation. Pursuant to the Merger Agreement,
immediately after the consummation of the Merger, Eagle Bank will be merged into
Webster Bank, with Webster Bank as the surviving federal savings bank.
At the Effective Time, except as discussed below, each share of Eagle
Common Stock issued and outstanding as of the Effective Time, together with the
Eagle Rights attached thereto pursuant to the Rights Agreement, dated October
22, 1996, between Eagle and the First National Bank of Boston, as Rights Agent
(the "Eagle Rights Agreement"), will, by virtue of the Merger Agreement and
without any action on the part of the holder thereof, be converted into the
right to receive 0.84 shares, the Exchange Ratio, of Webster Common Stock,
together with an equal number of Webster Rights issued pursuant to the Rights
Agreement, dated as of February 5, 1996, between Webster and Chemical Mellon
Shareholder Services, L.L.C., as Rights Agent (the "Webster Rights Agreement").
At the Effective Time, all shares of Eagle Common Stock held as treasury stock
by Eagle or held directly or indirectly by Eagle, Webster or any of their
subsidiaries (other than Trust Account Shares and DPC Shares) will be canceled
and will cease to exist, and no stock of Webster or other consideration will be
given in exchange for such shares. All shares of Webster Common Stock owned by
Eagle or any of its subsidiaries (other than Trust Account Shares and DPC
Shares) will become treasury stock of Webster. All shares of Webster Common
Stock issued and outstanding immediately prior to the Effective Time (other than
those held directly or indirectly by Eagle other than as Trust Account Shares or
DPC shares, which will become treasury shares of Webster) will be unchanged and
will remain issued and outstanding as common stock of the Surviving Corporation.
Subject to the terms and conditions of the Merger Agreement, the closing of
the Merger will take place on the 15th day after the receipt of the Requisite
Regulatory Approval and the expiration of all regulatory waiting periods, or at
such other time as the parties may agree. If the Merger is not consummated by
September 30, 1998, the Merger Agreement may be terminated by Webster or
35
<PAGE>
Eagle, unless the failure of the Merger to be consummated by that date is due to
the failure of the party seeking to terminate the Merger Agreement to perform
its covenants and agreements under the Merger Agreement.
Webster may elect to modify the structure of the Merger so long as (i) the
federal income tax consequences to the Eagle Stockholders of the Merger as
described herein are not changed adversely, (ii) the consideration to be paid to
Eagle Stockholders under the Merger Agreement is not thereby changed or reduced
in amount, and (iii) such modification will not delay or jeopardize receipt of
the Requisite Regulatory Approval. As of the date of this Joint Proxy
Statement/Prospectus, Webster does not intend to modify the structure of the
Merger described herein.
EXCHANGE RATIO
The Merger Agreement provides that at the Effective Time, except as
discussed below, each issued and outstanding share of Eagle Common Stock will be
converted automatically into the right to receive 0.84 shares of Webster Common
Stock. Shares of Eagle Common Stock held as treasury stock by Eagle and shares
held directly or indirectly by Eagle, Webster or any of their Subsidiaries
(other than Trust Account Shares and DPC Shares) will be canceled. Subject to
possible antidilution adjustments and Webster's right to increase the Exchange
Ratio in the event certain termination rights of Eagle are triggered by a fall
in the market price of Webster Common Stock during a defined period prior to
consummation of the Merger (see "-- Termination and Amendment of the Merger
Agreement"), no more than 5,893,366 shares of Webster Common Stock (the "Maximum
Share Amount") will be issued or will become issuable in connection with the
Merger.
Because the market price of Webster Common Stock is subject to fluctuation
and the Exchange Ratio is fixed, the market value of the shares of Webster
Common Stock that Eagle Stockholders will receive in the Merger may materially
increase or decrease prior to the Merger. No assurance can be given as to the
market price of Webster Common Stock at the time of the Merger. See "MARKET
PRICES AND DIVIDENDS" and "THE MERGER -- Exchange Ratio."
Certificates representing fractions of shares of Webster Common Stock will
not be issued. Under the Merger Agreement, in lieu of a fractional share of
Webster Common Stock, each Eagle Stockholder will be entitled to receive an
amount of cash equal to the fraction of a share of Webster Common Stock to which
such Eagle Stockholder would otherwise be entitled multiplied by the market
value of the Webster Common Stock, which will be deemed to be the average of the
daily closing price per share of Webster Common Stock for the twenty consecutive
trading days on which shares of Webster Common Stock are actually traded (as
reported on Nasdaq) ending on the third trading day preceding the date of the
closing of the Merger. Following consummation of the Merger, no Eagle
Stockholder will be entitled to any dividends or any other rights in respect of
any such fractional share of Webster Common Stock.
The conversion of Eagle Common Stock held by stockholders of Eagle into the
right to receive shares of Webster Common Stock at the Exchange Ratio (and cash
in lieu of fractional shares) will occur automatically upon consummation of the
Merger. Pursuant to the Merger Agreement, at or prior to the Effective Time,
Webster will deposit or cause to be deposited with the Exchange Agent, for the
benefit of the holders of the certificates representing shares of Eagle Common
Stock to be exchanged pursuant to the Merger (each, a "Certificate"),
certificates representing the shares of Webster Common Stock to be issued and
the cash in lieu of fractional shares to be paid in the Merger.
As soon as practicable after the Effective Time, the Exchange Agent will
mail to each holder of record of Eagle Common Stock a form letter of transmittal
and instructions for use in surrendering the Certificates in exchange for
certificates representing the shares of Webster Common Stock and the cash in
lieu of fractional shares into which the shares of Eagle Common Stock
represented by such Certificate or Certificates will have been converted
pursuant to the Merger Agreement. Eagle shall have the right to review both the
letter of transmittal and the instructions prior to such documents being
finalized. Upon the surrender of a Certificate for exchange and cancellation to
the Exchange Agent, together with the letter of transmittal, duly executed, the
holder of such Certificate will be entitled to receive in exchange for such
Certificate (i) a certificate representing that number of whole shares of
Webster
36
<PAGE>
Common Stock to which such Eagle Stockholder will have become entitled pursuant
to the Merger Agreement and (ii) a check representing the amount of cash in lieu
of fractional shares, if any, that such Eagle Stockholder has the right to
receive in respect of the Certificate surrendered pursuant to the Merger
Agreement. The Certificate surrendered will be canceled. No interest will be
paid or accrued on the cash in lieu of fractional shares and unpaid dividends
and distributions, if any, payable to holders of Certificates. No dividends or
distributions with respect to Webster Common Stock payable to any such Eagle
Stockholder will be paid until such Eagle Stockholder surrenders such
Certificate or Certificates for exchange.
If any certificate representing shares of Webster Common Stock is to be
issued in a name other than that in which the Certificate for such shares
surrendered in exchange is registered, it shall be a condition of such issuance
that the Certificate so surrendered shall be properly endorsed or otherwise be
in proper form for transfer and that the person requesting such exchange shall
either (i) pay to the Exchange Agent in advance any transfer or other taxes
required by reason of the issuance of a certificate to a person other than the
registered holder of the Certificate surrendered or (ii) establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable. After the close of business of the day immediately prior to the
Effective Time, there shall be no transfers on the stock transfer books of Eagle
of the shares of Eagle Common Stock outstanding immediately prior to the
Effective Time, and any such shares presented to the Exchange Agent at or after
the Effective Time shall be canceled and exchanged for certificates representing
shares of Webster Common Stock (and cash in lieu of fractional shares) as
described above.
Any portion of the certificates representing shares of Webster Common Stock
or cash that Webster made available to the Exchange Agent that remains unclaimed
by the Eagle Stockholders for six months after the Effective Time will be
returned to Webster. Any Eagle Stockholder who has not exchanged shares of Eagle
Common Stock in accordance with the Merger Agreement prior to that time shall
thereafter look only to Webster for the shares of Webster Common Stock to which
they may be entitled, cash in lieu of fractional shares and any unpaid dividends
and distributions in respect of such shares. Notwithstanding the foregoing, none
of Webster, Eagle, the Exchange Agent or any other person will be liable to any
Eagle Stockholder for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
In the event any certificate representing shares of Eagle Common Stock
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such certificate has been lost, stolen or
destroyed, and if required by Webster, the posting by such person of a bond in
such amount as Webster may reasonably direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed certificate the shares of
Webster Common Stock and cash in lieu of fractional shares which such person
would otherwise be entitled as a result of the Merger.
CERTIFICATES SHOULD NOT BE RETURNED TO EAGLE WITH THE ENCLOSED PROXY CARD
AND SHOULD ONLY BE FORWARDED TO THE EXCHANGE AGENT AFTER RECEIPT OF THE LETTER
OF TRANSMITTAL.
CONVERSION OF EAGLE STOCK OPTIONS
As of the Effective Time, each option granted by Eagle to purchase Eagle
Common Stock (each, an "Eagle Option") that is outstanding and unexercised
immediately prior thereto will be converted automatically into an option to
purchase shares of Webster Common Stock in an amount determined by multiplying
the number of shares of Eagle Common Stock subject to the Eagle Option
immediately before the Effective Time by the Exchange Ratio, rounded down to the
nearest share, and at an exercise price equal to the exercise price per share of
Eagle Common Stock under the Eagle Option immediately before the Effective Time
divided by the Exchange Ratio, rounded to the nearest cent. The duration and
other terms of the option (including the terms of the plans pursuant to which
the Eagle Options were issued, including the Eagle Financial Corp. 1991 Stock
Option Plan, the Eagle Financial Corp. 1987 Stock Option Plan, the BFS Bancorp.,
Inc. Stock Option Plan, and the Eagle Financial Corp. 1988 Stock Option Plan
(collectively, the "Eagle Stock Plans") immediately after the Effective Time
will be the
37
<PAGE>
same as the corresponding terms in effect immediately before the Effective Time,
except that all references to Eagle or Eagle Bank in the Eagle Stock Plans, as
well as the corresponding references in the option agreements documenting such
Eagle Options, will be deemed references to Webster. The adjustment described
above will be, and is intended to be, effected in a manner that is consistent
with Section 424(a) of the Code.
REGULATORY APPROVALS
Under the Merger Agreement, the obligations of both Webster and Eagle to
consummate the Merger are conditioned upon the receipt of the Requisite
Regulatory Approval. Each of Webster and Eagle has agreed to use its best
efforts to obtain the Requisite Regulatory Approval. See "-- Conditions to the
Merger."
The Merger and the Bank Merger are subject to the approval of the OTS under
Section 10(e) of the Home Owner's Loan Act of 1933 and the Bank Merger Act
provisions of the Federal Deposit Insurance Act, respectively, and related OTS
regulations. These approvals require consideration by the OTS of various
factors, including assessments of the competitive effect of the contemplated
transactions, the managerial and financial resources and future prospects of the
resulting institutions, and the effect of the contemplated transactions on the
convenience and needs of the communities to be served. The Community
Reinvestment Act of 1977, as amended (the "CRA"), also requires that the OTS, in
deciding whether to approve the Merger and the Bank Merger, assess the records
of performance of Webster Bank and Eagle Bank in meeting the credit needs of the
communities they serve, including low and moderate income neighborhoods. As part
of the review process, it is not unusual for the OTS to receive protests and
other adverse comments from community groups and others. Webster Bank and Eagle
Bank currently have outstanding and satisfactory CRA ratings, respectively, from
the OTS. The regulations of the OTS require publication of notice of, and an
opportunity for public comment with respect to, the applications filed in
connection with the Merger and the Bank Merger, and authorize the OTS to hold
oral arguments in connection therewith if the OTS, after reviewing the
application or other materials, determines it desirable to do so. Any such
hearing, meeting or comments provided by third parties could prolong the period
during which the Merger and the Bank Merger are subject to review by the OTS.
The Merger and the Bank Merger may not be consummated for a period of 15 to 30
days following OTS approval (the precise length of the period to be determined
by the OTS with the concurrence of the DOJ), during which time the DOJ has
authority to challenge the Merger or the Bank Merger on antitrust grounds. The
commencement of an antitrust action would stay the effectiveness of any approval
granted by the OTS unless a court specifically orders otherwise. If the DOJ does
not commence a legal action during the waiting period, it may not thereafter
challenge the transaction, except in an action commenced under Section 2 of the
Sherman Antitrust Act.
Webster has filed applications and notices seeking the requisite OTS
approval. The public comment period for the OTS application expired on January
5, 1998. To date, Webster has not received any approvals or notices of
disapproval.
Webster and Eagle are not aware of any other material governmental
approvals that are required for consummation of the Merger except as described
above. Should any other approval or action be required, it is presently
contemplated that such approval would be sought.
THE MERGER CANNOT PROCEED IN THE ABSENCE OF THE REQUISITE REGULATORY
APPROVAL, WHICH APPROVAL HAS NOT YET BEEN RECEIVED. THERE CAN BE NO ASSURANCE
THAT SUCH APPROVAL WILL BE OBTAINED OR AS TO THE DATE OF SUCH APPROVAL. THERE
CAN LIKEWISE BE NO ASSURANCE THAT THE DOJ WILL NOT CHALLENGE THE MERGER, OR, IF
SUCH A CHALLENGE IS MADE, AS TO THE RESULT THEREOF.
See "MERGER SUMMARY -- The Effective Time," "-- Conditions to the Merger"
and "-- Termination and Amendment of the Merger Agreement."
38
<PAGE>
CONDITIONS TO THE MERGER
The respective obligations of Webster and Eagle to consummate the Merger
are conditioned upon the satisfaction at or prior to the Effective Time of each
of the following: (i) approval and adoption of the Merger Agreement and the
Merger by the requisite vote of the Eagle Stockholders and the Webster
Stockholders; (ii) authorization for quotation on Nasdaq of the shares of
Webster Common Stock to be issued in the Merger (or on such other exchange on
which the Webster Common Stock may become listed); (iii) receipt of the
Requisite Regulatory Approval; (iv) no order, decree or injunction issued by any
court or agency of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger or any other transactions
contemplated by the Merger Agreement will be in effect; and no law, statute,
rule, regulation, order, injunction, or decree will have been enacted, entered,
promulgated or enforced by any governmental entity that prohibits, restricts or
makes illegal consummation of the transactions contemplated by the Merger
Agreement; and no proceeding initiated by any governmental entity seeking an
injunction will be pending; (v) Webster shall have received from Wachtell,
Lipton, Rosen & Katz, its counsel, and Eagle shall have received from Skadden,
Arps, Slate, Meagher & Flom LLP, its counsel, an opinion, in each case dated as
of the Effective Time and substantially to the effect set forth under "--
Certain Federal Income Tax Consequences"; (vi) with respect to the obligations
of each party, the representations and warranties of the other party contained
in the Merger Agreement will be true and correct at the time of the Merger
Agreement and (except to the extent such representations and warranties speak as
of an earlier date) as of the date of the closing of the Merger; provided,
however, that such representations and warranties will be deemed to be true
unless the failure or failures of such representations and warranties to be true
and correct, individually or in the aggregate, would have a Material Adverse
Effect (as defined herein) on the party by whom such representations and
warranties were made or on such party's ability to perform its obligations under
the Merger Agreement or to consummate the Merger (and each party will have
received from the President and Chief Executive Officer and the Chief Financial
Officer of the other party a signed certificate to such effect); (vii) the
covenants and agreements of both parties will have been performed in all
material respects (and each party will have received from the President and
Chief Executive Officer and the Chief Financial Officer of the other party a
signed certificate to such effect); (viii) the Registration Statement of which
this Joint Proxy Statement/Prospectus is a part will have become effective under
the Securities Act and no stop order suspending the effectiveness of the
Registration Statement will have been issued and no proceedings for that purpose
will have been initiated or threatened by the SEC or any other regulatory
authority; and (ix) Webster shall have received from KPMG Peat Marwick LLP
("Peat Marwick"), Webster's independent public accountants, Peat Marwick's
opinion that the Merger will qualify for "pooling-of-interests" accounting
treatment. Material Adverse Effect, with respect to Webster or Eagle, as the
case may be, means a condition, event, change or occurrence that has had or is
reasonably certain to have a material adverse effect upon (A) the financial
condition, results of operations or business of such party and its Subsidiaries,
taken as a whole, or (B) the ability of Webster or Eagle to timely perform its
obligations under, and to consummate the transactions contemplated by, the
Merger Agreement and the Stock Option Agreement; provided, however, that in
determining whether a Material Adverse Effect has occurred there shall be
excluded any effect on the referenced party the cause of which is (i) any change
in banking or similar laws, rules or regulations of general applicability or
interpretations thereto by courts or governmental authorities, (ii) any change
in generally accepted accounting principles or regulatory accounting
requirements applicable to banks, thrifts or their holding companies generally,
(iii) any action or omission of Eagle or Webster or any Subsidiary (as defined
herein) of either of them taken with the prior written consent of Webster or
Eagle, as applicable, in contemplation of the Merger, (iv) any expenses
reasonably incurred by such party in connection with the Merger Agreement or the
transactions contemplated by the Merger Agreement and (v) any changes in general
economic conditions affecting banks, thrifts or their holding companies
generally. With respect to clause (vi) of the second preceding sentence, such
determination of aggregate Material Adverse Effect shall be made as if there
were no materiality qualifications in such representations and warranties. With
respect to any party, "Subsidiary" means any corporation, partnership or other
organization, whether incorporated or unincorporated, which is consolidated with
such party for financial reporting purposes.
39
<PAGE>
CONDUCT OF BUSINESS PENDING THE MERGER
The Merger Agreement contains certain restrictions on the operations of
Eagle and the subsidiaries of Eagle prior to the Effective Time. In general, the
Merger Agreement obligates Eagle and each of its subsidiaries to carry on their
respective businesses in the ordinary course consistent with past practices and
consistent with prudent banking practices and to preserve intact Eagle and each
of its Subsidiaries' businesses, employment relationships, and goodwill. Without
limiting Eagle's general obligations concerning its business, and except as
disclosed to Webster prior to the execution of the Merger Agreement, consented
to in writing by Webster or expressly contemplated or permitted by the Merger
Agreement, the Bank Merger agreement or the Stock Option Agreement, Eagle will
not, and Eagle will not permit any of its Subsidiaries to: (i) declare or pay
any dividends on, or make any other distributions in respect of, any of Eagle's
capital stock other than the payment of regular quarterly cash dividends of
$0.25 per share on Eagle Common Stock, and Eagle and Webster will coordinate
with each other in declaring any dividend or distribution by either party on its
respective common stock (it being the intent of the parties that the holders of
Eagle Common Stock and Webster Common Stock will not receive more than one
dividend, or fail to receive one dividend, for any single calendar quarter on
their shares of Eagle Common Stock (including any shares of Webster Common Stock
received in exchange therefor in the Merger) or Webster Common Stock, as the
case may be); (ii) split, combine or reclassify any shares of its capital stock
or issue, authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock (except upon
the exercise or fulfillment of rights or options issued and outstanding as of
October 26, 1997 pursuant to the Eagle Stock Plans in accordance with their
present terms, or pursuant to the Stock Option Agreement), or repurchase, redeem
or otherwise acquire (except for the acquisition of Trust Shares and DPC Shares)
any shares of the capital stock of Eagle or any Eagle Subsidiary, or any
securities convertible into or exercisable for any such shares; (iii) issue,
deliver or sell, any shares of Eagle's capital stock or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares, or authorize or propose any such transactions with
respect to any such shares or rights, other than the issuance of Eagle Common
Stock pursuant to stock options or similar rights to acquire Eagle Common Stock
granted pursuant to the Eagle Stock Plans outstanding prior to October 26, 1997,
and in accordance with the terms existing as of October 26, 1997, or pursuant to
the Stock Option Agreement; (iv) amend the Restated Certificate of Incorporation
of Eagle (the "Eagle Certificate"), the Bylaws of Eagle (the "Eagle Bylaws") or
other similar governing documents; (v) authorize or permit any of its officers,
directors, employees or agents to, directly or indirectly, solicit, initiate or
encourage any inquiries, proposals, or hold discussions or negotiations with or
provide any information to any person, entity or group (other than Webster)
concerning any (a) tender or exchange offer involving Eagle or any Eagle
Subsidiary, (b) merger, consolidation or other business combination with Eagle
or any Eagle Subsidiary or (c) the acquisition in any manner of a substantial
equity interest in or a substantial portion of the assets of Eagle or Eagle Bank
other than the transactions contemplated or permitted by the Merger Agreement
and the Stock Option Agreement unless the Eagle Board determines, after
consulting with and considering the advice of outside counsel, that the failure
to provide such information or to participate in such negotiations or
discussions could cause the members of the Eagle Board to breach their fiduciary
duties under applicable laws; and Eagle shall promptly communicate to Webster
the material terms of any such proposal, negotiations, discussions, or supply of
information to a third party; (vi) make capital expenditures aggregating in
excess of $100,000, expect as disclosed to Webster; (vii) enter into any new
line of business; (viii) acquire or agree to acquire, whether by merger,
consolidation, purchase or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire any assets, other than in connection with foreclosures,
settlements in lieu of foreclosure or troubled loan or debt restructuring, or in
the ordinary course of business consistent with prudent banking practices; (ix)
take any action that is intended or may reasonably be expected to result in any
of Eagle's representations or warranties being or becoming untrue or in any of
the conditions to the Merger set forth in Article VII of Merger Agreement not
being satisfied or in a violation of any provision of the Merger Agreement or
the merger agreement to govern the merger of Webster Bank and Eagle Bank, except
as required by applicable law; (x) change its methods of accounting in effect at
September 30, 1996, except as required by changes in generally accepted
accounting principles or regulatory accounting principles as concurred to by
Eagle's independent auditors; (xi) (a) adopt, amend,
40
<PAGE>
renew (other than through operation of evergreen provisions or as previously
disclosed to Webster consistent with past practice) or terminate any agreement,
arrangement, plan or policy between Eagle or any Eagle Subsidiary and one or
more of its current or former directors, officers or employees, except as
required by applicable law or to maintain qualification pursuant to the Code,
(b) for employees not subject to an employment, change of control or severance
agreement, increase in any manner the compensation of any employee or director,
or pay any benefit not required by any plan or agreement as in effect as of
October 26, 1997 (including, without limitation, granting stock options, stock
appreciation rights or shares), except for normal annual increases in pay
consistent with past practice, (c) for employees not subject to an employment,
change of control or severance agreement, enter into, modify or renew (other
than through operation of evergreen provisions or renewals of such agreement
disclosed to Webster prior to the execution of the Merger Agreement and
consistent with past practice) any contract, agreement, commitment or
arrangement providing for the payment to any director, officer or employee of
compensation or benefits, other than normal annual increases in pay, consistent
with past practice, and except for the retention and incentive bonus arrangement
disclosed to Webster prior to the execution of the Merger Agreement, (d) hire
any new employee at an annual compensation in excess of $30,000, (e) pay
expenses of any employees or directors for attending conventions or similar
meetings where the convention or meeting is held after October 26, 1997, except
as disclosed to Webster prior to the execution of the Merger Agreement, (f)
promote any employee to any rank of equal or greater seniority as the rank of
vice president, or (g) pay any retention or other bonuses to any employees
except for the retention and incentive bonus arrangements disclosed to Webster
prior to the execution of the Merger Agreement; (xii) incur any indebtedness for
borrowed money, assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other individual, corporation or
other entity other than in the ordinary course of business consistent with past
practice; (xiii) except as disclosed to Webster prior to the execution of the
Merger Agreement, sell, purchase, enter into a lease, relocate, open or close
any banking or other office, or file an application pertaining to such action
with any governmental entity; (xiv) make any equity investment or commitment to
make such an investment in real estate or in any real estate development
project, other than in connection with foreclosure, settlements in lieu of
foreclosure, or troubled loan or debt restructuring, in the ordinary course of
business consistent with past banking practices; (xv) make any new loans to,
modify the terms of any existing loan to, or engage in any other transactions
(other than routine banking transactions) with, any Affiliated Person of Eagle
or any Eagle Subsidiary; (xvi) make any investment, or incur deposit
liabilities, other than in the ordinary course of business consistent with past
practices, or make any equity investments; (xvii) except as disclosed to Webster
prior to the execution of the Merger Agreement, purchase any loans or sell,
purchase or lease any real property, except for the sale of real estate that is
the subject of a casualty loss or condemnation or the sale of OREO on a basis
consistent with past practices; (xviii) originate any loans except in accordance
with existing Eagle Bank lending policies, or originate any unsecured consumer
loans in excess of $10,000, commercial real estate first mortgage or other
commercial loans in excess of $250,000 as to any loan or $500,000 in the
aggregate as to related loans, or land acquisition loans to borrowers who intend
to construct a residence on such land in excess of the lesser of 75% of the
appraised value of such land or $100,000 except, in each case, for loans for
which Eagle Bank has disclosed written commitments issued as of October 26,
1997, for renewals of loans existing as of October 26, 1997 or loans permitted
pursuant to the section of the Merger Agreement described in this clause
(xviii), and for increases in the principal amount of loans existing as of the
date of October 26, 1997 in amounts provided for in the Merger Agreement; (xix)
make any investments in any equity or derivative securities or engage in any
forward commitment, futures transaction, financial options transaction, hedging
or arbitrage transaction or covered asset trading activities or make any
investment in any investment security with a maturity of greater than one year;
(xx) sell or purchase any mortgage loan servicing rights; or (xxi) agree or
commit to do any of the actions discussed in clauses (i) through (xx) of this
paragraph.
The Merger Agreement also contains restrictions on the operations of
Webster and the Subsidiaries of Webster prior to the Effective Time that
obligate Webster and each of its Subsidiaries, except with the prior written
consent of Eagle or except as expressly contemplated or permitted by the Merger
Agreement, to not: take any action that will result in any of Webster's
representations and warranties set forth in the Merger Agreement being or
becoming untrue or any of the conditions to the Merger set
41
<PAGE>
forth in the Merger Agreement not being satisfied or in a violation of any
provision of the Merger Agreement or the Bank Merger agreement, except, in every
case, as may be required by applicable law; or take any other action that would
materially adversely affect or materially delay the ability of Webster to obtain
the Requisite Regulatory Approval or otherwise materially adversely affect
Webster's and Webster Bank's ability to consummate the transactions contemplated
by the Merger Agreement.
EXPENSES
The Merger Agreement generally provides for Webster and Eagle to pay their
own expenses relating to the Merger Agreement, except that the filing and other
fees paid to the SEC and the printing fees incurred in connection with this
Joint Proxy Statement/Prospectus will be borne equally by Webster and Eagle. If
the Merger Agreement is terminated by Webster or Eagle as a result of a material
breach of a representation, warranty, covenant or other agreement contained
therein by the other party, the Merger Agreement provides for the
non-terminating party to pay all documented, reasonable costs and expenses of
the terminating party up to $1.5 million. See "-- Termination and Amendment of
the Merger Agreement."
REPRESENTATIONS AND WARRANTIES
Under the Merger Agreement, Eagle has made certain representations and
warranties to Webster, including those with regard to (i) the organization,
existence, good standing and status of Eagle and Eagle Bank; (ii) capitalization
and subsidiaries; (iii) corporate power and authority, the enforceability of the
Merger Agreement and Stock Option Agreement, and absence of violation of law,
organizational documents or agreements in respect thereof; (iv) consents and
approvals required for the Merger and the Bank Merger; (v) loan portfolio and
reports; (vi) financial statements, Exchange Act filings, and books and records;
(vii) broker's fees; (viii) absence of any material adverse change in Eagle;
(ix) legal proceedings; (x) tax matters; (xi) employee benefit plans; (xii)
certain contracts; (xiii) certain regulatory matters; (xiv) environmental
matters; (xv) loan loss reserves; (xvi) properties and assets; (xvii) insurance
matters; (xviii) compliance with applicable laws; (xix) loan information; (xx)
ownership of Webster Common Stock; (xxi) suspension of the Eagle dividend
reinvestment plan; (xxii) vote required for Eagle Stockholder approval of the
Merger Agreement and Eagle Board approval thereof and of related matters;
(xxiii) receipt of the fairness opinion of Sandler O'Neill, (xxiv) tax and
accounting treatment of the Merger; (xxv) non-triggering of the Eagle Rights
contemplated by the Eagle Rights Agreement; and (xxvi) the truth and
completeness of the information supplied by Eagle for inclusion in this Joint
Proxy Statement/Prospectus.
Under the Merger Agreement, Webster has made certain representations and
warranties to Eagle, including those with regard to (i) the organization,
existence, good standing and status of Webster and Webster Bank; (ii)
capitalization and subsidiaries; (iii) the corporate power and authority; (iv)
consents and approvals required for the Merger and the Bank Merger; (v)
financial statements, Exchange Act filings and books and records; (vi) the
absence of any material adverse change in Webster; (vii) compliance with
applicable laws; (viii) ownership of Eagle Common Stock; (ix) employee benefit
plans; (x) certain regulatory matters; (xi) tax and accounting treatment of the
Merger; (xii) legal proceedings; (xiii) loan loss reserves; (xiv) broker's fees;
(xv) receipt of the fairness opinion of Merrill Lynch; (xvi) tax matters; and
(xvii) the truth and completeness of the information supplied by Webster for
inclusion in this Joint Proxy Statement/Prospectus.
COMPENSATION AND BENEFITS
Following the Merger, Webster will honor the existing written deferred
compensation, employment, change of control and severance contracts with
directors and employees of Eagle and Eagle Bank previously disclosed to Webster
to the extent that such contracts or any other Eagle employment plan, program,
agreement or other arrangement under which any such director or employee is a
beneficiary, either individually or in the aggregate, do not provide for any
payment by Eagle or any Eagle subsidiary that would not be deductible under
Section 162(a)(1) or 404 of the Code or that would constitute a "parachute
payment" within the meaning of Section 280G of the Code.
42
<PAGE>
To the extent permissible under the applicable provisions of the Code and
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), for
purposes of crediting periods of service for eligibility to participate and
vesting, but not for benefit accrual purposes, under employee pension benefit
plans (within the meaning of Section 3(2) of ERISA) maintained by Webster or
Webster Bank, as applicable, employees of Eagle or Eagle Bank as of the
Effective Time will be credited with periods of service with Eagle or Eagle Bank
before the Effective Time as if such service had been with Webster or Webster
Bank, as applicable. Webster will also give similar credit (or cause Webster
Bank to give similar credit) in calculating other retirement plan, vacation and
similar benefits. Webster will (or will cause Webster Bank to) (i) give credit
to employees of Eagle and Eagle Bank, with respect to the satisfaction of the
limitations as to pre-existing condition exclusions and waiting periods for
participation and coverage that are applicable under the welfare benefit plans
of Webster or Webster Bank, equal to the credit that any such employee had
received as of the Effective Time towards the satisfaction of such limitations
and waiting periods under the comparable welfare benefit plans of Eagle and
Eagle Bank and (ii) provide each employee of Eagle and Eagle Bank with credit
for any co-payment and deductibles paid prior to the Effective Time in
satisfying any deductible or out-of-pocket requirements.
Webster will pay (or will cause Webster Bank to pay) severance to employees
of Eagle and Eagle Bank for one year in accordance with the terms of the
severance policy disclosed by Eagle to Webster prior to execution of the Merger
Agreement and thereafter in accordance with the terms of Webster's or Webster
Bank's severance plan, as the case may be. Webster will cause Webster Bank to
offer a position of at-will employment to each of Eagle Bank's non-management
branch office personnel in good standing. Webster will use its reasonable best
efforts to provide Eagle and Eagle Bank employees who are not offered positions
at the Effective Time the same consideration when applying for employment
positions with Webster or Webster Bank as is afforded Webster or Webster Bank
employees applying for such positions and will also provide outplacement
assistance to each Eagle and Eagle Bank employee who is not offered a position
at the Effective Time.
OTHER AGREEMENTS
Pursuant to the Merger Agreement, Webster and Eagle reached agreement with
respect to various other matters, including, but not limited to: (i) filing the
appropriate documents with all third parties and federal and state governmental
entities necessary or advisable to consummate the transactions contemplated in
connection with the Merger Agreement; (ii) providing information and access to
information (including access to all of Eagle and Eagle Bank's properties,
books, contracts, commitments, information filed or received by Eagle and Eagle
Bank pursuant to federal securities laws and federal and state banking laws, and
access to one senior officer of Webster to all meetings of the Boards of
Directors of Eagle and Eagle Bank (except for those portions of such meetings
relating to the Merger or other confidential matters) and all meeting of
committees of the Boards of Directors and management of Eagle and Eagle Bank,
with all information so gained to be held in confidence in accordance with the
October 15, 1997 confidentiality agreement entered into between Webster and
Eagle); (iii) taking all steps necessary to duly call, give notice of, convene
and hold a meeting of Eagle and Webster's respective stockholders for the
purpose of voting on the Merger and the Merger Agreement, at which meetings, the
management and the Board of Directors of the party calling the respective
meeting shall recommend the Merger and the transactions contemplated thereby
(together with any matter incident thereto) to their respective stockholders and
shall oppose any third-party proposal or other action that is inconsistent with
the Merger Agreement or the consummation of the transactions contemplated
thereby (subject, in each case, to compliance with its fiduciary duties as
advised by counsel); (iv) advice of changes; (v) changes in the structure of the
Merger that will not result in adverse tax consequences to Eagle Stockholders,
reduce the consideration paid to Eagle Stockholders or delay or jeopardize
receipt of the Requisite Regulatory Approval; and (vi) certain other agreements.
TERMINATION AND AMENDMENT OF THE MERGER AGREEMENT
Webster or Eagle may terminate the Merger Agreement (provided that the
terminating party is not in violation of the Merger Agreement) at any time prior
to the Effective Time, and the Merger may be abandoned, as summarized below:
43
<PAGE>
(i) by the mutual written consent of the parties, if the Board of
Directors of each so determines by vote of a majority of the
members of its entire Board of Directors;
(ii) by either party 30 days after the date on which any request or
application for a Requisite Regulatory Approval has been denied
or withdrawn at the request or recommendation of the governmental
entity that must grant such Requisite Regulatory Approval unless
within 30 days following a denial the parties agree to file and
have filed a petition for rehearing or an amended application
(provided that such denial or recommendation for withdrawal shall
not be due to the failure of the Party seeking to terminate the
Merger Agreement to perform or observe the covenants and
agreements of such party set forth on the Merger Agreement);
(iii) by either party, if the Merger has not been consummated on or
before September 30, 1998 (unless the failure to consummate the
Merger shall be due to the failure of the terminating party to
perform or observe the covenants and agreements of such party set
forth in the Merger Agreement);
(iv) by either party (provided that such party is not in breach of its
obligations under the Merger Agreement in respect of obtaining
stockholder approval), if either party is unable to obtain its
required shareholder approval;
(v) by either party (provided that the terminating party is not in
breach of the Merger Agreement entitling the other party to
terminate the Merger Agreement), in the event of either a breach
by the other party of any of its representations or warranties
contained in the Merger Agreement that has had or would be
reasonably certain to have a Material Adverse Effect on the
breaching party, which breach cannot be or has not been cured
within 30 days after giving written notice to the breaching party
of such breach, or a material breach by the other party of any of
its covenants or agreements contained in the Merger Agreement,
which breach cannot be or has not been cured within 30 days after
giving written notice to the breaching party of such breach;
(vi) by the Board of Directors of either party, if the Board of
Directors of the other party to the Merger Agreement shall have
withdrawn, modified or changed in a manner adverse to the
terminating party its approval or recommendation of the Merger
Agreement and the transactions contemplated thereby; and
(vii) by the Eagle Board, if at any time during the 10-day period
commencing two days after the Determination Date (as defined
herein), if both of the following conditions are satisfied:
(a) the Average Closing Price (as defined herein) is less than
$52.80, and
(b) (1) the number obtained by dividing the Average Closing Price
by $66.00 (the "Webster Ratio") is less than (2) the number obtained
by dividing the Average Index Price (as defined herein) by the Index
Price (as defined herein) on October 24, 1997 and subtracting 0.15
from the quotient (such number being referred to herein as the "Index
Ratio");
provided, however, that, if Eagle elects to exercise the termination right
contemplated by the foregoing clause (vii), it will give prompt written notice
to Webster (which notice may be withdrawn at any time within the aforementioned
10-day period) and during the five days commencing with its receipt of such
notice, Webster will have the option to adjust the Exchange Ratio to equal the
lesser of (1) the quotient obtained by dividing (A) the product of $52.80 and
the Exchange Ratio (as then in effect) by (B) the Average Closing Price, and (2)
the quotient obtained by dividing (A) the product of the Index Ratio and the
Exchange Ratio (as then in effect) by (B) the Webster Ratio (and, if Webster
makes an election contemplated by the preceding sentence within the five-day
period, it will give prompt written notice to Eagle of such election and the
revised Exchange Ratio, whereupon no termination will have occurred as a result
of this right of termination and the Merger Agreement will remain in effect in
accordance with its terms (except for the modification of the Exchange Ratio),
and any references in the Merger Agreement to "Exchange Ratio" will thereafter
be deemed to refer to the Exchange Ratio as so adjusted, and a corresponding
modification will be made to the Maximum Share Amount).
44
<PAGE>
For purposes of the right of termination and adjustment described in (vii)
above, the following terms are defined in the Merger Agreement as follows:
"Average Closing Price" means the average of the daily last sale prices of
Webster Common Stock as reported on Nasdaq for the 10 consecutive full trading
days in which such shares are traded on Nasdaq ending at the close of trading on
the Determination Date. "Average Index Price" means the average of the Index
Prices for the 10 consecutive full Nasdaq trading days ending at the close of
trading on the Determination Date. "Determination Date" means the date on which
the approval of the OTS required for consummation of the Merger will be
received. "Index Group" means the 16 savings and loan holding companies listed
below, the common stock of all of which will be publicly traded and as to which
there will not have been, since October 24, 1997 and before the Determination
Date, any public announcement of a proposal for such company to be acquired or
for such company to acquire another company or companies in transactions with a
value exceeding 25% of the acquiror's market capitalization as of October 24,
1997. In the event that the common stock of any such company ceases to be
publicly traded or such an announcement is made, such company will be removed
from the Index Group, and the weights (which were determined based on the number
of outstanding shares of common stock) redistributed proportionately for
purposes of determining the Index Price. The 16 savings and loan holding
companies and the weights attributed to them are as follows:
SAVINGS AND LOAN HOLDING COMPANY WEIGHTING
- ----------------------------------------------- ----------
Washington Federal ..................... 12.39%
Bank United Corp. ..................... 8.25
Peoples Heritage Financial Corp. ...... 7.17
Astoria Financial Corp. ............... 5.48
Commercial Federal Corp. ............... 5.63
Roslyn Bancorp Inc. .................. 11.39
St. Paul Bancorp Inc. .................. 8.91
Downey Financial Corp. ............... 6.98
TR Financial Corp. .. .................. 4.57
Queens County Bancorp Inc. ............ 3.94
Westcorp .............................. 6.84
ALBANK Financial Corp. ............... 3.36
MAF Bancorp Inc. ..................... 4.02
CFX Corp. .............................. 6.26
CitFed Bancorp Inc. .................. 2.25
JSB Financial Inc. ..................... 2.57
"Index Price" on a given date means the weighted average (weighted in
accordance with the factors listed above) of the closing prices on such date of
the companies composing the Index Group. If any company belonging to the Index
Group or Webster declares or effects a stock dividend, reclassification,
recapitalization, split-up, combination, exchange of shares or similar
transaction between October 24, 1997 and the Determination Date, the prices for
the common stock of such company or Webster will be appropriately adjusted for
use in the index.
In the event of termination of the Merger Agreement pursuant to its terms,
the Merger Agreement will become void and of no effect except (i) for certain
confidentiality and expense payment obligations and (ii) that termination will
not relieve or release a breaching party from liability or damages for any
willful breach of the Agreement.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary discusses the material federal income tax
consequences of the Merger. The summary is based upon the Code, applicable
United States Treasury Regulations thereunder, administrative rulings and
judicial authority, all as of the date hereof. All of the foregoing are subject
to change, and any such change could affect the continuing validity of this
summary. The summary assumes that the Eagle Stockholders hold such shares of
Eagle Common Stock as a capital asset. The summary does not
45
<PAGE>
address the tax consequences that may be applicable to a particular Eagle
Stockholder subject to special tax rules, such as tax-exempt organizations,
dealers in securities, financial institutions, insurance companies, non-United
States persons, Eagle Stockholders who acquired shares of Eagle Common Stock
pursuant to the exercise of Eagle Options or otherwise as compensation or
through a qualified retirement plan and stockholders who hold shares of Eagle
Common Stock as part of a "straddle," "hedge," or "conversion transaction." This
summary also does not address any consequences arising under the tax laws of any
state, locality, or foreign jurisdiction.
In connection with the filing of the Registration Statement, Wachtell,
Lipton, Rosen & Katz, special counsel to Webster, has delivered to Webster its
opinion, dated the date hereof and based upon certain customary assumptions and
representations, substantially to the effect that (and, at the Effective Time,
each of Wachtell, Lipton, Rosen & Katz and Skadden, Arps, Slate, Meagher & Flom
LLP, counsel to Eagle, will, subject to the qualifications discussed in the next
paragraph, deliver to Webster and Eagle, respectively, its opinion (each, a "Tax
Opinion") dated as of the Effective Time, substantially to the effect that), in
each case for U.S. federal income tax purposes: the Merger will be treated for
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code and each of Webster and Eagle will be a party to the
reorganization within the meaning of Section 368(b) of the Code, and that,
accordingly, for federal income tax purposes, (i) no gain or loss will be
recognized by Webster or Eagle as a result of the Merger, (ii) no gain or loss
will be recognized by Eagle Stockholders who exchange all of their Eagle Common
Stock solely for Webster Common Stock pursuant to the Merger (except with
respect to cash received in lieu of a fractional share interest in Webster
Common Stock), and (iii) the aggregate tax basis of the Webster Common Stock
received by Eagle Stockholders who exchange all of their Eagle Common Stock
solely for Webster Common Stock pursuant to the Merger will be the same as the
aggregate tax basis of the Eagle Common Stock surrendered in exchange therefor
(reduced by any amount allocable to a fractional share interest for which cash
is received).
The obligations of Webster and Eagle to consummate the Merger are subject
to the receipt by Webster and Eagle of the Tax Opinion of its respective counsel
in form and substance reasonably acceptable to the party to whom such Tax
Opinion is addressed. Each of Wachtell, Lipton, Rosen & Katz and Skadden, Arps,
Slate, Meagher & Flom LLP will render its respective Tax Opinion on the basis of
facts, representations and assumptions set forth or referred to in such opinion
that are consistent with the state of facts existing at the Effective Time. In
rendering such opinion, such counsel may, to the extent such counsel deems
necessary or appropriate, require and rely upon representations and covenants,
including those contained in certificates of officers of Eagle, Webster, their
respective affiliates and others. Unlike a ruling from the Internal Revenue
Service ("IRS"), an opinion of counsel is not binding on the IRS, and there can
be no assurance that the IRS will not take a position contrary to one or more of
the positions reflected in such opinion or that such positions will be upheld by
the courts if challenged by the IRS.
Assuming that the Merger will qualify as a reorganization within the
meaning of Section 368(a) of the Code, and subject to the foregoing, the Merger
will have the federal income tax consequences discussed below.
Tax Implications to Eagle Stockholders. Except to the extent Eagle
Stockholders receive cash in lieu of a fractional share interest, Eagle
Stockholders who exchange shares of Common Stock in the Merger for shares of
Webster Common Stock will not recognize gain or loss for federal income tax
purposes upon the receipt of shares of Webster Common Stock in exchange for
their shares of Eagle Common Stock. The aggregate tax basis of shares of Webster
Common Stock received as a result of the Merger will be the same as the Eagle
Stockholder's aggregate tax basis in the shares of Eagle Common Stock
surrendered in the exchange, reduced by the portion of such stockholder's tax
basis properly allocated to the fractional share interest, if any, for which
such stockholder receives cash. The holding period of the shares of Webster
Common Stock received by Eagle Stockholders as a result of the Merger will
include the period during which such Eagle Stockholder held the shares of Eagle
Common Stock exchanged by such Eagle Stockholder in the Merger, provided that
the shares of Eagle Common Stock so exchanged were held as capital assets at the
Effective Time. An Eagle Stockholder that receives cash in lieu of a fractional
share interest in Webster Common Stock in the Merger will be treated as having
received the
46
<PAGE>
fractional share interest in shares of Webster Common Stock in the Merger and as
having received the cash in redemption of the fractional share interest. The
cash payment will be treated as a distribution in payment of the fractional
interest deemed redeemed under Section 302 of the Code, with the result that the
Eagle Stockholder should generally recognize gain or loss on the deemed
redemption in an amount equal to the difference between the amount of cash
received and such Eagle Stockholder's adjusted tax basis allocable to such
fractional share. Such gain or loss will be capital gain or loss if such Eagle
Stockholder's shares of Eagle Common Stock are held as a capital asset at the
Effective Time. The capital gain or loss so recognized generally will be
long-term capital gain or loss if the holding period for the fractional share
interest exceeds one year at the Effective Time. In the case of Eagle
Stockholders who are individuals, such capital gain will be taxed at a maximum
rate of 28% if such Eagle Stockholder's holding period is more than one year but
not more than 18 months, and at a maximum rate of 20% if such holding period is
more than 18 months.
Tax Implications to Webster and Eagle. Neither Webster nor Eagle will
recognize any gain or loss for federal income tax purposes as a result of the
Merger.
Eagle Stockholders are urged to consult their own tax advisors as to the
specific tax consequences to them of the Merger, including tax return reporting
requirements, the applicability and effect of federal, state, local and other
applicable tax laws, and the effect of any proposed changes in the tax laws.
ACCOUNTING TREATMENT
The Merger is intended to qualify as a "pooling-of-interests" for
accounting and financial reporting purposes. Under the pooling-of-interests
method of accounting, the recorded assets and liabilities of Eagle will be
carried forward to Webster at their recorded amounts. Revenues and expenses of
Webster will include revenues and expenses of Eagle for the entire fiscal year
of Webster in which the Merger occurs, and the reported revenues and expenses of
Eagle for prior periods will be combined with those of Webster, whose financial
statements will then be restated.
It is a condition to the Merger that Webster receive an opinion of its
independent accountants, Peat Marwick, to the effect that the Merger will be
accounted for as a pooling-of-interests. See "-- Conditions to the Merger."
RESALES OF WEBSTER COMMON STOCK RECEIVED IN THE MERGER
The shares of Webster Common Stock issuable to Eagle Stockholders upon
consummation of the Merger have been registered under the Securities Act. Such
securities may be traded freely without restriction by those stockholders who
are not deemed to be "affiliates" of Webster or Eagle (as defined in the rules
promulgated under the Securities Act).
Shares of Webster Common Stock received by those Eagle Stockholders who are
deemed to be affiliates of Eagle at the time of the Eagle Special Meeting may be
resold without registration under the Securities Act only as permitted by Rule
145 under the Securities Act or as otherwise permitted thereunder. SEC
guidelines regarding qualifying for the "pooling-of-interests" method of
accounting also limit sales of shares of the acquiring and acquired company by
affiliates of either company in a business combination. SEC guidelines also
indicate that the "pooling-of-interests" method of accounting generally will not
be challenged on the basis of sales by affiliates of the acquiring or acquired
company if such affiliates do not dispose of or otherwise reduce their risk
relative to any of the shares of the corporation they own, or shares of a
corporation they receive in connection with a merger, during the period
beginning 30 days before the merger is consummated and ending when financial
results covering at least 30 days of post-merger operations of the combined
companies have been published.
Each of Webster and Eagle has agreed in the Merger Agreement to use its
reasonable best efforts to cause each person who is an affiliate (for purposes
of Rule 145 under the Securities Act and for purposes of qualifying the Merger
for "pooling-of-interests" accounting treatment) of such party to execute and
deliver to the other party a written agreement intended to ensure compliance
with the Securities Act (in the case of Eagle affiliates) and to preserve the
ability of the Merger to be accounted for as a "pooling-of-interests."
47
<PAGE>
ABSENCE OF DISSENTERS' APPRAISAL RIGHTS
Neither Webster Stockholders nor Eagle Stockholders will have appraisal
rights under the DGCL or any other statute in connection with the Merger. As
stockholders of Delaware corporations, the appraisal rights of both Webster
Stockholders and Eagle Stockholders are governed by Section 262 of the DGCL.
Under Section 262 of the DGCL, stockholders do not have appraisal rights when
(i) the common stock that they hold is designated as a national market system
security on an interdealer quotation system by the National Association of
Securities Dealers, Inc. and (ii) the holder is not required in the merger to
accept for such stock anything except shares of stock in the surviving
corporation or cash in lieu of fractional shares. Because each of the Webster
Common Stock and Eagle Common Stock are listed on Nasdaq, and because Eagle
Stockholders will receive only shares of Webster Common Stock and cash in lieu
of fractional shares thereof, no dissenter's appraisal rights are available
under the DGCL or otherwise.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Eagle management and of the Eagle Board may be deemed to
have interests in the Merger that are different from or in addition to their
interests as Eagle Stockholders. The Eagle Board was aware of these interests
and considered them, among other matters, in approving the Merger Agreement and
the transactions contemplated thereby. The following information describes the
material interests of Eagle management and of the Eagle Board in the Merger that
are different from or in addition to their interests as Eagle Stockholders.
Webster Board of Directors; Advisory Board. Pursuant to the Merger
Agreement and prior to the Effective Time, three directors of Eagle, selected by
the Webster Board in consultation with Eagle, will be invited to serve as
additional members of the Webster Board and will receive directors fees on the
same basis as the other non-employee directors of Webster. Further, the
remaining non-employee directors of Eagle serving on the Eagle Board immediately
prior to the Effective Time will be invited to serve on an advisory board to
Webster for a period of not less than 24 months following the Effective Time.
The advisory directors will be paid a quarterly retainer fee of $3,250 and will
also receive a meeting fee of $1,750 for each meeting attended. The advisory
board will meet at least four times per year.
Eagle Options. Each of the directors and executive officers of Eagle owns
Eagle Options granted under the Eagle Stock Plans. At the Effective Time, each
outstanding and unexercised Eagle Option under the Eagle Stock Plans will be
converted automatically into an option to purchase shares of Webster Common
Stock on the terms set forth in the Merger Agreement. See "-- Options." As of
February 11, 1998, the directors and executive officers of Eagle as a group held
Eagle Options to purchase 303,416 shares of Eagle Common Stock.
Indemnification. In the Merger Agreement, Webster has agreed that, for a
period of six years after the Effective Time, it will indemnify and hold
harmless, to the fullest extent permitted by applicable law, each person who is,
was or becomes prior to the Effective Time, a director, officer or employee of
Eagle or any of its subsidiaries (each, an "Indemnified Party") against any
losses, claims, damages, liabilities, costs, expenses (including reasonable
attorneys' fees and expenses in advance of the final disposition of any claim,
suit, proceeding or investigation to each Indemnified Party upon receipt of any
undertaking required by applicable law), judgments, fines and amounts paid in
settlement in connection with any threatened or actual claim, action, suit,
proceeding or investigation to which the Indemnified Party is made a party based
on, arising out of, or pertaining to the fact that such person is or was a
director, officer or employee of Eagle or any of its subsidiaries or their
predecessors or the Merger Agreement, the Stock Option Agreement and the
transactions contemplated thereby. If any such claim, action, suit, proceeding
or investigation occurs or is threatened, whether asserted before or after the
Effective Time, the Indemnified Parties are entitled to retain counsel
reasonably acceptable to Webster, subject to certain limitations. In addition,
Webster has agreed to use commercially reasonable efforts to cause the persons
serving as officers and directors of Eagle immediately prior to the Effective
Time to be covered by a directors' and officers' liability insurance policy on
terms not generally less advantageous than Eagle's policy in effect as of the
date of the Merger Agreement, such policy to cover acts or omissions occurring
prior to the Effective Time and to remain in effect for not less than one year.
48
<PAGE>
New Consulting and Employment Agreements. In connection with the execution
of the Merger Agreement, Webster entered into consulting agreements with Mr.
Britton, President and Chief Executive Officer of Eagle, and Mark J. Blum, Vice
President, Chief Financial Officer and Secretary of Eagle, pursuant to which
Messrs. Britton and Blum will serve as consultants to Webster for up to twenty
hours per week for a period of one year beginning on the Effective Date (each, a
"Consulting Agreement"). For such service, each of Messrs. Britton and Blum will
receive an annual consulting fee equal to 75% of his annual base salary as an
executive officer of Eagle as in effect immediately prior to the Effective Time.
Mr. Britton's annual base salary as of January 1, 1998, was $248,170, and Mr.
Blum's annual base salary as of that date was $148,363. Webster has also agreed
to reimburse each of Messrs. Britton and Blum for all reasonable business
expenses incurred by each of them in their capacities as consultants to Webster.
Webster will indemnify each of Messrs. Britton and Blum for all expenses, costs,
liabilities and legal fees he incurs in the discharge of his duties as a
consultant performed at the direction of a senior officer of Webster. The
Consulting Agreements contain an acknowledgment by Webster that, at the
Effective Time, each of Messrs. Britton's and Blum's employment under their
respective Eagle Agreements (as defined herein) will terminate and that such
termination will be deemed a termination for Good Reason (as defined in each of
the Eagle Agreements) in connection with a change in control of Eagle. Each
Consulting Agreement terminates at the expiration of its one-year term or on the
death or disability of Mr. Britton or Mr. Blum, as the case may be. Each
Consulting Agreement is also terminable by the consultant on 30 days' notice to
Webster or by Webster if the consultant should engage in certain specified
competitive activities.
Also in connection with the execution of the Merger Agreement, Webster
entered into an employment agreement (the "Employment Agreement") with Kenneth
F. Burns, Vice President of Eagle. The terms of the Employment Agreement are
substantially similar to the terms of the Consulting Agreements, with the
following differences. Under the Employment Agreement, Mr. Burns will serve as
an employee of Webster with a title of senior vice president or higher. Mr.
Burns will be paid an annual base salary that is not less than his annual base
salary as in effect immediately prior to the Effective Time, which annual base
salary, as of January 1, 1998, was $113,295. Mr. Burns will also be entitled to
participate in all compensation, retirement and other benefit plans, and fringe
benefits, of Webster (or of any Webster subsidiary by which Mr. Burns is then
employed) on the same basis as peer executives of Webster or such subsidiary, as
the case may be. In the event Mr. Burns terminates his employment under the
Employment Agreement as a result of Webster's breach of such agreement, or other
than upon expiration of the term of the Employment Agreement, on 30 days'
written notice by Mr. Burns to Webster, or on Mr. Burns' death or disability, or
if Webster terminates Mr. Burns' employment under the Employment Agreement other
than for cause (as defined in the Employment Agreement), Webster is required to
pay to Mr. Burns a lump sum in cash equal to his base salary with respect to the
remainder of the term of the Employment Agreement and is required to continue
the benefits and perquisites under the Employment Agreement for the remainder of
such term. The Employment Agreement does not contain an indemnification
provision comparable to the Consulting Agreements.
Existing Employment Agreements with Executive Officers. Each of Messrs.
Britton, Blum and Burns, and Barbara S. Mills, Vice President and Treasurer of
Eagle, and a senior officer of Eagle Bank (collectively, the "Eagle
Executives"), is a party to an employment agreement with Eagle (each, an "Eagle
Agreement"). Pursuant to the Eagle Agreements, each Eagle Executive is entitled
to a lump sum cash payment in the event his or her employment is terminated,
voluntarily or involuntarily, or in the event an Eagle Executive terminates his
or her Eagle Agreement, in connection with or within two years after a change in
control of Eagle or of Eagle Bank (unless the termination occurs by virtue of
normal retirement, permanent and total disability or death) (a "Merger-Related
Termination"). The Merger will constitute a "change in control" of Eagle for
purposes of the Eagle Agreements. If a Merger-Related Termination is a voluntary
termination by the Eagle Executive without good reason (as defined in the Eagle
Agreements), the cash lump sum will be equal to one year's salary; for Ms.
Mills, this amount would be $81,168, and for each of the other Eagle Executives,
this amount would be their base salaries as described above. If the
Merger-Related Termination is involuntary on the part of the Eagle Executive or
is voluntary for good reason, the cash lump sum payment will be equal to three
times the Base Amount (as defined herein) less one dollar. The "Base Amount" is
the Eagle Executive's average
49
<PAGE>
annualized compensation payable by Eagle or any subsidiary thereof that was
includible in his or her gross income for federal income tax purposes with
respect to the five most recent taxable years of the Eagle Executive ending
before the change in control. The estimated lump sum severance amounts payable
under the terms of the Eagle Agreement, assuming a qualifying termination as of
the Effective Time, would be as follows: Mr. Britton, $1,936,000; Mr. Blum,
$1,185,000; Mr. Burns, $1,042,000; and Ms. Mills, $256,000 (totalling
$4,419,000). Payments to an Eagle Executive pursuant to an Eagle Agreement are
limited so that such payment, together with any other compensation due to the
Eagle Executive, would not cause any payment due the Eagle Executive under an
Eagle Agreement to be considered a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code.
Eagle Post-Retirement Compensation Plan for Outside Directors. The Eagle
Post-Retirement Compensation Plan for Outside Directors (the "Directors
Retirement Plan") generally provides for periodic payments to Eagle directors
who retire or who are not re-elected and who have served for five years or more
on the Eagle Board. The Directors Retirement Plan further provides that, in the
event of a change in control (as defined in the Directors Retirement Plan) of
Eagle or Eagle Bank, the administrator of the Directors Retirement Plan is
required to direct Eagle to establish a grantor trust to provide for the payment
of the benefits of the participants under the Directors Retirement Plan. Such
grantor trust is required to be funded within 10 days of the occurrence of a
change in control, and must be funded in an amount not less than the aggregate
present value, as determined by the administrator, of all amounts that in the
future will be payable to participants in the Directors Retirement Plan as of
the date of such funding. In lieu of the establishment of such grantor trust,
Webster and Eagle have agreed that Eagle may pay such benefits to the
participants in a lump sum equivalent.
THE STOCK OPTION AGREEMENT
As a condition of and an inducement to Webster's approval and execution of
the Merger Agreement, Webster and Eagle approved and executed the Stock Option
Agreement immediately after the execution of the Merger Agreement.
The Stock Option Agreement is intended to increase the likelihood that the
Merger will be consummated in accordance with the terms of the Merger Agreement.
Consequently, certain aspects of the Stock Option Agreement may have the effect
of discouraging persons who might now be, or at any other time prior to the
Effective Time might be, interested in acquiring all of or a significant
interest in Eagle from considering or proposing such an acquisition, even if
such persons were prepared to offer to the Eagle Stockholders consideration with
a higher current market price than the shares of Webster Common Stock to be
received per share of Eagle Common Stock pursuant to the Merger Agreement. The
acquisition of Eagle by a third party could cause the Option to become
exercisable. The existence of the Option could significantly increase the cost
to a potential acquiror of acquiring Eagle compared to such cost had the parties
not entered into the Stock Option Agreement. Such increased cost might
discourage a potential acquiror from considering or proposing an acquisition or
might result in a potential acquiror proposing to pay a lower per share price to
acquire Eagle than it might otherwise have proposed to pay. Moreover, the
exercise or repurchase of the Option is likely to prohibit any other acquiror of
Eagle from accounting for such an acquisition using the "pooling-of-interests"
accounting method for a period of two years.
Pursuant to the Stock Option Agreement, Eagle granted to Webster the Option
entitling Webster to purchase, subject to the terms of the Option Agreement, up
to 1,256,991 shares of Eagle Common Stock, under the circumstances described
below, at a price per share of $41.25, subject to adjustment in certain
circumstances (the "Option Price"). In no event, however, will the number of
Eagle Option Shares exceed 19.9% of Eagle's issued and outstanding shares of
Common Stock without giving effect to the issuance of any shares of Eagle Common
Stock subject to the Option.
The number of shares of Eagle Common Stock subject to the Option will be
increased or decreased, as appropriate, to the extent that additional shares of
Eagle Common Stock are either (i) issued or otherwise become outstanding after
October 26, 1997 or (ii) redeemed, repurchased, retired or otherwise cease to be
outstanding after October 26, 1997, such that, after such issuance, the number
of Eagle Option Shares will continue to equal 19.9% of the Eagle Common Stock
then issued and outstanding without giving effect to the issuance of any shares
of Eagle Common Stock subject to the Option.
50
<PAGE>
The Stock Option Agreement provides that Webster or any other holder or
holders of the Option (each, a "Holder") may exercise the Option, in whole or in
part, if both an Initial Triggering Event and a Subsequent Triggering Event have
occurred prior to the occurrence of an Exercise Termination Event (as defined
herein); provided that the Holder has sent to Eagle written notice of such
exercise within 90 days following such Subsequent Triggering Event (subject to
extension as provided in the Stock Option Agreement). If prior notification to
or approval of the OTS or of any other regulatory agency or of Eagle
Stockholders is required in connection with such purchase, the Holder shall
promptly file the required notice or application for approval and shall
expeditiously process the same or use best efforts to promptly obtain such Eagle
Stockholder approval, as the case may be, and the period of time that otherwise
would run pursuant to the notice requirement described above shall run instead
from the date on which any required notification periods have expired or been
terminated or such approvals have been obtained and any requisite waiting period
or periods shall have passed. Any exercise of the Option will be deemed to occur
on the date the Holder sends the required notice. Eagle shall take all necessary
action in order to permit the Holder to exercise the Option.
For purposes of the Stock Option Agreement:
(i) The term "Initial Triggering Event" means the occurrence of any of
the following events or transactions after October 26, 1997: (a) Eagle or any
subsidiary of Eagle, without Webster's prior written consent, enters into an
agreement to engage in, or the Eagle Board recommends that Eagle Stockholders
approve or accept, an Acquisition Transaction (as defined herein) with any
person or group (other than Webster or any Subsidiary of Webster); (b) Eagle,
without Webster's prior written consent, authorizes, recommends, proposes or
publicly announces its intention to authorize, recommend or propose to engage
in an Acquisition Transaction, or the Eagle Board publicly withdraws or
modifies, or publicly announces its intention to withdraw or modify, in any
manner adverse to Webster, its recommendation that the Eagle Stockholders
approve the Merger Agreement in anticipation of engaging in an Acquisition
Transaction; (c) any person, other than Webster, any subsidiary of Webster or
any subsidiary Eagle acting in a fiduciary capacity in the ordinary course of
business acquires beneficial ownership, or the right to acquire beneficial
ownership, of 10% or more of the outstanding shares of Eagle Common Stock;
(d) any person other than Webster or any subsidiary of Webster makes a bona
fide proposal to Eagle or its stockholders by public announcement or written
communication that becomes the subject of public disclosure to engage in an
Acquisition Transaction; (e) Eagle breaches any covenant or obligation in the
Merger Agreement after any person, other than Webster or any subsidiary of
Webster, has proposed an Acquisition Transaction, and such breach (1) would
entitle Webster to terminate the Merger Agreement and (2) is not remedied
prior to the date of Webster's notice to Eagle of its intent to exercise the
Option; or (f) any person other than Webster or any subsidiary of Webster,
other than in connection with a transaction to which Webster has given its
prior written consent, files an application or notice with the OTS, or other
federal or state bank or thrift regulatory authority, which application or
notice has been accepted for processing, for approval to engage in an
Acquisition Transaction.
(ii) The term "Acquisition Transaction" means (a) a merger or
consolidation, or any similar transaction, with Eagle or any of its
Significant Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the
SEC); (b) a purchase, lease or other acquisition or assumption of all or
substantially all of the assets or deposits of Eagle or any of its
Significant Subsidiaries; (c) a purchase or other acquisition of securities
representing 10% or more of the voting power of Eagle; or (d) any
substantially similar transaction; provided, however, that in no event will
any (1) merger, consolidation, purchase or similar transaction involving only
Eagle and one or more of its subsidiaries or involving only any two or more
of such subsidiaries or (2) merger or consolidation as to which the Eagle
Stockholders immediately prior thereto own in the aggregate at least 60% of
the common stock of the surviving corporation or its publicly held parent
corporation immediately following consummation thereof be deemed to be an
Acquisition Transaction, provided that any such transaction is not entered
into in violation of the terms of the Merger Agreement.
(iii) The term "Subsequent Triggering Event" means the occurrence of
either of the following events or transactions after October 26, 1997: (a)
the acquisition by any person of beneficial ownership of 25% or more of the
then-outstanding shares of Eagle Common Stock; or (b) the occurrence of the
Initial Triggering Event described above in clause (i)(a) above, except that
the percentage referred to in clause (ii)(c) above of the definition of
"Acquisition Transaction" will be 25%.
51
<PAGE>
The Option will expire upon the occurrence of an "Exercise Termination
Event," which includes: (i) the Effective Time (as defined in the Merger
Agreement) of the Merger; (ii) termination of the Merger Agreement in accordance
with the provisions thereof if such termination occurs prior to the occurrence
of an Initial Triggering Event, except in the event that Webster terminates the
Merger Agreement pursuant thereto as a result of a breach by Eagle of any of its
representations, warranties, covenants or agreements set forth therein, unless
the breach by Eagle is non-volitional; or (iii) the date that is 12 months after
the termination of the Merger Agreement if such termination occurs after the
occurrence of an Initial Triggering Event or is a termination by Webster as a
result of a breach by Eagle of any of its representations, warranties, covenants
or agreements set forth therein, unless the breach by Eagle is non-volitional.
As of the date of this Joint Proxy Statement/Prospectus, to the best
knowledge of Eagle and Webster, no Initial Triggering Event or Subsequent
Triggering Event has occurred.
Immediately prior to the occurrence of a Repurchase Event (as defined
herein), (i) following a request of the Holder, delivered prior to an Exercise
Termination Event, Eagle (or any successor thereto) will repurchase the Option
from the Holder at a price (the "Option Repurchase Price") equal to the amount
by which (a) the Market/Offer Price (as defined herein) exceeds (b) the Option
Price, multiplied by the number of shares for which the Option may then be
exercised and (ii) at the request of the owner of Option Shares from time to
time (the "Owner"), delivered within 90 days of such occurrence (subject to
extension in certain cases), Eagle will repurchase such number of Option Shares
from the Owner as the Owner designates at a price (the "Option Share Repurchase
Price") equal to the Market/Offer Price multiplied by the number of Option
Shares so designated.
The term "Market/Offer Price" means the highest of (i) the price per share
of Eagle Common Stock at which a tender offer or exchange offer has been made,
(ii) the price per share of Eagle Common Stock to be paid by any third party
pursuant to an agreement with Eagle, (iii) the highest closing price for shares
of Eagle Common Stock within the six-month period immediately preceding the date
the Holder gives notice of the required repurchase of the Option or the Owner
gives notice of the required repurchase of Option Shares, as the case may be, or
(iv) in the event of a sale of all or a substantial portion of Eagle's assets,
the sum of the price paid in such sale for such assets and the current market
value of the remaining assets of Eagle as determined by a nationally recognized
investment banking firm selected by the Holder or the Owner, as the case may be,
and reasonably acceptable to Eagle, divided by the number of shares of Eagle
Common Stock outstanding at the time of such sale. In determining the
Market/Offer Price, the value of consideration other than cash will be
determined by a nationally recognized investment banking firm selected by the
Holder or Owner, as the case may be, and reasonably acceptable to Eagle. To the
extent that Eagle is prohibited under applicable law or regulation from
repurchasing (or would be required to give prior notice to, or to obtain the
prior approval of, any regulatory authority in order to cause Eagle Bank to pay
dividends sufficient to allow Eagle to repurchase), or requires any approval of
Eagle Stockholders to repurchase, the Option and/or the Option Shares in full,
Eagle will immediately so notify the Holder and/or the Owner and thereafter
deliver or cause to be delivered, from time to time, to the Holder and/or the
Owner, as appropriate, the portion of the Option Repurchase Price and the Option
Share Repurchase Price, respectively, that it is no longer prohibited from
delivering (or with respect to which Eagle has received any required funds from
Eagle Bank), within five business days after the date on which Eagle is no
longer so prohibited. Eagle has agreed to use its best efforts to obtain such
approval of Eagle Stockholders and all required regulatory and legal approvals
and to file any required notices as promptly as practicable in order to
accomplish such repurchase. Notwithstanding the above, if Eagle is prohibited
under applicable law or regulation (or would be required to give prior notice to
or obtain the prior approval of any regulatory authority in order to cause Eagle
Bank to pay dividends sufficient to allow Eagle to repurchase), or requires any
approval of Eagle Stockholders to deliver the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full, the Holder and/or Owner
may revoke its notice of repurchase in whole or to the extent of the
prohibition, whereupon, in the latter case, Eagle will promptly (i) deliver to
the Holder or the Owner, as appropriate, that portion of the Option Repurchase
Price or the Option Share Repurchase Price that Eagle is not prohibited from
delivering (or with respect to which Eagle has received any required funds from
Eagle Bank); and (ii) deliver, as appropriate, either (a) to the Holder, a new
Stock Option Agreement evidencing the right of the Holder to purchase that
number of shares of Eagle Common Stock obtained by multiplying the number of
shares of Eagle Common Stock for which the surrendered Stock Option Agreement
was exercisable at the time of delivery of the notice of repurchase by a
fraction, the numerator of which is the Option Repurchase Price less the portion
thereof that
52
<PAGE>
previously was delivered to the Holder and the denominator of which is the
Option Repurchase Price, or (b) to the Owner, a certificate for the Option
Shares it is then so prohibited from repurchasing.
A "Repurchase Event" is deemed to have occurred (i) upon the consummation
of an Acquisition Transaction or (ii) upon the acquisition by any person of the
beneficial ownership of 50% or more of the then-outstanding Eagle Common Stock,
provided that a Subsequent Triggering Event has occurred prior to an Exercise
Termination Event.
In the event that, prior to an Exercise Termination Event, Eagle enters
into an agreement (i) to consolidate with or merge into any person, other than
Webster or one of its subsidiaries, such that Eagle is not the continuing or
surviving corporation; (ii) to permit any person, other than Webster or one of
its subsidiaries, to merge into Eagle where Eagle is the continuing or surviving
corporation, but, in connection with such merger, the outstanding shares of
Eagle Common Stock are changed into or exchanged for stock or other securities
of any other person or cash or any other property, or the outstanding shares of
Eagle Common Stock after such merger will represent less than 50% of the
outstanding voting shares and voting share equivalents of the merged
corporation; or (iii) to sell or otherwise transfer all or substantially all of
its assets to any person, other than Webster or one of its Subsidiaries, then,
and in each such case, the agreement governing such transaction must provide
that the Option will, upon consummation of such transaction and upon terms and
conditions set forth in the Stock Option Agreement, be converted into, or
exchanged for, an option having substantially the same terms as the Option (the
"Substitute Option") to purchase securities, at the election of the Holder, of
either the acquiring person or any person that controls the acquiring person. At
the request of the Holder of the Substitute Option (or the owner of shares of
common stock issued thereunder), the issuer of the Substitute Option will
repurchase it (or any shares of such issuer's common stock issued pursuant
thereto, as the case may be) at a price, and subject to such other terms and
conditions, as set forth in Stock Option Agreement.
Within 90 days after the occurrence of a Subsequent Triggering Event prior
to an Exercise Termination Event (subject to extension as provided in the Option
Agreement), Webster may request Eagle to prepare, file and keep current with
respect to the Option and any shares issued and issuable pursuant to the Option,
a shelf registration statement under the Securities Act. Eagle is required to
use its reasonable best efforts to cause such registration statement to become
effective and then to remain effective for 180 days or such shorter time as may
be reasonably necessary to effect such sales or other disposition of the Option
and any shares issued and issuable under the Option. Webster has the right to
demand two such registrations. The Stock Option Agreement also provides that, in
the event that Eagle is in registration with respect to an underwritten public
offering of shares of Eagle Common Stock at the time of a request by Webster for
registration, and, if in the good faith judgment of the managing or sole
underwriter inclusion of Holder's Option or Option Shares would interfere with
such offering, the number of Option Shares to be covered in the registration may
be reduced to no less than 25% of the total number of shares to be sold by the
Holder and Eagle in the aggregate; provided, however, that Eagle shall
thereafter file a registration statement for the balance as promptly as
practicable and no further reduction shall occur.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Pursuant to the Merger Agreement and prior to the Effective Time, the
Webster Board, in consultation with Eagle, will select three directors of Eagle
to be invited to serve as additional members of the Webster Board. In addition,
the remaining non-employee directors of Eagle serving on the Eagle Board
immediately prior to the Effective Time will be invited to serve on an advisory
board to Webster for a period of not less than 24 months after the Effective
Time. Further, in connection with the execution of the Merger Agreement, Webster
entered into the Consulting Agreements with Mr. Britton and Mr. Blum, and the
Employment Agreement with Mr. Burns. See "THE MERGER -- Interests of Certain
Persons in the Merger."
53
<PAGE>
MARKET PRICES AND DIVIDENDS
WEBSTER COMMON STOCK
The following sets forth the range of high and low sale prices of Webster
Common Stock as reported on Nasdaq, as well as cash dividends paid during the
periods indicated.
CASH
MARKET PRICE DIVIDENDS PAID
--------------------- ---------------
HIGH LOW QUARTER
--------- --------- ---------------
Ended:
March 31, 1995 .................. $ 22.25 $ 18.00 $ 0.16
June 30, 1995 .................. 26.00 21.25 0.16
September 30, 1995 ............ 31.00 23.00 0.16
December 31, 1995 ............... 29.50 24.50 0.16
March 31, 1996 .................. 30.25 27.50 0.16
June 30, 1996 .................. 29.38 26.75 0.16
September 30, 1996 ............ 35.75 28.00 0.18
December 31, 1996 ............... 38.25 33.50 0.18
March 31, 1997 .................. 41.38 35.13 0.18
June 30, 1997 .................. 45.75 34.63 0.20
September 30, 1997 ............ 59.75 43.38 0.20
December 31, 1997 ............... 67.75 57.00 0.20
Through February 9, 1998 ........ 67.00 58.00
On October 24, 1997, the last trading day prior to the public announcement
of the Merger, the closing price of Webster Common Stock on Nasdaq was $66.00.
On February 9, 1998, the closing price of Webster Common Stock on Nasdaq was
$64.00.
EAGLE COMMON STOCK
The following sets forth the range of high and low sale prices of Eagle
Common Stock as reported on Nasdaq, as well as cash dividends paid during the
periods indicated.
CASH
MARKET PRICE DIVIDENDS PAID
--------------------- ---------------
HIGH LOW QUARTER
--------- --------- ---------------
Ended:
March 31, 1995 .................. $ 21.25 $ 17.50 $ 0.21
June 30, 1995 .................. 22.25 19.00 0.21
September 30, 1995 ............ 24.25 21.25 0.21
December 31, 1995 ............... 27.75 22.25 0.23
March 31, 1996 .................. 26.25 22.75 0.23
June 30, 1996 .................. 26.75 22.25 0.23
September 30, 1996 ............ 27.25 23.75 0.23
December 31, 1996 ............... 31.00 26.25 0.23
March 31, 1997 .................. 30.75 27.75 0.23
June 30, 1997 .................. 31.75 26.75 0.23
September 30, 1997 ............ 41.00 30.25 0.25
December 31, 1997 ............... 55.50 39.00 0.25
Through February 9, 1998 ........ 55.94 45.50
On October 24, 1997, the last trading day prior to the public announcement
of the Merger, the closing price of Eagle Common Stock on Nasdaq was $43.00. On
February 9, 1998, the closing price of Eagle Common Stock on Nasdaq was $52.75.
54
<PAGE>
COMPARISON OF STOCKHOLDER RIGHTS
Set forth below is a summary of certain differences between the rights of
Eagle Stockholders and the rights of Webster Stockholders. If the Merger
Agreement is approved and adopted and the Merger is consummated, Eagle
Stockholders will become Webster Stockholders, and, therefore, the rights of
Eagle Stockholders will cease to be governed by the Eagle Certificate and the
Eagle Bylaws and, instead, will be governed by the Certificate of Incorporation
of Webster (the "Webster Certificate") and Bylaws of Webster (the "Webster
Bylaws"). The rights of Eagle Stockholders will, however, continue to be subject
to the DGCL. See "AMENDMENT TO THE WEBSTER CERTIFICATE."
The following comparison is based on the current terms of the governing
documents of Webster and Eagle. The discussion is intended to highlight
important similarities and differences between the rights of Webster
Stockholders and Eagle Stockholders. There are no substantial differences
between the rights of Webster Stockholders and Eagle Stockholders under the DGCL
other than as a result of the foregoing.
Although it is impractical to compare all of the aspects in which the
certificates of incorporation and bylaws of Webster and Eagle differ with
respect to stockholders' rights, the following discussion summarizes the
material differences in such rights.
DIRECTORS
The Webster Certificate provides that the Webster Board will be divided
into three classes, with directors in each class elected for three-year terms,
and with one of the three classes to expire each succeeding year. The Webster
Certificate further provides that the size of the Webster Board shall not exceed
15 members. The Webster Bylaws currently provide for 12 directors and the Merger
Agreement contemplates the addition of three directors of Eagle as of the
Effective Time.
The Webster Certificate and the Webster Bylaws provide that a vacancy
occurring in the Board of Directors, including a vacancy created by any increase
in the number of directors, shall be filled for the remainder of the unexpired
term by a majority vote of the directors then in office. The Webster Certificate
provides that a director may be removed only for cause and then only by the
affirmative vote of at least two-thirds of the total votes eligible to be voted
by stockholders at a duly constituted stockholder meeting called for the purpose
of voting to remove the directors. The director who is the subject of the
meeting must receive 30 days' written notice of the meeting and reasons
therefor.
Webster's Bylaws provide that to be eligible for nomination as a director,
a nominee must be a resident of the State of Connecticut at the time of his or
her nomination or, if not then a resident, have been previously a resident for
at least three years. The Webster Bylaws further provide that each director is
required to own at least 100 shares of Webster Common Stock.
The Webster Bylaws also provide that nominations for election to the
Webster Board be made at a meeting of stockholders by or at the direction of the
Webster Board or by any Webster stockholder entitled to vote for the election of
directors at such meeting who complies with certain notice requirements. Such
notification must be made in writing and must be delivered to or mailed and
received by the Secretary of Webster not less than 30 nor more than 90 days
prior to the meeting (or not less than 15 days following the day on which notice
is given or public disclosure is made in the event that such notice is given or
disclosure is made less than 45 days prior to the date of the stockholder
meeting).
The provisions of the Eagle Certificate and the Eagle Bylaws with regard to
directors are substantially similar to those of Webster, except as follows: the
Eagle Bylaws provide for 10 directors; the Eagle Bylaws require directors to be
residents of the State of Connecticut without exception, require directors to be
employed on a substantially full-time basis in the State of Connecticut, and
provide that no person of an age 70 years or older is eligible for election,
reelection, appointment or reappointment to the Eagle Board or is permitted to
serve as a director beyond the annual meeting of Eagle immediately following
such director's seventieth birthday.
55
<PAGE>
SPECIAL MEETINGS
The Webster Certificate provides that a special meeting of stockholders may
be called only by the Chairman of the Webster Board, the President of Webster or
the Webster Board. Stockholders are not authorized to call a special meeting.
The Eagle Certificate contains substantially the same provision. The Webster
Bylaws require notice of special meetings to be given to stockholders eligible
to vote at such meeting not less than 20 nor more than 50 days before the date
of the meeting. The Eagle Bylaws provide for similar notice to be given not less
than 10 nor more than 60 days before the date of the meeting.
STOCKHOLDER ACTION WITHOUT A MEETING
The Webster Certificate provides that any action required or permitted to
be taken by stockholders must be effected at a duly called annual or special
meeting of such stockholders and may not be effected by written consent unless
such consent is unanimous. The Eagle Certificate contains a substantially
similar provision.
APPROVALS FOR ACQUISITIONS OF CONTROL AND OFFERS TO ACQUIRE CONTROL
Generally, the Webster Certificate prohibits any person, with certain
limited exceptions, from acquiring Control (as defined herein) of Webster unless
the acquisition has received the prior approval of at least two-thirds of the
outstanding shares of voting stock at a duly called meeting of Webster
Stockholders held for such purpose and of all regulatory approvals. For purposes
of this provision, "Control" is defined as the sole or shared power to vote or
to direct the voting of, or to dispose or direct the disposition of, 10% or more
of Webster's voting stock. Furthermore, no person may make an offer to acquire
Control without obtaining prior approval of the offer by at least two-thirds of
the Webster Board or by the OTS. This provision of the Webster Certificate
remains effective only so long as a federally insured depositary institution is
a majority-owned subsidiary of Webster. Shares acquired in excess of the 10%
limitation without such approval ("Excess Shares") are not entitled to vote or
take other stockholder action or be counted in determining the total number of
outstanding shares in connection with any matter involving stockholder action.
Excess Shares are also subject to transfer to a trustee, selected by Webster,
for sale on the open market or otherwise, with the proceeds to be paid first to
the trustee in an amount equal to the trustee's reasonable fees and expenses,
second to the beneficial owner in an amount up to such owner's federal tax basis
in such shares and third to Webster as to any remaining balance. The Eagle
Certificate contains a substantially similar provision, except as follows: the
Eagle Certificate prohibits any person, with certain limited exceptions, from
acquiring Control of Eagle unless the acquisition has received the prior
approval of either the two-thirds vote of the outstanding shares of voting stock
of Eagle Stockholders or, in the alternative, the acquisition has been approved
by at least two-thirds of the directors in office at a duly constituted meeting
of the Eagle Board called for that purpose and by the affirmative vote of the
holders of at least a majority of the outstanding shares of Eagle Voting Stock
at a duly constituted meeting of shareholders called for that purpose. In
addition, no person shall acquire Control of Eagle at any time without obtaining
prior to such acquisition all federal regulatory approvals.
PROCEDURES FOR CERTAIN BUSINESS COMBINATIONS
Generally, the Webster Certificate requires that certain business
combinations between Webster (or any majority-owned subsidiary thereof) and an
"Interested Person" (as defined herein) or any affiliate or associate of an
Interested Person (collectively, the "Interested Stockholder") either (i) be
approved by at least 80% of the total number of outstanding shares of voting
stock of Webster, or (ii) be approved by at least two-thirds of Webster's
Continuing Directors (as defined herein) or meet certain price and procedure
requirements that provide for consideration per share generally equal to that
paid by the Interested Stockholder when it acquired its shares of Webster Common
Stock. "Interested Person" is defined as any person (other than Webster or any
majority-owned Webster subsidiary or any employee stock purchase plan or other
employee benefit plan of Webster or any majority-owned Webster subsidiary) that
is the direct or indirect Beneficial Owner (as defined herein) of 10% or more or
the voting
56
<PAGE>
power of Webster or, alternatively, is an affiliate of Webster and at any time
within the two-year period immediately prior to the date in question was the
beneficial owner, directly or indirectly, of 10% or more of the voting power of
the then outstanding voting stock. "Beneficial Owner" is defined as a person
(individually or with any of its affiliates or associates) that, directly or
indirectly, owns voting stock, has the right to acquire voting stock, has the
right to vote or direct the voting of voting stock, has the right to dispose of
or to direct the disposition of voting stock or has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting, or disposing of
voting stock with any other person (individually or with any of its affiliates
or associates) that beneficially owns, directly or indirectly, such shares of
voting stock. "Continuing Directors" are persons who are unaffiliated with the
Interested Stockholder and who were either on the Webster Board before the
Interested Stockholder became such or who are later elected to the Webster Board
to succeed a Continuing Director and whose election is recommended by a majority
of the Continuing Directors.
The types of business combinations involving an Interested Stockholder
covered by this provision include: any merger, consolidation or share exchange;
any sale, lease, exchange, mortgage, pledge or other transfer other than in the
usual and regular course of business of assets of Webster having an aggregate
book value of 10% or more of the total market value of the outstanding shares of
Webster or of Webster's net worth; an issuance or transfer of equity securities
having an aggregate market value in excess of 5% of the aggregate market value
of Webster's outstanding shares; the adoption of any plan or proposal of
liquidation proposed by or on behalf of an Interested Stockholder; and any
reclassification of securities, recapitalization of Webster or any merger or
consolidation of Webster with any of its subsidiaries or any other transaction
that has the effect of increasing the proportionate ownership interest of the
Interested Stockholder.
The Eagle Certificate contains a substantially similar provision.
LIMITATION ON LIABILITY AND INDEMNIFICATION OF DIRECTORS
The Webster Certificate provides that no director shall be personally
liable to Webster or the Webster Stockholders for monetary damages for breach of
fiduciary duty as a director other than liability (i) for any breach of the
director's duty of loyalty to Webster or the Webster Stockholders, (ii) for acts
or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) for any payment of a dividend or approval of a
stock repurchase that is illegal under Section 174 of the DGCL or (iv) for any
transaction from which a director derived an improper personal benefit. In
addition, the Webster Bylaws provide for indemnification of directors, officers,
trustees, employees and agents of Webster who are made parties to or threatened
to be made parties to any suit or proceeding ("Defendants") because of their
position as such or because they assumed such position with another entity at
Webster's request, for expenses (including attorneys' fees), judgments, fines,
penalties and amounts paid in settlement actually and reasonably incurred in
connection with such action. These provisions only apply where the Defendant
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of Webster (and, with respect to any criminal
proceeding, he or she had no reasonable cause to believe his or her conduct was
unlawful); provided, however, that, in the case of suits brought in the name of
Webster, no indemnification will be made against expenses in respect of any
matter as to which such Defendant shall have been found liable to Webster or
against amounts paid in settlement unless and only to the extent that there is a
determination that, in view of all of the circumstances, the Defendant met the
applicable standard of conduct and indemnification for such expenses or amounts
is proper. Determining the propriety of indemnification rests with (i) the
Webster Board by a majority of a quorum of directors who were not parties to the
action, (ii) by independent legal counsel, (iii) Webster Stockholders or (iv)
any court of competent jurisdiction within the State of Delaware; provided,
however, that, to the extent that a Defendant was successful on the merits or
otherwise, he or she will be indemnified against expenses, without the necessity
of such a determination. The Webster Bylaws further provide that Webster may
purchase and maintain insurance on behalf of any person who is or was a
director, officer, trustee, employee or agent of Webster, or is or was serving
in such a capacity with another corporation at Webster's request, for liability
asserted against or incurred by him or her in such capacity, regardless of
whether Webster would have had the power or the obligation to indemnify him
against such liability under the provisions discussed above.
57
<PAGE>
The Eagle Certificate contains substantially similar provisions regarding
limitations on director liability and the Eagle Bylaws set forth substantially
similar provisions regarding indemnification.
CUMULATIVE VOTING
Neither the Webster Certificate and the Eagle Certificate provides for
cumulative voting rights in the election of directors.
NOTICE OF STOCKHOLDER MEETINGS
The Webster Bylaws require that notice setting forth the place, date and
hour of the meeting and the purpose or purposes for which the meeting is brought
be given not less than 20 nor more than 50 days prior to each annual or special
meeting of Webster Stockholders. The Eagle Bylaws require that notice setting
forth the place, date and hour of the meeting and the purpose or purposes for
which the meeting is brought be given not less than 10 nor more than 60 days
prior to such meeting.
NOTICE OF BUSINESS TO BE CONDUCTED AT STOCKHOLDER MEETINGS
The Webster Bylaws provide that Webster Stockholders seeking to bring
business before an annual Webster Stockholders meeting must give proper notice,
which notice must be delivered to or mailed and received at Webster's principal
executive office not less than 30 nor more than 90 days prior to the meeting;
provided, however, that, in the event that notice or public disclosure of the
meeting is given less than 45 days prior to the meeting, the stockholder's
notice must be so received not less than 15 days following the day of notice or
public disclosure of the meeting was made. The Eagle Bylaws contain a
substantially similar provision.
QUORUM
The Webster Bylaws and the Eagle Bylaws each provide that the holders of
one-third of the capital stock issued and outstanding and entitled to vote at a
meeting constitutes a quorum.
ACTION OF STOCKHOLDERS
Except as otherwise required by law or the Webster Certificate or the
Webster Bylaws, the Webster Bylaws provide that any matter brought before a
meeting of Webster Stockholders shall be decided by the affirmative vote of a
majority of the votes cast on the matter. The Eagle Bylaws provide that except
as otherwise provided by law, the Eagle Certificate or the Eagle Bylaws, all
questions shall be decided by the affirmative vote of a majority of the votes
cast on the matter.
RECORD DATE
The Webster Bylaws provide that the record date for determination of
stockholders entitled to notice of or to vote at a meeting and for certain other
specified purposes shall not be less than 20 nor more than 50 days before the
date of such meeting or other action. The Eagle Bylaws provide that the record
date for determination of stockholders entitled to notice of or to vote at a
meeting and for certain other specified purposes shall be not less than 10 nor
more than 60 days prior to the date of the meeting or other action.
ANTI-GREENMAIL
The Webster Certificate requires approval by a majority of the outstanding
shares of Webster voting stock before Webster may, directly or indirectly,
purchase or otherwise acquire any voting stock of Webster beneficially owned,
directly or indirectly, by a holder of 5% percent or more of Webster's voting
stock, if such holder has owned such shares for less than two years. Any shares
beneficially held by such person are excluded in calculating the number of
shares outstanding and the required affirmative vote. This provision does not
apply to a pro rata offer made by Webster to all of its stockholders in
58
<PAGE>
compliance with the Exchange Act and the rules and regulations thereunder, or to
a purchase of voting stock by Webster if the Webster Board has determined that
the purchase price per share does not exceed the fair market value of such
voting stock. The Eagle Certificate contains a substantially similar provision.
CRITERIA FOR EVALUATING CERTAIN OFFERS
The Webster Certificate provides that the Webster Board, when evaluating
any offers to (i) make a tender or exchange offer for Webster Common Stock, (ii)
merge or consolidate Webster with another institution or (iii) purchase or
otherwise acquire all or substantially all of the properties and assets of
Webster, shall, in connection with determining what is, in the Webster Board's
judgment, in the best interests of Webster and the Webster Stockholders, give
due consideration to all relevant factors, including, without, limitation, the
economic effects of acceptance of the offer on depositors, borrowers and
employees of its insured institution subsidiaries and on the communities in
which such subsidiaries operate or are located, as well as on the ability of
such subsidiaries to fulfill the objectives of insured institutions under
applicable United States federal statutes and regulations. The Eagle's
Certificate contains a substantially similar provision.
AMENDMENT TO CERTIFICATE OF INCORPORATION AND BYLAWS
Amendments to the Webster Certificate must be first proposed by the Webster
Board upon the affirmative vote of at least two-thirds of the Webster Board at a
duly constituted meeting called for such purpose and thereafter approved by
Webster's stockholders by an affirmative vote of at least a majority of the
shares entitled to vote thereon at a duly called annual or special meeting;
provided, however, that approval by an affirmative vote of at least two-thirds
of the shares entitled to vote thereon is required to amend provisions relating
to the Webster Board, amendment of the Webster Bylaws, authority to call special
meetings of Webster Stockholders, approval of acquisitions of control and
related offers, criteria for evaluating certain offers, anti-greenmail and
action by written consent; and that approval by an affirmative vote of at least
80% of the shares entitled to vote thereon is required for amendments to the
provisions relating to amendments of the Webster Certificate and Webster
Stockholder approval required for business combinations involving Interested
Stockholders. The Webster Bylaws may be amended by the affirmative vote of at
least two-thirds of the Webster Board or by Webster Stockholders by an
affirmative vote of at least two-thirds of the total votes eligible to be voted
at a duly constituted meeting called for such purpose. The Eagle Certificate and
the Eagle Bylaws contain substantially similar provisions.
SHAREHOLDER RIGHTS AGREEMENT
On February 5, 1996, the Webster Board declared a dividend distribution of
one preferred stock purchase right (a "Webster Right") for each outstanding
share of Webster Common Stock to Webster Stockholders of record at the close of
business on February 16, 1996. Each Webster Right entitles the registered holder
to purchase from Webster a unit consisting of one one-thousandth of a share (a
"Unit") of Series C Participating Preferred Stock, par value $.01 per share, of
Webster (the "Series C Stock"), at a purchase price of $100 per unit, subject to
adjustment. The description and terms of the Webster Rights are set forth in the
Webster Rights Agreement. The Webster Rights are exercisable, if at all, on or
prior to February 4, 2006.
No separate rights certificates have been or will be distributed, and
ownership of the Webster Rights is and will be evidenced by the ownership of
Webster Common Stock certificates representing shares then outstanding, unless
and until certain circumstances occur. The Webster Rights will separate from the
Webster Common Stock and will be distributed upon the earliest of (i) 10
business days following a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding shares of Webster Common Stock (the "Stock Acquisition Date"), (ii)
10 business days following the commencement of a tender offer or exchange offer
that, if consummated, would result in a
59
<PAGE>
person or group beneficially owning 15% or more of such outstanding shares of
Webster Common Stock or (iii) 10 business days after the Webster Board has
declared any person to be an Adverse Person (as defined herein) (such date, the
"Distribution Date").
The Webster Board, by a majority vote, shall declare a person to be an
"Adverse Person" upon making (i) a determination that such person, alone or
together with its affiliates and associates, has or will become the beneficial
owner of 10% or more of the outstanding shares of Webster Common Stock (provided
that any such determination will not be effective until such person has become
the beneficial owner of 10% or more of the outstanding shares of Webster Common
Stock) and (ii) a determination, after reasonable inquiry and investigation,
including consultation with such persons as the Webster Board deems appropriate,
that (a) such beneficial ownership by such person is intended to cause, is
reasonably likely to cause or will cause Webster to repurchase the Webster
Common Stock beneficially owned by such person or to cause pressure on Webster
to take action or enter into a transaction or series of transactions intended to
provide such person with short-term financial gain under circumstances where the
Webster Board believes that the best long-term interests of Webster and the
Webster Stockholders would not be served by taking such action or entering into
such transactions or series of transactions at that time, (b) such beneficial
ownership is causing or is reasonably likely to cause a material adverse impact
(including, but not limited to, impairment of relationships with customers or
impairment of Webster's ability to maintain its competitive position) on the
business or prospects of Webster or (c) such beneficial ownership is otherwise
determined to be not in the best interests of Webster and the Webster
Stockholders, employees, customers and the communities in which Webster and its
subsidiaries do business. However, the Webster Board may not declare a person to
be an Adverse Person if, prior to the time that the person acquired 10% or more
of the shares of Webster Common Stock then outstanding, such person provided to
the Webster Board a written statement of the person's purpose and intentions
with respect to the acquisition of the Webster Common Stock, and the Webster
Board deemed it appropriate not to declare the person an Adverse Person. The
Webster Board may impose conditions on its determination (such as the person not
acquiring more than a specified amount of Webster Common Stock).
Until the date rights certificates are distributed pursuant to the Webster
Rights Agreement, (i) the Webster Rights will be evidenced by the Webster Common
Stock certificates and will be transferred with and only with such Webster
Common Stock certificates, (ii) new Webster Common Stock certificates issued
after February 16, 1996 will contain a notation incorporating the Webster Rights
Agreement by reference, and (iii) the surrender for transfer of any certificates
for Webster Common Stock outstanding will also constitute the transfer of the
Webster Rights associated with the Webster Common Stock represented by such
certificate.
The Webster Rights are not exercisable until the Distribution Date and will
expire at the close of business on February 4, 2006, unless earlier redeemed by
Webster as described below.
As soon as practicable after the Distribution Date, rights certificates
will be mailed to holders of record of the Webster Common Stock as of the close
of business on the Distribution Date and, thereafter, the separate rights
certificates alone will represent the Webster Rights. Except as otherwise
determined by the Webster Board, only shares of Webster Common Stock issued
prior to the Distribution Date will be issued with Webster Rights.
In the event that the Webster Board determines that a person is an Adverse
Person or a person becomes the beneficial owner of 15% or more of the then
outstanding shares of Webster Common Stock, each holder of a Webster Right,
after the end of the redemption period, will thereafter have the right to
receive (i) upon exercise and payment of the exercise price, Webster Common
Stock (or, in certain circumstances, cash, property or other securities of
Webster) having a value equal to two times the exercise price of the Webster
Right or (ii) at the discretion of the Webster Board, upon exercise and without
payment of the exercise price, Webster Common Stock (or, in certain
circumstances, cash, property or other securities of Webster) having a value
equal to the difference between the exercise price of the Webster Right and the
value of the consideration that would be payable under clause (i).
Notwithstanding any of the foregoing, following the occurrence of any of the
events set forth in this
60
<PAGE>
paragraph, all Webster Rights that are, or (under certain circumstances
specified in the Webster Rights Agreement) were, beneficially owned by any
Acquiring Person or Adverse Person will be null and void. However, Webster
Rights are not exercisable following the occurrence of either of the events set
forth above until such time as the Webster Rights are no longer redeemable by
Webster as set forth below.
In the event that, at any time following the Stock Acquisition Date, (i)
Webster consolidates with or merges with and into any other person and Webster
is not the continuing or surviving corporation, (ii) any person consolidates
with or merges with or into Webster and Webster is the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Webster Common
Stock shall be changed into or exchange for stock or other securities of any
other person or cash or any other property or (iii) Webster sells or transfers
50% or more of its assets or earning power, each holder of a Webster Right
(except Webster Rights that previously have been voided as set forth above) will
thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the exercise price of the
Webster Right. The events set forth in this paragraph and in the preceding
paragraph are referred to as the "Triggering Events."
At any time after a person or group of affiliated or associated persons
becomes an Acquiring Person, the Webster Board may exchange the Webster Rights
(other than Webster Rights owned by such person or group that have become void),
in whole or in part, at an exchange ratio of one share of Webster Common Stock
per Webster Right (subject to adjustment).
The purchase price payable and the number of Units of Series C Stock or
other securities or property issuable upon exercise of the Webster Rights are
subject to adjustment from time to time in certain circumstances, including as
follows: (i) issuance of a stock dividend on, or a subdivision, combination or
reclassification of the Series C Stock; (ii) if holders of the Series C Stock
are granted certain rights, options or warrants to subscribe for Series C Stock
or securities convertible into Series C Stock at less than the current market
price of the Series C Stock, or (iii) upon the distribution to holders of the
Series C Stock of evidences of indebtedness, cash (excluding regular quarterly
cash dividends) or assets (other than dividends payable in Series C Stock, but
including dividends payable in stock other than Series C Stock) or of
subscription rights or warrants (other than those referred to above). With
certain exceptions, no adjustment in the purchase price will be required until
cumulative adjustments amount to at least 1% of the purchase price.
No fractional Units will be issued and, in lieu thereof, an adjustment in
cash will be made based on the market price of the Series C Stock on the last
trading date prior to the date of exercise.
In general, the Webster Board may cause Webster to redeem the Webster
Rights in whole, but not in part, at a price of $.01 per Webster Right, at any
time until 10 business days following the Stock Acquisition Date or such period
as may be extended. Under certain circumstances, the decision to redeem the
Webster Rights will require the concurrence of a majority of the continuing
directors (who, in general, are those directors who were directors of Webster on
February 5, 1996, or who subsequently became directors and whose elections or
nominations were approved by a majority of the continuing directors). Moreover,
redemption is not permitted after 10 business days following the effective date
of any declaration by the Webster Board that any person is an Adverse Person.
After the redemption period has expired, Webster's right of redemption may be
reinstated if an Acquiring Person reduces its beneficial ownership to less that
10% of the outstanding shares of Webster in a transaction or series of
transactions not involving Webster and there are no other Acquiring Persons or
Adverse Persons. Immediately upon the action of the Webster Board ordering
redemption of the Webster Rights, the Webster Rights will terminate and the only
right of the holders of Webster Rights will be to receive the $.01 redemption
price.
Until a Webster Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of Webster, including, without limitation, the right
to vote or to receive dividends.
Other than those provisions relating to the principal economic terms of the
Webster Rights, any of the provisions of the Webster Rights Agreement may be
amended by the Webster Board prior to the Distribution Date. After the
Distribution Date, the provisions of the Webster Rights Agreement may be
61
<PAGE>
amended by the Webster Board in order to cure any ambiguity, defect or
inconsistency or to make changes which do not adversely affect the interests of
holders of Webster Rights (excluding the interests of any Acquiring Person or
Adverse Person), or to shorten or lengthen any time period under the Webster
Rights Agreement; provided, however, no amendment to adjust the time period
governing redemption may be made at such time as the Webster Rights are not
redeemable.
A copy of the Webster Rights Agreement has been filed with the SEC as an
exhibit to a Current Report on Form 8-K. A copy of the Webster Rights Agreement
is available free of charge from Webster. This summary description of the
Webster Rights does not purport to be complete and is qualified in its entirety
by reference to the Rights Agreement, which is incorporated herein by reference.
On October 22, 1996, the Eagle Board declared a dividend distribution of
one preferred stock purchase right (an "Eagle Right") for each outstanding share
of Eagle Common Stock, with each Eagle Right entitling the holder to purchase
from Eagle a unit consisting of one one-thousandth of a share of Series A
Participating Preferred Stock of Eagle, at a purchase price of $100 per unit,
subject to adjustment. The rights set forth in the Eagle Rights Agreement are
substantially similar to those set forth in the Webster Rights Agreement and
described above (except that, in instances in which the Webster Rights would be
exercisable for or exchangeable into securities or assets of Webster, the Eagle
Rights are generally exercisable or exchangeable into securities or assets of
Eagle). The Eagle Rights are exercisable, if at all, on or prior to October 22,
2006.
Eagle has amended the Eagle Rights Agreement to ensure that entering into
the Merger Agreement and the Stock Option Agreement and consummating the
transactions contemplated thereby did not and will not result in the grant of
any rights to any person under the Eagle Rights Agreement or enable or require
the Eagle Rights to be exercised, distributed or triggered.
62
<PAGE>
STOCKHOLDER PROPOSALS
Any proposal which a Webster Stockholder wishes to have included in the
proxy materials of Webster with respect to Webster's 1998 Annual Meeting must
have been received by Webster at Webster's principal executive offices at
Webster Plaza, Waterbury, Connecticut 06702 no later than December 1, 1997.
Eagle will hold a 1998 Annual Meeting of Eagle Stockholders only if the
Merger is not consummated. In the event that Eagle holds its 1998 Annual
Meeting, Eagle will inform its stockholders of the date upon which such meeting
will be held and the date by which stockholder proposals must be received for
inclusion in the proxy materials.
OTHER MATTERS
It is not expected that any matters other than those described in this
Joint Proxy Statement/ Prospectus will be brought before the Webster Special
Meeting or the Eagle Special Meeting. If any other matters are presented,
however, it is the intention of the persons named in the Webster or Eagle proxy,
as the case may be, to vote such proxy in accordance with the determination of a
majority of the Webster or Eagle Board, as the case may be, including, without
limitation, a motion to adjourn or postpone the Webster Special Meeting or the
Eagle Special Meeting to another time and/or place for the purpose of soliciting
additional proxies in order to approve the Merger Agreement or otherwise.
EXPERTS
The consolidated financial statements of Webster (as restated to include DS
Bancor Inc and Peoples Savings Financial Corp.) at December 31, 1996 and 1995,
and for each of the three years in the period ended December 31, 1996,
incorporated by reference into this Joint Proxy Statement/Prospectus, have been
so incorporated in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, appearing in the incorporated
materials and given upon the authority of that firm as experts in accounting and
auditing.
The separate consolidated financial statements of Webster (excluding DS
Bancor Inc and Peoples Savings Financial Corp.) at December 31, 1996 and 1995,
and for each of the years in the three year period ended December 31, 1996
incorporated by reference into this Joint Proxy Statement/Prospectus, have been
so incorporated in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, appearing in the incorporated
materials and given upon the authority of that firm as experts in accounting and
auditing.
The consolidated financial statements of Eagle Financial Corp. and
subsidiaries at September 30, 1997 and 1996, and for each of the years in the
three year period ended September 30, 1997, have been incorporated by reference
herein in reliance on the report of KPMG Peat Marwick LLP, independent certified
public accountants, incorporated by reference herein and upon the authority of
said firm as experts in accounting and auditing. The report of KPMG Peat Marwick
LLP covering the September 30, 1997, consolidated financial statements of Eagle
Financial Corp. and subsidiaries refers to a change in the method of accounting
for investment securities in 1995.
LEGAL MATTERS
The validity of the Webster Common Stock to be issued in the Merger has
been passed upon by Wachtell, Lipton, Rosen & Katz. Wachtell, Lipton, Rosen &
Katz and Skadden, Arps, Slate, Meagher & Flom LLP will be passing upon certain
tax matters in connection with the Merger.
63
<PAGE>
PRO FORMA COMBINED FINANCIAL STATEMENTS
The following Pro Forma Combined Statement of Condition as of September 30,
1997 combines the historical consolidated statements of financial condition of
Webster and Eagle as if the Merger had occurred on September 30, 1997, after
giving effect to the pro forma adjustments described in the accompanying notes.
The Pro Forma Combined Statements of Income for the nine months ended September
30, 1997 and 1996, and for the years ended December 31, 1996, 1995 and 1994 are
presented as if the Merger had been consummated at the beginning of each period
presented. Webster's fiscal year ends December 31 and Eagle's fiscal year ends
September 30. The pro forma combined financial statements combine the financial
information of Webster (as restated to include DS Bancor Inc. and Peoples
Savings Financial Corp.) at and for the fiscal years ended December 31, 1996,
1995 and 1994 with the financial information of Eagle (as restated to include
MidConn Bank) at and for the fiscal years ended September 30, 1996, 1995 and
1994, respectively, and combines the financial information of Webster (as
restated to include DS Bancor Inc. and Peoples Savings Financial Corp.) at and
for the nine-month periods ended September 30, 1997 and 1996 with the financial
information of Eagle (as restated to include MidConn Bank) at and for the nine
months periods ended June 30, 1997 and 1996, respectively.
The pro forma combined financial statements should be read in conjunction
with the separate historical consolidated financial statements and notes of
Webster and Eagle incorporated by reference herein. See "INFORMATION
INCORPORATED BY REFERENCE." The pro forma combined financial statements are not
necessarily indicative of the consolidated financial position or results of
future operations of the combined entity or of the actual results that would
have been achieved had the Merger been consummated prior to the periods
indicated.
64
<PAGE>
PRO FORMA COMBINED STATEMENT OF CONDITION
SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
WEBSTER EAGLE PRO FORMA PRO FORMA
(HISTORICAL) (HISTORICAL) ADJUSTMENTS COMBINED
-------------- -------------- ------------------------ --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Cash and Due from Depository Institutions ...... $ 125,728 $ 28,435 $ 154,163
Interest-bearing Deposits ........................ 90,100 42,716 132,816
Securities:
Trading Securities at Fair Value ............... 71,452 -- 71,452
Available for Sale, at Fair Market Value ......... 2,101,410 736,722 (14,263)(a)(e) 2,823,869
Held to Maturity (Market: 447,237) ............... 444,980 -- 444,980
Loans Receivable, Net ........................... 3,732,498 1,130,304 (1,500)(c) 4,861,302
Segregated Assets, Net ........................... 44,784 -- 44,784
Accrued Interest Receivable ..................... 40,127 11,557 51,684
Premises and Equipment, Net ..................... 58,436 12,578 (1,200)(c) 69,814
Foreclosed Properties, Net ..................... 10,983 4,685 15,668
Intangible Assets .............................. 50,525 30,304 80,829
Prepaid Expenses and Other Assets ............... 39,991 16,058 1,450 (b) 57,499
---------- ---------- ------- ----------
Total Assets .................................... $6,811,014 $2,013,359 $ (15,513) $8,808,860
========== ========== ============ ==========
LIABILITIES AND SHAREHOLDERS'
EQUITY
LIABILITIES:
Deposits ....................................... $4,265,011 $1,385,431 $5,650,442
Federal Home Loan Bank Advances ............... 1,039,029 409,558 1,448,587
Other Borrowings .............................. 972,437 1,251 973,688
Advanced Payments by Borrowers for Taxes and In-
surance........................................ 12,052 12,701 24,753
Accrued Expenses and Other Liabilities ......... 58,901 17,315 10,500 (c) 86,716
---------- ---------- ------------ ----------
Total Liabilities .............................. 6,347,430 1,826,256 10,500 8,184,186
Corporation-Obligated Mandatorily Redeemable
Capital Securities of Subsidiary Trust ...... 100,000 48,858 (5,000)(e) 143,858
---------- ---------- ------------ ----------
SHAREHOLDERS' EQUITY:
Common Stock .................................... 136 63 (12)(d) 187
Paid In Capital ................................. 172,321 78,589 (7,610)(a)(d) 243,300
Retained Earnings .............................. 181,203 59,072 (11,750)(b)(c) 228,525
Less Treasury Stock at Cost ..................... (4,068) (362) 362 (d) (4,068)
Unrealized Gains (Losses), Net .................. 15,963 883 (2,003)(a) 14,843
Less Employee Stock Ownership Plan Shares Pur-
chased with Debt .............................. (1,971) -- -- (1,971)
---------- ---------- ------------ ----------
Total Shareholders' Equity ..................... 363,584 138,245 (21,013) 480,816
---------- ---------- ------------ ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY:...... $6,811,014 $2,013,359 $ (15,513) $8,808,860
========== ========== ============ ==========
</TABLE>
The pro forma combined statement of condition has not been adjusted to
reflect any of the improvements in operating efficiencies that Webster
anticipates may occur in the future due to the Merger.
See accompanying notes to pro forma combined financial statements.
65
<PAGE>
PRO FORMA COMBINED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
WEBSTER EAGLE PRO FORMA
(HISTORICAL) (HISTORICAL) COMBINED
-------------- -------------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
INTEREST INCOME:
Loans and Segregated Assets .............................. $223,250 $65,219 $288,469
Securities ............................................. 103,179 32,022 135,201
-------- ------- --------
Total Interest Income ................................. 326,429 97,241 423,670
INTEREST EXPENSE:
Interest on Deposits .................................... 126,695 41,453 168,148
Interest on Borrowings ................................. 56,164 12,315 68,479
-------- ------- --------
Total Interest Expense ................................. 182,859 53,768 236,627
Net Interest Income .................................... 143,570 43,473 187,043
Provision for Loan Losses ................................. 13,460 8,678 22,138
-------- ------- --------
Net Interest Income After Provision for Loan Losses ...... 130,110 34,795 164,905
NONINTEREST INCOME:
Fees and Service Charges ................................. 20,168 3,205 23,373
Gain on Sale of Loans and Securities, Net ............... 2,379 17 2,396
Other Noninterest Income ................................. 3,183 2,037 5,220
-------- ------- --------
Total Noninterest Income .............................. 25,730 5,259 30,989
-------- ------- --------
NONINTEREST EXPENSES:
Salaries and Employee Benefits ........................... 45,041 12,700 57,741
Occupancy Expense of Premises ........................... 9,491 2,495 11,986
Furniture and Equipment Expenses ........................ 8,818 1,611 10,429
Federal Deposit Insurance Premiums ..................... 757 525 1,282
Foreclosed Property Expenses and Provisions, Net ......... 1,716 1,687 3,403
Intangibles Amortization ................................. 4,693 2,257 6,950
Marketing Expenses ....................................... 4,261 1,541 5,802
Merger and Acquisition Expenses ........................ 27,058 3,499 30,557
Capital Securities Expenses .............................. 6,446 1,260 7,706
Other Operating Expenses ................................. 17,809 6,574 24,383
-------- ------- --------
Total Noninterest Expenses ........................... 126,090 34,149 160,239
-------- ------- --------
Income before Income Taxes .............................. 29,750 5,905 35,655
Income Taxes ............................................. 10,757 3,057 13,814
-------- ------- --------
NET INCOME: ............................................. $ 18,993 $ 2,848 $ 21,841
======== ======= ========
NET INCOME PER COMMON SHARE: (f)
Primary ................................................ $ 1.37 $ 0.44 $ 1.13
======== ======= ========
Fully Diluted .......................................... $ 1.35 $ 0.44 $ 1.12
======== ======= ========
</TABLE>
The pro forma combined statement of income has not been adjusted to reflect
any of the improvements in operating efficiencies that Webster anticipates may
occur in the future due to the Merger.
See accompanying notes to pro forma combined financial statements.
66
<PAGE>
PRO FORMA COMBINED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
WEBSTER EAGLE PRO FORMA
(HISTORICAL) (HISTORICAL) COMBINED
-------------- -------------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
INTEREST INCOME:
Loans and Segregated Assets ........................... $212,983 $ 60,468 $273,451
Securities ............................................. 73,581 29,409 102,990
-------- -------- --------
Total Interest Income .............................. 286,564 89,877 376,441
INTEREST EXPENSE:
Interest on Deposits ................................. 130,324 41,467 171,791
Interest on Borrowings ................................. 31,215 8,914 40,129
-------- -------- --------
Total Interest Expense .............................. 161,539 50,381 211,920
Net Interest Income ................................. 125,025 39,496 164,521
Provision for Loan Losses .............................. 6,204 2,541 8,745
-------- -------- --------
Net Interest Income After Provision for Loan Losses..... 118,821 36,955 155,776
NONINTEREST INCOME:
Fees and Service Charges .............................. 16,626 2,859 19,485
Gain (Loss) on Sale of Loans and Securities, Net ...... 2,383 (1,947) 436
Non-recurring Gain on Sale of Deposits ............... -- 15,904 15,904
Other Noninterest Income .............................. 3,659 1,452 5,111
-------- -------- --------
Total Noninterest Income ........................... 22,668 18,268 40,936
-------- -------- --------
NONINTEREST EXPENSES:
Salaries and Employee Benefits ........................ 45,561 12,653 58,214
Occupancy Expense of Premises ........................ 9,290 2,238 11,528
Furniture and Equipment Expenses ..................... 8,031 1,262 9,293
Federal Deposit Insurance Premiums ..................... 1,584 1,387 2,971
Foreclosed Property Expenses and Provisions, Net ....... 2,644 1,524 4,168
Intangible Amortization .............................. 4,141 2,098 6,239
Marketing Expenses .................................... 4,172 1,435 5,607
Merger and Acquisition Expenses ........................ 500 -- 500
SAIF Assessment ....................................... 4,730 -- 4,730
Other Operating Expenses .............................. 17,217 6,450 23,667
-------- -------- --------
Total Noninterest Expenses ........................... 97,870 29,047 126,917
-------- -------- --------
Income before Income Taxes .............................. 43,619 26,176 69,795
Income Taxes Expense .................................... 15,747 10,388 26,135
-------- -------- --------
NET INCOME ............................................. 27,872 15,788 43,660
Preferred Stock Dividends .............................. 928 -- 928
-------- -------- --------
Net Income Available to Common Stockholders ............ $ 26,944 $ 15,788 $ 42,732
======== ======== ========
NET INCOME PER COMMON SHARE: (f)
Primary ................................................ $ 1.99 $ 2.49 $ 2.26
======== ======== ========
Fully Diluted .......................................... $ 1.90 $ 2.47 $ 2.18
======== ======== ========
</TABLE>
The pro forma combined statement of income has not been adjusted to reflect
any of the improvements in operating efficiencies that Webster anticipates may
occur in the future due to the Merger.
See accompanying notes to pro forma combined financial statements.
67
<PAGE>
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
WEBSTER EAGLE PRO FORMA
(HISTORICAL) (HISTORICAL) COMBINED
-------------- -------------- ------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
INTEREST INCOME:
Loans and Segregated Assets ........................... $285,614 $ 81,390 $367,004
Securities .......................................... 100,844 39,178 140,022
-------- -------- --------
Total Interest Income .............................. 386,458 120,568 507,026
INTEREST EXPENSE:
Interest on Deposits ................................. 173,934 55,289 229,223
Interest on Borrowings .............................. 43,487 12,198 55,685
-------- -------- --------
Total Interest Expense .............................. 217,421 67,487 284,908
Net Interest Income ................................. 169,037 53,081 222,118
Provision for Loan Losses .............................. 9,788 3,266 13,054
-------- -------- --------
Net Interest Income After Provision for Loan Losses.... 159,249 49,815 209,064
NONINTEREST INCOME:
Fees and Service Charges .............................. 22,242 3,818 26,060
Gain (Loss) on Sale of Loans and Loan Servicing,
Net ................................................ 737 (1,442) (705)
Gain (Loss) on Sale of Securities, Net ............... 4,133 (463) 3,670
Non-recurring Gain on Sale of Deposits ............... -- 15,904 15,904
Other Noninterest Income .............................. 5,067 2,013 7,080
-------- -------- --------
Total Noninterest Income ........................... 32,179 19,830 52,009
-------- -------- --------
NONINTEREST EXPENSES:
Salaries and Employee Benefits ........................ 60,702 16,974 77,676
Occupancy Expense of Premises ........................ 12,337 3,056 15,393
Furniture and Equipment Expenses ..................... 11,176 1,819 12,995
Federal Deposit Insurance Premiums .................. 1,577 1,789 3,366
Foreclosed Property Expenses and Provisions, Net ...... 3,507 1,651 5,158
Intangible Amortization .............................. 5,721 2,764 8,485
Marketing Expenses .................................... 5,900 1,840 7,740
Merger and Acquisition Expenses ..................... 500 746 1,246
SAIF Assessment ....................................... 4,730 4,652 9,382
Other Operating Expenses .............................. 24,405 8,631 33,036
-------- -------- --------
Total Noninterest Expenses ........................... 130,555 43,922 174,477
-------- -------- --------
Income before Income Taxes ........................... 60,873 25,723 86,596
Income Taxes .......................................... 22,372 10,230 32,602
-------- -------- --------
NET INCOME ............................................. 38,501 15,493 53,994
Preferred Stock Dividends .............................. 1,149 -- 1,149
-------- -------- --------
Net Income Available to Common Shareholders ............ $ 37,352 $ 15,493 $ 52,845
======== ======== ========
NET INCOME PER COMMON SHARE: (f)
Primary ............................................. $ 2.77 $ 2.44 $ 2.81
======== ======== ========
Fully Diluted ....................................... $ 2.66 $ 2.42 $ 2.72
======== ======== ========
</TABLE>
The pro forma combined statement of income has not been adjusted to reflect
any of the improvements in operating efficiencies that Webster anticipates may
occur in the future due to the Merger.
See accompanying notes to pro forma combined financial statements.
68
<PAGE>
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
WEBSTER EAGLE PRO FORMA
(HISTORICAL) (HISTORICAL) COMBINED
-------------- -------------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
INTEREST INCOME:
Loans and Segregated Assets ........................... $237,933 $ 82,712 $320,645
Securities .......................................... 94,989 24,018 119,007
-------- -------- --------
Total Interest Income .............................. 332,922 106,730 439,652
INTEREST EXPENSE:
Interest on Deposits ................................. 157,631 46,333 203,964
Interest on Borrowings .............................. 39,960 7,082 47,042
-------- -------- --------
Total Interest Expense .............................. 197,591 53,415 251,006
Net Interest Income ................................. 135,331 53,315 188,646
Provision for Loan Losses .............................. 5,726 4,138 9,864
-------- -------- --------
Net Interest Income After Provision for Loan Losses.... 129,605 49,177 178,782
NONINTEREST INCOME:
Fees and Service Charges .............................. 17,775 3,448 21,223
Gain on Sale of Loans and Loan Servicing, Net ......... 4,644 247 4,891
Gain (Loss) on Sale of Securities, Net ............... 532 (30) 502
Other Noninterest Income .............................. 4,951 1,749 6,700
-------- -------- --------
Total Noninterest Income ........................... 27,902 5,414 33,316
-------- -------- --------
NONINTEREST EXPENSES:
Salaries and Employee Benefits ........................ 52,725 15,567 68,292
Occupancy Expense of Premises ........................ 9,132 2,504 11,636
Furniture and Equipment Expenses ..................... 8,255 1,606 9,861
Federal Deposit Insurance Premiums .................. 5,888 2,767 8,655
Foreclosed Property Expenses and Provisions, Net ...... 6,254 1,381 7,635
Intangible Amortization .............................. 1,826 1,914 3,740
Marketing Expenses .................................... 4,829 1,171 6,000
Merger and Acquisition Expenses ..................... 4,271 -- 4,271
Bank Subsidiary Name Change ........................... 2,100 -- 2,100
Other Operating Expenses .............................. 17,456 7,217 24,673
-------- -------- --------
Total Noninterest Expense ........................... 112,736 34,127 146,863
-------- -------- --------
Income before Income Taxes ........................... 44,771 20,464 65,235
Income Taxes .......................................... 15,450 8,418 23,868
-------- -------- --------
NET INCOME 29,321 12,046 41,367
Preferred Stock Dividends .............................. 1,296 -- 1,296
-------- -------- --------
Net Income Available to Common Shareholders ............ $ 28,025 $ 12,046 $ 40,071
======== ======== ========
NET INCOME PER COMMON SHARE: (f)
Primary ............................................. $ 2.30 $ 1.94 $ 2.30
======== ======== ========
Fully Diluted ....................................... $ 2.22 $ 1.92 $ 2.24
======== ======== ========
</TABLE>
The pro forma combined statement of income has not been adjusted to reflect
any of the improvements in operating efficiencies that Webster anticipates may
occur in the future due to the Merger.
See accompanying notes to pro forma combined financial statements.
69
<PAGE>
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
WEBSTER EAGLE PRO FORMA
(HISTORICAL) (HISTORICAL) COMBINED
-------------- -------------- ------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
INTEREST INCOME:
Loans and Segregated Assets ........................... $212,747 $65,456 $278,203
Securities .......................................... 80,417 11,950 92,367
-------- ------- --------
Total Interest Income .............................. 293,164 77,406 370,570
INTEREST EXPENSE:
Interest on Deposits ................................. 122,658 33,856 156,514
Interest on Borrowings .............................. 29,894 2,062 31,956
-------- ------- --------
Total Interest Expense .............................. 152,552 35,918 188,470
Net Interest Income ................................. 140,612 41,488 182,100
Provision for Loan Losses .............................. 5,609 1,540 7,149
-------- ------- --------
Net Interest Income After Provision for Loan Losses.... 135,003 39,948 174,951
NONINTEREST INCOME:
Fees and Service Charges .............................. 14,625 2,591 17,216
Gain (Loss) on Sale of Loans and Loan Servicing,
Net ................................................ (16) 155 139
Gain (Loss) on Sale of Securities, Net ............... (1,050) 25 (1,025)
Other Noninterest Income .............................. 3,908 1,140 5,048
-------- ------- --------
Total Noninterest Income ........................... 17,467 3,911 21,378
-------- ------- --------
NONINTEREST EXPENSES:
Salaries and Employee Benefits ........................ 48,631 13,080 61,711
Occupancy Expense of Premises ........................ 8,634 1,997 10,631
Furniture and Equipment Expenses ..................... 7,722 1,107 8,829
Federal Deposit Insurance Premiums .................. 9,208 2,094 11,302
Foreclosed Property Expenses and Provisions, Net....... 10,106 2,007 12,113
Intangible Amortization .............................. 2,144 956 3,100
Marketing Expenses .................................... 3,607 757 4,364
Merger and Acquisition Expenses ..................... 700 -- 700
Core Deposit Intangible Write-down .................. 5,000 -- 5,000
Other Operating Expenses .............................. 17,547 5,663 23,210
-------- ------- --------
Total Noninterest Expenses ........................ 113,299 27,661 140,960
-------- ------- --------
Income before Income Taxes ........................... 39,171 16,198 55,369
Income Taxes .......................................... 11,211 6,747 17,958
-------- ------- --------
Net Income before Cumulative Change: 27,960 9,451 37,411
Cumulative Change .................................... -- 97 97
NET INCOME ............................................. 27,960 9,548 37,508
Preferred Stock Dividends .............................. 1,716 -- 1,716
-------- ------- --------
Net Income Available to Common Shareholders ............ $ 26,244 $ 9,548 $ 35,792
======== ======= ========
NET INCOME PER COMMON SHARE: (f)
Primary ............................................. $ 2.28 $ 1.84 $ 2.25
======== ======= ========
Fully Diluted ....................................... $ 2.17 $ 1.83 $ 2.17
======== ======= ========
</TABLE>
The pro forma combined statement of income has not been adjusted to reflect
any of the improvements in operating efficiencies that Webster anticipates may
occur in the future due to the Merger.
See accompanying notes to pro forma combined financial statements.
70
<PAGE>
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(a) Represents the conversion to treasury stock and subsequent retirement
of Eagle Common Stock owned by Webster.
(b) Represents the reversal of the tax effect of the gain on Eagle Common
Stock currently owned by Webster.
(c) Represents the estimated merger costs that will be incurred by Webster
and Eagle. These costs are not reflected in the Pro Forma Combined Statements of
Income since these items do not have a continuing impact upon Webster. The
following table summarizes the financial impact of the additional accruals as
reflected in the Pro Forma Combined Statement of Financial Condition (in
thousands):
Credit Related:
Additions to allowances for loan losses ............... $ 1,500
Merger-Related Costs:
Compensation (severance and related costs) ............ 8,900
Writedown of fixed assets in preparation for sale ...... 1,200
Transaction costs (including investment bankers, attor-
neys and accountants) .................................. 3,700
Conversion and miscellaneous expenses .................. 3,600
--------
Total Merger-Related costs .............................. 17,400
--------
Total pre-tax adjustments .............................. $ 18,900
Income tax effect ....................................... (5,700)
--------
Net after-tax adjustments .............................. $ 13,200
--------
The above estimated Merger-Related costs that will be incurred by Webster
and Eagle include only those expenses that are estimated to be incurred as a
result of the Merger. Compensation costs include estimated severance to Eagle
employees and other related expenses as a result of merging administrative staff
and consolidating overlapping branch locations. The writedown of fixed assets
represents the estimated loss on the sale of fixed assets due to consolidation
of overlapping branch locations.
(d) Represents the issuance of Webster Common Stock at the aggregate $0.01
per share par value and the elimination of shares of Eagle treasury stock and
the net effect on Paid in Capital.
(e) Represents the retirement of 50,000 shares of Eagle
Corporation-Obligated Mandatorily Redeemable Capital Securities of Subsidiary
Trust owned by Webster.
(f) Pro forma combined Webster and Eagle Net Income per Common Share data
have been determined based upon (i) the combined historical net income of
Webster and Eagle and (ii) the combined historical weighted average common
equivalent shares of Webster and Eagle. For the purposes of this determination,
the historical weighted average common shares outstanding of Eagle was
multiplied by 0.84, the Exchange Ratio. See "THE MERGER -- Exchange Ratio."
71
<PAGE>
AMENDMENT TO THE WEBSTER CERTIFICATE
Webster Stockholders will also vote on the Certificate Amendment at the
Webster Special Meeting. Approval of the Certificate Amendment by Webster
Stockholders is not a condition to Webster's or to Eagle's obligation to
consummate the Merger.
Currently, the Webster Certificate authorizes the issuance of a total of
30,000,000 shares of Webster Common Stock. Of such authorized shares, 13,662,299
shares were outstanding as of February 11, 1998. If the Merger Agreement and the
Merger are approved and consummated, approximately 5,880,000 shares of Webster
Common Stock will be issued in connection with the Merger. Giving effect to the
foregoing, approximately 10,457,701 shares of Webster Common Stock would be
available for other corporate purposes immediately after consummation of the
Merger. If approved, the Certificate Amendment would amend the Webster
Certificate to increase the number of shares of Webster Common Stock authorized
for issuance thereunder from 30,000,000 to 50,000,000. The additional shares of
Webster Common Stock authorized pursuant to the Certificate Amendment (the
"Additional Shares") and not otherwise reserved could be issued at the
discretion of the Webster Board without further action by Webster Stockholders
(except as required by applicable law, regulation or rule, including applicable
rules of Nasdaq or other securities exchange or market on which the shares of
Webster Common Stock may then be listed or authorized for quotation) in
connection with acquisitions, efforts to raise additional capital and for other
corporate purposes. The issuance of shares of Webster Common Stock, including
the Additional Shares, may in certain situations dilute the present equity
ownership position of current Webster Stockholders. Shares of Webster Common
Stock will be issued only upon a determination by the Webster Board that such
proposed issuance is in the best interests of Webster.
As of the date of this Joint Proxy Statement-Prospectus, Webster has no
plans or commitments that would involve the issuance of the Additional Shares.
The increase in the authorized shares of Webster Common Stock will allow the
Webster Board to consider and, if in the best interest of Webster Stockholders,
take advantage of other merger or acquisition possibilities. As part of its
business strategy, Webster continually considers potential strategic business
combinations, and it is the policy of Webster not to comment on such matters
publicly until a definitive agreement with respect thereto has been reached. In
addition, the discretion vested in the Webster Board to authorize the issuance
and sale of authorized but unissued shares of Webster Common Stock could, under
some circumstances, be used to discourage certain potential business
combinations that some Webster Stockholders may believe to be in the best
interests of Webster Stockholders and make more difficult management changes
that may occur if a potential business combination were successful, although
Webster has no current intention to issue shares of Webster Common Stock for
such purpose.
If the Certificate Amendment is approved, the first sentence of the first
paragraph of Article 4 of the Webster Certificate would read in its entirety as
follows:
The total number of shares of all classes of the capital stock which the
Corporation has authority to issue is fifty-three million (53,000,000), of
which fifty million (50,000,000) shall be common stock, par value $.01 per
share, amounting in the aggregate to five hundred thousand dollars
($500,000), and three million (3,000,000) shall be serial preferred stock,
par value $.01 per share, amounting in the aggregate to thirty thousand
dollars ($30,000).
THE WEBSTER BOARD RECOMMENDS THAT WEBSTER STOCKHOLDERS VOTE "FOR" THE
CERTIFICATE AMENDMENT. The affirmative vote of the holders of a majority of the
shares of Webster Common Stock entitled to vote on this matter as of the Record
Date is required to approve the Certificate Amendment.
72
<PAGE>
[Letterhead of Merrill Lynch & Co., Inc.]
APPENDIX A
February 11, 1998
Board of Directors
Webster Financial Corporation
Webster Plaza, 145 Bank Street
Waterbury, CT 06720
Members of the Board:
We understand that Webster Financial Corporation ("Webster") and Eagle
Financial Corporation ("Eagle") have entered into an Agreement and Plan of
Merger (the "Agreement") dated October 26, 1997 pursuant to which Eagle is to be
merged with and into Webster in a transaction (the "Merger") in which each
outstanding share of Eagle's common stock, par value $0.01 per share (the "Eagle
Shares"), will be converted into the right to receive 0.84 shares (the "Exchange
Ratio") of the common stock, par value $0.01 per share, of Webster (the "Webster
Shares"), all as set forth more fully in the Agreement. In connection with the
Merger the parties have entered into a stock option agreement, dated October 26,
1997 (the "Option Agreement") pursuant to which Eagle has granted to Webster an
option to acquire, under certain circumstances, 19.9% of outstanding Eagle
Shares, all as set forth more fully in the Option Agreement.
You have asked us whether, in our opinion, the Exchange Ratio is fair to
Webster from a financial point of view.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed certain publicly available business and financial
information relating to Webster and Eagle that we deemed to
be relevant;
(2) Reviewed certain information, including financial forecasts,
relating to the respective businesses, earnings, assets,
liabilities and prospects of Webster and Eagle furnished to
us by senior management of Webster and Eagle as well as the
amount and timing of the cost savings and related expenses
expected to result from the Merger furnished to us by senior
management of Webster and Eagle (the "Expected Synergies");
(3) Conducted discussions with members of senior management of
Webster and Eagle concerning the matters described in
clauses (1) and (2) above, as well as their respective
businesses and prospects before and after giving effect to
the Merger and the Expected Synergies;
(4) Reviewed the market prices and valuation multiples for the
Webster Shares and the Eagle Shares and compared them with
those of certain publicly traded companies which we deemed
to be relevant;
(5) Reviewed the respective financial condition and results of
operation of Webster and Eagle and compared them with those
of certain publicly traded companies which we deemed to be
relevant;
(6) Compared the proposed financial terms of the Merger with the
financial terms of certain other transactions which we
deemed to be relevant;
(7) Participated in certain discussions and negotiations among
representatives of Webster and Eagle and their financial and
legal advisors;
(8) Reviewed the potential pro forma impact of the Merger;
(9) Reviewed a draft of the Agreement and Plan of Merger and the
Option Agreement; and
A-1
<PAGE>
(10) Reviewed such other financial studies and analyses and took
into account such other matters as we deemed necessary under
the circumstances, including our assessment of general
economic, market and monetary conditions.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and we have not
assumed responsibility for independently verifying such information or
undertaken an independent evaluation or appraisal of any of the assets or
liabilities of Webster or Eagle or been furnished with any such evaluation or
appraisal. We are not experts in the evaluation of allowances for loan losses,
and we have neither made an independent evaluation of the adequacy of the
allowance for loan losses of Webster or Eagle, nor reviewed any individual
credit files relating to Webster or Eagle, and, as a result, we have assumed
that the aggregate allowance for loan losses for each of Webster and Eagle is
adequate to cover their respective losses and will be adequate on a pro forma
basis for the combined entity. In addition, we have not assumed any obligation
to conduct, nor have we conducted, any physical inspection of the properties or
facilities of Webster or Eagle. With respect to the financial forecast
information and information on the Expected Synergies furnished to or discussed
with us by Webster or Eagle, we have assumed that such information has been
reasonably prepared and reflects the best currently available estimates and
judgments of the senior management of Webster and Eagle as to the expected
future financial performance of Webster, Eagle, or the combined entity, as the
case may be. We have further assumed that the Merger will be accounted for as a
pooling-of-interests under generally accepted accounting principles and that it
will qualify as a tax-free reorganization for U.S. federal income tax purposes.
Our opinion is necessarily based upon market, economic and other conditions
as they exist and can be evaluated on, and on the information made available to
us as of the date hereof. We have assumed that in the course of obtaining the
necessary regulatory or other approvals (contractual or otherwise) for the
Merger, no restrictions, including any divestiture requirements or amendments or
modifications, will be imposed that will have a material adverse affect on the
contemplated benefits of the Merger, including the Expected Synergies.
We have been retained by the Board of Directors of Webster to act as
financial advisor to Webster in connection with the Merger and will receive a
fee for our services, a significant portion of which is contingent upon the
consummation of the Merger. In addition, Webster has agreed to indemnify us for
certain liabilities arising out of our engagement. We have in the past two years
provided financial advisory, investment banking and other services to Webster
and received customary fees for the rendering of such services. In the ordinary
course of our securities business, we also may actively trade debt and/or equity
securities of Webster and Eagle and their respective affiliates for our own
account and the accounts of our customers, and we therefore may from time to
time hold a long or short position in such securities.
This opinion is for the use and benefit of the Board of Directors of
Webster. Our opinion does not address the merits of the underlying decision by
Webster to engage in the Merger and does not constitute a recommendation to any
shareholder as to how such shareholder should vote on the proposed Merger.
We are not expressing any opinion herein as to the prices at which Webster
Shares will trade following the announcement or consummation of the Merger.
On the basis of and subject to the foregoing, we are of the opinion that,
as of the date hereof, the Exchange Ratio is fair to Webster from a financial
point of view.
Very truly yours,
/s/MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
A-2
<PAGE>
APPENDIX B
- ----------
February 11, 1998
Board of Directors
Eagle Financial Corp.
222 Main Street
Bristol, CT 06010
Gentlemen:
Eagle Financial Corp. ("Eagle") and Webster Financial Corporation
("Webster") have entered into an Agreement and Plan of Merger, dated as of
October 26, 1997 (the "Agreement"), pursuant to which Eagle will be merged with
and into Webster (the "Merger"). Upon consummation of the Merger, each share of
Eagle common stock, par value $.01 per share, issued and outstanding immediately
prior to the Merger (together with the rights attached thereto issued pursuant
to the Rights Agreement dated as of October 22, 1996 between Eagle and The First
National Bank of Boston, as Rights Agent, the "Eagle Shares"), other than
certain shares specified in the Agreement, will be converted into the right to
receive 0.84 shares (the "Exchange Ratio") of Webster common stock, par value
$.01 per share (together with the rights attached thereto to be issued pursuant
to the Rights Agreement dated as of February 5, 1996 between Webster and
Chemical Mellon Shareholder Services, L.L.C., as Rights Agent). The terms and
conditions of the Merger are more fully set forth in the Agreement. You have
requested our opinion as to the fairness, from a financial point of view, of the
Exchange Ratio to the holders of the Eagle Shares.
Sandler O'Neill & Partners, L.P., as part of its investment banking
business, is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other corporate
transactions. In connection with this opinion, we have reviewed, among other
things: (i) the Agreement and exhibits thereto; (ii) the Stock Option Agreement,
dated as of October 26, 1997, by and between Eagle and Webster; (iii) Eagle's
audited consolidated financial statements and management's discussion and
analysis of financial condition and results of operations as contained in its
Annual Report on Form 10-K for the years ended September 30, 1996 and 1997,
respectively; (iv) Webster's audited consolidated financial statements and
management's discussion and analysis of financial condition and results of
operations as contained in its Annual Report on Form 10-K for the year ended
December 31, 1996; (v) Eagle's unaudited consolidated financial statements and
management's discussion and analysis of financial condition and results of
operations contained in its Quarterly Report on Form 10-Q for the quarters ended
December 31, 1996 and March 31, and June 30, 1997, respectively; (vi) Webster's
unaudited consolidated financial statements and management's discussion and
analysis of financial condition and results of operations contained in its
Quarterly Report on Form 10-Q for the quarters ended March 31, June 30, and
September 30, 1997, respectively; (vii) summary financial information contained
in Eagle's press release dated January 23, 1998 concerning Eagle's financial
condition and results of operations for the three months ended December 31,
1997; (viii) summary financial information contained in Webster's press release
dated January 20, 1998 concerning Webster's financial condition and results of
operations for the three months and year ended December 31, 1997; (ix) certain
financial analyses and forecasts of Eagle prepared by and reviewed with
management of Eagle and the views of senior management of Eagle regarding
Eagle's past and current business operations, results thereof, financial
condition and future prospects; (x) certain financial analyses and forecasts of
Webster prepared by and reviewed with management of Webster and the views of
senior management of Webster regarding Webster's past and current business
operations, results thereof, financial condition and future prospects; (xi) the
pro forma impact of the Merger; (xii) the publicly reported historical price and
trading activity for Webster's and Eagle's common stock, including a comparison
of certain financial and stock market information for Webster and Eagle with
similar publicly available information for certain other companies the
securities of which are publicly traded; (xiii) the financial terms of recent
business combinations in the savings institution industry, to the extent
publicly available; (xiv) the current market environment generally and the
banking environment in particular; and (xv) such other information, financial
studies, analyses and investigations and financial, economic and market criteria
as we considered relevant. We were not asked to, and did not, solicit
indications of interest in a potential transaction from other third parties.
B-1
<PAGE>
In performing our review, we have assumed and relied upon, without
independent verification, the accuracy and completeness of all the financial
information, analyses and other information that was publicly available or
otherwise furnished to, reviewed by or discussed with us, and we do not assume
any responsibility or liability therefor. We did not make an independent
evaluation or appraisal of the specific assets, the collateral securing assets
or the liabilities of Eagle or Webster or any of their subsidiaries, or the
collectibility of any such assets, nor have we been furnished with any such
evaluations or appraisals (relying, where relevant, on the analyses and
estimates of Eagle and Webster). With respect to the financial projections
reviewed with management, we have assumed that they have been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the respective managements of the respective future financial
performances of Eagle and Webster and that such performances will be achieved.
We have also assumed that there has been no material change in Eagle's or
Webster's assets, financial condition, results of operations, business or
prospects since the date of the last financial statements noted above. We have
assumed that Eagle and Webster will remain as going concerns for all periods
relevant to our analyses, that the Merger will be accounted for as a pooling of
interests and that the conditions precedent in the Agreement are not waived.
Our opinion is necessarily based on financial, economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof. Events occurring after the date hereof could materially affect this
opinion. We have not undertaken to update, revise or reaffirm this opinion or
otherwise comment upon events occurring after the date hereof. We are expressing
no opinion herein as to what the value of Webster common stock will be when
issued to Eagle's shareholders pursuant to the Agreement or the prices at which
Eagle's or Webster's common stock will trade at any time.
We have acted as Eagle's financial advisor in connection with the Merger
and will receive a fee for our services, a significant portion of which is
contingent upon consummation of the Merger. We have also received a fee for
rendering this opinion. In the past, we have also provided certain other
investment banking services for Eagle and have received compensation for such
services.
In the ordinary course of our business, we may actively trade the debt and
equity securities of Eagle and Webster for our own account and for the accounts
of our customers and, accordingly, may at any time hold a long or short position
in such securities.
Our opinion is directed to the Board of Directors of Eagle in connection
with its consideration of the Merger and does not constitute a recommendation to
any stockholder of Eagle as to how such stockholder should vote at any meeting
of stockholders called to consider and vote upon the Merger. Our opinion is not
to be quoted or referred to, in whole or in part, in a registration statement,
prospectus, proxy statement or in any other document, nor shall this opinion be
used for any other purposes, without Sandler O'Neill's prior written consent;
provided, however, that we hereby consent to the inclusion of this opinion as an
exhibit to the Joint Proxy Statement/Prospectus of Eagle and Webster dated the
date hereof.
Based upon and subject to the foregoing, it is our opinion, as of the date
hereof, that the Exchange Ratio is fair, from a financial point of view, to the
holders of Eagle Shares.
Very truly yours,
/s/Sandler O'Neill & Partners, L.P.
B-2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 102(b)(7) of the DGCL permits a corporation's certificate of
incorporation to eliminate or limit the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director provided that the relevant provision does not eliminate or
limit the liability of a director (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for unlawful payment of a dividend or approval of an unlawful stock
purchase or redemption or (iv) for any transaction from which the director
derived an improper personal benefit. The Webster Certificate provides that no
director shall be personally liable to Webster or the Webster Stockholders for
monetary damages for breach of fiduciary duty as a director subject to the
limitations of DGCL Section 102(b)(7). See "COMPARISON OF SHAREHOLDER RIGHTS --
Limitation on Liability and Indemnification of Directors."
Section 145(a) of the DGCL permits a corporation to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation in such a capacity with another business entity,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Section 145(b) permits a corporation to indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation by reason of the
fact that such person acted in any of the capacities set forth above against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection with the defense or settlement of such action if such
person acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interests of the corporation, except that no
indemnification may be made in respect of any claim or issue as to which such
person shall have been adjudged liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such action was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as the Court of Chancery or
such other court deems proper.
Section 145(c) provides that a corporation must indemnify a director or
officer of a corporation who has been successful on the merits or otherwise in
the defense of any action, suit or proceeding referred to in subsections (a) and
(b) of Section 145 or in defense of any claim, issue or matter therein against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith. Section 145(e) permits a corporation to pay
expenses (including attorneys' fees) incurred by an officer or director in
defending any proceeding in advance of the final disposition of such matter upon
receipt of an undertaking by or on behalf of such person to repay such amount if
it is ultimately determined that such person is not entitled to indemnity. The
indemnification provided for by Section 145 is not exclusive of any other rights
to which the indemnified party may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise.
The Webster Bylaws provide for indemnification of directors, officers,
trustees, employees and agents of Webster substantially under the circumstances
and subject to the standards described in DGCL Section 145. Determining the
propriety of indemnification rests with (i) the Webster Board by a majority of a
quorum of directors who were not parties to the action, (ii) if no such quorum
exists, or at the option of such a quorum, by independent legal counsel, (iii)
Webster Stockholders or (iv) any court of competent jurisdiction within the
State of Delaware; provided, however, that, to the extent that such a
II-1
<PAGE>
person was successful on the merits or otherwise, the Webster Bylaws provide
that he or she will be indemnified against expenses, without the necessity of
such a determination. See "COMPARISON OF SHAREHOLDER RIGHTS -- Limitation on
Liability and Indemnification of Directors."
Section 145(g) of the DGCL provides that a corporation may purchase and
maintain insurance on behalf of any person who was or is a director, officer,
employee or agent of the corporation or was or is serving in such a capacity at
the request of the corporation with another business entity against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not the
corporation would have the power to indemnify such person against such liability
under Section 145. Webster has in effect a liability insurance policy covering
its directors and officers against certain damages and expenses resulting from
certain claims made against them caused by their negligent act, error or
omission. See "COMPARISON OF SHAREHOLDER RIGHTS -- Limitation on Liability and
Indemnification of Directors."
The foregoing is only a general summary of certain aspects of Delaware law
and the provisions of the Webster Certificate and Bylaws dealing with
indemnification of directors and officers and does not purport to completely
describe such law and such provisions. It is qualified in its entirety by
reference to the relevant statutes (included as Exhibit 99.4 hereto and
incorporated herein by reference), which contain detailed provisions regarding
indemnification and to the Webster Certificate and Bylaws, which are
incorporated herein by reference. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed herewith or incorporated herein by
reference.
EXHIBIT
NUMBER DESCRIPTION
- --------- ----------------------------------------------------------------------
2.1 -- Agreement and Plan of Merger, by and between Webster Financial
Corporation and Eagle Financial Corp., dated as of October 26, 1997,
incorporated herein by reference to Exhibit 2.1 of the Company's
Current Report on Form 8-K dated October 26, 1997.
3.1 -- Restated Certificate of Incorporation of Webster Financial
Corporation, incorporated herein by reference to Exhibit 3.1 of the
Company's Annual Report on Form 10-K for the year ended December 31,
1996.
3.2 -- Bylaws of Webster Financial Corporation, incorporated herein by
reference to Exhibit 3.7 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1996.
4.1 -- Rights Agreement, dated February 5, 1996, as amended, by and between
Webster Financial Corporation and American Stock Transfer and Trust
Company, incorporated herein by reference to Exhibit 1 to Webster
Financial Corporation's Current Report on Form 8-K dated February 5,
1996, and Webster Financial Corporation's Current Report on Form 8-K
dated November 4, 1996.
5.1 -- Opinion of Wachtell, Lipton, Rosen & Katz (with respect to the
validity of the common stock to be issued hereunder).
8.1 -- Opinion of Wachtell, Lipton, Rosen & Katz (with respect to certain tax
matters).
23.1 -- Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
23.2 -- Consent of Sandler O'Neill & Partners L.P.
23.3 -- Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 5.1 to
this Registration Statement).
23.4 -- Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 8.1 to
this Registration Statement).
23.5 -- Consent of KPMG Peat Marwick LLP (with respect to Webster Financial
Corporation).
23.6 -- Consent of KPMG Peat Marwick LLP (with respect to Eagle Financial
Corp.).
24.1 -- Power of Attorney (set forth on the signature pages hereto).
II-2
<PAGE>
99.1 -- Stock Option Agreement, dated as of October 26, 1997, by and between
Webster Financial Corporation and Eagle Financial Corp., incorporated
herein by reference to Exhibit 2.2 of the Company's Current Report on
Form 8-K dated October 26, 1997.
99.2 -- Form of Proxy for Special Meeting of Stockholders of Webster Financial
Corporation.
99.3 -- Form of Proxy for Special Meeting of Stockholders of Eagle Financial
Corp.
99.4 - Provisions of Delaware law regarding indemnification of directors and
officers.
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change in such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at the time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) The undersigned registrant hereby undertakes that prior to any public
reoffering of the securities registered hereunder through use of a prospectus
which is a part of this registration statement, by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the information called
for by the applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called for by the
other items of the applicable form.
(d) The undersigned registrant hereby undertakes that every prospectus (i)
that is filed pursuant to paragraph (c) immediately preceding, or (ii) that
purports to meet the requirements of Sections 10(a)(3) of the Securities Act and
is used in connection with an offering of securities subject to Rule 415, will
be filed as a part of an amendment to the registration statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-3
<PAGE>
(e) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange 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 the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the 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, the 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 Act and will be governed by the final adjudication of
such issue.
(f) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, 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.
(g) The undersigned registrant 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 the registration statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in Waterbury, Connecticut, on February
11, 1998.
WEBSTER FINANCIAL CORPORATION
(Registrant)
By /s/ JAMES C. SMITH
----------------------------
James C. Smith
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints James C. Smith and John V.
Brennan, and each and either of them, such individual's true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for such person and in such person's name, place and stead, in any and all
capacities, to sign this Registration Statement and any and all amendments
thereto, and to file the same with the Securities and Exchange Commission, with
all exhibits thereto and other documents in connection therewith, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as such person
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or either of them or any substitute therefor, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 11th day of February, 1998.
NAME TITLE
- -------------------------------- --------------------------------------
/S/ JAMES C. SMITH Chairman and Chief
---------------------------- Executive Officer
James C. Smith (Principal Executive Officer)
/S/ JOHN V. BRENNAN Executive Vice President,
---------------------------- Chief Financial Officer and Treasurer
John V. Brennan (Principal Financial Officer)
/S/ ACHILLE A. APICELLA Director
----------------------------
Achille A. Apicella
/S/ JOEL S. BECKER Director
----------------------------
Joel S. Becker
/S/ O. JOSEPH BIZZOZERO, JR. Director
----------------------------
O. Joseph Bizzozero, Jr.
/S/ JOHN J. CRAWFORD Director
----------------------------
John J. Crawford
/S/ HARRY P. DIADAMO, JR. Director
----------------------------
Harry P. DiAdamo, Jr.
II-5
<PAGE>
NAME TITLE
- ------------------------------ ---------
/S/ ROBERT A. FINKENZELLER Director
----------------------------
Robert A. Finkenzeller
/S/ WALTER R. GRIFFIN Director
----------------------------
Walter R. Griffin
/S/ J. GREGORY HICKEY Director
----------------------------
Gregory Hickey
/S/ C. MICHAEL JACOBI Director
----------------------------
C. Michael Jacobi
/S/ MARGUERITE F. WAITE Director
----------------------------
Marguerite F. Waite
II-6
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- --------- ----------------------------------------------------------------------
2.1 -- Agreement and Plan of Merger, by and between Webster Financial
Corporation and Eagle Financial Corp., dated as of October 26, 1997,
incorporated herein by reference to Exhibit 2.1 of the Company's
Current Report on Form 8-K dated October 26, 1997.
3.1 -- Restated Certificate of Incorporation of Webster Financial
Corporation, incorporated herein by reference to Exhibit 3.1 of the
Company's Annual Report on Form 10-K for the year ended December 31,
1996.
3.2 -- Bylaws of Webster Financial Corporation, incorporated herein by
reference to Exhibit 3.7 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1996.
4.1 -- Rights Agreement, dated February 5, 1996, as amended, by and between
Webster Financial Corporation and American Stock Transfer and Trust
Company, incorporated herein by reference to Exhibit 1 to Webster
Financial Corporation's Current Report on Form 8-K dated February 5,
1996, and Webster Financial Corporation's Current Report on Form 8-K
dated November 4, 1996.
5.1 -- Opinion of Wachtell, Lipton, Rosen & Katz (with respect to the
validity of the common stock to be issued thereunder).
8.1 -- Opinion of Wachtell, Lipton, Rosen & Katz (with respect to certain tax
matters).
23.1 -- Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
23.2 -- Consent of Sandler O'Neill & Partners L.P.
23.3 -- Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 5.1 to
this Registration Statement).
23.4 -- Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 8.1 to
this Registration Statement).
23.5 -- Consent of KPMG Peat Marwick LLP (with respect to Webster Financial
Corporation).
23.6 -- Consent of KPMG Peat Marwick LLP (with respect to Eagle Financial
Corp.).
24.1 -- Power of Attorney (set forth on the signature pages hereto).
99.1 -- Stock Option Agreement, dated as of October 26, 1997, by and between
Webster Financial Corporation and Eagle Financial Corp., incorporated
herein by reference to Exhibit 2.2 of the Company's Current Report on
Form 8-K dated October 26, 1997.
99.2 -- Form of Proxy for Special Meeting of Stockholders of Webster Financial
Corporation.
99.3 -- Form of Proxy for Special Meeting of Stockholders of Eagle Financial
Corp.
99.4 - Provisions of Delaware law regarding indemnification of directors and
officers.
<PAGE>
EXHIBIT 5.1
[Letterhead of Wachtell, Lipton, Rosen & Katz]
February 11, 1998
Webster Financial Corporation
Webster Plaza
145 Bank Street
Waterbury, Connecticut 06702
Re: Registration Statement on Form S-4 of Webster Financial Corporation
Ladies and Gentlemen:
We are acting as special counsel to Webster Financial Corporation, a
Delaware corporation ("Webster"), in connection with the above-captioned
registration statement filed by Webster with the Securities and Exchange
Commission (the "Registration Statement") with respect to up to 5,880,000 shares
of common stock ("Webster Common Stock"), par value $.01 per share, of Webster
(plus such indeterminate number of additional shares of Webster Common Stock
issuable upon adjustment, if any, of the Exchange Ratio, as provided in the
Agreement and Plan of Merger (the "Agreement"), dated as of October 26, 1997, by
and between Webster and Eagle Financial Corp., a Delaware corporation
("Eagle")), proposed to be issued in connection with the merger (the "Merger")
of Eagle with and into Webster, as described in the joint proxy
statement/prospectus that forms a part of the Registration Statement (the "Proxy
Statement/Prospectus").
In connection with this opinion, we have reviewed the Registration
Statement and the exhibits thereto, and we have examined originals or copies,
certified or otherwise identified to our satisfaction, of such corporate
records, agreements, certificates of public officials and of officers of
Webster, and such other instruments and matters of law and fact as we have
deemed necessary to render the opinion contained herein.
Based upon and subject to the foregoing, we are of the opinion that the
Webster Common Stock being registered under the Registration Statement, when
issued pursuant to the Merger following approval of the Agreement by the
requisite votes of the stockholders of Webster, will be validly issued, fully
paid and non-assessable.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to the
reference to our firm under the
<PAGE>
Webster Financial Corporation
February 11, 1998
Page 2
caption "LEGAL MATTERS" in the Proxy Statement/Prospectus contained therein. In
giving such consent, we do not hereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended.
Very truly yours,
/s/ Wachtell, Lipton, Rosen & Katz
EXHIBIT 8.1
[Letterhead of Wachtell, Lipton, Rosen & Katz]
February 11, 1998
Webster Financial Corporation
Webster Plaza
145 Bank Street
Waterbury, Connecticut 06702
Ladies/Gentlemen:
We have acted as special counsel to Webster Financial Corporation, a
Delaware corporation ("Webster"), in connection with the proposed merger (the
"Merger") of Eagle Financial Corporation, a Delaware corporation ("Eagle"), with
and into Webster, upon the terms and conditions set forth in the Agreement and
Plan of Merger dated as of October 26, 1997, by and between Webster and Eagle
(the "Agreement"). At your request, in connection with the filing of the
Registration Statement on Form S-4 filed with the Securities Exchange Commission
in connection with the Merger (the "Registration Statement"), we are rendering
our opinion concerning certain federal income tax consequences of the Merger.
For purposes of the opinion set forth below, we have relied, with the
consent of Webster and the consent of Eagle, upon the accuracy and completeness
of the statements and representations (which statements and representations we
have neither investigated nor verified) contained, respectively, in the
certificates of the officers of Webster and Eagle dated the date hereof (copies
of which are attached hereto and which are incorporated herein by reference),
and have assumed that such certificates will be complete and accurate as of the
Effective Time. We have also relied upon the accuracy of the Registration
Statement and the Joint Proxy Statement/Prospectus included therein (together,
the "Proxy Statement"). Any capitalized term used and not defined herein has the
meaning given to it in the Proxy Statement or the appendices thereto (including
the Agreement).
We have also assumed that (i) the transactions contemplated by the
Agreement will be consummated in accordance therewith and as described in the
Proxy Statement and (ii) the Merger will qualify as a statutory merger under the
applicable laws of the State of Delaware.
Based upon and subject to the foregoing, it is our opinion that, under
currently applicable United States federal income tax law, the Merger will be
treated as a reorganization
<PAGE>
Webster Financial Corporation
February 11, 1998
Page 2
within the meaning of Section 368(a) of the Code and each of Webster and Eagle
will be a party to the reorganization within the meaning of Section 368(b) of
the Code and that, accordingly:
(i) No gain or loss will be recognized by Webster or Eagle as a
result of the Merger;
(ii) No gain or loss will be recognized by Eagle Stockholders who
exchange all of their Eagle Common Stock solely for Webster
Common Stock pursuant to the Merger (except with respect to
cash received in lieu of a fractional share interest in Webster
Common Stock); and
(iii) The aggregate tax basis of the Webster Common Stock received by
Eagle Stockholders who exchange all of their Eagle Common Stock
solely for Webster Common Stock pursuant to the Merger will be
the same as the aggregate tax basis of the Eagle Common Stock
surrendered in exchange therefor (reduced by any amount
allocable to a fractional share interest for which cash is
received).
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement, and to the
references to us under the caption "THE MERGER -- Certain Federal Income Tax
Consequences" and elsewhere in the Proxy Statement. In giving such consent, we
do not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Wachtell, Lipton, Rosen & Katz
EXHIBIT 23.1
February 11, 1998
Webster Financial Corporation
Webster Plaza, 145 Bank Street
Waterbury, CT 06720
Dear Sirs:
We hereby consent to the use of our opinion letter to the Board of
Directors of Webster Financial Corporation included as Appendix A to the Joint
Proxy Statement-Prospectus which forms a part of the Registration Statement on
Form S-4 relating to the proposed merger of Webster Financial Corporation with
Eagle Financial Corp., and to the references to such opinion in such Joint Proxy
Statement Prospectus under the captions "Merger Summary-Opinion of Webster's
Financial Advisor,""The Merger-Background of the Merger," "The
Merger-Recommendation of the Webster Board of Directors and Reasons for the
Merger" and "The Merger-Opinion of Webster's Financial Advisor". In giving such
consent, we do not 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, nor do we thereby admit that we are experts with respect to any part
of such Registration Statement within the meaning of the term "expert" as used
in the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
/s/ Merrill Lynch, Pierce, Fenner
& Smith, Inc.
EXHIBIT 23.2
CONSENT OF SANDLER O'NEILL & PARTNERS, L.P.
We hereby consent to the inclusion of our opinion letter to the Board
of Directors of Eagle Financial Corporation (the "Company") as Appendix B in the
Joint Proxy Statement/Prospectus relating to the proposed merger of the Company
with and into Webster Financial Corporation contained in the Registration
Statement on Form S-4, as filed with the Securities and Exchange Commission on
the date hereof, and to the references to our firm and such opinion in such
Joint Proxy Statement/Prospectus. In giving such consent, we do not admit that
we come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933, as amended (the "Act"), or the rules and
regulations of the Securities and Exchange Commission thereunder (the
"Regulations"), nor do we admit that we are experts with respect to any part of
such Registration Statement within the meaning of the term "experts" as used in
the Act or the Regulations.
SANDLER O'NEILL & PARTNERS, L.P.
/s/ Sandler O'Neill & Partners, L.P.
February 11, 1998
EXHIBIT 23.5
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Webster Financial Corporation:
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the Joint Proxy
Statement/Prospectus.
/s/ KPMG Peat Marwick LLP
Hartford, Connecticut
February 11, 1998
EXHIBIT 23.6
INDEPENDENT AUDITOR'S CONSENT
The Board of Directors
Eagle Financial Corp.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the Joint Proxy
Statement/Prospectus. Our report refers to a change in the method of accounting
for investment securities in 1995.
/s/ KPMG Peat Marwick LLP
Hartford, Connecticut
February 11, 1998
EXHIBIT 99.2
- --------------------------------------------------------------------------------
REVOCABLE PROXY
WEBSTER FINANCIAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Webster Financial Corporation
("Webster") hereby appoints Walter Griffin and J. Gregory Hickey, or either of
them, with full power of substitution in each, as proxies to cast all votes that
the undersigned stockholder is entitled to cast at the special meeting of
stockholders (the "Webster Special Meeting") to be held at 2:00 p.m., local
time, on April 2, 1998, at the Sheraton Four Points Hotel, 3580 East Main
Street, Waterbury, Connecticut 06705, and at any adjournments or postponements
thereof, upon the following matters. The undersigned stockholder hereby revokes
any proxy or proxies heretofore given.
This proxy will be voted as directed by the undersigned stockholder.
UNLESS CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED: (1) TO APPROVE AND
ADOPT THE AGREEMENT AND PLAN OF MERGER, DATED AS OF OCTOBER 26, 1997, BY AND
BETWEEN WEBSTER AND EAGLE FINANCIAL CORP. (THE "MERGER AGREEMENT"), AND THE
MERGER PROVIDED FOR THEREIN, (2) TO APPROVE AND ADOPT THE AMENDMENT TO THE
RESTATED CERTIFICATE OF INCORPORATION OF WEBSTER TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF WEBSTER COMMON STOCK FROM 30 MILLION TO 50 MILLION AND (3)
IN ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE BOARD OF DIRECTORS OF
WEBSTER AS TO ANY OTHER MATTERS. The undersigned stockholder may revoke this
proxy at any time before it is voted by delivering to the Secretary of Webster
either a written notice of revocation of the proxy or a duly executed proxy
bearing a later date, or by attending the Webster Special Meeting and voting in
person. The undersigned stockholder hereby acknowledges receipt of Webster's
Notice of Special Meeting and the Joint Proxy Statement/Prospectus.
If you receive more than one proxy card, please sign and return all
cards in the accompanying envelope.
(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(CONTINUED FROM OTHER SIDE)
[x] Please mark your vote as in this example.
Proposal 1: To approve and adopt the Agreement and Plan of Merger, dated as
of October 26, 1997, by and between Webster Financial
Corporation and Eagle Financial Corp. (the "Merger Agreement"),
and the merger provided for therein.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 2: To approve and adopt the amendment to the Restated Certificate
of Incorporation of Webster Financial Corporation to increase
the number of authorized shares of Webster Financial Corporation
common stock from 30 million to 50 million. Approval of such
amendment is not a condition to the obligation of Webster
Financial Corporation or of Eagle Financial Corp to consummate
the transactions contemplated by the Merger Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Other Matters: The proxies are authorized to vote upon such other business as
may properly come before the Webster Special Meeting, or any
adjournments or postponements thereof, in accordance with the
determination of a majority of Webster's Board of Directors.
Date:
-----------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
Signature(s) of Stockholder or Authorized Representative
Please date and sign exactly as name appears hereon. Each
executor, administrator, trustee, guardian, attorney-in-
fact and other fiduciary should sign and indicate his or
her full title. When stock has been issued in the name of
two or more persons, all should sign.
- --------------------------------------------------------------------------------
EXHIBIT 99.3
- --------------------------------------------------------------------------------
REVOCABLE PROXY
EAGLE FINANCIAL CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Eagle Financial Corp. ("Eagle") hereby
appoints Robert J. Britton and George T. Carpenter, or either of them, with full
power of substitution in each, as proxies to cast all votes that the undersigned
stockholder is entitled to cast at the special meeting of stockholders (the
"Eagle Special Meeting") to be held at 10:00 a.m., local time, on April 2, 1998,
at Cornucopia Banquet Hall, 371 Pinewoods Road, Torrington, Connecticut 06790,
and at any adjournments or postponements thereof, upon the following matters.
The undersigned stockholder hereby revokes any proxy or proxies heretofore
given.
This proxy will be voted as directed by the undersigned stockholder.
UNLESS CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED: (1) TO APPROVE AND
ADOPT THE AGREEMENT AND PLAN OF MERGER, DATED AS OF OCTOBER 26, 1997, BY AND
BETWEEN WEBSTER FINANCIAL CORPORATION AND EAGLE (THE "MERGER AGREEMENT"), AND
THE MERGER PROVIDED FOR THEREIN, AND (2) IN ACCORDANCE WITH THE DETERMINATION OF
A MAJORITY OF THE BOARD OF DIRECTORS OF EAGLE AS TO ANY OTHER MATTERS. The
undersigned stockholder may revoke this proxy at any time before it is voted by
delivering to the Secretary of Eagle either a written notice of revocation of
the proxy or a duly executed proxy bearing a later date, or by attending the
Eagle Special Meeting and voting in person. The undersigned stockholder hereby
acknowledges receipt of Eagle's Notice of Special Meeting and the Joint Proxy
Statement/Prospectus.
(continued and to be signed and dated on reverse side)
SEE REVERSE SIDE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[x] Please mark your vote as in this example.
IF YOU RECEIVE MORE THAN ONE PROXY CARD, PLEASE SIGN AND RETURN ALL CARDS
IN THE ACCOMPANYING ENVELOPE.
Proposal 1: To approve and adopt the Agreement and Plan of Merger, dated as
of October 26, 1997, by and between Webster Financial
Corporation and Eagle Financial Corp., and the merger provided
for therein.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Other Matters: The proxies are authorized to vote upon such other business as
may properly come before the Eagle Special Meeting, or any
adjournment or postponement thereof, in accordance with the
determination of a majority of Eagle's Board of Directors.
[ ] MARK HERE FOR ADDRESS CHANGE AND NOTE AT RIGHT
Please date and sign exactly as name appears hereon. Each executor,
administrator, trustee, guardian, attorney-in-fact and other fiduciary should
sign and indicate his or her full title. When stock has been issued in the name
of two or more persons, all should sign.
Signature: Date:
---------------------------- ---------------
Signature: Date:
---------------------------- ---------------
- --------------------------------------------------------------------------------
EXHIBIT 99.4
------------
120 CONTENTS OF CERTIFICATE OF INCORPORATION -
(b) In addition to the matters required to be set forth in the
certificate of incorporation by subsection (a) of this section, the certificate
of incorporation may also contain any or all of the following matters:
(7) A provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) under section 174 of this title; or (iv) for any
transaction from which the director derived an improper personal benefit. No
such provision shall eliminate or limit the liability of a director for any act
or omission occurring prior to the date when such provision becomes effective.
All references in this paragraph to a director shall also be deemed to refer (x)
to a member of the governing body of a corporation which is not authorized to
issue capital stock, and (y) to such other person or persons, if any, who,
pursuant to a provision of the certificate of incorporation in accordance with
Section 141(a) of this title, exercise or perform any of the powers or duties
otherwise conferred or imposed upon the board of directors by this title.
145 INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE.--(a) A corporation shall have power to indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe the
person's conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that the
person's conduct was unlawful.
(b) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the
<PAGE>
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by the
person in connection with the defense or settlement of such action or suit if
the person acted in good faith and in a manner the person reasonably believed to
be in or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other Court shall deem proper.
(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, such person shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the present or
former director, officer, employee or agent is proper in the circumstances
because the person has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made with
respect to a person who is a director or officer at the time of such
determination, (1) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum, or (2) by a
committee of such directors designated by majority vote of such directors, even
though less than a quorum, or (3) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or 5(4)
by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by former directors and officers or other
employees and agents may be so paid upon such terms and conditions, if any, as
the 6 corporation deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office.
<PAGE>
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the corporation would have the power to
indemnify such person against such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees).
