As filed with the Securities and Exchange Commission on January 25, 1999
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)
<TABLE>
<S> <C> <C>
Delaware 6712 06-1187536
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
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 agent for service)
------------------------
Copies to:
Stuart G. Stein, Esq. William W. Bouton, Esq.
Margaret Rhinelander Rizzi, Esq. Tyler, Cooper & Alcorn L.L.P.
Hogan & Hartson L.L.P. City Place, 35th Floor
555 Thirteenth Street, N.W. Hartford, CT 06103-3488
Washington, D.C. 20004 (860) 725-6210
(202) 637-8575
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
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. [ ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Title of each class of Proposed maximum
securities to be Amount to be Proposed maximum aggregate offering Amount of
registered registered offering price per unit price registration fee
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Common Stock, par value 880,136 $28* $24,643,808* $6,851*
$.01 per share
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
</TABLE>
* Estimated pursuant to Rule 457(f)(1) under the Securities Act of 1933, as
amended, and based upon the average of the high and low prices for shares
of common stock of Maritime Bank & Trust Company as reported and calculated
as of January 21, 1999 and the exchange ratio prescribed by the Agreement
and Plan of Merger.
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>
MARITIME BANK & TRUST COMPANY
130 WESTBROOK ROAD
ESSEX, CONNECTICUT 06426-1149
____________ ___, 1999
DEAR SHAREHOLDER:
You are cordially invited to attend our special meeting of shareholders to
be held on ____________ ___, 1999, at ____ __.m. at Maritime's main
headquarters, 130 Westbrook Road, Essex, Connecticut. At the shareholder
meeting, you will be asked to approve an agreement for the merger of Maritime
into Webster Bank. Webster Bank is a subsidiary of Webster Financial
Corporation. In the merger, each outstanding share of Maritime's common stock
that you own will be converted into the equivalent of $26.67 of Webster
Financial Corporation common stock based on a 15 day average closing market
price of Webster common stock. If the 15 day average is greater than $24.45,
shares of Maritime's common stock will be converted into 1.091 shares of Webster
common stock. If the 15 day average is less than $17.50, Maritime's common stock
will be converted into 1.524 shares of Webster common stock.
YOUR BOARD OF DIRECTORS APPROVED THE MERGER AGREEMENT AND THE MERGER AND
RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT AND THE MERGER.
THE REQUIRED VOTE OF MARITIME'S SHAREHOLDERS IS BASED ON THE TOTAL NUMBER
OF OUTSTANDING SHARES OF MARITIME'S COMMON STOCK AND NOT ON THE NUMBER OF SHARES
WHICH ARE ACTUALLY VOTED. IF YOU DO NOT SUBMIT A PROXY CARD OR VOTE IN PERSON AT
THE SHAREHOLDER MEETING, OR IF YOU ABSTAIN FROM VOTING, YOU EFFECTIVELY ARE
VOTING "AGAINST" THE MERGER AGREEMENT AND THE MERGER.
You should carefully read the Proxy Statement/Prospectus. It provides you
with a description of Webster's common stock and the terms of the merger. A copy
of the merger agreement (including each of its exhibits) and the other documents
described in the Proxy Statement/Prospectus will be provided to you without
charge if you call or write to James M. Sitro, Vice President, Investor
Relations of Webster Financial Corporation, Webster Plaza, Waterbury,
Connecticut 06702, telephone (203) 578-2399.
IT IS VERY IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE SHAREHOLDER
MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE SHAREHOLDER MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT AS SOON AS
POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
Sincerely,
WILLIAM R. ATTRIDGE
Chief Executive Officer and President
<PAGE>
MARITIME BANK & TRUST COMPANY
130 WESTBROOK ROAD
ESSEX, CONNECTICUT 06426-1149
-------------------
NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD ON
____________ ___, 1999
---------------------
A special meeting of shareholders of Maritime Bank & Trust Company
("Maritime") will be held on ____________ ___, 1999, at ____ __.m. at Maritime's
main headquarters, 130 Westbrook Road, Essex, Connecticut for the following
purposes:
1. To consider and vote on a proposal to approve and adopt the
Agreement and Plan of Merger, dated as of November 3, 1998, among
Webster Financial Corporation ("Webster"), Webster Bank and
Maritime, the merger of Maritime into Webster Bank and the other
transactions contemplated by the merger agreement, as described
in the attached Proxy Statement/Prospectus.
2. To transact any other business that properly comes before the
shareholder meeting, or any adjournments or postponements of the
meeting, including, without limitation, a motion to adjourn the
shareholder meeting to another time and/or place for the purpose
of soliciting additional proxies in order to approve the merger
agreement and the merger or otherwise.
You are entitled to notice and to vote at the shareholder meeting or any
adjournments or postponements of the meeting only if you were a holder of record
of Maritime's common stock at the close of business on ___________ ____, 1999.
If you held Maritime's common stock on that day, you are entitled to dissent
from the merger under Sections 33-855 to 33-872 of the Connecticut General
Statutes. A copy of these sections is attached to the Proxy
Statement/Prospectus.
MARITIME'S BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER IS FAIR TO AND
IN THE BEST INTERESTS OF MARITIME'S SHAREHOLDERS, HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND THE MERGER, AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE TO APPROVE THE MERGER AGREEMENT. The affirmative vote of two-thirds of the
shares of Maritime's common stock outstanding on _______ __, 1999 is required to
approve the merger agreement.
WHETHER OR NOT YOU EXPECT TO ATTEND THE SHAREHOLDER MEETING IN PERSON,
PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY CARD. A SHAREHOLDER WHO
EXECUTES A PROXY MAY REVOKE IT AT ANY TIME BEFORE IT IS EXERCISED BY GIVING
WRITTEN NOTICE TO THE SECRETARY OF MARITIME, BY SUBSEQUENTLY FILING ANOTHER
PROXY OR BY ATTENDING THE SHAREHOLDER MEETING AND VOTING IN PERSON.
By Order of the Board of Directors
WILLIAM R. ATTRIDGE
Chief Executive Officer and President
Essex, Connecticut
____________ ___, 1999
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY CARD.
<PAGE>
WEBSTER FINANCIAL CORPORATION MARITIME BANK & TRUST COMPANY
WEBSTER PLAZA 130 WESTBROOK ROAD
WATERBURY, CONNECTICUT 06702 ESSEX, CONNECTICUT 06426-1149
MARITIME BANK & TRUST COMPANY -- PROXY STATEMENT
----------------------
WEBSTER FINANCIAL CORPORATION -- PROSPECTUS
880,136 SHARES OF COMMON STOCK
----------------------
The Boards of Directors of Maritime Bank & Trust Company ("Maritime") and
Webster Financial Corporation ("Webster") have agreed on an Agreement and Plan
of Merger, dated as of November 3, 1998, among Webster, Webster Bank and
Maritime which provides for Maritime to merge into Webster Bank, a wholly owned
subsidiary of Webster. If the merger takes place, each issued and outstanding
share of Maritime's common stock (other than dissenting and certain other
shares) will be converted into $26.67 worth of Webster's common stock based on a
15 day average closing market price of Webster's common stock. If the 15 day
average is greater than $24.45, shares of Maritime's common stock will be
converted into 1.091 shares of Webster's common stock. If the 15 day average is
less than $17.50, Maritime's common stock will be converted into 1.524 shares of
Webster's common stock. Webster will pay cash instead of issuing fractional
shares.
Webster's common stock is traded on the Nasdaq Stock Market's National
Market Tier under the symbol "WBST." On November 3, 1998, the last trading day
before the public announcement of the merger, the closing price for a share of
Webster's common stock was $24.94. In connection with the merger agreement,
Maritime granted Webster an irrevocable option to purchase up to 141,004 shares
of Maritime's common stock at a purchase price of $22.00 per share, subject to
adjustment. Webster can exercise this option if certain events occur.
This Proxy Statement/Prospectus is being sent to Maritime shareholders in
connection with the solicitation of proxies by the Maritime Board of Directors.
The Board has scheduled a special meeting for Maritime shareholders to vote on
the merger agreement that will be held on ____________, ___, 1999 at ___:___
__.m., local time, at Maritime's main headquarters, 130 Westbrook Road, Essex,
Connecticut. The merger will not take place unless Maritime shareholders who own
at least two-thirds of Maritime's outstanding common stock approve the merger
agreement and certain other conditions are satisfied. If these conditions are
met, we expect the merger to take place during the second quarter of 1999.
This Proxy Statement/Prospectus provides you with detailed information
about the proposed merger. We encourage you to read this entire document
carefully. You may obtain additional information about Webster from documents
that Webster has filed with the Securities and Exchange Commission.
WEBSTER'S COMMON STOCK HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION, THE OFFICE
OF THRIFT SUPERVISION, THE FEDERAL DEPOSIT INSURANCE CORPORATION, OR THE
CONNECTICUT COMMISSIONER OF BANKING, NOR HAS ANY OF THESE INSTITUTIONS PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE SHARES OF WEBSTER'S
COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE
FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
----------------------
This Proxy Statement/Prospectus and the related proxy card are being mailed
to Maritime shareholders on or about __________ __, 1999.
The date of this Proxy Statement/Prospectus is __________ __, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
---- ----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER.. DESCRIPTION OF WEBSTER'S CAPITAL STOCK
AND COMPARISON OF SHAREHOLDER
WHERE YOU CAN FIND MORE RIGHTS.............................
INFORMATION........................ Webster's Common Stock.............
Webster's Preferred Stock..........
INCORPORATION OF CERTAIN Senior Notes.......................
DOCUMENTS BY REFERENCE............. Capital Securities.................
Certificate of Incorporation and
WHO CAN HELP ANSWER Bylaw Provisions..............
YOUR QUESTIONS..................... Applicable Law.....................
SUMMARY................................. ADJOURNMENT OF SHAREHOLDER
MEETING............................
SHAREHOLDER MEETING.....................
Matters to be Considered at the SHAREHOLDER PROPOSALS...................
Shareholder Meeting............
Record Date and Voting............. OTHER MATTERS...........................
Required Vote; Revocability of
Proxies........................ EXPERTS.................................
Solicitation of Proxies............
LEGAL MATTERS...........................
THE MERGER..............................
The Parties........................ Appendix A
Background of the Merger........... Opinion of Ostrowski & Company, Inc..A-1
Recommendation of the Maritime
Board of Directors and Reasons Appendix B
for the Merger................ Sections 33-855 to 33-872 of the
Purpose and Effects of the Merger.. Connecticut General Statutes...... B-1
Structure..........................
Exchange Ratio..................... Appendix C
Options............................ Financial Statements of Maritime
Regulatory Approvals............... Bank & Trust Company at and for
Conditions to the Merger........... the nine months ended September
Conduct of Business Pending 30, 1998 and 1997(unaudited)..... C-1
the Merger....................
Third Party Proposals.............. Appendix D
Expenses; Breakup Fee.............. Audited Financial Statements of
Opinion of Maritime's Financial Maritime Bank & Trust Company at
Advisor....................... December 31, 1997 and 1996 and
Certain Provisions of the Merger for the years ended December
Agreement..................... 31, 1997, 1996, and 1995....... D-1
Termination and Amendment of No person is authorized to give any
the Merger Agreement.......... information or to make any representation
Federal Income Tax Consequences.... not contained in this Proxy Statement/
Accounting Treatment............... Prospectus, and, if given or made, such
Resales of Webster's Common Stock information or representation should not be
Received in the Merger........ relied upon as having been authorized. This
Dissenters' Appraisal Rights....... Proxy Statement/Prospectus does not
Arrangements with and Payments to constitute an offer to sell, or a
Maritime Directors, Executive solicitation of an offer to purchase, any
Officers and Employees........ of Webster's common stock offered by this
Indemnification.................... Proxy Statement/ Prospectus, or the
Option Agreement................... solicitation of a proxy, in any
jurisdiction in which it is unlawful to
INFORMATION ABOUT MARITIME make such an offer or solicitation. Neither
Business........................... the delivery of this Proxy
Supervision and Regulation......... Statement/Prospectus nor any distribution
Management's Discussion and of Webster's common stock offered pursuant
Analysis of Financial to this Proxy Statement/Prospectus shall,
Conditions and Results of under any circumstances, create an
Operations.................... implication that there has been no change
Security Ownership of Certain in the affairs of Maritime or Webster or
Beneficial Owners and the information in this document or the
Management.................... documents or reports incorporated by
reference into this document since the date
MARKET PRICES AND DIVIDENDS............. of this Proxy Statement/Prospectus.
Webster's Common Stock.............
Maritime's Common Stock............
</TABLE>
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHY IS MARITIME PROPOSING TO MERGE WITH WEBSTER BANK? HOW WILL I BENEFIT?
A: In our opinion, the business potential for the combination of Webster and
Maritime exceeds what Maritime could accomplish individually. We expect
that the merger will further serve the best interests of Maritime's
customers and shareholders.
Q: WHAT DO I NEED TO DO NOW?
A: Just indicate on your proxy card how you want to vote, and sign, date and
return it as soon as possible. If you sign and send in your proxy and do
not indicate how you want to vote, your proxy will be voted in favor of the
merger agreement. If you do not return your proxy or if you do not vote at
the shareholder meeting or if you abstain from voting, you effectively are
voting against the merger agreement.
You can choose to attend the shareholder meeting and vote your shares in
person instead of completing and returning your proxy card. If you do
complete and return a proxy card, you may change your vote at any time up
to and including the time of the vote on the day of the shareholder meeting
by following the directions on page ___.
PLEASE REMEMBER THAT THE VOTE OF MARITIME'S SHAREHOLDERS REQUIRED TO
APPROVE THE MERGER AGREEMENT IS BASED ON THE TOTAL NUMBER OF OUTSTANDING
SHARES, AND NOT ON THE NUMBER OF SHARES WHICH ARE ACTUALLY VOTED. THIS
MEANS THAT THE HOLDERS OF AT LEAST TWO-THIRDS OF MARITIME'S OUTSTANDING
COMMON STOCK MUST VOTE "FOR" THE MERGER AGREEMENT.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your shares only if you provide instructions to your
broker on how you want your shares voted.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the merger takes place, you will receive instructions on how to
exchange your Maritime certificates for Webster certificates.
Q: WHAT WILL MARITIME SHAREHOLDERS RECEIVE IN THE MERGER?
A: In the merger, each share of Maritime's common stock will be converted
automatically into the equivalent of $26.67 of Webster's common stock based
on a 15 day average closing market price of Webster's common stock. If the
15 day average is greater than $24.45, shares of Maritime's common stock
will be converted into 1.091 shares of Webster's common stock. If the 15
day average is less than $17.50, shares of Maritime's common stock will be
converted into 1.524 shares of Webster's common stock.
Q: WHAT HAPPENS TO MY FUTURE DIVIDENDS?
A: Before the merger takes place, Maritime expects to continue to pay regular
quarterly cash dividends on its common stock (currently $0.13). After the
merger, any dividends will be based on what Webster pays (currently $0.11
per share of Webster's common stock per quarter).
Q: WHEN DO YOU EXPECT THE MERGER TO TAKE PLACE?
A: We are working toward completing the merger as quickly as possible. In
addition to the approval of Maritime's shareholders, we must obtain certain
regulatory approvals. We expect the merger to take place shortly after the
shareholder meeting.
Q: WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO ME?
A: In general, the merger will be tax-free for federal income tax purposes.
However, you will have to pay tax on any cash received instead of
fractional shares. To review the tax consequences to Maritime's
shareholders in greater detail, see pages __ to ___. Your individual tax
situation may result in different tax treatment. Please consult your tax
advisor.
ii
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Webster files annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any reports, statements or other information that Webster files with the
SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549. You may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site
that contains reports, proxy and information statements and other information
about issuers that file electronically with the SEC. The address of the SEC's
Internet site is http://www.sec.gov. Webster can be found on the Internet at
http://www.websterbank.com. Webster's common stock is traded on the Nasdaq Stock
Market's National Market Tier under the trading symbol "WBST."
Webster has filed with the SEC a registration statement on Form S-4 under
the Securities Act of 1933 relating to Webster's common stock to be issued to
Maritime's shareholders in the merger. As permitted by the rules and regulations
of the SEC, this Proxy Statement/Prospectus does not contain all the information
set forth in the registration statement. You can obtain that additional
information from the SEC's principal office in Washington, D.C. or the SEC's
Internet site as described above. Statements contained in this Proxy
Statement/Prospectus or in any document incorporated by reference into this
Proxy Statement/Prospectus about the contents of any contract or other document
are not necessarily complete and, in each instance where such contract or
document is filed as an exhibit to the registration statement, reference is made
to the copy of that contract or document filed as an exhibit to the registration
statement, with each such statement in this Proxy Statement/Prospectus being
qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows Webster to "incorporate by reference" information into this
Proxy Statement/Prospectus, which means that Webster can disclose important
information to you by referring you to another document filed separately with
the SEC. The information that Webster incorporates by reference is considered a
part of this Proxy Statement/Prospectus, except for any information superseded
by information presented in this Proxy Statement/Prospectus. This Proxy
Statement/Prospectus incorporates important business and financial information
about Webster and its subsidiaries that is not included in or delivered with
this document. All documents subsequently filed by Webster pursuant to Sections
13(a), 13(c) 14 or 15(d) of the Securities Exchange Act of 1934 prior to
_____________, ___, 1999 are deemed to be incorporated by reference into this
Proxy Statement/Prospectus.
This Proxy Statement/Prospectus incorporates by reference the documents
listed below that Webster has filed with the SEC:
FILINGS PERIOD OF REPORT OR DATE FILED
- ------- ------------------------------
o Annual Report on Form 10-K Year ended December 31, 1997
(updated by the Current Report
on Form 8-K filed on July 23, 1998)
o Quarterly Report on Form 10-Q For the quarter ended March 31, 1998
o Quarterly Report on Form 10-Q For the quarter ended June 30, 1998
o Quarterly Report on Form 10-Q For the quarter ended September 30, 1998
o Current Report on Form 8-K/A Filed January 26, 1998
o Current Report on Form 8-K/A Filed January 26, 1998
o Current Report on Form 8-K/A Filed February 6, 1998
o Current Report on Form 8-K Filed March 4, 1998
o Current Report on Form 8-K Filed March 19, 1998
o Current Report on Form 8-K Filed April 30, 1998
o Current Report on Form 8-K Filed July 23, 1998
(restating portions of the 1997
annual report to shareholders)
o Current Report on Form 8-K Filed October 30, 1998
iii
<PAGE>
o Current Report on Form 8-K Filed November 23, 1998
THESE DOCUMENTS ARE AVAILABLE WITHOUT CHARGE TO YOU IF YOU CALL OR WRITE
TO: JAMES M. SITRO, VICE PRESIDENT, INVESTOR RELATIONS OF WEBSTER FINANCIAL
CORPORATION, WEBSTER PLAZA, WATERBURY, CONNECTICUT 06702, TELEPHONE (203)
578-2399. IN ORDER TO OBTAIN TIMELY DELIVERY OF DOCUMENTS, YOU SHOULD REQUEST
INFORMATION AS SOON AS POSSIBLE, BUT NO LATER THAN ____________ ___, 1999.
WHO CAN HELP ANSWER YOUR QUESTIONS
If you have more questions about the merger you should call or write:
MARITIME BANK & TRUST COMPANY
130 Westbrook Road
Essex, Connecticut 06426-1149
Attention: William R. Attridge, President
Phone Number: (860) 767-1166
If you would like additional copies of the Proxy Statement/Prospectus,
you should call or write:
WEBSTER FINANCIAL CORPORATION
Webster Plaza
Waterbury, Connecticut 06702
Attention: James M. Sitro, Vice President, Investor Relations
Phone Number: (203) 578-2399
iv
<PAGE>
SUMMARY
The following is a brief summary of certain information located elsewhere
in this 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 located elsewhere in this Proxy Statement/Prospectus.
BEFORE YOU VOTE, YOU SHOULD GIVE CAREFUL CONSIDERATION TO ALL OF THE INFORMATION
CONTAINED IN OR INCORPORATED BY REFERENCE INTO THIS PROXY STATEMENT/PROSPECTUS.
THE PARTIES (PAGE ___)
WEBSTER FINANCIAL CORPORATION
Webster Plaza
Waterbury, Connecticut 06702
(203) 753-2921
Webster is a Delaware corporation and the holding company of Webster Bank, a
federal savings bank which is wholly owned by Webster. Both Webster and Webster
Bank are headquartered in Waterbury, Connecticut. Deposits at Webster Bank are
insured by the Federal Deposit Insurance Corporation. At September 30, 1998,
Webster had total consolidated assets of $9.2 billion, total deposits of $5.6
billion, and shareholders' equity of $565.9 million, or 6.2% of total assets.
On November 11, 1998, Webster announced that it had signed a definitive merger
agreement to acquire Village Bancorp, Inc., the holding company of The Village
Bank & Trust Company. The Village transaction will be accounted for as a
purchase.
MARITIME BANK & TRUST COMPANY
130 Westbrook Road
Essex, Connecticut 06426-1149
(860) 767-1166
Maritime is a Connecticut-chartered commercial bank headquartered in Essex,
Connecticut. Deposits at Maritime are insured by the Federal Deposit Insurance
Corporation. At September 30, 1998, Maritime had total consolidated assets of
$103.7 million, total deposits of $91.2 million, and stockholders' equity of
$7.1 million, or 6.8% of total assets.
THE MERGER (PAGE ___)
The merger agreement provides for the merger of Maritime into Webster Bank with
Webster Bank the surviving bank.
A copy of the merger agreement (including each of its exhibits) and the other
documents described in this Proxy Statement/Prospectus will be provided to you
promptly without charge if you call or write to James M. Sitro, Vice President,
Investor Relations of Webster Financial Corporation, Webster Plaza, Waterbury,
Connecticut 06702, telephone (203) 578-2399.
WHAT SHAREHOLDERS WILL RECEIVE IN THE MERGER (PAGE ___)
As a result of the merger, each outstanding share of Maritime's common stock
that you own will be converted automatically into the equivalent of $26.67 of
Webster's common stock based on a 15 day average closing market price of
Webster's common stock. If the 15 day average is greater than $24.45, shares of
Maritime's common stock will be converted into 1.091 shares of Webster's common
stock. If the 15 day average is less than $17.50, Maritime's common stock will
be converted into 1.524 shares of Webster's common stock.
THE SHAREHOLDER MEETING
(PAGE ___)
A special meeting of Maritime shareholders will be held on ____________ ___,
1999, at ____ __.m. at Maritime's main headquarters, 130 Westbrook Road, Essex,
Connecticut for the following purposes:
o to vote on the merger agreement, the merger and the other transactions
contemplated by the merger agreement; and
o to address any other matters that properly come before the shareholder
meeting, or any adjournments or postponements of the meeting, including a
motion to adjourn the shareholder meeting to another time and/or place to
solicit additional proxies in favor of the merger agreement and the merger
or otherwise.
1
<PAGE>
THE RECOMMENDATION OF THE MARITIME BOARD TO SHAREHOLDERS (PAGE ___)
The Maritime Board of Directors unanimously approved the merger agreement and
the merger and unanimously recommends that you vote "FOR" approval of these
matters.
RECORD DATE; VOTING POWER (PAGE ___)
You are entitled to vote at the shareholder meeting if you owned shares of
Maritime's common stock on ____________ ___, 1999. You will have one vote for
each share of Maritime's common stock that you owned on that date.
VOTE REQUIRED (PAGE ___)
The affirmative vote of the holders of two-thirds of the issued and outstanding
shares of Maritime's common stock entitled to vote at the shareholder meeting is
required to approve the merger agreement, the merger and the other transactions
contemplated by the merger agreement.
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN SHAREHOLDERS (PAGE ___)
At the close of business on _____, 1999, the directors and executive officers of
Maritime and their affiliates owned a total of ____ shares of Maritime's common
stock (excluding all options to purchase Maritime's common stock), which was
approximately ____% of the outstanding shares of Maritime's common stock on that
date.
REGULATORY APPROVALS (PAGE ___)
For the merger to take place, we need to receive the regulatory approvals of the
Connecticut Commissioner of Banking and the Office of Thrift Supervision. We
will file applications with these regulators soon.
APPRAISAL RIGHTS (PAGE ___)
Under Connecticut law, you are entitled to dissenters' rights of appraisal in
connection with the merger. If you want to exercise dissenters' rights, you must
follow carefully the procedures described at pages ____ to ____ of this document
and Appendix B.
WEBSTER'S DIVIDEND POLICY (PAGE ___)
Webster presently pays dividends at a quarterly dividend rate of $0.11 per
share. An exchange ratio of ___ would mean an equivalent dividend of $___ per
share for Maritime's common stock. Webster's Board of Directors determines the
level of dividends to be declared each quarter based on various economic and
financial factors.
FEDERAL INCOME TAX CONSEQUENCES (PAGE ___)
In general, you will not recognize gain or loss for federal income tax purposes
as a result of the merger, except if you receive cash instead of fractional
shares.
TAX MATTERS ARE VERY COMPLICATED. YOU SHOULD CONSULT YOUR TAX ADVISOR FOR A FULL
EXPLANATION OF THE TAX CONSEQUENCES OF THE MERGER TO YOU.
FAIRNESS OPINION OF MARITIME'S FINANCIAL ADVISOR (PAGE ___)
In deciding to approve the merger, Maritime's Board of Directors considered an
opinion of Ostrowski & Company, Inc., Maritime's financial advisor. This opinion
concluded that the terms of the merger agreement are fair to Maritime
shareholders from a financial point of view. An update of this opinion is
attached as Appendix A to this document. WE ENCOURAGE YOU TO READ THIS OPINION
CAREFULLY.
INTERESTS OF MARITIME DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER (PAGE ___)
You should note that Maritime's directors and executive officers have interests
in the merger as directors and/or employees that are different from, or in
addition to, yours as a Maritime shareholder. These interests are described at
page _____.
CONDITIONS TO THE MERGER (PAGE ___)
The merger will not take place unless several conditions are satisfied,
including:
o the merger agreement and the merger are approved by Maritime's
shareholders;
o Webster's common stock that will be issued in the merger is authorized for
quotation on the
2
<PAGE>
Nasdaq Stock Market's National Market;
o all required regulatory approvals are obtained and any waiting periods
expire;
o the registration statement filed with the SEC is effective and is not
subject to a stop order or any threatened stop order;
o there is no injunction preventing the merger from taking place, and
completing the merger continues to be legal; and
o Webster receives a favorable tax opinion from Webster's counsel that is
reasonably satisfactory to Webster and Maritime.
TERMINATION OF THE MERGER AGREEMENT (PAGE ___)
The Boards of Directors of Webster and Maritime may jointly agree to terminate
the merger agreement at any time without completing the merger. Also, either of
us can terminate the merger agreement if:
o 30 days pass after any required regulatory approval is denied or regulatory
application is withdrawn at a regulator's request, unless action is taken
during the 30 day period for a rehearing or to file an amended application;
o the merger has not taken place by September 30, 1999;
o Maritime's shareholders fail to approve the merger agreement; or
o either of us breaches any representation, warranty, covenant or agreement
contained in the merger agreement, if such breach has a material adverse
effect on the breaching party, unless the breach is cured.
Webster can terminate the merger agreement if the management of Maritime or its
Board of Directors, for any reason:
o fails to hold the shareholder meeting to approve the merger agreement on a
timely basis;
o fails to recommend to Maritime's shareholders approval of the merger
agreement;
o fails to oppose any third-party proposal that is inconsistent with the
transactions contemplated by the merger agreement; or
o violates the merger agreement's restriction on inquiries, discussions,
negotiations and providing information to third-parties regarding
acquisition transactions.
Maritime can terminate the merger agreement if:
o the average closing market price of Webster's common stock over a specified
15 day period is less than $17.50, unless Webster decides to increase the
exchange ratio so that Maritime shareholders will receive $26.67 of
Webster's common stock based on a 15 day average closing market price of
Webster's common stock.
OPTION AGREEMENT (PAGE ___)
Maritime and Webster entered into an option agreement on November 3, 1998
immediately after they entered into the merger agreement. In the option
agreement, Maritime granted Webster an option to purchase 19.9% of Maritime's
common stock under certain circumstances. The option agreement is intended to
discourage other parties from making alternative acquisition-related proposals,
even if a proposal of that kind is for a higher price per share for Maritime's
common stock than the price per share to be paid pursuant to the merger
agreement.
ACCOUNTING TREATMENT (PAGE ___)
The merger will be accounted for as a purchase transaction for accounting and
financial reporting purposes.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE (PAGE ___)
We have made forward-looking statements in this document, and in documents that
we incorporate by reference. These kinds of statements are subject to risks and
uncertainties. Forward-looking statements include the information concerning
possible or assumed future results of operations of Webster, Webster Bank,
Maritime or the surviving bank. When we use words such as "believes," "expects,"
"anticipates" or similar expressions, we are making forward-looking statements.
3
<PAGE>
You should note that many factors, some of which are discussed elsewhere in this
document and in the documents that we incorporate by reference, could affect the
future financial results of Webster, Webster Bank, Maritime or the surviving
bank and could cause those results to differ materially from those expressed in
our forward-looking statements. These factors include the following:
o operating, legal and regulatory risks;
o economic, political and competitive forces affecting our banking,
securities, asset management and credit services businesses; and
o the risk that our analyses of these risks and forces could be incorrect
and/or that the strategies developed to address them could be unsuccessful.
4
<PAGE>
MARKET PRICES OF COMMON STOCK
Webster's common stock is traded on the Nasdaq Stock Market's National
Market Tier under the trading symbol "WBST." Maritime's common stock is not
registered under the federal securities laws and is not listed on any exchange
or automated quotation system. However, it does trade on the over-the-counter
bulletin board.
The table below presents the per share closing prices of Webster's common
stock on the Nasdaq Stock Market's National Market Tier as of the dates
specified, the per share closing prices of Maritime's common stock on the
over-the-counter bulletin board as of the dates specified and the pro forma
equivalent market value of Webster's common stock to be issued for Maritime's
common stock in the merger. For more information about the stock prices and
dividends of Webster and Maritime, see "MARKET PRICES AND DIVIDENDS."
<TABLE>
<CAPTION>
Maritime's
Last Reported Sale Price common stock
------------------------ Pro Forma
Date Webster's Maritime's Equivalent Market
common stock common stock Value (a)
------------ ------------ -----------------
<S> <C> <C> <C>
November 3, 1998 (b).................... $24.94 $20.00 $ *
_________ __, 1999 (c).................. * * *
</TABLE>
- ----------
(a) Determined by multiplying the respective closing prices of Webster's common
stock by the exchange ratio calculated based on the average of the daily
closing prices per share of Webster's common stock for the 15 consecutive
trading days on which shares of Webster's common stock were actually traded
prior to ________ __, 1999 (the most recent practicable date prior to the
date of this Proxy Statement/Prospectus). See "THE MERGER -- Exchange
Ratio."
(b) Last trading date prior to announcement of the execution of the merger
agreement.
(c) The most recent practicable date prior to the date of this Proxy
Statement/Prospectus.
Maritime's shareholders are advised to obtain current market quotations for
Webster's common stock. It is expected that the market price of Webster's common
stock will fluctuate between the date of this Proxy Statement/Prospectus and the
date on which the merger takes place. No assurance can be given as to the market
price of Webster's common stock at the time of the merger.
- ----------
* To be calculated subsequently
5
<PAGE>
COMPARATIVE PER SHARE DATA
The table below presents certain comparative selected historical per share
data of Webster and Maritime, pro forma combined per share data for Webster and
Maritime and equivalent pro forma per share data of Maritime. The financial data
is based on, and should be read in conjunction with, the historical consolidated
financial statements and the notes to those financial statements of Webster and
Maritime. All financial data presented for Webster prior to December 31, 1997
has been restated to reflect the financial results of Eagle Financial Corp.,
which was acquired by Webster in April 1998. All per share data of Webster,
Maritime and pro forma are presented on a fully diluted basis and have been
adjusted retroactively to give effect to stock dividends. The pro forma data is
not necessarily indicative of results which will be obtained on a combined
basis.
<TABLE>
<CAPTION>
At or for the Nine
Months Ended At or for the Year
September 30, 1998 Ended December 31, 1997
------------------ -----------------------
<S> <C> <C>
Net Income per fully diluted Common Share:
Webster -- historical $ 1.27 $ 1.07
Maritime -- historical 0.88 1.07
Pro Forma Combined 1.27 1.07
Maritime Equivalent Pro Forma (a) * *
Cash Dividends per Common Share:
Webster -- historical 0.32 0.40
Maritime -- historical 0.32 0.32
Pro Forma Combined 0.32 0.40
Maritime Equivalent Pro Forma (a) * *
Book Value per Common Share:
Webster -- historical 14.91 13.78
Maritime -- historical 10.01 9.24
Pro Forma Combined 14.83 13.68
Maritime Equivalent Pro Forma (a) * *
</TABLE>
- ----------
(a) Maritime equivalent pro forma per share amounts are calculated by
multiplying the pro forma combined amounts by the exchange ratio calculated
based on the average daily closing prices per share of Webster's common
stock for the 15 consecutive trading days on which shares of Webster's
common stock were actually traded prior to _______ __, 1999 (the most
recent practicable date prior to the date of this Proxy
Statement/Prospectus). See "THE MERGER -- Exchange Ratio."
- ----------
* To be calculated subsequently
6
<PAGE>
SUMMARY FINANCIAL AND OTHER DATA
The tables below present summary historical financial and other data for
Webster and Maritime as of the dates and for the periods indicated. This summary
data is based upon and should be read in conjunction with Webster's historical
consolidated financial statements and related notes that are incorporated by
reference into this document and Maritime's historical financial statements and
related notes that appear elsewhere in this document. For Webster's historical
information, see "WHERE YOU CAN FIND MORE INFORMATION." For Maritime's
historical information, see Appendix C and Appendix D to this document. The
historical consolidated financial statements of Webster and the historical
financial statements of Maritime for the periods ended September 30, 1998 and
1997 are unaudited. All adjustments necessary for a fair presentation of
financial position and results of operations of interim periods have been
included. All financial data presented for Webster prior to December 31, 1997
has been restated to reflect the financial results of Eagle Financial Corp.,
which was acquired by Webster in April 1998.
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA - WEBSTER
FINANCIAL CONDITION
AND OTHER DATA - WEBSTER
(DOLLARS IN THOUSANDS) AT SEPTEMBER 30, AT DECEMBER 31,
---------------- ---------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets........................ $ 9,163,686 $ 8,817,767 $ 9,095,887 $ 7,368,941 $ 6,479,567 $6,114,613 $5,054,572
Loans receivable, net............... 4,931,885 4,906,859 4,954,813 4,737,883 3,977,725 4,007,710 3,281,388
Investment securities............... 3,688,241 3,340,301 3,589,273 2,105,173 2,000,185 1,558,401 1,289,107
Intangible assets (a)............... 81,037 80,829 78,493 81,936 26,720 31,093 17,944
Deposits............................ 5,621,371 5,650,442 5,719,030 5,826,264 5,060,822 5,044,336 4,163,757
Federal Home Loan Bank advances
and other borrowings............. 2,654,126 2,422,275 2,549,597 957,835 834,557 613,791 452,755
Shareholders' equity................ 565,916 494,016 517,262 472,824 460,791 364,112 327,676
Number of banking offices........... 104 114 114 120 109 108 91
<CAPTION>
OPERATING DATA - WEBSTER FOR THE
(DOLLARS IN THOUSANDS) NINE MONTHS
ENDED SEPTEMBER 30, FOR THE YEAR ENDED DECEMBER 31,
------------------- -------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income................. $ 182,691 $ 187,043 $ 251,050 $ 222,118 $ 188,646 $ 182,100 $ 153,428
Provision for loan losses........... 5,300 22,138 24,813 13,054 9,864 7,149 9,886
Noninterest income.................. 53,530 30,077 42,264 52,009 33,316 21,378 24,052
Noninterest expenses:
Acquisition related expenses..... 17,400 29,792 29,792 500 4,271 700 --
Other noninterest expenses....... 136,891 129,535 171,871 173,977 142,592 140,260 112,502
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total noninterest expenses..... 154,291 159,327 201,663 174,477 146,863 140,960 112,502
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before income taxes.......... 76,630 35,655 66,838 86,596 65,235 55,369 55,092
Income taxes........................ 27,426 13,814 25,725 32,602 23,868 17,958 23,672
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income before cumulative
change .......................... 49,204 21,841 41,113 53,994 41,367 37,411 31,420
Cumulative change (b)............... -- -- -- -- -- 97 6,408
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income.......................... 49,204 21,841 41,113 53,994 41,367 37,508 37,828
Preferred stock dividends........... -- -- -- 1,149 1,296 1,716 2,653
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income available to common
shareholders..................... $ 49,204 $ 21,841 $ 41,113 $ 52,845 $ 40,071 $ 35,792 $ 35,175
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
See footnotes on the following page
7
<PAGE>
<TABLE>
<CAPTION>
SIGNIFICANT STATISTICAL DATA - WEBSTER
AT OR FOR THE
NINE MONTHS
ENDED SEPTEMBER 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
------------------- -------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD:
Net income per common share:
Basic .............................. $ 1.30 $ 0.58 $ 1.10 $ 1.44 $ 1.18 $ 1.16 $ 1.02(c)
Diluted ............................ $ 1.27 $ 0.56 $ 1.07 $ 1.36 $ 1.12 $ 1.09 $ 0.95(c)
Dividends declared per common
share .............................. $ 0.32 $ 0.30 $ 0.40 $ 0.34 $ 0.32 $ 0.26 $ 0.25
Return on average shareholders'
equity ............................. 12.44% 6.07% 8.44% 11.32% 10.05% 10.52% 11.66%(c)
Interest rate spread .................. 2.58% 3.05% 3.00% 3.12% 2.98% 3.23% 3.11%
Net interest margin ................... 2.76% 3.27% 3.19% 3.24% 3.14% 3.36% 3.25%
Noninterest expenses to average
assets ............................. 2.20% 2.65% 2.45% 2.42% 2.34% 2.45% 2.28%
Noninterest expenses (excluding
foreclosed property, acquisition
related, capital securities and
preferred dividends of subsidiary
corporation expenses) to average
assets ............................. 1.74% 1.97% 2.40% 2.35% 2.22% 2.24% 2.01%
AT END OF PERIOD:
Diluted weighted average shares (000's) 38,650 37,698 38,473 39,560 36,797 34,533 32,161
Book value per common share ........... $ 14.91 $ 13.26 $ 13.78 $ 12.73 $ 12.24 $ 10.96 $ 10.58
Tangible book value per common
share .............................. $ 12.78 $ 11.09 $ 11.69 $ 10.48 $ 11.50 $ 9.98 $ 9.95
Shareholders' equity to total assets .. 6.18% 5.61% 5.69% 6.42% 7.11% 5.95% 6.48%
</TABLE>
- ----------
(a) The increase in the core deposit intangible in 1996 is a result of certain
assets and liabilities purchased in the Shawmut Bank Connecticut National
Association (now Fleet National Bank of Connecticut) acquisition.
(b) Reflects cumulative change in method of accounting for income taxes adopted
by Webster in 1993 in accordance with Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 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 Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 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 0.77%; and (iii) return on average
shareholders' equity for 1993 was 12.92%.
8
<PAGE>
SELECTED FINANCIAL DATA - MARITIME
<TABLE>
<CAPTION>
FINANCIAL CONDITION
AND OTHER DATA - MARITIME AT SEPTEMBER 30, AT DECEMBER 31,
----------------------- ---------------------------------------------------------
(DOLLARS IN THOUSANDS) 1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets ....................... $103,663 $ 80,534 $ 83,064 $ 69,911 $ 56,383 $ 43,295 $ 40,456
Loans, net ......................... 68,384 51,435 56,077 44,432 37,459 32,322 27,231
Investments in available-for-sale
securities (at fair value) ...... 24,157 21,038 19,950 17,432 12,434 6,969 8,905
Total deposits ..................... 91,174 71,893 72,311 63,847 50,840 38,480 36,093
Total stockholders' equity ......... 7,060 6,323 6,516 5,864 5,282 4,548 4,284
Number of banking offices .......... 3 3 3 3 2 1 1
</TABLE>
<TABLE>
<CAPTION>
OPERATING DATA - MARITIME FOR THE NINE MONTHS
(DOLLARS IN THOUSANDS) ENDED SEPTEMBER 30, FOR THE YEAR ENDED DECEMBER 31,
-------------------- -------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Total interest and dividend income .. $ 5,480 $ 4,443 $ 6,054 $ 4,817 $ 4,098 $ 3,062 $ 2,350
Total interest expense .............. 2,226 1,691 2,283 1,759 1,438 932 834
------- ------- ------- ------- ------- ------- -------
Net interest and dividend income .... 3,254 2,752 3,771 3,058 2,660 2,130 1,516
Provision for loan losses ........... 255 180 240 160 125 90 205
------- ------- ------- ------- ------- ------- -------
Net interest and dividend income
after provision for loan losses . 2,999 2,572 3,531 2,898 2,535 2,040 1,311
Total other income .................. 331 223 332 268 199 199 201
Securities gains (losses), net ...... 12 -- 2 (36) (34) (14) (14)
Total expenses ...................... 2,204 1,869 2,526 2,017 1,687 1,307 1,111
------- ------- ------- ------- ------- ------- -------
Income before income taxes ....... 1,138 926 1,339 1,113 1,013 918 387
Income taxes ........................ 458 377 538 454 431 373 164
------- ------- ------- ------- ------- ------- -------
Net income before cumulative change . 680 549 801 659 582 545 223
Cumulative change (a) ............... -- -- -- -- -- -- 383
------- ------- ------- ------- ------- ------- -------
Net income ..................... $ 680 $ 549 $ 801 $ 659 $ 582 $ 545 $ 606
======= ======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
SIGNIFICANT STATISTICAL DATA - MARITIME
AT OR FOR THE NINE MONTHS
ENDED SEPTEMBER 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
------------------- -------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD:
Net earnings per common share (b) ....... $ 0.96 $ 0.78 $ 1.14 $ 0.95 $ 0.84 $ 0.79 $ 0.32(c)
Net earnings per common share,
assuming dilution (b) ................ $ 0.88 $ 0.74 $ 1.07 $ 0.91 $ 0.81 $ 0.79 $ 0.32(c)
Cash dividends declared (b) ............. $ 0.33 $ 0.23 $ 0.32 $ 0.23 $ 0.15 $ 0.03 $ --
Dividend payout ratio ................... 0.34% 0.29% 0.28% 0.24% 0.19% 0.04% --%
Risk based capital ratio ................ 10.97% 12.99% 12.93% 13.33% 13.79% 16.00% 17.03%
Loan loss reserve / loans ............... 1.44% 1.37% 1.33% 1.64% 1.60% 1.67% 1.66%
Nonperforming assets / total assets ..... 0.15% 0.59% 0.30% 0.17% 0.10% 0.43% --%
Net interest margin ..................... 4.88% 5.15% 5.20% 5.40% 5.70% 5.52% 4.83%
Return on average assets ................ 0.96% 0.96% 1.04% 1.08% 1.15% 1.30% 0.64(c)
Return on average equity ................ 13.31% 12.05% 12.97% 11.89% 11.77% 12.27% 5.67%(c)
AT END OF PERIOD:
Diluted weighted average (000's) ....... 773 747 750 728 721 694 694
Book value per common share (b) ......... $ 10.01 $ 8.97 $ 9.24 $ 8.37 $ 7.61 $ 6.55 $ 6.17
Stockholders' equity to total assets .... 6.81% 7.85% 7.84% 8.39% 9.37% 10.50% 10.59%
</TABLE>
- ----------
(a) Reflects cumulative change in method of accounting for income taxes adopted
by Maritime in 1993 in accordance with Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 109.
(b) Reflects three-for-two stock split in August 1998.
(c) Does not give effect to $383,000 of additional income in 1993 resulting
from the cumulative change of Maritime's adoption of Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 109. Giving
effect to such cumulative change, (i) net income per common share for 1993
was $.87 on a primary basis and $.87 on a fully diluted basis; (ii) return
on average assets for 1993 was 1.74%; and (iii) return on average
shareholders' equity for 1993 was 15.40%.
9
<PAGE>
SHAREHOLDER MEETING
MATTERS TO BE CONSIDERED AT THE SHAREHOLDER MEETING
This Proxy Statement/Prospectus is first being mailed to the holders of
Maritime's common stock on or about ____________ ___, 1999, and is accompanied
by a proxy card furnished in connection with the solicitation of proxies by the
Maritime Board of Directors for use at the special meeting of Maritime's
shareholders. The shareholder meeting is scheduled to be held on __________ ___,
1999, at ___ _.m., at Maritime's main headquarters, 130 Westbrook Road, Essex,
Connecticut. At the shareholder meeting, the holders of Maritime's common stock
will consider and vote upon: (i) the proposal to approve and adopt the merger
agreement, the merger and the other transactions contemplated by the merger
agreement, and (ii) any other business that properly comes before the
shareholder meeting, or any adjournments or postponements of the meeting,
including, without limitation, a motion to adjourn the shareholder meeting to
another time and/or place for the purpose of soliciting additional proxies in
order to approve the merger agreement and the merger or otherwise.
RECORD DATE AND VOTING
The Maritime Board of Directors has fixed the close of business on
____________ ___, 1999 as the record date for determining the Maritime
shareholders entitled to receive notice of and to vote at the shareholder
meeting. Only holders of record of Maritime's common stock at the close of
business on that day will be entitled to vote at the shareholder meeting or at
any adjournment or postponement of the meeting. At the close of business on
______ ___, 1999, there were _____ shares of Maritime's common stock outstanding
and that are entitled to vote at the shareholder meeting, held by approximately
_____ shareholders of record. Maritime is not authorized to issue preferred
stock.
Each holder of Maritime's common stock on the record date will be entitled
to one vote for each share held of record upon each matter properly submitted at
the shareholder meeting or at any adjournment or postponement of the meeting.
The presence, in person or by proxy, of the holders of a majority of the voting
power of Maritime's common stock issued and outstanding and entitled to be voted
at the shareholder meeting is necessary to constitute a quorum. Abstentions and
broker non-votes will be included in the calculation of the number of shares
represented at the shareholder meeting in order to determine whether a quorum
has been achieved. Since approval of the merger agreement requires the
affirmative vote of the holders of at least two-thirds of the issued and
outstanding shares of Maritime's common stock entitled to be voted at the
shareholder meeting, abstentions and broker non-votes will have the same effect
as a vote against the merger agreement.
If a quorum is not obtained, or if fewer shares of Maritime's common stock
are voted in favor of the proposal for approval of the merger agreement than the
number required for approval, it is expected that the shareholder meeting will
be adjourned to allow additional time for obtaining additional proxies. In such
event, proxies will be voted to approve an adjournment, except for proxies as to
which instructions have been given to vote against the merger agreement. In the
absence of a quorum, an officer entitled to preside at or act as secretary of
the shareholder meeting will have the power to adjourn the meeting until a
quorum is present. If a quorum is obtained, an adjournment of the meeting will
be approved if the votes cast favoring adjournment exceed the votes cast
opposing adjournment.
If your proxy card is properly executed and received by Maritime in time to
be voted at the shareholder meeting, the shares represented by the proxy card
will be voted in accordance with the instructions marked on the proxy card.
EXECUTED PROXIES WITH NO INSTRUCTIONS INDICATED ON THE PROXY CARD WILL BE VOTED
"FOR" THE PROPOSAL TO APPROVE THE MERGER AGREEMENT.
10
<PAGE>
The Maritime Board of Directors is not aware of any matters other than the
proposal to approve the merger agreement and the merger (or a proposal to
adjourn or postpone the shareholder meeting as necessary) that may properly come
before the shareholder meeting. If any other matters properly come before the
shareholder meeting, the persons named in the accompanying proxy will vote the
shares represented by all properly executed proxies on such matters as
determined by a majority of the Maritime Board of Directors.
YOU SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH YOUR PROXY CARD. IF
THE MERGER TAKES PLACE, MARITIME STOCK CERTIFICATES SHOULD BE DELIVERED IN
ACCORDANCE WITH INSTRUCTIONS THAT WILL BE SENT TO YOU BY WEBSTER'S EXCHANGE
AGENT PROMPTLY AFTER THE EFFECTIVE TIME OF THE MERGER.
REQUIRED VOTE; REVOCABILITY OF PROXIES
The affirmative vote of the holders of at least two-thirds of the issued
and outstanding shares of Maritime's common stock entitled to be voted at the
shareholder meeting is required in order to approve and adopt the merger
agreement, the merger of Maritime into Webster Bank and the other transactions
contemplated by the merger agreement.
THE REQUIRED VOTE OF MARITIME'S SHAREHOLDERS IS BASED ON THE TOTAL NUMBER
OF OUTSTANDING SHARES OF MARITIME'S COMMON STOCK AND NOT ON THE NUMBER OF SHARES
WHICH ARE ACTUALLY VOTED. IF YOU DO NOT SUBMIT A PROXY CARD OR VOTE IN PERSON AT
THE SHAREHOLDER MEETING, OR IF YOU ABSTAIN FROM VOTING, YOU EFFECTIVELY ARE
VOTING "AGAINST" THE MERGER AGREEMENT AND THE MERGER.
All of the directors and executive officers of Maritime beneficially owned
as of _____ __, 1999 a total of _____ shares of Maritime's common stock
(excluding all options to purchase shares of Maritime common stock), which was
approximately ___% of the outstanding shares of Maritime's common stock on that
date. All of the directors (including the officer who serves as the Chief
Executive Officer and President of Maritime) have entered into a stockholder
agreement with Webster, in which they each agreed, among other things, to
certain transfer restrictions and to vote all shares of Maritime's common stock
that they have the right to vote (whether owned as of the date of the
stockholder agreement or acquired after that date) in favor of the merger
agreement, the merger and the other transactions contemplated by the merger
agreement and against any third party merger proposal. No separate consideration
was paid to any of the directors for entering into the stockholder agreement.
Webster required that the stockholder agreement be executed as a condition to
Webster entering into the merger agreement.
If you submit a proxy card, attending the shareholder meeting will not
automatically revoke your proxy. However, you may revoke a proxy at any time
before it is voted by (i) delivering to Nicholas Lewitz, Jr., Secretary of
Maritime Bank & Trust Company, 130 Westbrook Road, Essex, Connecticut
06426-1149, a written notice of revocation before the shareholder meeting, (ii)
delivering to Maritime a duly executed proxy bearing a later date before the
shareholder meeting, or (iii) attending the shareholder meeting and voting in
person.
Maritime and Webster are not obligated to complete the merger unless, among
other things, the merger agreement and the merger are approved by the
affirmative vote of the holders of at least two-thirds of the issued and
outstanding shares of Maritime's common stock entitled to vote. For a
description of the conditions to the merger, see "THE MERGER -- Conditions to
the Merger."
11
<PAGE>
SOLICITATION OF PROXIES
In addition to solicitation by mail, directors, officers and employees of
Maritime may solicit proxies for the shareholder meeting from shareholders
personally or by telephone or telegram without receiving additional compensation
for these activities. The cost of soliciting proxies will be paid by Maritime.
In addition, Maritime has retained D.F. King & Co., Inc., a proxy solicitation
firm, to assist in proxy solicitation for the shareholder meeting. The fee to be
paid to that firm is $________, plus reasonable out-of-pocket expenses. The fee
will be paid by Webster. Maritime also will make arrangements with brokerage
firms and other custodians, nominees and fiduciaries to send proxy materials to
their principals and will reimburse such parties for their expenses in doing so.
THE MERGER
The information in this Section is qualified in its entirety by reference
to the full text of the merger agreement (including each of its exhibits), the
option agreement and the stockholder agreement, all of which are incorporated
herein by reference and the material features of which are described in this
Proxy Statement/Prospectus. A copy of the merger agreement (including each of
its exhibits) and the other documents described in this Proxy
Statement/Prospectus will be provided to you promptly without charge if you call
or write to James M. Sitro, Vice President, Investor Relations of Webster
Financial Corporation, Webster Plaza, Waterbury, Connecticut 06702, telephone
(203) 578-2399.
THE PARTIES
The merger agreement was entered into by Webster, Webster Bank and
Maritime. Under the merger agreement, Webster will acquire Maritime through the
merger of Maritime into Webster Bank, a wholly-owned subsidiary of Webster.
WEBSTER. Webster is a Delaware corporation and the holding company of
Webster Bank, Webster's wholly owned federal savings bank subsidiary. Both
Webster and Webster Bank are headquartered in Waterbury, Connecticut. Webster
Bank can be found on the Internet at http://www.websterbank.com. Deposits at
Webster Bank are insured by the Federal Deposit Insurance Corporation. Through
Webster Bank, Webster currently serves customers from over 100 banking offices,
three commercial banking centers and more than 174 ATMs located in Hartford, New
Haven, Fairfield, Litchfield and Middlesex Counties in Connecticut, in addition
to telephone banking, video banking and PC banking. Webster's mission is to help
individuals, families and businesses achieve their financial goals. Webster
emphasizes five business lines -- consumer banking, business banking, mortgage
banking, trust and investment services and insurance services -- each supported
by centralized administration and operations. Through a number of recent
acquisitions of other financial service firms, including banks and thrifts, a
trust company and an insurance firm, Webster has established a leading position
in the banking and trust and investment services market in Connecticut.
On November 11, 1998, Webster announced that it had signed a definitive
merger agreement to acquire Village Bancorp, Inc., the holding company of The
Village Bank & Trust Company. At September 30, 1998, Village had total
consolidated assets of $230.2 million, total deposits of $210.8 million, and
shareholders' equity of $17.2 million. The Village transaction will be accounted
for as a purchase.
At September 30, 1998, Webster had total consolidated assets of $9.2
billion, total deposits of $5.6 billion, and shareholders' equity of $565.9
million or 6.2% of total assets. Webster's consolidated financial statements as
of September 30, 1998 include Eagle Financial Corp., which was acquired by
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Webster on April 15, 1998. At September 30, 1998, Webster had loans receivable,
net of $4.9 billion, which included $3.8 billion in residential mortgage loans,
$386.1 million in commercial real estate loans, $314.9 million in commercial and
industrial loans and $494.5 million in consumer loans (consisting primarily of
home equity loans). At September 30, 1998, nonaccrual loans and other real
estate owned were $35.7 million. At that date, Webster's allowance for loan
losses was $57.0 million, or 192.7% of nonaccrual loans, and its total allowance
for loan and other real estate owned losses was $57.3 million, or 160.4% of
nonaccrual loans and other real estate owned. For additional information about
Webster that is incorporated by reference into this document, see "WHERE YOU CAN
FIND MORE INFORMATION."
Webster, as a savings and loan holding company, is regulated by the Office
of Thrift Supervision. Webster Bank, as a federal savings bank, also is
regulated by the Office of Thrift Supervision and by the Federal Deposit
Insurance Corporation as to certain matters.
MARITIME. Maritime is a Connecticut-chartered commercial bank headquartered
in Essex, Connecticut. Deposits at Maritime are insured by the Federal Deposit
Insurance Corporation. Maritime is engaged principally in the business of
attracting deposits from the general public and investing those deposits in
residential real estate loans, and in consumer and small business loans.
Maritime currently serves customers from three banking offices located in
Middlesex and New London Counties, Connecticut.
At September 30, 1998, Maritime had total consolidated assets of $103.7
million, total deposits of $91.2 million, and stockholders' equity of $7.1
million, or 6.8% of total assets. At September 30, 1998, Maritime had loans
receivable, net of $68.4 million, which included $27.5 million in residential
real estate loans, $17.5 million in commercial real estate loans, $12.8 million
in commercial loans and $11.7 million in home equity credit lines and consumer
installment loans. At September 30, 1998, nonperforming loans were $158,471. At
that date, Maritime's allowance for loan losses was $1.0 million, or 632% of
nonperforming loans. For additional information about Maritime, see "INFORMATION
ABOUT MARITIME," Appendix C and Appendix D.
Maritime, as a Connecticut-chartered commercial bank, is regulated by the
Connecticut Commissioner of Banking and by the Federal Deposit Insurance
Corporation.
BACKGROUND OF THE MERGER
Maritime was incorporated in 1991 as a Connecticut-chartered commercial
bank headquartered in Essex, Connecticut. The Board of Directors and management
of Maritime periodically have reviewed the objectives of Maritime and various
strategic alternatives available to Maritime. These reviews involved evaluation
of Maritime's existing franchise and opportunities to enhance shareholder value
through expansion. Maritime has considered and pursued various expansion
opportunities, including establishing branch offices in Old Lyme and Old
Saybrook, Connecticut.
More recently, the Maritime Board of Directors became concerned about
Maritime's ability to enhance shareholder value because of consolidation in the
banking industry and Maritime's need to raise capital to fund further
significant expansion. In the summer of 1998, the Maritime Board of Directors
decided to pursue determining the value of the Maritime franchise from a merger
and acquisition perspective, as compared to remaining independent. Maritime
engaged Ostrowski & Company, Inc. as its financial advisor to assist in that
evaluation.
In September 1998, Ostrowski & Company, Inc. compiled a package of relevant
materials about Maritime. Four of the 11 banks Ostrowski & Company, Inc.
contacted requested the package. Three banks responded with proposals after
receiving the package. Maritime's Board of Directors decided
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to pursue further negotiations with Webster principally because its proposal
contained the highest offer.
Over the next three weeks, Webster performed a detailed due diligence
investigation of Maritime, including an examination of the books and records of
Maritime and meetings with management officials. Maritime also performed certain
due diligence activities regarding Webster. Upon completion of the due
diligence, the Maritime Board asked Webster to finalize its proposal in the form
of a definitive agreement. The parties then negotiated concerning the definitive
agreement's final terms. On October 15, October 30 and November 2, Maritime's
Board met and considered Webster's offer and Maritime's strategic alternatives.
Those negotiations and considerations continued through November 3, 1998. On
that date, the Maritime Board of Directors approved the definitive merger
agreement and the merger.
RECOMMENDATION OF THE MARITIME BOARD OF DIRECTORS AND REASONS FOR THE MERGER
The Board of Directors of Maritime has approved the merger agreement and
has determined that the merger is fair to and in the best interests of Maritime
and its shareholders. THE MARITIME BOARD OF DIRECTORS RECOMMENDS THAT HOLDERS OF
MARITIME'S COMMON STOCK VOTE TO APPROVE AND ADOPT THE MERGER AGREEMENT AND THE
merger. The Maritime Board of Directors believes that the merger will enable
holders of Maritime's common stock to realize increased value due to the premium
over market price, net income per share and book value per share of Maritime's
common stock. The Board also believes that the merger may enable Maritime
shareholders to participate in opportunities for appreciation of Webster's
common stock. See "-- Opinion of Maritime Financial Advisor" below. In reaching
its decision to approve the merger agreement, the Board consulted with its
outside counsel regarding the legal terms of the merger and the Board's
fiduciary obligations in its consideration of the proposed merger, its financial
advisor, Ostrowski & Company, Inc. regarding the financial aspects and fairness
of the proposed merger agreement, as well as with management of Maritime and,
without assigning any relative or specific weight, considered the following,
which are all of the material factors considered, both from a short-term and
long-term perspective:
o The Maritime Board's familiarity with, and review of, the business,
financial condition, results of operations and prospects of Maritime,
including, but not limited to, its potential growth, development,
productivity and profitability and the business risks associated with the
merger;
o The current and prospective environment in which Maritime operates,
including national and local economic conditions, the highly competitive
environment for financial institutions generally, the increased regulatory
burden on financial institutions, and the trend toward consolidation in the
financial services industry;
o The potential appreciation in market and book value of Maritime's common
stock on both a short- and long-term basis, as a stand alone entity;
o The proposals of the two other interested parties;
o Information concerning the business, financial condition, results of
operations, asset quality and prospects of Webster including the long-term
growth potential of Webster's common stock, the future growth prospects of
Webster, combined with Maritime following the proposed merger, and the
potential synergies expected from the merger and the business risks
associated with the merger;
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o The fact that the exchange of Webster's common stock for Maritime's common
stock can be effected on a tax-free basis for Maritime shareholders, and
the potential for appreciation and growth for the market and book value of
Webster's common stock following the proposed merger;
o The oral presentation of Ostrowski & Company that the terms of the merger
agreement are fair to the holders of Maritime's common stock from a
financial point of view (see "-- Opinion of Maritime's Financial Advisor");
o The advantages and disadvantages of Maritime remaining aabn independent
institution or affiliating with a larger institution;
o The short- and long-term interests of Maritime and its shareholders, the
interests of the employees, customers, creditors and suppliers of Maritime,
and the interests of the Maritime community that could 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
o The compatibility with respect to businesses and management philosophies of
Maritime and Webster and Webster's strong commitment to the communities it
serves.
On the basis of these considerations, the merger agreement was approved,
and the Board of Directors recommends that the shareholders vote for the
approval of the merger agreement and the merger.
PURPOSE AND EFFECTS OF THE MERGER
The purpose of the merger is to enable Webster to acquire the assets and
business of Maritime. After the merger, it is anticipated that Maritime's three
branch banking offices will remain open and will be operated as banking offices
of Webster Bank.
The merger will result in an expansion of Webster Bank's primary market
area to include Maritime's banking offices in Middlesex County, where Webster
currently operates banking offices, and New London County, Connecticut, where
Webster currently does not have any offices. Webster expects to achieve
reductions in the current operating expenses of Maritime upon the consolidation
of Maritime's operations into Webster Bank. Upon completion of the merger, the
issued and outstanding shares of Maritime's common stock automatically will be
converted into Webster's common stock based on a 15 day closing average market
price of Webster's common stock. See "-- Exchange Ratio."
STRUCTURE
The merger will occur through the merger of Maritime into Webster Bank,
with Webster Bank the surviving bank. When the merger takes place, except as
discussed below, each outstanding share of Maritime's common stock will be
converted into the equivalent of $26.67 of Webster's common stock, subject to
adjustment, plus cash to be paid instead of fractional shares. Shares held as
treasury stock or held directly or indirectly by Maritime, Webster or any of
Webster's subsidiaries (other than trust account shares and shares related to a
previously contracted debt) shall be canceled. Dissenting shares will not be
automatically converted. See "--Dissenters' Appraisal Rights."
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We expect that the merger will take place in the second quarter of 1999, or
as soon as possible after we receive all required regulatory and shareholder
approvals and all regulatory waiting periods expire. If the merger does not take
place by September 30, 1999, the merger agreement may be terminated unless
Maritime and Webster both agree to extend it.
The merger agreement permits Webster to modify the structure of the
transactions contemplated by and described in the merger agreement so long as
(i) there are no material adverse federal income tax consequences to Maritime's
shareholders as a result of the modification, (ii) the consideration to be paid
to Maritime's shareholders under the merger agreement is not changed or reduced
in amount, and (iii) the modification will not be reasonably likely to delay
materially or jeopardize receipt of any required regulatory approvals. Webster
presently has no intent to modify the structure.
EXCHANGE RATIO
The merger agreement provides that at the effective time of the merger,
except as discussed below, each outstanding share of Maritime's common stock
automatically will be converted into the equivalent of $26.67 of Webster's
common stock, based on a 15 day average closing market price of Webster's common
stock. Shares held as treasury stock and shares held directly or indirectly by
Maritime, Webster or any of Webster's subsidiaries (other than trust account
shares and shares related to a previously contracted debt) will be canceled.
Dissenting shares will not be converted into the right to receive shares of
Webster's common stock unless and until Maritime shareholders who dissent fail
to perfect or effectively withdraw or lose their right of payment under
applicable law. See "--Dissenters' Appraisal Rights" and Appendix B.
The exchange ratio for the conversion of Maritime's common stock into
Webster's common stock will be determined by dividing $26.67 by a 15 day average
closing market price of Webster's common stock, computed to three decimal
places. The 15 day average will be the average of the daily closing prices per
share for Webster's common stock for the 15 consecutive trading days during
which Webster's common stock is actually traded as reported on the Nasdaq Stock
Market's National Market Tier ending on the day before the receipt of the last
required federal bank regulatory approval or waiver required for the merger.
Nonetheless, if the 15 day average price is greater than $24.45, the exchange
ratio will be 1.091. If the 15 day average price is less than $17.50, the
exchange ratio will be 1.524 unless Maritime gives notice to Webster of its
intention to terminate the merger agreement. If Maritime takes this action,
Webster can decide that the exchange ratio will be determined by dividing $26.67
by the 15 day average price, computed to three decimal places, and the merger
agreement will remain in effect. In summary, you will receive $26.67 worth of
Webster's common stock unless the 15 day average price is greater than $24.45,
in which case the exchange ratio will be one share of Maritime's common stock
for 1.091 shares of Webster's common stock.
For example, based on the $____ average of the daily closing prices per
share for Webster's common stock for the 15 consecutive trading days on which
shares of Webster's common stock were actually traded prior to __________ ___,
1999 (the most recent practicable date prior to the date of this Proxy
Statement/ Prospectus), the exchange ratio would be ______. Based on the ____
shares of Maritime's common stock outstanding on ____________ ___, 1999 and an
exchange ratio of ______, Webster would issue up to ______ shares of Webster's
common stock to Maritime shareholders in the merger, plus cash instead of
fractional shares. These numbers do not reflect the additional shares of
Webster's common stock to be issued in the event of the exercise prior to the
merger of the ______ existing options to purchase Maritime's common stock.
Because the market price of Webster's common stock is subject to
fluctuation, the exchange ratio may materially increase or decrease prior to the
merger. No assurance can be given as to the market price of Webster's common
stock at the time of the merger. Such variance would not alter the obligation of
Webster or Maritime to consummate the merger, except as provided above.
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Certificates for fractions of shares of Webster's common stock will not be
issued. Under the merger agreement, instead of a fractional share of Webster's
common stock, a Maritime shareholder will be entitled to receive an amount of
cash equal to (i) the fraction of a share of Webster's common stock to which
such shareholder would otherwise be entitled multiplied by (ii) the average of
the daily closing prices per share for Webster's common stock for the 15
consecutive trading days on which shares of Webster's common stock are actually
traded (as reported on the Nasdaq Stock Market's National Market Tier) ending on
the third trading day preceding the closing date of the merger. After the merger
takes place, no holder of Maritime's common stock will be entitled to any
dividends or any other rights in respect of any such fraction. In this document,
we use the term "Purchase Price" to refer to the total number of shares of
Webster's common stock and any cash to be paid instead of a fraction of a share
of Webster's common stock payable to each holder of Maritime's common stock.
The conversion of Maritime's common stock into shares of Webster's common
stock at the exchange ratio will occur automatically upon the merger. Pursuant
to the merger agreement, after the effective time of the merger, Webster will
cause its exchange agent to pay the Purchase Price to each Maritime shareholder
who surrenders the certificate or certificates representing such shares to the
exchange agent, together with a properly executed letter of transmittal.
As soon as practicable after the effective time of the merger, the exchange
agent will mail a letter of transmittal and instructions for use in surrendering
certificates to each shareholder who held Maritime's common stock immediately
before the effective time. Webster will deposit with the exchange agent
certificates representing the total number of shares of Webster's common stock
to be issued to Maritime shareholders, along with the cash to be paid instead of
fractional shares. The exchange agent will not be obligated to deliver the
Purchase Price to any shareholder until the holder surrenders the certificate(s)
representing the shares of Maritime's common stock for exchange, or, if not
available, an appropriate affidavit of loss and indemnity agreement and/or a
bond that may be required by Webster. No dividends or distributions on Webster's
common stock payable to any shareholder will be paid until the shareholder
surrenders the certificate(s) representing the shares of Maritime's common stock
for exchange. No interest will be paid or accrued to Maritime shareholders on
cash instead of fractional shares or unpaid dividends and distributions, if any.
If any certificate representing shares of Webster's 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 be properly endorsed or otherwise be in
proper form for transfer and that the person requesting the exchange 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 before the merger takes place, there will be no
transfers on Maritime's stock transfer books of shares of Maritime's common
stock, and any such shares presented to the exchange agent after the merger
takes place will be canceled and exchanged for the Purchase Price.
Any portion of the Purchase Price made available to the exchange agent that
remains unclaimed by Maritime shareholders for six months after the effective
time of the merger will be returned to Webster. Any Maritime shareholder who has
not exchanged shares of Maritime's common stock for the Purchase Price in
accordance with the merger agreement before that time may look only to Webster
for payment of the Purchase Price for such shares and any unpaid dividends or
distributions after that time. Nonetheless, Webster, Maritime, the exchange
agent or any other person will not be liable to any Maritime shareholder for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
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STOCK CERTIFICATES FOR SHARES OF MARITIME'S COMMON STOCK SHOULD NOT BE
RETURNED TO MARITIME WITH THE ENCLOSED PROXY CARD AND SHOULD ONLY BE FORWARDED
TO THE EXCHANGE AGENT AFTER RECEIPT OF THE LETTER OF TRANSMITTAL.
OPTIONS
As of _______ __, 1999, there were outstanding options to purchase _____
shares of Maritime's common stock at an average exercise price of $___ per
share. Under the merger agreement, shares of Maritime's common stock issued
prior to when the merger takes place upon the exercise of outstanding Maritime
options also will be converted into Webster's common stock at the exchange
ratio. Each Maritime option that is not exercised immediately prior to the
effective time of the merger automatically will be converted into an option to
purchase shares of Webster's common stock, with adjustment in the number of
shares and exercise price to reflect the exchange ratio. The adjustment will be
made in a manner consistent with Section 424(a) of the Internal Revenue Code of
1986. The duration and other terms of the Maritime options will otherwise be
unchanged.
REGULATORY APPROVALS
For the merger of Maritime and Webster Bank to take place, we must receive
approvals of the Office of Thrift Supervision (the "OTS") and the Connecticut
Commissioner of Banking. In this section, we refer to these approvals as the
"Required Regulatory Approvals." Webster, Webster Bank and Maritime have agreed
to use their best efforts to obtain the Required Regulatory Approvals.
Webster Bank will file with the OTS an application for approval of the
merger. The merger is subject to the approval of the OTS under the Home Owners'
Loan Act of 1933, the Bank Merger Act provisions of the Federal Deposit
Insurance Act 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 (the "CRA") also requires that
the OTS, in deciding whether to approve the merger, assess the records of
performance of Webster Bank and Maritime 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 currently
has an outstanding CRA rating from the OTS. Maritime currently has a
satisfactory CRA rating from the Federal Deposit Insurance Corporation. The OTS
regulations require publication of notice and an opportunity for public comment
concerning the applications filed in connection with the merger, and authorize
the OTS to hold informal and formal meetings in connection with the applications
if the OTS, after reviewing the applications or other materials, determines it
desirable to do so or receives a request for an informal meeting. Any such
meeting or comments provided by third parties could prolong the period during
which the merger is subject to review by the OTS. As of the date of this Proxy
Statement/Prospectus, Webster is not aware of any protests, adverse comments or
requests for a meeting filed with the OTS concerning the merger. The merger may
not take place for a period of 15 to 30 days following OTS approval (the precise
length of the period will be determined by the OTS in consultation with the
Department of Justice), during which time the Department of Justice has
authority to challenge the 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 Department of Justice does
not start a legal action during the waiting period, it may not challenge the
transaction afterward, except in an action under Section 2 of the Sherman
Antitrust Act.
An acquisition statement will be filed with the Connecticut Commissioner of
Banking in connection with Webster's acquisition of Maritime and the merger. In
reviewing the acquisition statement, the Connecticut Commissioner will review
and consider, among other things, whether the
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investment and lending policies of Webster Bank are consistent with safe and
sound banking practices and will benefit the economy of the state, whether the
services or proposed services of Webster Bank are consistent with safe and sound
banking practices and will benefit the economy of the state, the competitive
effects of the transaction, and the financial and managerial resources of
Webster and Webster Bank. The Connecticut Commissioner also will review Webster
Bank's record under the CRA. The Connecticut Commissioner may, at his
discretion, hold a public hearing on the proposed transaction.
Webster and Maritime are not aware of any other material governmental
approvals that are required for the merger to take place that are not described
above. If any other approval or action is required, we presently expect that we
would seek such approval or take the necessary action.
THE MERGER CANNOT TAKE PLACE WITHOUT THE REQUIRED REGULATORY APPROVALS,
WHICH WE HAVE NOT RECEIVED YET. THERE IS NO ASSURANCE THAT WE WILL RECEIVE SUCH
APPROVALS, AND IF WE DO, WHEN WE WILL RECEIVE THEM. ALSO, THERE IS NO ASSURANCE
THAT THE DEPARTMENT OF JUSTICE WILL NOT CHALLENGE THE MERGER, OR, IF SUCH A
CHALLENGE IS MADE, WHAT THE RESULT OF A CHALLENGE WOULD BE.
CONDITIONS TO THE MERGER
Under the merger agreement, Webster and Maritime are not required to
complete the merger unless the following conditions are satisfied: (i) the
merger agreement is not terminated on or before the effective time of the
merger; (ii) the merger agreement and the merger are approved by the affirmative
vote of the holders of at least two-thirds of the issued and outstanding shares
of Maritime's common stock entitled to vote at the shareholder meeting; (iii)
the Webster common stock to be issued in the merger is authorized for quotation
on the Nasdaq Stock Market's National Market Tier; (iv) all required regulatory
approvals are obtained and remain in full force and effect, all statutory
waiting periods related to these approvals expire, and none of the regulatory
approvals contains a non-customary condition that Webster reasonably considers
to be burdensome or which alters the benefits for which Webster bargained in the
merger agreement; (v) the registration statement filed with the SEC is effective
and is not subject to a stop order or any threatened stop order; (vi) no
injunction preventing the merger from taking place is in effect and completing
the merger continues to be legal; and (vii) Webster receives a favorable tax
opinion from Webster's counsel.
Webster and Webster Bank are not required to complete the merger unless the
following additional conditions are satisfied or waived: (i) the representations
and warranties of Maritime contained in the merger agreement are true and
correct as of the date of the merger agreement and as of the effective time of
the merger, except where the failure or failures to be true and correct would
not have a material adverse effect on Maritime; (ii) Maritime performs in all
material respects all covenants and agreements contained in the merger agreement
to be performed by Maritime by the effective time; (iii) Maritime obtains the
consents, approvals or waivers of other persons that are required in connection
with the merger agreement or to permit the succession by the surviving bank
under any lease or other agreement, except where the failure or failures to
obtain such consents, approvals or waivers would not have a material adverse
effect on the surviving bank; (iv) no proceeding initiated by any governmental
entity seeking an injunction is pending; and (v) Webster receives certain legal
opinions of Maritime's counsel and a comfort letter of Maritime's independent
public accountants.
Maritime is not required to complete the merger unless the following
additional conditions are satisfied or waived: (i) the representations and
warranties of Webster contained in the merger agreement are true and correct as
of the date of the merger agreement and as of the effective time of the merger,
except where the failure or failures to be true and correct would not have a
material
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adverse effect on Webster; (ii) Webster and Webster Bank each performs in all
material respects all covenants and agreements contained in the merger agreement
required to be performed by it by the effective time; (iii) Webster and Webster
Bank obtain the consents, approvals or waivers of other persons that are
required in connection with the merger agreement under any lease or other
agreement to which Webster or Webster Bank is a party or otherwise bound, except
where the failure or failures to obtain such consents, approvals or waivers
would not have a material adverse effect; and (iv) no proceeding initiated by
any governmental entity seeking an injunction is pending.
CONDUCT OF BUSINESS PENDING THE MERGER
The merger agreement contains various restrictions on the operations of
Maritime prior to the effective time of the merger. In general, the merger
agreement obligates Maritime to continue to carry on its businesses in the
ordinary course consistent with past practices and with prudent banking
practices, with certain specific limitations on the lending activities and other
operations of Maritime. The merger agreement prohibits Maritime from declaring
any dividends or other distributions on its capital stock other than regular
quarterly cash dividends on Maritime's common stock and splitting, combining or
reclassifying any of its capital stock. Maritime may not issue or authorize or
propose the issuance of any securities, other than the issuance of additional
shares of Maritime's common stock upon the exercise or fulfillment of rights or
options issued or existing under Maritime's stock option plan in accordance with
their present terms or the option for 141,004 shares of Maritime's common stock
held by Webster. Maritime generally may not repurchase shares of its capital
stock. Also, under the terms of the merger agreement, Maritime may not amend its
certificate of incorporation or bylaws, or change its methods of accounting in
effect at December 31, 1997, except as required by changes in regulatory or
generally accepted accounting principles. The merger agreement also restricts
Maritime from increasing employee or director benefit arrangements or
compensation (other than normal annual increases in pay for employees consistent
with past practices), including the granting of stock options and entering into
any new employment or severance agreements, or paying any bonuses.
THIRD PARTY PROPOSALS
Under the merger agreement Maritime generally may not authorize or permit
any of its officers, directors, employees or agents to solicit, initiate or
encourage any inquiries relating to any third party takeover proposal or hold
substantive discussions or negotiations regarding this kind of proposal. There
is a similar prohibition on providing third parties with information that
relates to this kind of inquiry or proposal, unless the Maritime Board of
Directors, after receiving written advice of counsel, reasonably determines in
the exercise of its fiduciary duty that this kind of information must be
furnished.
EXPENSES; BREAKUP FEE
The merger agreement generally provides for Webster and Maritime to pay
their own expenses relating to the merger agreement, with Webster paying the
filing and other fees paid to the SEC. However, if the merger agreement is
terminated by Webster or Maritime as a result of a material breach of a
representation, warranty, covenant or other agreement contained in the merger
agreement by the other party, or if Webster terminates the merger agreement
because Maritime (i) fails to hold the shareholder meeting on a timely basis,
(ii) fails to recommend to its shareholders approval of the merger agreement,
(iii) fails to oppose any third party proposal that is inconsistent with the
merger agreement, or (iv) violates the merger agreement's restriction on
discussions and negotiations with third parties regarding acquisition
transactions, the merger agreement provides for the non-terminating party to pay
all reasonable expenses of the terminating party up to $100,000, plus a breakup
fee of $350,000. If the merger agreement is terminated by Webster because
Maritime fails to obtain the approval of its shareholders necessary to complete
the merger, Webster is entitled to have all of its reasonable expenses up to
$100,000 paid by Maritime. Certain events described
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above that would permit Webster to terminate the merger agreement would also
constitute Preliminary Purchase Events under the option agreement. See "--
Option Agreement."
OPINION OF MARITIME'S FINANCIAL ADVISOR
Maritime has retained Ostrowski & Company ("O&Co") as its financial advisor
since 1995. O&Co currently is providing services to Maritime, including advice
and assistance relating to the evaluation and execution of mergers and
acquisitions pursuant to an engagement letter dated July 28, 1998. Maritime
selected O&Co as its financial advisor on the basis of O&Co's in-depth knowledge
of the bank and thrift industry and the qualifications, experience and
reputation of its personnel in the banking and investment communities, as well
as its experience in the valuation of bank and thrift institutions and their
securities in connection with mergers and acquisitions and other corporate
transactions.
As part of the advisory services described above, Maritime's Board of
Directors requested O&Co's opinion as to the fairness, from a financial point of
view, to the holders of Maritime's common stock of the terms of the merger
agreement, dated November 3, 1998, among Webster, Webster Bank and Maritime.
Pursuant to the terms of the merger agreement, Maritime will be acquired by
Webster through the merger of Maritime into Webster Bank. The merger agreement
generally provides that at the effective time of the merger, each outstanding
share of Maritime's common stock will be converted into the equivalent of $26.67
of Webster's common stock. The exchange ratio for the conversion will be
determined by dividing $26.67 by a 15 day average closing market price of
Webster's common stock, computed to three decimal places. The 15 day average
will be the average of the daily closing prices per share for Webster's common
stock for the 15 consecutive trading days during which Webster's common stock is
actually traded as reported on the Nasdaq Stock Market, Inc.'s National Market
Tier ending on the day before the receipt of the last required federal bank
regulatory approval or waiver required for the merger. Nonetheless, if the 15
day average price is greater than $24.45, the exchange ratio will be 1.091. If
the 15 day average price is less than $17.50, the exchange ratio will be 1.524.
Furthermore, if the 15 day average price is less than $17.50, Maritime may
terminate the merger agreement unless Webster decides that the exchange ratio
will be determined by dividing $26.67 by the 15 day average price, computed to
three decimal places. For more information about the exchange of Maritime's
common stock, see "-- Exchange Ratio."
On November 3, 1998, O&Co orally delivered its opinion to Maritime's Board
of Directors. The opinion concluded that as of such date, the terms of the
merger agreement are fair, from a financial point of view, to Maritime's
shareholders. There were no limitations imposed by Maritime on O&Co in
connection with its rendering of the fairness opinion.
THE FULL TEXT OF O&CO'S UPDATED FAIRNESS OPINION DATED ________ __, 1999 IS
ATTACHED AS APPENDIX A TO THIS PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED
INTO THIS DOCUMENT BY REFERENCE. THE DESCRIPTION OF THE FAIRNESS OPINION IN THIS
SECTION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO APPENDIX A. HOLDERS OF
MARITIME'S COMMON STOCK ARE URGED TO READ THE OPINION IN ITS ENTIRETY. The
opinion describes the procedures followed, assumptions made, matters considered
and qualifications of the review undertaken by O&Co in connection with the
opinion. O&Co's opinion is directed solely to the fairness, from a financial
point of view, of the terms of the merger agreement and does not constitute any
recommendation to Maritime's Board of Directors or to the holders of Maritime's
common stock with respect to any vote at the shareholder meeting.
In connection with providing the fairness opinion, O&Co examined and relied
upon, among other things: a draft of the merger agreement dated November 3,
1998; annual reports to shareholders, proxy statements and related audited
financial statements for Maritime for each of the three fiscal years ended
December 31, 1995, 1996 and 1997; certain unaudited interim financial
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reports for Maritime for the quarters ended March 31, 1998, June 30, 1998 and
September 30, 1998; certain other financial information for Maritime, including
pro forma financial statements and management's estimates relating to, among
other things, earnings, asset quality, loan delinquencies and capital; annual
reports to shareholders, proxy statements and related audited financial
statements for Webster for each of the three fiscal years ended December 31,
1995, 1996 and 1997; unaudited interim financial reports for the quarters ended
March 31, 1998, June 30, 1998 and September 30, 1998; and certain other
financial information for Webster, including pro forma financial statements and
management's estimates relating to, among other things, earnings, asset quality,
loan delinquencies and capital. O&Co discussed historical financial performance
and condition, market area economic conditions, future business prospects and
financial forecasts with executive management of Maritime and Webster. O&Co also
reviewed comparable financial, operating and market data for the banking
industry and selected peer groups; compared the terms of the merger agreement
with other bank and thrift merger and acquisition transactions; and considered
such additional financial and other information that O&Co deemed relevant.
In preparing its opinion, O&Co relied upon the accuracy, completeness and
fair presentation of all information supplied or otherwise made available to
O&Co by or on behalf of Maritime and Webster. O&Co has not independently
verified such information or undertaken an independent evaluation or appraisal
of the assets or liabilities of Maritime or Webster, nor was O&Co furnished any
such evaluations or appraisals. With respect to forecasts of expected future
financial performance, O&Co has been advised that they reflect the best
currently available estimates and judgment of the executive management. O&Co's
opinion is necessarily based upon the information available to it and the
market, economic and other conditions, as they existed and could be evaluated,
as of the date of the opinion.
In connection with providing its fairness opinion to Maritime's Board of
Directors, O&Co performed a variety of financial analyses. The following is a
summary of the material terms of such analyses but it does not purport to be a
complete description of O&Co's analyses or presentations to Maritime's Board of
Directors. The preparation of a fairness opinion is a complex process involving
subjective judgments and does not necessarily lend itself to partial analyses or
summary description. O&Co 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 the processes underlying O&Co's opinion.
In performing its analyses, O&Co made numerous assumptions with respect to
industry performance, business and economic conditions and various other
matters, many of which may be more or less favorable than actual results.
Estimates of values of companies do not purport to be appraisals or necessarily
reflect the prices at which companies or their securities may actually be sold.
No company or transaction utilized in O&Co's analyses was identical to Maritime
or Webster or to the terms of the merger agreement. Because such estimates are
inherently subject to uncertainty, O&Co assumes no responsibility for their
accuracy.
Stock Trading History
O&Co examined the quarterly trading price trends for banks and thrifts
headquartered in Connecticut, Maine, Massachusetts, New Hampshire, New Jersey,
New York, Pennsylvania, Rhode Island and Vermont that were similar to Maritime
and Webster for the period beginning with the second quarter 1997 through the
third quarter 1998. In this section, those states are referred to as the
"Northeast" and the term "LTM" refers to latest twelve months. The comparable
trading group established for Maritime was community banks with assets under $1
billion and the comparable trading group for Webster was large community thrifts
with assets from $1 billion to $10 billion. From the second quarter 1997 through
the third quarter 1998, the average quarterly price/earnings ratio for Northeast
community bank stocks ranged from a low of 16.3 times LTM earnings for the
second quarter 1997 and a high of 21.4 times LTM earnings for the first quarter
1998. For the third quarter
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1998 the average was 17.2 times LTM earnings. The quarterly average of Northeast
community bank stock prices measured as a percentage of book value for the same
time period ranged from a low of 199% for the second quarter 1997 and a high of
264% for the first quarter 1998. The average for the third quarter 1998 was 210%
of book value. At _____ ___, 1999, Maritime's directors and executive officers
held approximately ___% of the outstanding shares of Maritime's common stock
(excluding options to purchase shares of Maritime's common stock). Maritime's
common stock is not listed on any exchange and trades infrequently. Although
bid/ask prices are available for Maritime's common stock, its infrequent trading
activity limits the comparability of trading market data for Maritime.
Between the second quarter 1997 and the third quarter 1998, the quarterly
average price/earnings ratio for Northeast large community thrift stocks ranged
from a low of 15.6 times LTM earnings for the third quarter 1998 and a high of
22.4 times LTM earnings for the first quarter 1998. The average for the third
quarter 1998 was 15.6 times LTM earnings. The lowest quarterly average for
Northeast large community thrift stocks measured as a percentage of book value
was 154% for the third quarter 1998; and the highest value of 225% was for the
first quarter 1998. During the same time period, Webster traded at its lowest
multiple of 14.6 times LTM earnings in the third quarter 1998 and its highest
multiple of 31.2 times LTM earnings in the fourth quarter 1997. Measured as a
percentage of book value, Webster traded at its lowest value of 170% of book
value in the third quarter 1998 and its highest value of 248% of book value in
both the fourth quarter 1997 and the first quarter 1998.
Contribution Analysis
O&Co prepared a contribution analysis showing the percentage contributed by
Maritime to the combined company on a pro forma basis of assets and deposits at
September 30, 1998. This analysis showed that Maritime's shareholders would
contribute 1.1 % of pro forma consolidated assets and 1.6% of pro forma
consolidated deposits. Maritime's contribution to net income was considered
based upon nine months ended September 30, 1998 results annualized for both
companies adjusted for certain purchase accounting adjustments resulting from
the transaction. Based on these assumptions, Maritime would contribute 1.3% to
consolidated pro forma earnings and Maritime's shareholders would receive
approximately 2.3% of the pro forma ownership of the combined company based on
the number of outstanding shares of Webster's common stock as of September 30,
1998.
Comparable Company Analysis
O&Co compared the financial condition and operating performance of Maritime
with a peer group of Nasdaq and exchange-listed financial institutions with
assets less than $150 million. Maritime reported a return on average assets of
1.08%, and return on average equity of 13.83%, based on six months ended June
30, 1998 results annualized, and an equity to assets ratio of 7.38% as of June
30, 1998. Based on trailing twelve months earnings through June 30, 1998, the
peer group averaged a return on average assets of 1.05%; an average return on
average equity of 8.68% and an average equity to assets ratio of 13.79% as of
June 30, 1998. Maritime reported a slightly higher return on assets and return
on equity and a lower equity to asset ratio than its peer group.
O&Co compared the financial condition and operating performance of Webster
with a peer group of Nasdaq and exchange-listed thrifts with assets between $5
billion and $15 billion. Based on June 30, 1998 financial data and operating
data of twelve months ended June 30, 1998, Webster reported a return of average
assets of 0.65%; a return on average equity of 12.08% and an equity to assets
ratio of 5.97%; the peer group had an average return on average assets of 1.04%,
an average return on average equity of 11.77% and an average equity to assets
ratio of 8.52%. Webster reported operating performance and an equity to assets
ratio below its peer group.
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O&Co also compared the trading performance of Webster with this peer group.
On October 30, 1998, the closing price of Webster's common stock on the Nasdaq
Stock Market, Inc.'s National Market Tier was $24.69, or 14.8 times earnings for
the twelve months ended June 30, 1998 and 173% of reported June 30, 1998 book
value, compared to the peer group averages for these same measures of 14.0 times
trailing twelve months earnings for the twelve months ended June 30, 1998, and
173% of reported June 30, 1998 book value. Webster's trading performance was
comparable to its peers on both an earnings multiple and book value basis.
Analysis of Selected Merger Transactions
O&Co reviewed certain financial data for acquisitions of commercial banks
and thrifts in the Northeast announced between January 1997 and September 1998.
O&Co also reviewed acquisitions of commercial banks and thrifts in Connecticut
between January 1997 and September 1998. O&Co calculated the average multiple of
price to target's earnings for trailing 12 months, the average percentage of
price to book value and the average premium (price in excess of reported equity)
as a percentage of deposits, on a quarterly basis beginning January 1, 1997
through September 30, 1998. Comparisons were made for Maritime based on the
proposed transaction to the averages for these calculations based on
transactions announced in the third quarter 1998. Maritime comparisons are based
on or for results annualized for nine months ended September 30, 1998 and an
exchange value of $26.67 per share: (i) price as a multiple to earnings for
Northeast banks 25.2 times, Northeast thrifts 27.6 times, and Connecticut
transactions 25.2 times, compared with the value of the proposed transaction of
26.7 times Maritime's September 30, 1998 results annualized; (ii) price as a
percentage of book value for Northeast banks of 312%, Northeast thrifts of 217%,
and Connecticut transactions of 221%, compared with the value of the proposed
transaction of 304% of Maritime's September 30, 1998 book value; (iii) premium
as a percentage of deposits for Northeast banks of 25.5%, Northeast thrifts of
14.9%, and Connecticut transactions of 7.1%, compared with the value of the
proposed transaction of a premium of 15.9% of Maritime's deposits.
Impact Analysis
O&Co analyzed the changes in the amount of earnings per share and book
value for Maritime based upon nine months ended September 30, 1998 results
annualized for both companies adjusted for certain purchase accounting
adjustments . The analyses considered, among other things, the impact on diluted
earnings per share and book value per share of Maritime's common stock
outstanding at September 30, 1998 and the exercise of all outstanding options to
purchase Maritime's common stock.
The respective estimated equivalent 1998 annual earnings per equivalent
share of Maritime's common stock was $1.82 or 68% higher than Maritime's
estimated 1998 earnings per share; book value per equivalent share of Maritime's
common stock was $16.26 or 85% higher than Maritime's book value per share as of
September 30, 1998; and the annual cash dividends for each equivalent share of
Maritime's common stock was $0.48. Maritime currently pays an annual cash
dividend of $0.48 per share.
Discounted Cash Flow Analysis
O&Co performed an analysis which estimated the future cash flows to
Maritime's shareholders over a three year period under various circumstances,
assuming Maritime performed in accordance with the earnings forecasts of its
management. To approximate the terminal value of Maritime's common stock at the
end of the three-year period, O&Co applied price to earnings multiples ranging
from 16.0 times to 23.4 times, which resulted in values that equated to
percentages of projected book value ranging from 261% to 380%. The terminal
values were then discounted to present values using discount rates ranging from
10.0% to 17.5%, chosen to reflect assumptions regarding rates of return
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and risk premiums required by holders or prospective holders of Maritime's
common stock. This analysis resulted in a range of present values per share of
$19.23 to $34.98.
Remaining Independent Scenario
O&Co discussed with Maritime's management and Board of Directors the
various expenses associated with remaining as an independent company while
achieving acceptable shareholder returns. In order to survive independently in a
highly competitive market, Maritime would have to broaden its product and
service offerings to attract and retain customers. This strategy would require a
near-term investment in Maritime through the attraction and retention of
additional qualified professionals and a substantial investment in technology.
Moreover, the potential benefit of new products and services is long-term with
no certainty as to the degree of success and Maritime's operating performance
could suffer in the short-term with adverse implications to shareholder value.
Compensation of Financial Advisor
Pursuant to the O&Co engagement letter, Maritime agreed to pay O&Co an
advisory fee for advice and assistance in connection with the merger, including
rendering a written opinion as to the fairness of the proposed transaction, from
a financial point of view, to Maritime's shareholders. The advisory fee is to
equal 1.5% of the value of the transaction, or approximately $325,000. Maritime
has agreed to make interim payments to O&Co before the merger takes place which
will be credited against the total advisory fee. Maritime will have made interim
payments to O&Co totaling $55,000 as of the mailing of this Proxy
Statement/Prospectus. In addition, Maritime has paid O&Co approximately $18,000
for general advisory services provided in 1997 and 1998. Pursuant to the O&Co
engagement letter, Maritime also agreed to reimburse O&Co for its reasonable
out-of-pocket expenses, including legal fees, incurred in connection with O&Co's
engagement and to indemnify O&Co and its directors, officers, employees, agents
and controlling persons against certain expenses and liabilities.
CERTAIN PROVISIONS OF THE MERGER AGREEMENT
In the merger agreement, Maritime made certain representations and
warranties to Webster and Webster Bank. The material representations and
warranties of Maritime are the following: (i) the organization and good standing
of Maritime; (ii) insurance of Maritime's deposit accounts by the Federal
Deposit Insurance Corporation; (iii) capitalization; (iv) corporate power and
authority; (v) the execution and delivery of the merger agreement, the bank
merger agreement and the option agreement; (vi) consents and approvals required
for the agreements and the merger; (vii) loan portfolio and reports; (viii)
financial statements and books and records; (ix) broker's fees; (x) absence of
any material adverse change in Maritime; (xi) legal proceedings; (xii) tax
matters; (xiii) employee benefit plans; (xiv) certain contracts; (xv) certain
regulatory matters; (xvi) state takeover laws and certificate of incorporation
takeover provisions; (xvii) environmental matters; (xviii) loss reserves; (xix)
properties and assets; (xx) insurance matters; (xxi) compliance with applicable
laws; (xxii) loan information; (xxiii) affiliates and the stockholder agreement;
(xxiv) ownership of Webster's common stock; (xxv) receipt of the fairness
opinion of Ostrowski & Company, Inc.; and (xxvi) Year 2000 compliance.
In the merger agreement, Webster made certain representations and
warranties to Maritime. The material representations and warranties of Webster
are the following: (i) the organization and good standing of Webster and the
chartering of Webster Bank; (ii) capitalization; (iii) corporate power and
authority; (iv) the execution and delivery of the merger agreement, the option
agreement and the bank merger agreement; (v) consents and approvals required for
the agreements and the merger; (vi) reports; (vii) financial statements,
exchange act filings and books and records; (viii) the
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absence of any material adverse change in Webster; (ix) ownership of Maritime's
common stock; (x) employee benefit plans; (xi) certain regulatory matters; and
(xii) Year 2000 compliance.
TERMINATION AND AMENDMENT OF THE MERGER AGREEMENT
The merger agreement may be terminated by Webster or Maritime (as long as
the terminating party is not in violation of the merger agreement) as summarized
below:
o by mutual written consent of Webster and Maritime;
o by Webster or Maritime if (a) 30 days pass after any required
regulatory approval is denied or regulatory application is
withdrawn at a regulator's request, unless action is taken during
the 30 day period for a rehearing or to file an amended
application; (b) the merger has not taken place on or before
September 30, 1999; or (c) Maritime's shareholders do not approve
the merger agreement;
o by Webster, if there is a breach of any representation, warranty,
covenant or agreement in the merger agreement by Maritime, if the
breach or breaches would have a material adverse effect on
Maritime and the breach is not cured within 30 days after
receiving notice of the breach;
o by Maritime, if there is a breach of any representation,
warranty, covenant or agreement in the merger agreement by
Webster, if the breach or breaches would have a material adverse
effect on Webster and the breach is not cured within 30 days
after receiving notice of the breach;
o by Webster, if Maritime or its Board of Directors (a) fails to
hold the shareholder meeting on a timely basis; (b) fails to
recommend to Maritime's shareholders approval of the merger
agreement and the merger; (c) fails to oppose any third party
proposal that is inconsistent with the merger agreement; or (d)
violates the merger agreement's restriction on inquiries,
discussions, negotiations and providing information to third
parties regarding acquisition transactions; and
o by Maritime, if the average closing market price for a specified
15 day period is less than $17.50 unless Webster decides that the
exchange ratio will be adjusted to equal the number obtained by
dividing $26.67 by the 15 day average trading price, rounded to
three decimal places.
The merger agreement also permits, subject to applicable law, the Boards of
Directors of Webster and Maritime to: (i) amend the merger agreement (except as
provided below); (ii) extend the time for performance of any of the obligations
or other acts of the other parties; (iii) waive any inaccuracies in the
representations and warranties contained in the merger agreement or in any
document delivered under the merger agreement; or (iv) waive compliance with any
of the agreements or conditions contained in the merger agreement. After
approval of the merger agreement by Maritime's shareholders, no amendment of the
merger agreement may be made without further shareholder approval if the
amendment would reduce the amount or change the form of the consideration to be
delivered to Maritime's shareholders under the merger agreement.
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FEDERAL INCOME TAX CONSEQUENCES
The following summary discusses the material federal income tax
consequences of the merger. The summary is based on the Internal Revenue Code of
1986 (the "Code"), applicable U.S. Treasury regulations under the Code,
administrative rulings and judicial authority, all as of the date of this Proxy
Statement/Prospectus. All of the foregoing authorities are subject to change,
and any such change could affect the continuing validity of this summary. The
summary assumes that the holders of shares of Maritime's common stock hold such
shares as a capital asset. The summary does not address the tax consequences
that may be applicable to a particular Maritime shareholder subject to special
tax rules, such as tax-exempt organizations, dealers in securities, financial
institutions, insurance companies, non-United States persons, shareholders who
acquired shares of Maritime's common stock pursuant to the exercise of options
or otherwise as compensation or through a qualified retirement plan and
shareholders who hold shares of Maritime's 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.
One of the conditions for the merger to take place is that Webster must
receive an opinion from Hogan & Hartson L.L.P., Webster's special counsel, that
the merger will be treated for federal income tax purposes as a tax-free
reorganization within the meaning of Section 368(a) of the Code. The opinion
must be reasonably satisfactory to Maritime and Webster. The opinion of Hogan &
Hartson L.L.P. will be based on the Code, the U.S. Treasury regulations
promulgated under the Code and related administrative interpretations and
judicial decisions, all as in effect as of the effective time of the merger, on
the assumption that the merger takes place as described in the merger agreement,
and on certain representations to be provided to Hogan & Hartson L.L.P. by
Webster and Maritime that relate to the satisfaction of certain requirements to
a reorganization within the meaning of Section 368(a) of the Code (including
certain limitations on repurchases by Webster of shares of Webster's common
stock to be issued upon the merger). Unlike a ruling from the Internal Revenue
Service, an opinion of counsel is not binding on the Internal Revenue Service
and there can be no assurance that the Internal Revenue Service 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 Internal
Revenue Service. If this opinion is not received, or if the material tax
consequences described in the opinion materially differ from the consequences
stated below, we will not close the merger unless Maritime resolicits
shareholders.
If, as concluded in the opinion of counsel, the merger qualifies as a
tax-free reorganization within the meaning of Section 368(a) of the Code, then:
(1) Except as discussed in (4) below with respect to cash received
instead of a fractional share of Webster's common stock, a
Maritime shareholder will recognize no gain or loss upon the
exchange of Maritime's common stock for Webster's common stock
pursuant to the merger.
(2) The tax basis of Webster's common stock received by a Maritime
shareholder in the merger will be the same as the shareholder's
tax basis in Maritime's common stock surrendered in exchange
therefor.
(3) The holding period of Webster's common stock received by a
Maritime shareholder in the merger will include the holding
period of Maritime's common stock surrendered in exchange
therefor (assuming Maritime's common stock was held as a capital
asset).
(4) The receipt by a Maritime shareholder of cash instead of
fractional shares of Webster's common stock will be treated as if
the fractional shares were distributed as part of the merger and
then were redeemed by Webster. These
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cash payments will be treated as distributions in full payment in
exchange for the stock redeemed, as provided in Section 302(a) of
the Code.
(5) None of Webster, Webster Bank nor Maritime will recognize any
gain or loss as a result of the merger.
The shareholders of Maritime 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.
As described above (see "-- Options"), holders of options to purchase
Maritime's common stock that are outstanding at the effective time of the merger
will have their Maritime options converted into options to purchase shares of
Webster's common stock. The assumption of the options by Webster should not be a
taxable event and former holders of Maritime options who hold options to
purchase Webster's common stock after the merger should be subject to the same
federal income tax treatment upon exercise of those options as would have
applied if they had exercised their Maritime options.
Holders of Maritime options are urged to consult their own tax advisors as
to the specific tax consequences to them of the merger, including tax return
reporting requirements, available elections, 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 will be accounted for as a purchase transaction for accounting
and financial reporting purposes.
RESALES OF WEBSTER'S COMMON STOCK RECEIVED IN THE MERGER
Webster is registering the sale of the shares of its common stock to be
issued in the merger under the Securities Act of 1933. The shares will be freely
transferable under the Securities Act, except for shares received by Maritime
shareholders who are deemed to be "affiliates" of Maritime before the merger or
"affiliates" of Webster. These affiliates may only resell their shares pursuant
to an effective registration statement under the Securities Act covering such
shares, in compliance with Securities Act Rule 145 or under another exemption
from the Securities Act's registration requirements. This Proxy
Statement/Prospectus does not cover any resales of Webster's common stock by
Webster or Maritime affiliates. "Affiliates" will generally include individuals
or entities who control, are controlled by or are under common control with
Maritime or Webster, and may include certain officers or directors, as well as
principal shareholders of Maritime or Webster.
DISSENTERS' APPRAISAL RIGHTS
Because Maritime is a constituent bank in the merger of Maritime and
Webster Bank, the Banking Law of Connecticut provides that you are entitled to
dissent from the merger. In this document, we use the term "Dissenters' Rights"
to refer to the rights set forth in Sections 33-855 to 33-872 of the Connecticut
General Statutes. In accordance with Sections 33-855 through 33-872, if the
merger takes place, Maritime shareholders who do not vote in favor of the merger
will have the right to demand the purchase of their shares at their "fair
value," which means the value of the shares immediately before the merger takes
place (excluding any increase or decrease in value in anticipation of the
merger), if they fully comply with the provisions of Sections 33-855 to 33-872
of the Connecticut General Statutes.
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This section presents a brief summary of the procedures set forth in
Sections 33-855 to 33-872 which must be followed by holders of shares of
Maritime's common stock who wish to dissent from the merger and demand the
purchase of their shares at their fair value. This summary is qualified in its
entirety by reference to Sections 33-855 to 33-872. A complete text of these
sections is attached to this Proxy Statement/Prospectus as Appendix B.
Dissenting shareholders are advised to seek independent counsel concerning
exercising their dissenters' rights. This Proxy Statement/Prospectus constitutes
notice to holders of shares of Maritime's common stock concerning the
availability of Dissenters' Rights under Sections 33-855 to 33-872 of the
Connecticut General Statutes.
Dissenting shareholders must satisfy all of the conditions of Sections
33-855 to 33-872. Before the vote on the adoption of the merger agreement occurs
at the shareholder meeting, each dissenting shareholder must give written notice
to the President of Maritime of the shareholder's intent to demand payment for
his shares if the merger takes place. This notice must be in addition to and
separate from any abstention or any vote, in person or by proxy, cast against
approval of the merger.
NEITHER VOTING "AGAINST," ABSTAINING FROM VOTING, OR FAILING TO VOTE ON THE
ADOPTION OF THE MERGER AGREEMENT WILL CONSTITUTE NOTICE OF INTENT TO DEMAND
PAYMENT OR DEMAND FOR PAYMENT OF FAIR VALUE WITHIN THE MEANING OF SECTIONS
33-855 TO 33-872.
A dissenting shareholder may NOT vote for approval of the merger agreement.
If a Maritime shareholder returns a signed proxy but does not specify in the
proxy a vote "AGAINST" adoption of the merger agreement or an instruction to
abstain, the proxy will be voted "FOR" adoption of the merger agreement, which
will have the effect of waiving the rights of that Maritime shareholder to have
his shares purchased at fair value. Abstaining from voting or voting against the
adoption of the merger agreement will NOT constitute a waiver of such
shareholder's rights.
After the vote is taken at the shareholder meeting, if the merger is
approved, no later than 10 days after the merger takes place, a "Dissenters'
Notice" shall be sent to each dissenting shareholder who has given the written
notice described above and did not vote in favor of the merger. The Dissenters'
Notice will state the results of the vote on the merger agreement, where the
payment demand must be sent, where and when certificates for certificated shares
must be deposited. It will set a date, not fewer than thirty nor more than sixty
days after delivery of such notice, by which the payment demand must be received
from the dissenting shareholder. The notice will include a form for demanding
payment that will require the dissenting shareholder to certify whether or not
the shareholder acquired beneficial ownership of the shares before November 4,
1998. PLEASE NOTE THAT SHARES ACQUIRED AFTER NOVEMBER 4, 1998 ("AFTER ACQUIRED
SHARES"), MAY BE SUBJECT TO DIFFERENT TREATMENT IN ACCORDANCE WITH SECTION
33-867 OF THE CONNECTICUT GENERAL STATUTES THAN SHARES ACQUIRED BEFORE THAT
DATE. The Dissenters' Notice also will include a copy of Sections 33-855 to
33-872 of the Connecticut General Statutes. A dissenting shareholder who
receives a Dissenters' Notice must comply with the terms of such notice. A
dissenting shareholder who does so by demanding payment, depositing his
certificates in accordance with the terms of the notice and certifying that
beneficial ownership was acquired before November 4, 1998 will retain all other
rights of a shareholder until such rights are canceled or modified by the
merger. A dissenting shareholder who receives a Dissenters' Notice and does not
comply with the terms of the notice is not entitled to payment for his shares
under Sections 33-855 to 33-872 of the Connecticut General Statutes.
Dissenters' Rights under Sections 33-855 through 33-872 may be asserted
either by a beneficial shareholder or a record shareholder. A record shareholder
may assert Dissenters' Rights as to fewer than every share registered in his
name only if he dissents with respect to all shares beneficially owned by any
one person. A beneficial shareholder may assert Dissenters' Rights as to shares
held on his behalf only if he submits the record shareholder's written consent
before or at the
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time he asserts Dissenters' Rights and he does so for all shares that he
beneficially owns or over which he has the power to direct the vote.
After the merger takes place, or upon receipt of a payment demand, Webster
shall pay each dissenting shareholder who complied with the terms of the
Dissenters' Notice the amount Webster estimates to be the fair value of the
shares, plus accrued interest. Within 30 days of such payment, if a dissenting
shareholder believes that the amount paid is less than the fair value of the
shares or that the interest due is incorrectly calculated, such shareholder may
notify Webster in writing of his own estimate of the fair value of the shares
and interest due. If such a claim is made by a dissenting shareholder, and it
cannot be settled, Webster will petition the court to determine the fair value
of the shares and accrued interest within 60 days after receiving the payment
demand.
The costs and expenses of any such court proceeding shall be determined by
the court and shall be assessed against Webster, but such costs and expenses may
be assessed as the court shall deem equitable against any or all dissenting
shareholders who are parties to the proceeding if the court finds the action of
the dissenting shareholders in failing to accept Webster's offer was arbitrary
or vexatious or not in good faith. Such expenses may include the fees and
expenses of counsel and experts employed by the respective parties.
All written notices of intent to demand payment of fair value should be
sent or delivered to William R. Attridge, President of Maritime Bank & Trust
Company, 130 Westbrook Road, Essex, Connecticut 06426-1149. Maritime suggests
that shareholders use registered or certified mail, return receipt requested,
for this purpose.
HOLDERS OF SHARES OF MARITIME'S COMMON STOCK CONSIDERING DEMANDING THE
PURCHASE OF THEIR SHARES AT FAIR VALUE SHOULD KEEP IN MIND THAT THE FAIR VALUE
OF THEIR SHARES DETERMINED UNDER SECTIONS 33-855 TO 33-872 COULD BE MORE, THE
SAME, OR LESS THAN THE MERGER CONSIDERATION THEY ARE ENTITLED TO RECEIVE
PURSUANT TO THE MERGER AGREEMENT IF THEY DO NOT DEMAND THE PURCHASE OF THEIR
SHARES AT FAIR VALUE. ALSO, SUCH HOLDERS SHOULD CONSIDER THE FEDERAL INCOME TAX
CONSEQUENCES OF EXERCISING DISSENTERS' APPRAISAL RIGHTS.
THIS SUMMARY IS NOT A COMPLETE STATEMENT OF THE PROVISIONS OF THE
CONNECTICUT GENERAL STATUTES RELATING TO THE RIGHTS OF DISSENTING HOLDERS OF
SHARES OF MARITIME'S COMMON STOCK AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SECTIONS 33-855 THROUGH 33-872 OF THE CONNECTICUT GENERAL STATUTES, WHICH ARE
ATTACHED AS APPENDIX B TO THIS DOCUMENT. HOLDERS OF SHARES OF MARITIME'S COMMON
STOCK INTENDING TO DEMAND THE PURCHASE OF THEIR SHARES AT FAIR VALUE ARE URGED
TO REVIEW APPENDIX B CAREFULLY AND TO CONSULT WITH LEGAL COUNSEL SO AS TO BE IN
STRICT COMPLIANCE WITH THE REQUIREMENTS FOR EXERCISING DISSENTERS' RIGHTS.
ARRANGEMENTS WITH AND PAYMENTS TO MARITIME DIRECTORS, EXECUTIVE OFFICERS AND
EMPLOYEES
The non-employee directors of Maritime serving immediately prior to the
effective time of the merger will be invited to serve on an advisory board to
Webster Bank after the merger for a period of up to 24 months. These advisory
directors each will be paid for such service for the 24 month period up to
$15,000 based on an annual retainer of $3,500 per year, payable in quarterly
installments, and quarterly meeting attendance fees of $1,000 for each meeting
attended in person.
Webster has agreed to honor existing written deferred compensation,
employment, change of control and severance contracts with Maritime's directors
and employees to the extent that these contracts do not provide for any payments
that are not deductible or that constitute parachute payments under the Internal
Revenue Code of 1986 (the "Code"). Maritime has no such contracts with any of
its directors. The employment agreement with the Chief Executive Officer and
President of Maritime, William R. Attridge, was amended in connection with the
merger. As amended, the
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agreement provides that upon consummation of the merger, Mr. Attridge will be
entitled to a severance payment equal to three years of his base salary in
effect at that time, plus compensation for unused vacation time, but limited to
the maximum amount that can be paid without adverse tax consequences under
Section 280G of the Code. On this basis, the severance payable to Mr. Attridge
if the merger takes place would be approximately $426,000. Under the amended
employment agreement, Webster Bank will employ Mr. Attridge for two years
following the merger as Senior Vice President Commercial Banking/Business
Development at an annual salary of $105,000 during the first 12 months and
$110,000 for the second 12 months, with an annual target bonus of 25% of his
annual salary under Webster Bank's Economic Value Added Incentive Plan, which is
Webster's bonus plan. No minimum or maximum bonus amount is specified. Mr.
Attridge also will be eligible to participate in certain employee benefit plans
and his previous service with Maritime will be included in determining his
eligibility and vesting under Webster Bank's 401(k) and employee stock ownership
plans. If Webster Bank terminates Mr. Attridge's employment without cause (as
defined in the amended employment agreement) or Mr. Attridge terminates his
employment with good reason (as defined in the amended employment agreement),
Webster Bank will be obligated to continue to pay him compensation in accordance
with the amended employment agreement through the remaining term of the
agreement. In that event, if such termination occurs during the first 12 months
of employment, Mr. Attridge will be obligated to mitigate damages by seeking
other reasonably comparable employment for which he is reasonably qualified and
amounts payable following such termination by Webster Bank will be reduced by
amounts received by Mr. Attridge from other employment. No such reduction will
apply if such termination occurs after the first 12 months of employment.
Pursuant to existing termination agreements of Maritime, severance payments will
be made upon consummation of the merger to Marla R. Boegart, Maritime's Senior
Vice President, Retail Banking, Consumer Lending, Steven J. Cronen, Maritime's
Senior Vice President and Senior Loan Officer, and Douglas J. Pierce, Maritime's
Senior Vice President, Controller and Treasurer, equal to one year base salary
then in effect, plus compensation for any unused vacation time.
In addition, each Maritime employee (other than Mr. Attridge) who has more
than one year of service and who remains in Maritime's employ until the
effective date of the merger will receive a lump sum change of control payment
equal to his or her full and partial years of service multiplied by two weeks
salary. Each such Maritime employee also will receive a severance payment equal
to his or her full and partial years of service multiplied by two weeks salary
if his or her employment is terminated within one year after the effective date.
On this basis, assuming the merger takes place in April 1999, Ms. Boegart, Mr.
Cronen and Mr. Pierce would receive total combined change of control and
severance payments if the merger takes place and the officers are severed within
one year of the change of control, of approximately $97,184, $107,444, and
$104,897, respectively.
Webster Bank will offer a position of at-will employment to each
non-officer or non-managerial branch office personnel of Maritime in good
standing at the effective time of the merger at his or her existing branch
location or within 20 miles of the employee's place of employment as of the
effective time. Maritime employees who become employees of Webster Bank at the
effective time will be given credit for service at Maritime for eligibility and
vesting purposes under the 401(k) and employee stock ownership plans of Webster
Bank (but not the defined benefit pension plan). Webster Bank will use its
reasonable best efforts in connection with reviewing applicants for employment
positions to give Maritime employees who are not offered positions at the
effective time the same consideration that is given to Webster or Webster Bank
employees for such positions in accordance with existing policies and will
provide outplacement assistance (and severance as described above) to employees
of Maritime who are not offered positions at the effective time.
INDEMNIFICATION
In the merger agreement, Webster agreed to indemnify, defend and hold
harmless each person who is, has been, or before the effective time of the
merger becomes, a director, officer or
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employee of Maritime to the fullest extent permitted under applicable law and
Webster's restated certificate of incorporation and bylaws or the federal stock
charter and by-laws of Webster Bank, with respect to any claims made against
such person because he or she is or was a director, officer or employee of
Maritime or in connection with the merger agreement. Webster also agreed to use
commercially reasonable efforts to cover the officers and directors of Maritime
under a directors' and officers' liability insurance policy for a total premium
cost of not more than $100,000 and for a period of at least two years after the
effective time.
OPTION AGREEMENT
As a condition of and inducement to Webster's entering into the merger
agreement, Webster and Maritime entered into the option agreement immediately
after the execution of the merger agreement. Pursuant to the option agreement,
Maritime granted Webster an option (the "Option"), which entitles Webster to
purchase, subject to the terms of the option agreement, up to 141,004 fully paid
and nonassessable shares of Maritime's common stock, or approximately 19.99% of
the shares of Maritime's common stock then outstanding, under the circumstances
described below, at a price per share of $22.00, subject to adjustment in
certain circumstances. The Option is intended to discourage the making of
alternative acquisition-related proposals and, under specified circumstances, to
significantly increase the cost to a potential third party of acquiring Maritime
compared to its cost had Maritime not entered into the option agreement.
Therefore, the Option is likely to discourage third parties from proposing a
competing offer to acquire Maritime even if such offer involves a higher price
per share for Maritime's common stock than the per share consideration to be
paid pursuant to the merger agreement.
The following brief summary of certain provisions of the option agreement
is qualified in its entirety by reference to the option agreement. A copy of the
option agreement, as well as the other documents described in this Proxy
Statement/Prospectus, will be provided to you without charge if you call or
write to James M. Sitro, Vice President, Investor Relations of Webster Financial
Corporation, Webster Plaza, Waterbury, Connecticut 06702, telephone (203)
578-2399.
Subject to applicable law and regulatory restrictions, Webster may exercise
the Option, in whole or in part, following the occurrence of a "Purchase Event"
(as defined below), provided that the Option is not terminated first upon the
occurrence of an "Exercise Termination Event" (as defined below). "Purchase
Event" means, in substance, either (i) the acquisition by any third party of
beneficial ownership of 25% or more of the outstanding Maritime common stock or
(ii) the entry by Maritime, without the prior written consent of Webster, into a
letter of intent or definitive agreement to engage in an Acquisition Transaction
(as defined below) with any third party, or the recommendation by Maritime's
Board of Directors that its shareholders approve or accept any Acquisition
Transaction with any third party.
For purposes of the option agreement, the term "Acquisition Transaction"
means (i) a merger, consolidation or other business combination involving
Maritime, (ii) a purchase, lease or other acquisition of all or substantially
all of the assets and/or liabilities of Maritime, or (iii) a purchase or the
acquisition (including through merger, consolidation, share exchange or
otherwise) of beneficial ownership of securities representing 10% or more of the
voting power of Maritime.
The option agreement defines an "Exercise Termination Event" to mean the
earliest to occur of the following events: (i) the time immediately prior to the
effective time of the merger; (ii) 12 months after the first occurrence of a
Purchase Event; (iii) 12 months after the termination of the merger agreement
following the occurrence of a Preliminary Purchase Event (unless clause (vii) of
this paragraph is applicable); (iv) upon the termination of the merger
agreement, prior to the occurrence of a Purchase Event or Preliminary Purchase
Event, (A) by both parties, if the merger agreement is terminated by mutual
written consent; (B) by either Webster or Maritime, if the merger agreement has
been terminated as a result of regulatory denial or requested withdrawal of a
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regulatory application, or if the merger has not occurred by September 30, 1999;
or (C) by Maritime, if the merger agreement is terminated as a result of a
material breach of any representation, warranty, covenant or other agreement by
Webster; (v) 12 months after the termination of the merger agreement, if the
Maritime shareholders have failed to approve the merger agreement; (vi) 12
months after the termination of the merger agreement by Webster as a result of a
material breach of any representation, warranty, covenant or other agreement by
Maritime, if such breach was not willful or intentional by Maritime; or (vii) 24
months after the termination of the merger agreement by Webster as a result of a
willful or intentional material breach of any representation, warranty, covenant
or agreement by Maritime.
"Preliminary Purchase Event," as defined in the option agreement, includes
(i) Maritime's entry, without the prior written consent of Webster, into a
letter of intent or definitive agreement to engage in an Acquisition Transaction
with any third party, or the recommendation by Maritime's Board of Directors
that its shareholders approve or accept any Acquisition Transaction with any
third party; (ii) an acquisition by any third party of beneficial ownership of
10% or more of the outstanding shares of Maritime's common stock; (iii) the
making of a bona fide proposal for an Acquisition Transaction by any third party
to Maritime, or a public announcement or written communication that is publicly
disclosed to Maritime's shareholders as to a third party proposing to engage in
an Acquisition Transaction and Maritime's shareholders do not approve the
merger; (iv) a willful or intentional breach by Maritime of any representation,
warranty, covenant or agreement that would entitle Webster to terminate the
merger agreement; (v) the failure to hold or the cancellation of the shareholder
meeting for the purpose of voting on the merger agreement before the merger
agreement is terminated; (vi) for any reason whatsoever, the failure of
Maritime's Board of Directors to recommend, or the withdrawal or modification in
a manner adverse to Webster of a recommendation that Maritime's shareholders
approve the merger agreement, or if Maritime or Maritime's Board of Directors
fails to oppose any proposal by any person (other than Webster or any subsidiary
of Webster); or (vii) a filing by any third party of an application or notice
with any regulatory authority for approval to engage in an Acquisition
Transaction.
The Option may not be assigned by Webster to any other person without the
express written consent of Maritime, except that Webster may assign its rights
under the option agreement to a wholly owned subsidiary or may assign its rights
in whole or in part after the occurrence of a Preliminary Purchase Event. Upon
the occurrence of a Purchase Event prior to an Exercise Termination Event, at
the request of Webster, Maritime will be obligated (i) to prepare and keep
current an offering circular which meets the standards of a shelf registration
statement filed with the SEC with respect to the shares to be issued upon
exercise of the Option under applicable federal and state securities laws, and
(ii) to repurchase the Option, and any shares of Maritime's common stock
theretofore purchased pursuant to the Option, at prices determined as set forth
in the option agreement, except to the extent prohibited by applicable law,
regulation or administrative policy.
In the event that prior to an Exercise Termination Event, Maritime enters
into a letter of intent or definitive agreement (i) to consolidate or merge with
any third party, and Maritime is not the continuing or surviving corporation in
the consolidation or merger; (ii) to permit any third party to merge into
Maritime, and Maritime is the continuing or surviving corporation, but, in
connection with the merger, the then outstanding shares of Maritime's common
stock will be changed into or exchanged for stock or other securities of any
third party or cash or any other property or the then outstanding shares of
Maritime's common stock will represent after the merger less than 50% of the
outstanding shares and share equivalents of the merged company; or (iii) to sell
or otherwise transfer all or substantially all of its assets to any third party,
then, and in each such case, the agreement governing such transaction must make
proper provision so that the Option will, upon the completion of that
transaction, be converted into, or exchanged for, a substitute option, at the
election of Webster, of either (x) the acquiring corporation or (y) any person
that controls the acquiring corporation. The substitute option will be
exercisable for shares of the issuer's common stock in such number and at such
exercise price as is set forth in the option agreement and will otherwise have
the
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same terms as the Option, except that the number of shares subject to the
substitute option may not exceed 19.99% of the issuer's outstanding shares of
common stock.
INFORMATION ABOUT MARITIME
BUSINESS
Maritime is a Connecticut-chartered commercial bank headquartered in Essex,
Connecticut. Deposits at Maritime are FDIC insured. Maritime is engaged
principally in the business of attracting deposits from the general public and
investing those deposits in residential real estate loans, and in consumer and
small business loans. Maritime currently serves customers from three banking
offices located in Middlesex and New London Counties, Connecticut.
At September 30, 1998, Maritime had total consolidated assets of $103.7
million, total deposits of $91.2 million, and shareholders' equity of $7.1
million, or 6.8% of total assets. At September 30, 1998, Maritime had loans
receivable, net of $68.4 million, which included $27.5 million in residential
real estate loans, $17.5 million in commercial real estate loans, $12.8 million
in commercial loans and $11.7 million in home equity credit lines and consumer
installment loans. At September 30, 1998, nonperforming loans were $158,471. At
that date, Maritime's allowance for loan losses was $1.0 million, or 632% of
nonperforming loans.
SUPERVISION AND REGULATION
Maritime, as a state-chartered commercial bank, is regulated by the
Connecticut Commissioner of Banking and by the Federal Deposit Insurance
Corporation.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following is Maritime's management's discussion and analysis of
financial condition and results of operations. This discussion should be read in
conjunction with Maritime's financial data appearing elsewhere in this Proxy
Statement/Prospectus and Maritime's historical financial statements and notes
attached as Appendix C and Appendix D to this document.
FINANCIAL CONDITION. At September 30, 1998, Maritime had total assets of
$103.7 million. Funds derived from shareholders' capital, deposits and
borrowings are intended primarily to support Maritime's lending activities. As
of the years ended December 31, 1996 and December 31, 1997, and the nine month
period ended September 30, 1998, outstanding loans were $45.2 million, $56.8
million and $69.4 million, respectively, and represented 65%, 68% and 67%,
respectively, of Maritime's assets. Composition of the outstanding loan
portfolio as of September 30, 1998, and December 31, 1997 and 1996 were as
follows:
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<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30,
1998 AS OF DECEMBER 31,
------------- ------------------------
1997 1996
---------- -----------
<S> <C> <C> <C>
Commercial .............................. $12,722,186 $8,243,568 $7,806,073
Consumer ................................ 11,660,433 3,759,310 3,444,780
Real Estate
Residential ......................... 25,734,948 28,877,041 23,154,761
Commercial .......................... 15,719,536 14,262,896 9,912,403
Construction/Land Development ....... 3,535,921 1,689,807 691,633
Other ................................... 27,919 12,026 188,607
---------- ---------- -----------
Total Loans ........................ $69,400,943 $56,844,648 $45,198,257
=========== =========== ===========
Percent of Total Assets ................. 67.0% 68.4% 64.7%
</TABLE>
As of September 30, 1998, non-performing loans amounted to $158,000. At
September 30, 1998, the allowance for loan losses was $1.0 million or 1.44% of
total loans. Maritime maintains an allowance for loan losses to absorb potential
future losses. The allowance for loan losses is deemed to be adequate by
management.
Those funds not used to support lending activities have been invested in
various securities. At September 30, 1998 such investments were as follows:
<TABLE>
<CAPTION>
AMORTIZED
COST BASIS FAIR VALUE
------------ ------------
<S> <C> <C>
Debt securities issued by the U.S. Treasury
and other U.S. gov't corporations and
agencies ........................................... $13,561,947 $13,734,747
Debt securities issued by foreign govt's ............. 100,000 100,000
Mortgage-backed securities ........................... 7,756,109 7,807,162
Other Securities ..................................... 2,871,536 2,890,450
----------- -----------
$24,289,592 $24,532,359
=========== ===========
</TABLE>
The following table reflects outstanding deposit balances as of the dates
indicated:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------ --------------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Demand - Consumer ............... $ 788,942 $ 916,578 $ 1,039,262
Demand - Business ............... 16,570,357 13,065,672 11,504,559
NOW ............................. 11,047,755 9,385,727 7,893,689
Savings + Money Market .......... 33,651,816 27,378,831 24,146,939
Certificates of Deposit ......... 29,114,881 21,564,322 19,262,451
----------- ----------- -----------
Total Deposits .............. $91,173,751 $72,311,130 $63,846,900
=========== =========== ===========
</TABLE>
During 1997, the growth in loans exceeded the growth of deposits, and at
December 31, 1997, Maritime had outstanding borrowings of $4.0 million from the
Federal Home Loan Bank. As of September 30, 1998, Maritime had outstanding
borrowings of $5.1 million from the Federal Home Loan Bank with a maturity of
approximately 5 years.
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RESULTS OF OPERATIONS. Maritime's earnings have and will continue to depend
primarily on the difference between interest income and interest expense, or net
interest income, and the extent to which net interest income will exceed all
other operating expenses.
NET INCOME. In the first nine months of 1998, net income increased
$131,000, or 23.9%, to $680,000 from $549,000 in the first nine months of 1997.
For the year ended December 31, 1997, net income increased $142,000, or 21.5% to
$801,000 from $659,000 for the year ended December 31, 1996. These increases in
net income reflect primarily growth in interest income as a result of growth in
Maritime's loan portfolio.
NET INTEREST INCOME. Net interest income increased $500,000, or 26.9%,
to $3.3 million for the first nine months of 1998 from $2.8 million for the
first nine months of 1997. The net interest spread, or difference between the
yield on interest-earning assets and cost of funds, declined from 4.90% at
September 30, 1997 to 4.39% at September 30, 1998. Net interest income increased
during 1997 to $3.8 million from $3.1 million in 1996, a 22.6% increase. The net
interest spread increased during 1997 to 5.25% at December 31, 1997 from 5.13%
at December 31, 1996. The increase reflects a combination of increased spreads
as competition for loans and for deposits remains strong, coupled with more
reliance on higher cost borrowed funds to fund growth.
NET INTEREST MARGIN. Continuous growth in Maritime's loan portfolio
increased the net interest margin in absolute dollars. However, the net interest
margin decreased from 5.15% during the first nine months of 1997, to 4.88% for
the same period in 1998. Each year since opening for business, Maritime's net
interest margin in dollars has improved, a function of Maritime's growth.
However, the net interest margin as a percentage decreased from 5.40% in 1996 to
5.20% in 1997. The competitive factors mentioned above with respect to net
interest spread caused these decreases.
ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses was $1.0
million at September 30, 1998. Maritime makes a monthly provision to the
allowance for loan losses account based on the relative risk level of each
category of loans. At September 30, 1998, the allowance for loan loss account
was at 1.44% of total loans, and was 632.9% of non-performing loans. At December
31, 1997, the allowance for loan losses was $750,000, and the allowance for loan
loss account was at 1.33% of total loans. At December 31, 1997, the allowance
for loan losses was 298.7% of non-performing loans. The composition and quality
of the loan portfolio is reviewed continuously to assess the adequacy of the
allowance for loan losses.
LIQUIDITY AND INTEREST RATE SENSITIVITY MANAGEMENT. Maritime's primary
liquidity (cash, federal funds sold and marketable investment securities
maturing in less than one year) is managed to provide sufficient funds to meet
Maritime's cash needs, including funding loan and investment opportunities and
providing reserves against unforeseen withdrawal of customer deposits. At
September 30, 1998 and December 31, 1997, Maritime's primary liquidity ratio was
11.5% and 5.0%, respectively, of total assets, and within the 5% to 15%
guideline considered appropriate by Maritime's asset/liability management
policy. Maritime has not relied upon brokered deposits or jumbo certificates of
deposit as a source of funding.
Maritime has adopted policies and guidelines relative to the interest rate
sensitivity of Maritime's assets and liabilities. The actual rate sensitivity of
Maritime's assets and liabilities are reviewed monthly and compared to
Maritime's policies and guidelines, as well as to industry peer groups.
Maritime reviews, on a quarterly basis, a "Performance Profile" prepared by
an outside consultant that measures the performance of Maritime against a
national peer group, evaluates liquidity, cash flow stability, financial
feasibility and the effect of possible interest rate changes on
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<PAGE>
the earnings and capital of Maritime. This process is overseen by Maritime's
Investment and Asset & Liability Management Committee, which consists of three
directors and two senior officers of Maritime.
Maritime is a voluntary member of the Federal Home Loan Bank and is thereby
entitled to various benefits, including certain borrowing capabilities that may
assist Maritime to better match the maturities of assets and liabilities. Prior
to 1997, Maritime minimally utilized its borrowing capabilities, but in 1997 and
early 1998 increased its utilization and has borrowed both short term and long
term from the Federal Home Loan Bank to fund the growth in loans and to diminish
and somewhat neutralize the potential negative effect of future interest rate
changes. Maritime also has borrowing capabilities at correspondent banks, which
it has utilized periodically.
CAPITAL. At September 30, 1998, Maritime's Tier I capital-to-asset ratio
was 6.81%, well above the regulatory minimum and sufficient to qualify Maritime
as a "well capitalized" institution under the Federal Deposit Insurance
Corporation's capital regulations. During 1994, Maritime began to pay a
quarterly cash dividend. Maritime has increased the quarterly cash dividend from
3.3 cents per share in the third quarter of 1994 to 10 cents per share for the
first quarter of 1998, both adjusted for a three-for-two stock split in August
1998. Maritime's stated intention is to steadily increase the quarterly cash
dividend as long as the dividend can be supported by a corresponding increase in
earnings.
INFLATION AND CHANGING PRICES. The financial statements and related data
presented herein have been prepared in accordance with generally accepted
accounting principles which require the measurement of financial position and
operating results in terms of historical dollars, without considering changes in
the relative purchasing power of money over time due to inflation.
YEAR 2000. Maritime has taken a number of steps to minimize the potential
impact to Maritime of the prospective failure of computers to continue to
accurately process information following December 31, 1999 -- the "Year 2000"
challenge. Following guidelines provided by state and federal banking
regulators, Maritime has engaged in a process of identifying, evaluating,
testing and implementing Year 2000 issues and appropriate remedial measures.
Maritime has completed the identification and evaluation process and, as a
consequence, converted its data processing system in 1998 to a national vendor.
Maritime's testing process has begun and is expected to be complete by May 1,
1999. All corrective measures will be completed by June 30, 1999 for any systems
material to Maritime's operations. Systems not corrected by that date will be
replaced with compliant systems, although Maritime does not expect that
replacement will be necessary.
The approximate cost of Maritime's Year 2000 compliance activities through
September 30, 1998 was $3,000. Maritime estimates the cost of additional Year
2000 compliance through January 1, 2000 to be approximately $10,000. Maritime
currently believes it is in compliance with regulatory guidelines concerning
Year 2000. Maritime has begun a process of attempting to identify Year 2000
problems involving substantial customers. That process is expected to be
completed by June 30, 1999. Maritime's operations could be materially and
adversely affected if either its systems or those of its customers fail to work
effectively due to unresolved and/or undetected Year 2000 problems.
RECENT ACCOUNTING PRONOUNCEMENTS
ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND
EXTINGUISHMENTS OF LIABILITIES. In June 1996, the Financial Accounting Standards
Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No.
125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" ("SFAS No. 125"). SFAS No. 125 provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishments of liabilities based on consistent application of a
financial-components approach that focuses on control. It distinguishes
transfers of financial assets that are sales from transfers that are secured
borrowings. Under the financial-components approach, after a transfer of
financial assets, an entity recognizes all financial and servicing assets it
controls and liabilities it has incurred and does not recognize financial assets
it no longer controls and liabilities that have been extinguished. The
financial-components approach focuses on the assets and liabilities that exist
after the transfer. Many of these assets and liabilities are components of
financial assets that existed prior to the transfer. If a transfer does not meet
the criteria for a sale, the transfer is accounted for as a secured borrowing
with a pledge of collateral. SFAS No. 125 is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring after
December 31, 1996, applied prospectively. Earlier or retroactive application of
SFAS No. 125 was not permitted. The adoption of the non-deferred provisions of
SFAS No. 125 as of January 1, 1997 and the adoption as of January 1, 1998 of the
deferred provisions of SFAS No. 125 did not have a material impact on Maritime's
financial statements.
REPORTING COMPREHENSIVE INCOME. In June 1997, the FASB issued SFAS No. 130,
"Reporting Comprehensive Income," ("SFAS No. 130"). SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its components
(revenues, expenses, gains and losses) in a full set of general purpose
financial statements. SFAS No. 130 requires that all items that are required to
be recognized under accounting standards as components of comprehensive income
be reported in a financial statement that is displayed with the same prominence
as other financial statements. It does not require a specific format for that
financial statement but requires that an enterprise display an amount
representing total comprehensive income for the period in that financial
statement. SFAS No. 130 requires that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement and (b) display
the accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity section of a statement of
financial position. It does not address issues of recognition or measurement for
comprehensive income and its components. SFAS No. 130 is effective for fiscal
years beginning after December 31, 1997. Reclassification of financial
statements for earlier periods provided for comparative purposes is required.
Maritime does not expect that upon adoption, SFAS No. 130 will have a material
effect on its financial statements.
DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION. In
June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," ("SFAS No. 131"). SFAS No. 131 establishes
standards for the way public business enterprises report information about
operating segments in financial statements. SFAS No. 131 is effective for
financial statements for periods beginning after December 15, 1997. Maritime
does not expect that under SFAS No. 131 it will be required to report additional
information because its present organization consists of only one operating
segment as defined by this statement.
DISCLOSURES ABOUT PENSIONS AND OTHER POSTRETIREMENT BENEFITS. In February
1998, the FASB issued SFAS No. 132, "Employers' Disclosures about Pensions and
Other Postretirement Benefits," which was an amendment of FASB Statements of
Financial Accounting Standards Nos. 87, 88 and 106. SFAS No. 132 revises
employers' disclosures about pension and other postretirement benefit plans,
though it does not change the measurement or recognition of those plans.
Maritime will adopt SFAS No. 132 for the fiscal year beginning January 1, 1998.
Adoption of SFAS No. 132 will not have a material impact on Maritime's financial
position or results of operations.
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. In June 1998,
the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133"). SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, which are referred to collectively as derivatives
in this paragraph. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. SFAS No. 133 is effective for all fiscal
quarters of fiscal years beginning after June 15, 1999. It is not expected that
the adoption of SFAS No. 133 will have a material impact on Maritime's financial
statements. At this time, Maritime does not plan to adopt SFAS No. 133 early.
Also, Maritime has no plan, on adoption of SFAS No. 133, to use the window of
opportunity to reclassify held-to-maturity securities to available-for-sale.
37
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Maritime's common stock as of January 15, 1999: (i) by each person
(or group of affiliated persons) known by Maritime to be the beneficial owner of
more than 5% of its outstanding common stock; (ii) by each of Maritime's named
executive officers (as defined in Item 402 of Regulation S-B); (iii) by each
Maritime director; and (iv) by all of Maritime's executive officers and
directors as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF SHARES
NAME BENEFICIALLY OWNED OUTSTANDING
- ---- ------------------ -----------
<S> <C> <C>
William R. Attridge (1) ....................... 19,782 2.7%
Diana Atwood-Johnson (2) ...................... 64,200 8.9%
H. Judson Carr(3) ............................. 66,900 9.3%
Eleanor D. Champion (4) ....................... 3,000 *
William A. Childress (5) ...................... 300 *
Richard J. Hertz (6) .......................... 43,250 6.0%
Nicholas Lewitz, Jr. (7) ...................... 32,550 4.5%
Richard R. Manning (8) ........................ 44,850 6.2%
Stanley F. Prymas (9) ......................... 44,475 6.2%
John W. Rafal (10) ............................ 43,430 6.0%
Samuel J. Riggio (11) ......................... 27,450 3.8%
Gene R. Schiavone (12) ........................ 27,600 3.9%
George W. Whelen IV (13) ...................... 56,175 7.8%
All executive officers and
directors as a group
(13 persons) .................................. 352,182 45.4%
</TABLE>
- ----------
* Less than 1% of the outstanding shares of Maritime's common stock.
(1) Mr. Attridge's address is c/o Maritime Bank & Trust Co., 130 Westbrook
Road, Essex, CT 06426-1149. Includes 9,000 currently exercisable options
granted pursuant to Maritime's 1991 Stock Option Plan to purchase shares
of Maritime's common stock at $6.67 per share.
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<PAGE>
(2) Ms. Atwood-Johnson's address is 12 Tantummaheag Road, Old Lyme, CT 06371.
Includes 10,350 currently exercisable options granted pursuant to
Maritime's 1991 Stock Option Plan to purchase shares of Maritime's common
stock at $6.67 per share.
(3) Mr. Carr's address is 61 River Road, Essex, CT 06426. Includes 10,650
currently exercisable options granted pursuant to Maritime's 1991 Stock
Option Plan to purchase shares of Maritime's common stock at $6.67 per
share.
(4) Ms. Champion's address is 104 N. Main Street, Essex, CT 06426.
(5) Mr. Childress' address is 43 Sheffield Street, Old Saybrook, CT 06475.
(6) Mr. Hertz's address is 68 Estates Drive, Santa Fe, NM 87501. Includes
8,400 currently exercisable options granted pursuant to Maritime's 1991
Stock Option Plan to purchase shares of Maritime's common stock at $6.67
per share.
(7) Mr. Lewitz's address is 198 Fairview Road, Westbrook, CT 06475. Includes
6,900 currently exercisable options granted pursuant to Maritime's 1991
Stock Option Plan to purchase shares of Maritime's common stock at $6.67
per share.
(8) Mr. Manning's address is 2850 NE IXth Court Pompano Beach, FL. Includes
11,100 currently exercisable options granted pursuant to Maritime's 1991
Stock Option Plan to purchase shares of Maritime's common stock at $6.67
per share
(9) Mr. Prymas' address is 26 Hemlock Terrace Extension, Deep River, CT
06417. Includes 8,250 currently exercisable options granted pursuant to
Maritime's 1991 Stock Option Plan to purchase shares of Maritime's common
stock at $6.67 per share.
(10) Mr. Rafal's address is 4 Johnnycake Hill Road, Old Lyme, CT. Includes
7,500 currently exercisable options granted pursuant to Maritime's 1991
Stock Option Plan to purchase shares of Maritime's common stock at $6.67
per share.
(11) Mr. Riggio's address is 10 Warsaw Street, Deep River, CT 06417. Includes
6,750 currently exercisable options granted pursuant to Maritime's 1991
Stock Option Plan to purchase shares of Maritime's common stock at $6.67
per share
(12) Mr. Schiavone's address is Box 580, Essex, CT 06426.
(13) Mr. Whelen's address is 18 Hill Road, Old Saybrook, CT 06475. Includes
9,300 currently exercisable options granted pursuant to Maritime's 1991
Stock Option Plan to purchase shares of Maritime's common stock at $6.67
per share.
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<PAGE>
MARKET PRICES AND DIVIDENDS
WEBSTER'S COMMON STOCK
The table below sets forth the range of high and low sale prices of
Webster's common stock as reported on the Nasdaq Stock Market's National Market
Tier, as well as cash dividends paid during the periods indicated, restated to
reflect the two-for-one split of Webster's common stock in April 1998:
<TABLE>
<CAPTION>
Market Price
------------ Cash
High Low Dividends Paid
---- --- --------------
<S> <C> <C> <C>
Quarter Ended:
March 31, 1997 ....................... $20.69 $17.56 $0.10
June 30, 1997 ........................ 22.88 17.31 0.10
September 30, 1997 ................... 29.88 21.69 0.10
December 31, 1997 .................... 33.88 28.50 0.10
March 31, 1998 ....................... 35.00 28.56 0.10
June 30, 1998 ........................ 36.25 31.44 0.11
September 30, 1998 ................... 34.63 20.63 0.11
December 31, 1998 .................... 28.13 18.88 0.11
</TABLE>
On November 3, 1998, the last trading day prior to the public announcement
of the merger, the closing price of Webster's common stock on the Nasdaq Stock
Market's National Market Tier was $24.94. On __________ ___, 1999 (the most
recent practicable date prior to the printing of this Proxy
Statement/Prospectus), the closing price of Webster's common stock on the Nasdaq
Stock Market's National Market Tier was $ * .
MARITIME'S COMMON STOCK
Maritime's common stock is not registered under the federal securities laws
and is not listed on any exchange or automated quotation system. However, it
does trade on the over-the-counter bulletin board. Maritime's common stock is
not actively traded, and the prices for Maritime common stock reported on the
bulletin board may not provide an adequate measure of the fair market value of
the shares. The table below sets forth the range of high and low sales prices of
Maritime's common stock as reported on the over-the-counter bulletin board, as
well as cash dividends paid, during the periods indicated:
<TABLE>
<CAPTION>
Market Price
------------ Cash
High Low Dividends Paid
---- --- --------------
<S> <C> <C> <C>
Quarter Ended:
March 31, 1997 ....................... $11.58 $10.42 $0.07
June 30, 1997 ........................ 11.17 10.67 0.08
September 30, 1997 ................... 13.67 12.17 0.08
December 31, 1997 .................... 13.71 13.71 0.09
March 31, 1998 ....................... 19.33 16.83 0.10
June 30, 1998 ........................ 23.33 18.33 0.11
September 30, 1998 ................... 24.00 19.83 0.12
December 31, 1998 .................... 28.50 20.00 0.12
</TABLE>
- ----------
* To be calculated subsequently
40
<PAGE>
DESCRIPTION OF WEBSTER CAPITAL STOCK AND
COMPARISON OF SHAREHOLDER RIGHTS
Set forth below is a description of Webster's capital stock, as well as a
summary of the material differences between the rights of holders of Maritime
common stock and their prospective rights as holders of Webster's common stock.
If the merger agreement is approved and the merger takes place, the holders of
Maritime's common stock will become holders of Webster's common stock. As a
result, Webster's restated certificate of incorporation, as amended, and bylaws,
as amended, and the applicable provisions of the General Corporation Law of the
State of Delaware (the "Delaware Corporation Law") will govern the rights of
current shareholders of Maritime's common stock. The rights of those
shareholders are currently governed by the certificate of incorporation and the
second amended and restated bylaws of Maritime and the applicable provisions of
the Connecticut Business Corporation Act (the "Connecticut Corporation Law").
The following comparison is based on the current terms of the governing
documents of Webster and Maritime and on the provisions of the Delaware
Corporation Law and the Connecticut Corporation Law. The discussion is intended
to highlight important similarities and differences between the rights of
holders of Webster's common stock and Maritime's common stock.
WEBSTER'S COMMON STOCK
Webster is authorized to issue 50,000,000 shares of Webster's common stock,
par value $.01 per share. As of _________ __, 1999 _____ shares of Webster's
common stock were issued and outstanding and Webster had outstanding stock
options granted to directors, officers and other employees for ______ shares of
Webster's common stock. Each share of Webster's common stock has the same
relative rights and is identical in all respects to each other share of
Webster's common stock. Webster's common stock is non-withdrawable capital, is
not of an insurable type and is not insured by the Federal Deposit Insurance
Corporation or any other governmental entity.
Holders of Webster's common stock are entitled to one vote per share on
each matter properly submitted to shareholders for their vote, including the
election of directors. Holders of Webster's common stock do not have the right
to cumulate their votes for the election of directors, and they have no
preemptive or conversion rights with respect to any shares that may be issued.
Webster's common stock is not subject to additional calls or assessments by
Webster, and all shares of Webster's common stock currently outstanding are
fully paid and nonassessable. For a discussion of the voting rights of Webster's
common stock, classification of Webster's Board of Directors and provisions of
Webster's restated certificate of incorporation and bylaws that may prevent a
change in control of Webster or that would operate only with respect to an
extraordinary corporate transaction involving Webster or its subsidiaries, see
"-- Certificate of Incorporation and Bylaw Provisions."
Holders of Webster's common stock and any class or series of stock entitled
to participate with it are entitled to receive dividends declared by the Board
of Directors of Webster out of any assets legally available for distribution. No
such dividends or other distributions may be declared or paid, however, unless
all accumulated dividends and any sinking fund, retirement fund or other
retirement payments have been paid, declared or set aside on any class of stock
having preference as to payments of dividends over Webster's common stock. In
addition, as described below, the Indenture for Webster's Senior Notes places
certain restrictions on Webster's ability to pay dividends on its common stock.
See "-- Senior Notes."
In the unlikely event of any liquidation, dissolution or winding up of
Webster, the holders of Webster's common stock and any class or series of stock
entitled to participate with it would be entitled to receive all remaining
assets of Webster available for distribution, in cash or in kind, after payment
or provision for payment of all debts and liabilities of Webster and after the
liquidation
41
<PAGE>
preferences of all outstanding shares of any class of stock having preference
over Webster's common stock have been fully paid or set aside.
WEBSTER'S PREFERRED STOCK
Webster's restated certificate of incorporation authorizes its Board of
Directors, without further shareholder approval, to issue up to 3,000,000 shares
of serial preferred stock for any proper corporate purpose. In approving any
issuance of serial preferred stock, the Board of Directors has broad authority
to determine the rights and preferences of the serial preferred stock, which may
be issued in one or more series. These rights and preferences may include
voting, dividend, conversion and liquidation rights that may be senior to
Webster's common stock.
Webster's Series C Participating Preferred Stock was authorized in
connection with a rights agreement, which was adopted in February 1996 and
amended in October 1998. Webster adopted the rights agreement to protect
shareholders in the event of an inadequate takeover offer or to deter coercive
or unfair takeover tactics. Each right entitles a holder to purchase 1/1,000th
of a share of Series C Stock upon the occurrence of certain specified events. As
of the date of this Proxy Statement/Prospectus, no shares of Webster's Series C
Stock have been issued.
SENIOR NOTES
The 8 3/4% Senior Notes due 2000 were issued by Webster in an aggregate
principal amount of $40,000,000 pursuant to an Indenture (the "Indenture"),
dated as of June 15, 1993, between Webster and Chemical Bank, as trustee (the
"Trustee"). Certain provisions of the Indenture are summarized below because of
their impact on Webster's common stock. The Senior Notes bear interest at 8 3/4%
payable semi-annually on each June 30 and December 30 until maturity on June 30,
2000. The Senior Notes are unsecured general obligations only of Webster and not
of its subsidiaries. The Senior Notes may not be redeemed by Webster prior to
maturity. This limitation on redemption is not expected to have an anti-takeover
effect since the Senior Notes would be assumed by any acquirer of Webster. The
Indenture contains covenants that limit Webster's ability at the holding company
level to incur additional Funded Indebtedness (defined below), to make
Restricted Distributions (defined below), to engage in certain dispositions
affecting Webster Bank or its voting stock, to create certain liens upon
Webster's assets at the holding company level (including a negative pledge
clause), and to engage in mergers, consolidations, or a sale of substantially
all of Webster's assets unless certain conditions are satisfied. The Indenture
also requires that Webster maintain a specified level of liquid assets at the
holding company level.
RESTRICTIONS ON ADDITIONAL INDEBTEDNESS. The Indenture limits the amount of
Funded Indebtedness which Webster may incur or guarantee at the holding company
level. Funded Indebtedness includes any obligation of Webster with a maturity in
excess of one year for borrowed money, for the deferred purchase price of
property or services, for capital lease payments, or related to the guarantee of
such obligations. Webster may not incur or guarantee any Funded Indebtedness if,
immediately after giving effect thereto, the amount of Funded Indebtedness of
Webster at the holding company level, including the Senior Notes, would be
greater than 90% of Webster's consolidated net worth. As of September 30, 1998,
Webster's consolidated net worth was $565.9 million and it had $41.4 million of
Funded Indebtedness.
RESTRICTED DISTRIBUTIONS. Under the Indenture, Webster may not, directly or
indirectly, make any Restricted Distribution, except in capital stock of
Webster, if, at the time or after giving effect to the distribution: (a) an
event of default shall have occurred and be continuing under the Indenture; (b)
Webster Bank would fail to meet any of the applicable minimum capital
requirements under Office of Thrift Supervision regulations; (c) Webster would
fail to maintain sufficient liquid assets to comply with the terms of the
covenant described under "Liquidity Maintenance" below; or (d) the aggregate
amount of all Restricted Distributions subsequent to September 30, 1993 would
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<PAGE>
exceed the sum of (i) $5 million, plus (ii) 75% of Webster's aggregate
consolidated net income (or if such aggregate consolidated net income shall be a
deficit, minus 100% of such deficit) accrued on a cumulative basis in the period
commencing on June 30, 1993 and ending on the last day of the fiscal quarter
immediately preceding the date of the Restricted Distribution, and plus (iii)
100% of the net proceeds received by Webster from any capital stock issued by
Webster (other than to a subsidiary) subsequent to September 30, 1993. As of
September 30, 1998, Webster had the ability to pay $257.3 million in Restricted
Distributions.
Restricted Distribution means: (a) any dividend, distribution or other
payment (except for dividends, distributions or payments payable in capital
stock) on the capital stock of Webster or any subsidiary (other than a wholly
owned subsidiary); (b) any payment to purchase, redeem, acquire or retire any
capital stock of Webster or the capital stock of any subsidiary (other than a
wholly-owned subsidiary); and (c) any payment by Webster of principal (whether a
prepayment, redemption or at maturity) of, or to acquire, any indebtedness for
borrowed money issued or guaranteed by Webster (other than the Senior Notes or
pursuant to a guarantee by Webster of any borrowing by any employee stock
ownership plan established by Webster or a wholly owned subsidiary), except that
any such payment of, or to acquire, any such indebtedness for borrowed money
that is not subordinated to the Senior Notes will not constitute a Restricted
Distribution if such indebtedness was issued or guaranteed by Webster at a time
when the Senior Notes were rated in the same or higher rating category as the
rating assigned to the Senior Notes by Standard & Poor's at the time the Senior
Notes were issued.
LIQUIDITY MAINTENANCE. The Indenture requires that Webster maintain at all
times, on an unconsolidated basis, liquid assets in an amount equal to or
greater than 150% of the aggregate interest expense on the Senior Notes and all
other indebtedness for borrowed money of Webster for 12 full calendar months
immediately following each determination date under the Indenture, provided that
Webster will not be required to maintain such liquid assets once the Senior
Notes have been rated "BBB-" or higher by Standard & Poor's for six calendar
months and remain rated in such category.
CAPITAL SECURITIES
In January 1996, Webster raised $100 million through the sale of capital
securities that will be used for general corporate purposes. Webster formed a
business trust for the purpose of issuing capital securities and investing the
net proceeds in capital debentures.
Prior to its acquisition by Webster, Eagle Financial Corp. raised $50
million through the sale of capital securities to be used for general corporate
purposes. Eagle formed a business trust for the purpose of issuing capital
securities and investing the net proceeds in the Eagle capital debentures. In
connection with the acquisition of Eagle by Webster in April 1998, Webster
assumed all of Eagle's rights and obligations with respect to, among other
things, the Eagle capital securities and capital debentures.
CERTIFICATE OF INCORPORATION AND BYLAW PROVISIONS
The following discussion is a general summary of certain provisions of
Webster's restated certificate of incorporation and bylaws, and a comparison of
those provisions to similar types of provisions in the certificate of
incorporation and second amended and restated bylaws of Maritime. The discussion
is necessarily general and, with respect to provisions contained in Webster's
restated certificate of incorporation and bylaws, reference should be made to
the document in question. Certain provisions included in Webster's restated
certificate of incorporation and bylaws may serve to entrench current management
and to prevent a change in control of Webster even if desired by a majority of
shareholders. These provisions are designed to encourage potential acquirers to
negotiate directly with the Board of Directors of Webster and to discourage
other takeover attempts.
43
<PAGE>
DIRECTORS. Certain provisions of Webster's restated certificate of
incorporation and bylaws will impede changes in majority control of Webster's
Board of Directors. The restated certificate of incorporation provides that the
Board of Directors will be divided into three classes, with directors in each
class elected for three-year staggered terms. The restated certificate of
incorporation further provides that the size of the Board of Directors shall be
within a 7 to 15 range. The bylaws currently provide that there shall be 14
directors. The bylaws provide that (i) to be eligible for nomination as a
director, a nominee must be a resident of the State of Connecticut at the time
of his nomination or, if not then a resident, have been previously a resident
for at least three years; (ii) each director is required to own not less than
100 shares of Webster's common stock; and (iii) more than three consecutive
absences from regular meetings of the Board of Directors, unless excused by a
Board resolution, shall automatically constitute a resignation. Webster's bylaws
also contain a provision prohibiting certain contracts and transactions between
Webster and its directors and officers and certain other entities unless certain
procedural requirements are satisfied.
Webster's restated certificate of incorporation and 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. Webster's
restated certificate of incorporation 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 at a duly constituted meeting of
shareholders called for that purpose and that 30 days' written notice must be
provided to any director or directors whose removal is to be considered at a
shareholders' meeting.
The provisions of the certificate of incorporation and bylaws of Maritime
with regard to directors are similar to those of Webster. The certificate of
incorporation and the bylaws of Maritime provide that the Board of Directors is
divided into three classes, with directors in each class elected for three-year
staggered terms. The certificate of incorporation and bylaws provide that the
number of directors shall not be less than 7 nor more than 16, and that for any
12-month period, the number of positions on the Board of Directors may be
increased or decreased by no more than two unless (A) the Maritime Board of
Directors, by the affirmative vote of at least 66 2/3% of the entire Board of
Directors and a majority (in any event not less than seven) of the continuing
directors, shall adopt a resolution approving such change or (B) the
shareholders of Maritime, by the affirmative vote of at least 66 2/3% of the
voting power of the then outstanding voting shares and the shares of voting
stock held by a majority of independent shareholders, approve such change.
Maritime's certificate of incorporation provides that any vacancies on the
Board of Directors and any newly created directorships may be filled by the
Board by a vote of 66 2/3% of the directors then in office, and that directors
elected in this manner hold office until the next election of the class of
directors to which they are assigned. Maritime's certificate of incorporation
provides that any director or the entire Board may be removed at any time with
or without cause by the affirmative vote of the holders of at least 66 2/3% of
the voting power of the voting stock that elected the director at a meeting of
shareholders called for that purpose.
Webster's bylaws impose certain restrictions on the nomination by
shareholders of candidates for election to the Board of Directors and the
proposal by shareholders of business to be acted upon at an annual meeting of
shareholders. The certificate of incorporation of Maritime also contains
restrictions on shareholder nominations of directors but does not contain a
provision concerning the proposal by shareholders of other business to be acted
upon at a meeting.
CALL OF SPECIAL MEETINGS. Webster's restated certificate of incorporation
provides that a special meeting of shareholders may be called at any time but
only by the Chairman, the President or by the Board of Directors. Shareholders
are not authorized to call a special meeting. The certificate of incorporation
of Maritime provides that a special meeting of shareholders may be called at any
time by the Chairman, the President or the Board of Directors, and shall be
called by the
44
<PAGE>
President upon written request of Maritime's shareholders when required pursuant
to Section 33-326 of the Connecticut General Statutes (now Section 33-696 of the
Connecticut Corporation Law).
SHAREHOLDER ACTION WITHOUT A MEETING. Webster's restated certificate of
incorporation provides that shareholders may act by written consent only if they
are unanimous. Under the Connecticut Corporation Law, Maritime's shareholders
also may act by unanimous written consent.
LIMITATION ON LIABILITY OF DIRECTORS AND INDEMNIFICATION. Webster's
restated certificate of incorporation provides that no director shall be
personally liable to the corporation or its shareholders 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 the corporation or its shareholders,
(ii) for acts or omissions not in good faith or which 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 Delaware
Corporation Law, or (iv) for any transaction from which a director derived an
improper personal benefit.
Webster's bylaws provide for indemnification of directors, officers,
trustees, employees and agents of Webster, and for those serving in such roles
with other business organizations or entities, in the event that such person was
or is made a party to (or is threatened to be made a party to) any civil,
criminal, administrative, arbitration or investigative action, suit, or
proceeding (other than an action by or in the right of Webster) by reason of the
fact that such person is or was serving in such a capacity for or on behalf of
Webster. The bylaws provide that Webster will indemnify any such person against
expenses (including attorneys' fees), judgments, fines, penalties and amounts
paid in settlement if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of
Webster, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Similarly, the bylaws
provide that Webster will indemnify such persons for expenses reasonably
incurred and settlements reasonably paid in actions, suits, or proceedings
brought by or in the right of Webster, 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 Webster; provided, however, that no indemnification shall be made
against expenses in respect of any claim, issue, or matter as to which such
person is adjudged to be liable to Webster or against amounts paid in settlement
unless and only to the extent that there is a determination made by the
appropriate party set forth in the bylaws that the person to be indemnified is,
in view of all the circumstances of the case, fairly and reasonably entitled to
indemnity for such expenses or amounts paid in settlement. In addition,
Webster's bylaws permit the corporation to purchase and maintain insurance on
behalf of any person who is or was a director, officer, trustee, employee, or
agent of Webster or is acting in such capacity for another business organization
or entity at Webster's request, against any liability asserted against such
person and incurred in such capacity, or arising out of such person's status as
such, whether or not Webster would have the power or obligation to indemnify him
against such liability under the provisions of the indemnification provisions of
Webster's bylaws.
The certificate of incorporation of Maritime provides that the corporation
shall have all of the indemnification and other powers set forth at Section
33-320a of the Connecticut General Statutes (now Sections 33-770 through 33-778
of the Connecticut Corporation Law) and permits indemnification and the advance
of expenses in other circumstances. It also authorizes Maritime to obtain
insurance with respect to such liabilities.
CUMULATIVE VOTING. Webster's restated certificate of incorporation denies
cumulative voting rights in the election of directors. Maritime's bylaws contain
a similar provision.
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<PAGE>
PREEMPTIVE RIGHTS. Webster's restated certificate of incorporation and
Maritime's certificate of incorporation provide that shareholders shall not have
any preemptive rights regarding the offering or sale of such entity's
securities.
NOTICE OF SHAREHOLDER MEETINGS. Webster's bylaws require that notice be
given not less than 20 nor more than 50 days prior to each annual or special
meeting of shareholders. The bylaws of Maritime require that notice of each
shareholder meeting be given not less than 10 nor more than 60 days prior to a
meeting.
QUORUM. Webster's bylaws provide that the holders of one-third of the
capital stock issued and outstanding and entitled to vote at a meeting
constitutes a quorum. The bylaws of Maritime provide that the holders of a
majority of the voting power of the issued and outstanding stock entitled to
vote at a meeting constitutes a quorum, except as otherwise provided by law or
Maritime's certificate of incorporation or bylaws.
GENERAL VOTE. Webster's bylaws provide that any matter brought before a
meeting of shareholders shall be decided by the affirmative vote of a majority
of the votes cast on the matter except as otherwise required by law or Webster's
restated certificate of incorporation or bylaws. The bylaws of Maritime provide
that action on any matter other than the election of directors is approved if
the votes cast favoring the action exceed the votes cast opposing the action
except as otherwise provided by Connecticut law, the certificate of
incorporation or the bylaws. Maritime's bylaws provide that directors are
elected by a plurality of the votes cast by the shares entitled to vote at a
meeting.
RECORD DATE. Webster's bylaws provide that the record date for
determination of shareholders 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 bylaws of Maritime
provide that the record date shall be not less than 10 nor more than 70 days
prior to the date of the meeting or other action.
AUTHORIZED AND OUTSTANDING COMMON STOCK. See "-- Webster's Common Stock" as
to authorized and currently outstanding shares of Webster's common stock. The
certificate of incorporation of Maritime authorizes 1,500,000 shares of
Maritime's common stock, par value $.67 per share, of which ____ shares were
outstanding as of _____ __, 1999. In addition, as of ______ __, 1999, there were
outstanding options to purchase Maritime's common stock granted to directors,
officers and other employees of Maritime for _____ shares of Maritime's common
stock, plus the option for 141,004 shares of Maritime's common stock granted to
Webster in connection with the merger.
AUTHORIZED SERIAL PREFERRED STOCK. See "-- Webster Preferred Stock" as to
the authorized shares of serial preferred stock of Webster. Maritime is not
authorized to issue any preferred stock.
DIVIDEND AND LIQUIDATION RIGHTS. For a description of the provisions of
Webster's restated certification of incorporation with respect to dividends and
liquidation rights, see "-- Webster's Common Stock." The bylaws of Maritime
provide that, except for dividends payable in shares of Maritime's common stock,
Maritime's Board of Directors, subject to any restrictions contained in
Maritime's certificate of incorporation, may declare and pay dividends upon the
shares of its common stock only to the extent allowed under Section 36a-110 of
the Connecticut General Statutes.
APPROVALS FOR ACQUISITIONS OF CONTROL AND OFFERS TO ACQUIRE CONTROL.
Webster's certificate of incorporation prohibits any person (whether an
individual, company or group acting in concert) from acquiring beneficial
ownership of 10% or more of Webster's voting stock, unless the acquisition has
received the prior approval of at least two-thirds of the outstanding shares of
voting
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stock at a duly called meeting of shareholders held for such purpose and of all
required federal regulatory authorities. Furthermore, no person may make an
offer to acquire 10% or more of Webster's voting stock without obtaining prior
approval of the offer by at least two-thirds of Webster's Board of Directors or,
alternatively, before the offer is made, obtaining approval of the acquisition
from the Office of Thrift Supervision. These provisions do not apply to the
purchase of shares by underwriters in connection with a public offering or
employee stock ownership plan or other employee benefit plan of Webster or any
of its subsidiaries, and the provisions remain effective only so long as an
insured institution is a majority-owned subsidiary of Webster. Shares acquired
in excess of these limitations are not entitled to vote or take other
shareholder action or be counted in determining the total number of outstanding
shares in connection with any matter involving shareholder action. These excess
shares are also subject to transfer to a trustee, selected by Webster, for the
sale on the open market or otherwise, with the expenses of the trustee to be
paid out of the proceeds of such sale. The certificate of incorporation and
bylaws of Maritime do not contain a similar provision.
PROCEDURES FOR CERTAIN BUSINESS COMBINATIONS. Webster's restated
certificate of incorporation requires that certain business combinations between
Webster (or any majority-owned subsidiary thereof) and a 10% or more shareholder
or its affiliates or associates (collectively, the "interested shareholder")
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 (persons unaffiliated with the interested
shareholder and serving prior to the interested shareholder becoming such) or
meet certain price and procedure requirements that provide for consideration per
share generally equal to or greater than that paid by the interested shareholder
when it acquired its block of stock. The types of business combinations with an
interested shareholder covered by this provision include: any merger,
consolidation and share exchange; any sale, lease, exchange, mortgage, pledge or
other transfer of assets other than in the usual and regular course of business;
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 shareholder; and any reclassification of securities, recapitalization
of Webster or any merger or consolidation of Webster with any of its
subsidiaries or any other transaction which has the effect of increasing the
proportionate ownership interest of the interested shareholder. Webster's
restated certificate of incorporation excludes employee stock purchase plans and
other employee benefit plans of Webster and any of its subsidiaries from the
definition of "interested shareholder."
The certificate of incorporation of Maritime contains similar provisions as
to business combinations, except that it provides that in addition to approval
by the Board of Directors and the affirmative vote of the holders of at least
80% of the voting power of the then outstanding shares of voting stock, the
affirmative vote of the holders of at least two-thirds of the voting power of
the outstanding shares of voting stock held by independent stockholders also is
required. Also, the certificate of incorporation of Maritime provides that such
voting requirements do not apply if the business combination is approved or
exempted from the business combination requirements by the Board of Directors
prior to the time the "related person" becomes such or if certain fair price and
procedure requirements are satisfied. Maritime's certificate of incorporation
does not contain exceptions from the definition of "related person" similar to
the Webster provisions noted above.
ANTI-GREENMAIL. Webster's restated certificate of incorporation requires
approval by a majority of the outstanding shares of voting stock before Webster
may directly or indirectly purchase or otherwise acquire any voting stock
beneficially owned by a holder of 5% percent or more of Webster's voting stock,
if such holder has owned the shares for less than two years. Any shares
beneficially held by such person are required to be excluded in calculating
majority shareholder approval. This provision would not apply to a pro rata
offer made by Webster to all of its shareholders in compliance with the
Securities Exchange Act of 1934 and the rules and regulations under that statute
or a purchase of voting stock by Webster if the Board of Directors has
determined
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that the purchase price per share does not exceed the fair market value of such
voting stock. The certificate of incorporation and bylaws of Maritime do not
contain a similar provision.
CRITERIA FOR EVALUATING OFFERS. Webster's restated certificate of
incorporation provides that the Board of Directors, when evaluating any
acquisition offers, shall 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 federal statutes and regulations. The certificate
of incorporation and bylaws of Maritime do not contain a similar provision.
AMENDMENT TO CERTIFICATE OF INCORPORATION AND BYLAWS. Amendments to
Webster's restated certificate of incorporation must be approved by at least
two-thirds of Webster's Board of Directors at a duly constituted meeting called
for such purpose and also by shareholders by the 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 the affirmative vote of at
least two-thirds of the shares entitled to vote thereon is required for certain
provisions (the provisions regarding amendment of the certificate of
incorporation, directors, bylaws, approval for acquisitions of control and
offers to acquire control, criteria for evaluating offers, the calling of
special meetings of shareholders, greenmail, and shareholder actions). In
addition, the provisions regarding certain business combinations may be amended
only by the affirmative vote of at least 80% of the shares entitled to vote
thereon. Webster's bylaws may be amended by the affirmative vote of at least
two-thirds of the Board of Directors or by shareholders by at least two-thirds
of the total votes eligible to be voted, at a duly constituted meeting called
for such purpose.
The certificate of incorporation of Maritime provides that the affirmative
vote of a majority and the voting power of the voting stock is required to amend
the certificate of incorporation, unless otherwise required by law or the
certificate of incorporation. The certificate of incorporation further provides
that the affirmative vote of the holders of at least 80% of the voting power of
the outstanding voting stock and a majority of the shares of voting stock held
by independent shareholders is required to approve an amendment of any provision
of the certificate of incorporation that would have the effect of modifying or
permitting circumvention of the business combinations provisions in the
certificate of incorporation, unless such amendment is recommended by a vote of
at least 66 2/3% of the whole Board of Directors and a majority (in any event
not less that 7) of the continuing directors, in which case only the majority
vote described above would be required. The certificate of incorporation of
Maritime provides that the bylaws may be amended by the Board of Directors by
the affirmative vote of both 66 2/3% of the whole Board of Directors and a
majority (in any event not less than 7) of the continuing directors. Maritime's
certificate of incorporation also provides that Maritime's shareholders may
amend the bylaws by the affirmative vote of the holders of at least 66 2/3% of
the voting power of the outstanding voting stock and a majority of the shares of
voting stock held by independent stockholders.
APPLICABLE LAW
The following discussion is a general summary of certain Delaware and
Connecticut statutory provisions and federal statutory and regulatory provisions
that may be deemed to have an "anti-takeover" effect.
DELAWARE TAKEOVER STATUTE. Section 203 of the Delaware Corporation Law
applies to Delaware corporations with a class of voting stock listed on a
national securities exchange, authorized for quotation on the Nasdaq Stock
Market, or held of record by 2,000 or more persons, and restricts transactions
which may be entered into by such a corporation and certain of its shareholders.
Section 203 provides, in essence, that a shareholder acquiring more than 15% of
the outstanding voting stock of a corporation subject to the statute and such
person's affiliates and
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associates (each, an "Interested Stockholder") but less than 85% of such shares
may not engage in certain "Business Combinations" with the corporation for a
period of three years subsequent to the date on which the shareholder became an
Interested Stockholder unless (i) prior to such date the corporation's board of
directors approved either the Business Combination or the transaction in which
the shareholder became an Interested Stockholder or (ii) at or subsequent to
that time the Business Combination is approved by the corporation's board of
directors and authorized at an annual or special meeting of shareholders by the
affirmative vote of at least 66 (% of the outstanding voting stock of the
corporation not owned by the Interested Stockholder. Section 203 defines the
term "Business Combination" to include a wide variety of transactions with or
caused by an Interested Stockholder in which the Interested Stockholder receives
or could receive a benefit on other than a pro rata basis with other
shareholders, including mergers, consolidations, certain asset sales, certain
issuances of additional shares to the Interested Stockholder, transactions with
the corporation which increase the proportionate interest of the Interested
Stockholder or transactions in which the Interested Stockholder receives certain
other benefits.
CONNECTICUT REGULATORY RESTRICTIONS ON ACQUISITIONS OF STOCK. Connecticut
banking statutes prohibit any person from directly or indirectly offering to
acquire or acquiring voting stock of a Connecticut-chartered commercial bank
(such as Maritime), a federal savings bank having its principal office in
Connecticut (such as Webster Bank) or a holding company of any such entity (such
as Webster), that would result in such person becoming, directly or indirectly,
the beneficial owner of more than 10% of any class of voting stock of such
entity unless such person had previously filed an acquisition statement with the
Connecticut Commissioner of Banking and such offer or acquisition has not been
disapproved by the Connecticut Commissioner.
FEDERAL LAW. Federal law provides that, subject to certain exemptions, no
person acting directly or indirectly or through or in concert with one or more
other persons may acquire "control" of an insured institution or holding company
thereof, without giving at least 60 days prior written notice providing
specified information to the appropriate federal banking agency (i.e., the
Office of Thrift Supervision in the case of Webster and Webster Bank, and the
Federal Deposit Insurance Corporation in the case of Maritime). "Control" is
defined for this purpose as the power, directly or indirectly, to direct the
management or policies of an insured institution or to vote 25 percent or more
of any class of voting securities of an insured institution. Control is presumed
to exist where the acquiring party has voting control of at least 10 percent of
any class of the institution's voting securities and other conditions are
present. The Office of Thrift Supervision or the Federal Deposit Insurance
Corporation may prohibit the acquisition of control if such agency finds, among
other things, that (i) the acquisition would result in a monopoly or
substantially lessen competition; (ii) the financial condition of the acquiring
person might jeopardize the financial stability of the institution; or (iii) the
competence, experience or integrity of any acquiring person or any of the
proposed management personnel indicates that it would not be in the interest of
the depositors or the public to permit the acquisition of control by such
person.
ADJOURNMENT OF SHAREHOLDER MEETING
The holders of Maritime's common stock will be asked to approve, if
necessary, the adjournment of the shareholder meeting to solicit further votes
in favor of the merger agreement. If you vote against the merger agreement, your
proxy may not be used by management to vote in favor of an adjournment pursuant
to its discretionary authority.
SHAREHOLDER PROPOSALS
Any proposal which a Webster shareholder wishes to have included in the
proxy materials for Webster's 1999 Annual Meeting pursuant to SEC Rule 14a-8
must have been received by Webster at Webster's principal executive offices at
Webster Plaza, Waterbury, Connecticut 06702 by November 19,
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1998. Any other proposal for consideration by shareholders at Webster's 1999
Annual Meeting must be received by Webster by March 6, 1999.
OTHER MATTERS
We do not expect that any matters other than those described in this Proxy
Statement/Prospectus will be brought before the shareholder meeting. If any
other matters are presented, however, it is the intention of the persons named
in the Maritime proxy to vote proxies in accordance with the determination of a
majority of Maritime's Board of Directors, including, without limitation, a
motion to adjourn or postpone the shareholder 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
Eagle Financial Corp.) at December 31, 1997 and 1996, and for each of the years
in the three-year period ended December 31, 1997, have been incorporated by
reference into this Proxy Statement/Prospectus and in the registration statement
in reliance on the report of KPMG LLP, independent certified public accountants,
which is incorporated by reference into this Proxy Statement/Prospectus and in
the registration statement, and upon the authority of said firm as experts in
accounting and auditing.
The financial statements of Maritime at December 31, 1997 and 1996, and for
each of the years in the three-year period ended December 31, 1997 are attached
at Appendix D to this Proxy Statement/Prospectus in reliance on the report of
Shatswell, MacLeod & Company, P.C., independent certified public accountants,
which is attached at Appendix D to this Proxy Statement/Prospectus, incorporated
into this Proxy Statement/Prospectus and given upon the authority of said firm
as experts in accounting and auditing.
LEGAL MATTERS
The validity of Webster's common stock to be issued in the merger has been
passed upon by Hogan & Hartson L.L.P., Washington, D.C. Additionally, Hogan &
Hartson L.L.P. will be passing upon certain tax matters in connection with the
merger.
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APPENDIX A
* To be updated prior to the mailing of the Proxy Statement/Prospectus
OSTROWSKI & COMPANY, INC.
BANK AND THRIFT ADVISORS
ONE WORLD TRADE CENTER 1520 HIGHLAND AVENUE
SUITE 2135 SUITE 201
NEW YORK, NY 10048-0202 CHESHIRE, CT 06410-1265
212-432-0055 203-699-1445
FAX: 212-432-1254 FAX: 203-699-1447
November 3, 1998
Board of Directors
Maritime & Bank Trust Company
130 Westbrook Road
Essex, CT 06426-1149
Members of the Board:
You have requested our opinion as to the fairness, from a financial point
of view, of the terms of an Agreement and Plan of Merger dated November 3, 1998
(the "Merger Agreement"), by and among Webster Financial Corporation ("Webster")
and its principal subsidiary Webster Bank and Maritime Bank & Trust Company
("Maritime"), to the holders of Maritime common stock, par value $.67 per share
("Maritime Common Stock").
As provided for in the Merger Agreement, Webster will acquire Maritime
through the merger of Maritime with and into Webster Bank (the "Merger"). The
Merger Agreement provides that each outstanding share of Maritime Common Stock
shall be converted automatically into and be exchangeable for the number of
shares of Webster common stock, par value $.01 per share ("Webster Common
Stock"), determined by dividing $26.67 by the Base Period Trading Price (as
defined below), as may be adjusted as provided below, computed to three decimal
places (the "Exchange Ratio"); provided, however, that if the Base Period
Trading Price shall be greater than $24.45, the Exchange Ratio shall be 1.091
and if the Base Period Trading Price shall be less than $17.50, the Exchange
Ratio shall be 1.524. Further, if the Base Period Trading Price shall be less
than $17.50, Maritime Bank may elect to exercise its right to terminate the
Merger Agreement. Upon such election, Webster shall have the option to adjust
the Exchange Ratio to equal that number obtained by dividing $26.67 by the Base
Period Trading Price, rounded to three decimal places (the "Adjusted Exchange
Ratio"). If Webster elects to make such adjustment, no termination shall have
occurred. For the purposes of the Merger Agreement, the "Base Period Trading
Price" shall mean the average of the daily closing prices per share for Webster
Common Stock for the 15 consecutive trading days during which shares of Webster
Common Stock are actually traded (as reported on The Nasdaq Stock Market, Inc.
National Market Tier ("Nasdaq")) ending on the day preceding the receipt of the
last required federal bank regulatory approval or waiver required to effect the
Merger.
In connection with executing the Merger Agreement, Maritime entered into an
Option Agreement with Webster dated November 3, 1998 (the "Option Agreement"),
pursuant to which Maritime has granted Webster an option to acquire up to
141,004 fully paid and nonassessable shares of Maritime Common Stock at a price
of $22.00 per share. Webster may exercise this Option upon the occurrence of
certain events specified in the Option Agreement.
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OSTROWSKI & COMPANY, INC.
Board of Directors
November 3, 1998
Page 2
Ostrowski & Company, Inc., as part of its bank and thrift advisory
business, is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other corporate
purposes. We are familiar with Maritime, having previously provided advisory
services to Maritime and have received and will receive fees from Maritime in
connection with issuing this opinion as to the fairness, from a financial point
of view, of the terms of the proposed transaction as set forth in the Merger
Agreement to the holders of Maritime Common Stock.
In connection with providing this update of our opinion, we have examined
and relied upon, among other things: the Merger Agreement; the Option Agreement;
annual reports to shareholders, proxy statements and related audited financial
statements for Maritime and Webster for each of the three fiscal years ended
December 31, 1995, 1996 and 1997; certain unaudited interim financial reports
for Maritime and Webster for the quarters ended March 31, 1998, June 30, 1998
and September 30, 1998; certain other financial information for Maritime and
Webster, including proforma financial statements and managements' estimates
relating to, among other things, earnings, asset quality, loan delinquencies and
capital. We have conducted discussions with executive management of Maritime and
Webster concerning historical financial performance and condition, market area
economic conditions, future business prospects and financial forecasts. We have
reviewed comparable financial, operating and market data for the banking
industry and selected peer groups; compared the terms of the Merger Agreement
with other bank and thrift merger and acquisition transactions; and have
considered such additional financial and other information deemed relevant.
In preparing our opinion, we have relied upon the accuracy, completeness
and fair presentation of all information supplied or otherwise made available to
us by, or on behalf of, Maritime and Webster. We have not independently verified
such information or undertaken an independent evaluation or appraisal of the
assets or liabilities of Maritime or Webster, nor have we been furnished any
such evaluations or appraisals. With respect to forecasts of expected future
financial performance, we have been advised that they reflect the best currently
available estimates and judgment of executive management. This opinion is
necessarily based upon the information available to us and the market, economic
and other conditions, as they exist and can be evaluated, as of the date of this
letter.
This opinion is directed solely to the fairness, from a financial point of
view, of the terms of the Merger Agreement to the holders of Maritime Common
Stock ("Maritime Shareholders") and does not constitute a recommendation to any
Maritime Shareholder as to how such Maritime Shareholder should vote with
respect to the Merger Agreement.
In reliance upon and subject to the foregoing, it is our opinion that as of
the date hereof, the terms of the Merger Agreement are fair, from a financial
point of view, to Maritime Shareholders.
Very truly yours,
/s/ Ostrowski & Company, Inc.
OSTROWSKI & COMPANY, INC.
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APPENDIX B
SECTIONS 33-855 TO 33-872 OF THE CONNECTICUT GENERAL STATUTES
SECTION 33-855. DEFINITIONS
As used in sections 33-855 to 33-872, inclusive:
(1) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action or the surviving or acquiring corporation by merger or
share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under section 33-856 and who exercises that right when and in
the manner required by sections 33-860 to 33-868, inclusive.
(3) "Fair value", with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all the circumstances.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
SECTION 33-856. RIGHT TO DISSENT
(a) A shareholder is entitled to dissent from, and obtain payment of the
fair value of his shares in the event of, any of the following corporate
actions:
(1) Consummation of a plan of merger to which the corporation is a
party (A) if shareholder approval is required for the merger by section 33-817
or the certificate of incorporation and the shareholder is entitled to vote on
the merger or (B) if the corporation is a subsidiary that is merged with its
parent under section 33-818;
(2) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the shareholder
is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all, or substantially all,
of the property of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all of
the net proceeds of the sale will be distributed to the shareholders within one
year after the date of sale;
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(4) An amendment of the certificate of incorporation that materially
and adversely affects rights in respect of a dissenter's shares because it: (A)
Alters or abolishes a preferential right of the shares; (B) creates, alters or
abolishes a right in respect of redemption, including a provision respecting a
sinking fund for the redemption or repurchase, of the shares; (C) alters or
abolishes a preemptive right of the holder of the shares to acquire shares or
other securities; (D) excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution through
issuance of shares or other securities with similar voting rights; or (E)
reduces the number of shares owned by the shareholder to a fraction of a share
if the fractional share so created is to be acquired for cash under section
33-668; or
(5) Any corporate action taken pursuant to a shareholder vote to the
extent the certificate of incorporation, bylaws or a resolution of the board of
directors provides that voting or nonvoting shareholders are entitled to dissent
and obtain payment for their shares.
(b) Where the right to be paid the value of shares is made available to a
shareholder by this section, such remedy shall be his exclusive remedy as holder
of such shares against the corporate transactions described in this section,
whether or not he proceeds as provided in sections 33-855 to 33-872, inclusive.
SECTION 33-857. DISSENT BY NOMINEES AND BENEFICIAL OWNERS
(a) A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in writing of
the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered in
the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if: (1) He submits to the corporation the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and (2) he does so with
respect to all shares of which he is the beneficial shareholder or over which he
has power to direct the vote.
SECTIONS 33-858, 33-859. RESERVED FOR FUTURE USE
SECTION 33-860. NOTICE OF DISSENTERS' RIGHTS
(a) If proposed corporate action creating dissenters' rights under section
33-856 is submitted to a vote at a shareholders' meeting, the meeting notice
shall state that shareholders are or may be entitled to assert dissenters'
rights under sections 33-855 to 33-872, inclusive, and be accompanied by a copy
of said sections.
(b) If corporate action creating dissenters' rights under section 33-856 is
taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was taken
and send them the dissenters' notice described in section 33-862.
SECTION 33-861. NOTICE OF INTENT TO DEMAND PAYMENT
(a) If proposed corporate action creating dissenters' rights under section
33-856 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights (1) shall deliver to the corporation before
the vote is taken written notice of his intent to demand
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payment for his shares if the proposed action is effectuated and (2) shall not
vote his shares in favor of the proposed action.
(b) A shareholder who does not satisfy the requirements of subsection (a)
of this section is not entitled to payment for his shares under sections 33-855
to 33-872, inclusive.
SECTION 33-862. DISSENTERS' NOTICE
(a) If proposed corporate action creating dissenters' rights under section
33-856 is authorized at a shareholders' meeting, the corporation shall deliver a
written dissenters' notice to all shareholders who satisfied the requirements of
section 33-861.
(b) The dissenters' notice shall be sent no later than ten days after the
corporate action was taken and shall:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the proposed
corporate action and requires that the person asserting dissenters' rights
certify whether or not he acquired beneficial ownership of the shares before
that date;
(4) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than thirty nor more than sixty days after
the date the subsection (a) of this section notice is delivered; and
(5) Be accompanied by a copy of sections 33-855 to 33-872, inclusive.
SECTION 33-863. DUTY TO DEMAND PAYMENT
(a) A shareholder sent a dissenters' notice described in section 33-862
must demand payment, certify whether he acquired beneficial ownership of the
shares before the date required to be set forth in the dissenters' notice
pursuant to subdivision (3) of subsection (b) of said section and deposit his
certificates in accordance with the terms of the notice.
(b) The shareholder who demands payment and deposits his share certificates
under subsection (a) of this section retains all other rights of a shareholder
until these rights are cancelled or modified by the taking of the proposed
corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under sections 33-855 to 33-872,
inclusive.
SECTION 33-864. SHARE RESTRICTIONS
(a) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under section 33-866.
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(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate action.
SECTION 33-865. PAYMENT
(a) Except as provided in section 33-867, as soon as the proposed corporate
action is taken, or upon receipt of a payment demand, the corporation shall pay
each dissenter who complied with section 33-863 the amount the corporation
estimates to be the fair value of his shares, plus accrued interest.
(b) The payment shall be accompanied by: (1) The corporation's balance
sheet as of the end of a fiscal year ending not more than sixteen months before
the date of payment, an income statement for that year, a statement of changes
in shareholders' equity for that year and the latest available interim financial
statements, if any; (2) a statement of the corporation's estimate of the fair
value of the shares; (3) an explanation of how the interest was calculated; (4)
a statement of the dissenter's right to demand payment under section 33-868; and
(5) a copy of sections 33-855 to 33-872, inclusive.
SECTION 33-866. FAILURE TO TAKE ACTION
(a) If the corporation does not take the proposed action within sixty days
after the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under section 33-862 and repeat the payment demand procedure.
SECTION 33-867. AFTER-ACQUIRED SHARES
(a) A corporation may elect to withhold payment required by section 33-865
from a dissenter unless he was the beneficial owner of the shares before the
date set forth in the dissenters' notice as the date of the first announcement
to news media or to shareholders of the terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under
subsection (a) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of his demand. The corporation shall send with its offer a statement of its
estimate of the fair value of the shares, an explanation of how the interest was
calculated and a statement of the dissenter's right to demand payment under
section 33-868.
SECTION 33-868. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER
(a) A dissenter may notify the corporation in writing of his own estimate
of the fair value of his shares and amount of interest due, and demand payment
of his estimate, less any payment under section 33-865, or reject the
corporation's offer under section 33-867 and demand payment of the fair value of
his shares and interest due, if:
(1) The dissenter believes that the amount paid under section 33-865
or offered under section 33-867 is less than the fair value of his shares or
that the interest due is incorrectly calculated;
B-4
<PAGE>
(2) The corporation fails to make payment under section 33-865 within
sixty days after the date set for demanding payment; or
(3) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty days after the date set for
demanding payment.
(b) A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing under subsection (a)
of this section within thirty days after the corporation made or offered payment
for his shares.
SECTIONS 33-869, 33-870. RESERVED FOR FUTURE USE
SECTION 33-871. COURT ACTION
(a) If a demand for payment under section 33-868 remains unsettled, the
corporation shall commence a proceeding within sixty days after receiving the
payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding within
the sixty-day period, it shall pay each dissenter whose demand remains unsettled
the amount demanded.
(b) The corporation shall commence the proceeding in the superior court for
the judicial district where a corporation's principal office or, if none in this
state, its registered office is located. If the corporation is a foreign
corporation without a registered office in this state, it shall commence the
proceeding in the superior court for the judicial district where the registered
office of the domestic corporation merged with or whose shares were acquired by
the foreign corporation was located.
(c) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) of this section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers described
in the order appointing them, or in any amendment to it. The dissenters are
entitled to the same discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to judgment
(1) for the amount, if any, by which the court finds the fair value of his
shares, plus interest, exceeds the amount paid by the corporation, or (2) for
the fair value, plus accrued interest, of his after-acquired shares for which
the corporation elected to withhold payment under section 33-867.
SECTION 33-872. COURT COSTS AND COUNSEL FEES
(a) The court in an appraisal proceeding commenced under section 33-871
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously or not
in good faith in demanding payment under section 33-868.
B-5
<PAGE>
(b) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable: (1) Against
the corporation and in favor of any or all dissenters if the court finds the
corporation did not substantially comply with the requirements of sections
33-860 to 33-868, inclusive; or (2) against either the corporation or a
dissenter, in favor of any other party, if the court finds that the party
against whom the fees and expenses are assessed acted arbitrarily, vexatiously
or not in good faith with respect to the rights provided by sections 33-855 to
33-872, inclusive.
(c) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
B-6
<PAGE>
APPENDIX C
MARITIME BANK AND TRUST COMPANY
COMPARATIVE BALANCE SHEET
<TABLE>
<CAPTION>
September 30, September 30,
1998 1997
(Unaudited) (Unaudited)
---------------- ----------------
<S> <C> <C>
Assets
Cash on hand and due from banks.......................................... $ 3,570,768 $ 4,891,267
Federal funds sold....................................................... 4,200,000 --
Investment securities.................................................... 24,532,359 21,413,229
Loans:
Real estate - residential............................................... 27,500,848 20,985,297
Real estate - commercial................................................ 17,489,557 10,546,058
Consumer................................................................ 11,660,433 9,775,069
Commercial.............................................................. 12,750,105 10,850,442
---------------- ----------------
Total loans........................................................... 69,400,943 52,156,866
Reserve for loan losses.................................................. (1,001,759) (716,505)
Deferred income, net..................................................... (14,845) (5,043)
---------------- ----------------
Loans, net............................................................ 68,384,339 51,435,318
Bank premises and fixed assets............................................. 1,978,515 1,854,833
Other real estate owned.................................................... -- 110,000
Other assets............................................................... 997,154 829,215
---------------- ----------------
Total assets.......................................................... $ 103,663,135 $ 80,533,862
================ ================
Liabilities and Shareholders' Equity
Total deposits........................................................... $ 91,173,751 $ 71,892,812
Borrowed funds........................................................... 5,144,005 2,000,000
Other liabilities........................................................ 285,207 317,681
---------------- ----------------
Total liabilities..................................................... 96,602,963 74,210,493
---------------- ----------------
Shareholders' equity:
Common stock............................................................. 470,016 470,020
Surplus.................................................................. 4,207,128 4,201,864
Undivided profits........................................................ 2,238,023 1,602,206
Net unrealized gains on available-for-sale securities.................... 145,005 49,279
---------------- ----------------
Total shareholders' equity............................................ 7,060,172 6,323,369
---------------- ----------------
Total liabilities and shareholders' equity............................ $ 103,663,135 $ 80,533,862
================ ================
</TABLE>
C-1
<PAGE>
MARITIME BANK AND TRUST COMPANY
COMPARATIVE INCOME STATEMENT
<TABLE>
<CAPTION>
Third Quarter Ended Nine Months Ended
September 30, September 30, September 30, September 30,
1998 1997 1998 1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest Income:
Loans................................................ $ 1,497,563 $ 1,216,665 $ 4,243,811 $ 3,427,944
Investments.......................................... 466,195 365,593 1,236,462 1,015,032
----------- ----------- ----------- -----------
Total interest income............................. 1,963,758 1,582,258 5,480,273 4,442,976
Interest expense....................................... 819,564 594,911 2,225,922 1,690,840
----------- ----------- ----------- -----------
Net interest income............................... 1,144,194 987,347 3,254,351 2,752,136
Provision for loan losses.............................. 90,000 60,000 255,000 180,000
----------- ----------- ----------- -----------
Net interest income after provision for loan losses 1,054,194 927,347 2,999,351 2,572,136
Other income........................................... 104,686 78,496 330,937 223,131
Securities gains....................................... 548 -- 11,985 233
Other expenses......................................... 782,287 638,479 2,204,032 1,869,241
----------- ----------- ----------- -----------
Income before taxes............................... 377,141 367,364 1,138,241 926,259
Applicable income and other taxes...................... 158,000 150,700 458,000 376,800
----------- ----------- ----------- -----------
Net income........................................ $ 219,141 $ 216,664 $ 680,241 $ 549,459
=========== =========== =========== ===========
</TABLE>
C-2
<PAGE>
MARITIME BANK AND TRUST COMPANY
SUMMARY OF FINANCIAL RESULTS
<TABLE>
<CAPTION>
Third Quarter Ended Nine Months Ended
September 30, September 30, September 30, September 30,
1998 1997 1998 1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Per Share Information:
Net income per share (fully diluted)................. $ 0.28 $ 0.29 $ 0.88 $ 0.74
====== ======= ====== ======
Book value per share................................. $10.01 $ 8.97 $10.01 $ 8.97
====== ======= ====== ======
Financial Ratios:
Capital/assets....................................... 6.81% 7.85% 6.81% 7.85%
Risk based capital ratio............................. 10.97% 12.99% 10.97% 12.99%
Loan loss reserve/loans.............................. 1.44% 1.37% 1.44% 1.37%
Non-performing assets/total assets................... 0.15% 0.59% 0.15% 0.59%
Net interest margin (annualized)..................... 4.71% 5.25% 4.88% 5.15%
Return on assets (annualized)........................ 0.85% 1.08% 0.96% 0.96%
Return on equity (annualized)........................ 12.57% 13.85% 13.31% 12.05%
</TABLE>
C-3
<PAGE>
APPENDIX D
INDEX TO FINANCIAL STATEMENTS
Report of Independent Accountants........................................ D-2
Balance Sheets........................................................... D-3
Statements of Income..................................................... D-4
Statements of Changes in Stockholders' Equity............................ D-5
Statements of Cash Flows................................................. D-6
Notes to Financial Statements............................................ D-7
The accompanying notes are an integral part of these financial statements.
D-1
<PAGE>
To the Board of Directors
Maritime Bank & Trust Company
Essex, Connecticut
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheets of Maritime Bank & Trust Company
as of December 31, 1997 and 1996 and the related statements of income, changes
in stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1997. These financial statements are the
responsibility of the Bank's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Maritime Bank & Trust Company
as of December 31, 1997 and 1996, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 1997, in
conformity with generally accepted accounting principles.
/s/ SHATSWELL, MacLEOD & COMPANY, P.C.
West Peabody, Massachusetts
January 30, 1998, except for Note 16 as
to which the date is August 28, 1998
and Note 18 as to which the date is
November 3, 1998
D-2
<PAGE>
MARITIME BANK & TRUST COMPANY
BALANCE SHEETS
December 31, 1997 and 1996
<TABLE>
<CAPTION>
ASSETS 1997 1996
- ------ --------------- ---------------
<S> <C> <C>
Cash and due from banks $ 3,119,636 $ 3,770,237
Federal funds sold 1,000,000 2,000,000
----------- -----------
Cash and cash equivalents 4,119,636 5,770,237
Investments in available-for-sale securities (at fair value) 19,949,988 17,431,892
Federal Home Loan Bank stock, at cost 375,300 189,300
Loans, net 56,077,271 44,432,498
Premises and equipment 1,823,502 1,427,673
Accrued interest receivable 513,310 436,980
Other assets 205,163 222,694
----------- -----------
Total assets $83,064,170 $69,911,274
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits $13,982,250 $12,543,821
Savings and NOW deposits 36,764,558 32,040,628
Time deposits 21,564,322 19,262,451
----------- -----------
Total deposits 72,311,130 63,846,900
Advances from Federal Home Loan Bank of Boston 4,000,000
Other liabilities 237,087 200,427
----------- -----------
Total liabilities 76,548,217 64,047,327
----------- -----------
Stockholders' equity:
Common stock, $.666667 par value; authorized 1,500,000 shares; issued and
outstanding 705,030 shares in 1997 and 700,530
shares in 1996 470,020 467,020
Paid-in capital 4,207,266 4,174,864
Retained earnings 1,788,090 1,212,253
Net unrealized holding gain on available-for-sale securities 50,577 9,810
----------- -----------
Total stockholders' equity 6,515,953 5,863,947
----------- -----------
Total liabilities and stockholders' equity $83,064,170 $69,911,274
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
D-3
<PAGE>
MARITIME BANK & TRUST COMPANY
STATEMENTS OF INCOME
Years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
-------------- -------------- --------------
<S> <C> <C> <C>
Interest and dividend income:
Interest and fees on loans $ 4,687,054 $ 3,942,748 $ 3,524,012
Interest and dividends on securities:
Taxable 1,249,978 736,186 404,127
Dividends on equity securities 39,262 70,277 81,594
Other interest 78,383 67,722 88,723
----------- ----------- -----------
Total interest and dividend income 6,054,677 4,816,933 4,098,456
----------- ----------- -----------
Interest expense:
Interest on deposits 2,197,967 1,758,626 1,431,329
Interest on advances from Federal Home Loan Bank 80,156
Interest on other borrowed funds 5,090 152 7,158
----------- ----------- -----------
Total interest expense 2,283,213 1,758,778 1,438,487
----------- ----------- -----------
Net interest and dividend income 3,771,464 3,058,155 2,659,969
Provision for loan losses 240,000 160,000 125,000
----------- ----------- -----------
Net interest and dividend income after provision
for loan losses 3,531,464 2,898,155 2,534,969
----------- ----------- -----------
Other income:
Service charges on deposit accounts 103,135 89,921 79,102
Other income 228,920 177,695 119,986
----------- ----------- -----------
Total other income 332,055 267,616 199,088
----------- ----------- -----------
Other expense:
Salaries and employee benefits 1,336,379 1,072,887 883,560
Occupancy expense 228,632 190,375 142,825
Equipment expense 140,163 107,654 98,818
Securities (gains) losses, net (1,971) 36,288 34,303
Stationary and supplies expense 77,370 80,800 58,013
Directors fees expense 68,300 45,000 35,200
Advertising and marketing expense 73,535 77,539 82,012
Data processing expense 142,137 75,760 35,022
Other expense 459,828 366,886 350,834
----------- ----------- -----------
Total other expense 2,524,373 2,053,189 1,720,587
----------- ----------- -----------
Income before income taxes 1,339,146 1,112,582 1,013,470
Income taxes 538,000 453,500 431,600
----------- ----------- -----------
Net income $ 801,146 $ 659,082 $ 581,870
=========== =========== ===========
Earnings per common share $ 1.14 $ .95 $ .84
=========== =========== ===========
Earnings per common share, assuming dilution $ 1.07 $ .91 $ .81
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
D-4
<PAGE>
MARITIME BANK & TRUST COMPANY
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
Net Unrealized
Holding Gain
(Loss) On
Common Stock Paid-in Retained Available- For-
Shares Amount Capital Earnings Sale Securities Total
------ ------ ------- -------- --------------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 as
previously reported 462,820 $462,820 $4,137,064 $ 235,108 $(286,731) $4,548,261
Three-for-two stock split as
of August 28, 1998 and
equivalent change in par value 231,410
------- -------- ---------- ---------- ---------- ----------
Balance, December 31, 1994
as adjusted 694,230 462,820 4,137,064 235,108 (286,731) 4,548,261
Net income 581,870 581,870
Net change in unrealized holding
loss on available-for-sale
securities 257,862 257,862
Dividends declared ($.15
per share) (106,449) (106,449)
------- -------- ---------- ---------- ---------- ----------
Balance, December 31, 1995 694,230 462,820 4,137,064 710,529 (28,869) 5,281,544
Net income 659,082 659,082
Net change in unrealized holding
loss on available-for-sale
securities 38,679 38,679
Dividends declared ($.23 per share) (157,358) (157,358)
Exercised stock options 6,300 4,200 37,800 42,000
------- -------- ---------- ---------- ---------- ----------
Balance, December 31, 1996 700,530 467,020 4,174,864 1,212,253 9,810 5,863,947
Net income 801,146 801,146
Net change in unrealized holding
gain on available-for-sale
securities 40,767 40,767
Dividends declared ($.32 per share) (225,309) (225,309)
Exercised stock options 4,500 3,000 32,402 35,402
------- -------- ---------- ---------- ---------- ----------
Balance, December 31, 1997 705,030 $470,020 $4,207,266 $1,788,090 $ 50,577 $6,515,953
======= ======== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
D-5
<PAGE>
MARITIME BANK & TRUST COMPANY
STATEMENTS OF CASH FLOWS
Years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 801,146 $ 659,082 $ 581,870
Adjustments to reconcile net income to net cash provided
by operating activities:
Loss on disposal of fixed assets 3,402
Provision for loan losses 240,000 160,000 125,000
Depreciation and amortization 147,372 112,266 112,972
Deferred tax expense 1,161 6,039 31,663
Increase (decrease) in taxes payable 3,677 (26,460) (136,121)
Increase in interest receivable (76,330) (88,534) (111,810)
Increase in interest payable 12,594 7,352 11,773
Increase in accrued expenses 23,219 18,257 46,174
Increase in prepaid expenses (210) (16,185) (4,336)
Increase (decrease) in other liabilities 7,603 (75,807) 71,699
(Increase) decrease in other assets (16,653) 28,828 (35,283)
(Accretion) amortization of securities, net (10,809) (3,484) 9,183
Amortization of organization costs 4,013 9,632
Securities (gains) losses, net (1,971) 36,288 34,303
Change in unearned income (15,924) (40,218) 12,861
------------ ------------ ------------
Net cash provided by operating activities 1,114,875 781,437 762,982
------------ ------------ ------------
Cash flows from investing activities:
Purchases of available-for-sale securities (12,120,306) (11,295,979) (6,684,634)
Purchases of Federal Home Loan Bank stock (186,000) (18,500) (34,800)
Proceeds from sales of available-for-sale securities 2,441,922 2,971,684 422,565
Proceeds from maturities of available-for-sale securities 7,242,037 3,332,909 1,160,112
Net increase in loans (11,877,674) (7,093,732) (5,281,259)
Recoveries of loans previously charged off 8,825 6,614
Capital expenditures (545,503) (200,034) (142,468)
Proceeds from sales of fixed assets 2,302
------------ ------------ ------------
Net cash used in investing activities (15,034,397) (12,303,652) (10,553,870)
------------ ------------ ------------
Cash flows from financing activities:
Net increase in demand deposits, NOW and savings accounts 6,162,359 10,324,990 8,759,586
Net increase in time deposits 2,301,871 2,682,315 3,600,335
Dividends paid (225,309) (157,358) (106,449)
Proceeds from stock issuance 30,000 42,000
Advances from Federal Home Loan Bank 18,000,000
Repayments of advances from Federal Home Loan Bank (14,000,000)
------------ ------------ ------------
Net cash provided by financing activities 12,268,921 12,891,947 12,253,472
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents (1,650,601) 1,369,732 2,462,584
Cash and cash equivalents at beginning of year 5,770,237 4,400,505 1,937,921
------------ ------------ ------------
Cash and cash equivalents at end of year $ 4,119,636 $ 5,770,237 $ 4,400,505
============ ============ ============
Supplemental disclosures:
Interest paid $ 2,270,619 $ 1,751,426 $ 1,426,714
Income taxes paid 533,162 473,921 534,808
</TABLE>
The accompanying notes are an integral part of these financial statements.
D-6
<PAGE>
MARITIME BANK & TRUST COMPANY
NOTES TO FINANCIAL STATEMENTS
Years ended December 31, 1997, 1996 and 1995
NOTE 1 - NATURE OF OPERATIONS
Maritime Bank & Trust Company (Bank) is a state chartered bank, which was
incorporated in 1989 and is headquartered in Essex, Connecticut. The Bank
operates its business from three banking offices located in Connecticut. The
Bank is engaged principally in the business of attracting deposits from the
general public and investing those deposits in residential and real estate
loans, and in consumer and small business loans.
NOTE 2 - ACCOUNTING POLICIES
The accounting and reporting policies of the Bank conform to generally accepted
accounting principles and predominant practices within the banking industry. The
financial statements of the Bank were prepared using the accrual basis of
accounting. The significant accounting policies of the Bank are summarized below
to assist the reader in better understanding the financial statements and other
data contained herein.
PERVASIVENESS OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from the
estimates.
CASH AND CASH EQUIVALENTS:
For purposes of reporting cash flows, cash and cash equivalents include
cash on hand, cash items, due from banks and federal funds sold.
SECURITIES:
Investments in debt securities are adjusted for amortization of premiums
and accretion of discounts. Gains or losses on sales of investment
securities are computed on a specific identification basis.
The Bank classifies debt and equity securities into one of three
categories: held-to-maturity, available-for-sale, or trading. This security
classification may be modified after acquisition only under certain
specified conditions. In general, securities may be classified as
held-to-maturity only if the Bank has the positive intent and ability to
hold them to maturity. Trading securities are defined as those bought and
held principally for the purpose of selling them in the near term. All
other securities must be classified as available-for-sale.
-- Held-to-maturity securities are measured at amortized cost in the
balance sheet. Unrealized holding gains and losses are not
included in earnings or in a separate component of capital. They
are merely disclosed in the notes to the financial statements.
-- Available-for-sale securities are carried at fair value on the
balance sheet. Unrealized holding gains and losses are not
included in earnings, but are reported as a net amount (less
expected tax) in a separate component of capital until realized.
D-7
<PAGE>
-- Trading securities are carried at fair value on the balance
sheet. Unrealized holding gains and losses for trading securities
are included in earnings.
LOANS:
Loans receivable that management has the intent and ability to hold for the
foreseeable future or until maturity or payoff are reported at their
outstanding principal balances reduced by amounts due to borrowers on
unadvanced loans, any charge-offs, the allowance for loan losses and any
deferred fees or costs on originated loans, or unamortized premiums or
discounts on purchased loans.
Interest on loans is recognized on a simple interest basis.
Loan origination and commitment fees and certain direct origination costs
are deferred, and the net amount amortized as an adjustment of the related
loan's yield. The Bank is amortizing these amounts over the contractual
life of the related loans.
Cash receipts of interest income on impaired loans is credited to principal
to the extent necessary to eliminate doubt as to the collectibility of the
net carrying amount of the loan. Some or all of the cash receipts of
interest income on impaired loans is recognized as interest income if the
remaining net carrying amount of the loan is deemed to be fully
collectible. When recognition of interest income on an impaired loan on a
cash basis is appropriate, the amount of income that is recognized is
limited to that which would have been accrued on the net carrying amount of
the loan at the contractual interest rate. Any cash interest payments
received in excess of the limit and not applied to reduce the net carrying
amount of the loan are recorded as recoveries of charge-offs until the
charge-offs are fully recovered.
ALLOWANCE FOR LOAN LOSSES:
The allowance for loan losses is increased by provisions charged to current
operations and is decreased by loan losses, net of recoveries. The
provision for loan losses is based on management's evaluation of current
and anticipated economic conditions, changes in the character and size of
the loan portfolio, and other indicators. The balance in the allowance for
loan losses is considered adequate by management to absorb any reasonably
foreseeable loan losses.
As of January 1, 1995, the Bank adopted Statement of Financial Accounting
Standards No. 114, "Accounting by Creditors for Impairment of a Loan," as
amended by SFAS No. 118. According to SFAS No. 114, a loan is impaired
when, based on current information and events, it is probable that a
creditor will be unable to collect all amounts due according to the
contractual terms of the loan agreement. The Statement requires that
impaired loans be measured on a loan by loan basis by either the present
value of expected future cash flows discounted at the loan's effective
interest rate, the loan's observable market price, or the fair value of the
collateral if the loan is collateral dependent.
The Statement is applicable to all loans, except large groups of smaller
balance homogeneous loans that are collectively evaluated for impairment,
loans that are measured at fair value or at the lower of cost or fair
value, leases, and convertible or nonconvertible debentures and bonds and
other debt securities. The Bank considers its residential real estate loans
and consumer loans that are not individually significant to be large groups
of smaller balance homogeneous loans.
Factors considered by management in determining impairment include payment
status, net worth and collateral value. An insignificant payment delay or
an insignificant shortfall in payment does not in itself result in the
review of a loan for impairment. The Bank applies SFAS No. 114 on a
loan-by-loan basis. The Bank does not apply SFAS No. 114 to aggregations of
loans that have risk characteristics in common with other impaired loans.
Interest on a loan is not generally accrued when the loan becomes ninety or
D-8
<PAGE>
more days overdue. The Bank may place a loan on nonaccrual status but not
classify it as impaired, if (i) it is probable that the Bank will collect
all amounts due in accordance with the contractual terms of the loan or
(ii) the loan is an individually insignificant residential mortgage loan or
consumer loan. Impaired loans are charged-off when management believes that
the collectibility of the loan's principal is remote. Substantially all of
the Bank's loans that have been identified as impaired have been measured
by the fair value of existing collateral.
The financial statement impact of adopting the provisions of this Statement
was not material.
PREMISES AND EQUIPMENT:
Premises and equipment are stated at cost, less accumulated depreciation
and amortization. Cost and related allowances for depreciation and
amortization of premises and equipment retired or otherwise disposed of are
removed from the respective accounts with any gain or loss included in
income or expense. Depreciation and amortization are calculated principally
on the straight-line method over the estimated useful lives of the assets.
OTHER REAL ESTATE OWNED AND IN-SUBSTANCE FORECLOSURES:
Other real estate owned includes properties acquired through foreclosure
and properties classified as in-substance foreclosures in accordance with
Financial Accounting Standards Board Statement No. 15, "Accounting by
Debtors and Creditors for Troubled Debt Restructuring." These properties
are carried at the lower of cost or estimated fair value less estimated
costs to sell. Any writedown from cost to estimated fair value required at
the time of foreclosure or classification as in-substance foreclosure is
charged to the allowance for possible loan losses. Expenses incurred in
connection with maintaining these assets, subsequent writedowns and gains
or losses recognized upon sale are included in other expense.
In accordance with Statement of Financial Accounting Standards No. 114
"Accounting by Creditors for Impairment of a Loan," the Bank classifies
loans as in-substance repossessed or foreclosed if the Bank receives
physical possession of the debtor's assets regardless of whether formal
foreclosure proceedings take place.
INCOME TAXES:
The Bank recognizes income taxes under the asset and liability method.
Under this method, deferred tax assets and liabilities are established for
the temporary differences between the accounting basis and the tax basis of
the Bank's assets and liabilities at enacted tax rates expected to be in
effect when the amounts related to such temporary differences are realized
or settled.
EMPLOYEE BENEFITS:
The Bank has a 401(k) plan covering substantially all employees. Under the
plan, the Bank contributes two percent of all eligible participants' salary
and fifty percent of the participant's first six percent that they
contribute.
FAIR VALUES OF FINANCIAL INSTRUMENTS:
Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments," requires that the Bank disclose
estimated fair value for its financial instruments. Fair value methods and
assumptions used by the Bank in estimating its fair value disclosures are
as follows:
D-9
<PAGE>
Cash and cash equivalents: The carrying amounts reported in the balance
sheet for cash and federal funds sold approximate those assets' fair
values.
Securities (including mortgage-backed securities): Fair values for
securities are based on quoted market prices, where available. If quoted
market prices are not available, fair values are based on quoted market
prices of comparable instruments.
Loans receivable: For variable-rate loans that reprice frequently and with
no significant change in credit risk, fair values are based on carrying
values. The fair values for other loans are estimated using discounted cash
flow analyses, using interest rates currently being offered for loans with
similar terms to borrowers of similar credit quality. The carrying amount
of accrued interest approximates its fair value.
Deposit liabilities: The fair values disclosed for demand deposits (e.g.,
interest and non-interest checking, passbook savings and money market
accounts) are, by definition, equal to the amount payable on demand at the
reporting date (i.e., their carrying amounts). Fair values for fixed-rate
certificates of deposit are estimated using a discounted cash flow
calculation that applies interest rates currently being offered on
certificates to a schedule of aggregated expected monthly maturities on
time deposits.
Short-term borrowings: The carrying amounts of short-term advances from the
Federal Home Loan Bank of Boston approximate their fair values.
Off-balance sheet instruments: The fair value of commitments to originate
loans is estimated using the fees currently charged to enter similar
agreements, taking into account the remaining terms of the agreements and
the present creditworthiness of the counterparties. For fixed-rate loan
commitments and the unadvanced portion of loans, fair value also considers
the difference between current levels of interest rates and the committed
rates. The fair value of letters of credit is based on fees currently
charged for similar agreements or on the estimated cost to terminate them
or otherwise settle the obligation with the counterparties at the reporting
date.
STOCK BASED COMPENSATION:
Prior to 1996, the Bank recognized stock-based compensation using the
intrinsic value approach set forth in APB Opinion No. 25. As of January 1,
1996, the Bank had the option, under SFAS No. 123, of changing its
accounting method for stock-based compensation from the APB No. 25 method
to the fair value method introduced in SFAS No. 123. The Bank elected to
continue using the APB No. 25 method. Entities electing to continue to
follow the provisions of APB No. 25 must make pro forma disclosure of net
income and earnings per share, as if the fair value method of accounting
defined in SFAS No. 123 had been applied. The Bank has made the pro forma
disclosures required by SFAS No. 123.
EARNINGS PER SHARE:
Statement of Financial Accounting Standards No. 128 (SFAS No. 128),
"Earnings per Share" is effective for periods ending after December 15,
1997. SFAS No. 128 simplifies the standards of computing earnings per share
(EPS) previously found in APB Opinion No. 15. It replaces the presentation
of primary EPS with a presentation of basic EPS. It also requires dual
presentation of basic and diluted EPS on the face of the income statement
for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS
computation.
Basic EPS excludes dilution and is computed by dividing income available to
common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution
that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock or resulted in the issuance
of common stock that then shared in the earnings of the entity. Diluted EPS
is computed similarly to fully diluted EPS pursuant to APB Opinion No. 15.
D-10
<PAGE>
The Bank has computed and presented EPS for the year ended December 31,
1997 in accordance with SFAS No. 128. EPS as so computed does not differ
materially from EPS that would have resulted if APB Opinion No. 15 had been
applied. In accordance with SFAS No. 128 all prior-period EPS data
presented has been restated. EPS so restated does not differ materially
from EPS previously presented.
NOTE 3 - INVESTMENTS IN AVAILABLE-FOR-SALE SECURITIES
Investments in available-for-sale securities have been classified in the balance
sheets according to management's intent. The carrying amount of securities and
their approximate fair values are as follows as of December 31:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized
Cost Holding Holding Fair
Basis Gains Losses Value
--------- ---------- ---------- -----
<S> <C> <C> <C> <C>
December 31, 1997:
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies $11,988,283 $ 59,215 $ 2,448 $12,045,050
Debt securities issued by foreign governments 100,000 100,000
Mortgage-backed securities 7,776,083 48,885 20,030 7,804,938
----------- -------- ------- -----------
$19,864,366 $ 108,100 $22,478 $19,949,988
=========== ======== ======= ===========
December 31, 1996:
Marketable equity securities $ 1,200,000 $ $ $ 1,200,000
Debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies 9,473,535 30,203 15,938 9,487,800
Debt securities issued by foreign governments 100,000 100,000
Mortgage-backed securities 6,641,704 34,652 32,264 6,644,092
----------- --------- ------- -----------
$17,415,239 $ 64,855 $48,202 $17,431,892
=========== ========= ======= ===========
</TABLE>
The scheduled maturities of investments in available-for-sale securities were as
follows as of December 31, 1997:
<TABLE>
<CAPTION>
Amortized
Cost Fair
Basis Value
--------- -----
<S> <C> <C>
Debt securities other than mortgage-backed securities:
Due after one year through five years $10,488,893 $10,547,700
Due after five years through ten years 1,599,390 1,597,350
Mortgage-backed securities 7,776,083 7,804,938
----------- -----------
$19,864,366 $19,949,988
=========== ===========
</TABLE>
During 1997, proceeds from sales of investments in available-for-sale securities
amounted to $2,441,922. Gross realized losses on those sales amounted to $1,800.
Gross realized gains on those sales amounted to $3,771. During 1996, proceeds
from sales of investments in available-for-sale securities amounted to
$2,971,684. Gross realized losses on those sales amounted to $42,701. Gross
realized gains on those sales amounted to $6,413. During 1995, proceeds from
sales of securities amounted to $422,565. Gross realized losses on those sales
amounted to $34,303.
There were no securities of issuers whose aggregate carrying amount exceeded 10%
of stockholders' equity as of December 31, 1997.
A total par value of $5,340,957 and $3,169,812 of debt securities was pledged to
secure lines of credit with financial institutions and public funds on deposit
as of December 31, 1997 and 1996, respectively.
D-11
<PAGE>
NOTE 4 - LOANS
Loans consisted of the following as of December 31:
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Commercial, financial and agricultural $ 8,243,568 $ 7,806,073
Real estate - construction and land development 1,689,807 691,633
Real estate - residential 28,877,041 23,154,761
Real estate - commercial 14,262,896 9,912,403
Consumer 3,759,310 3,444,780
Other 12,026 188,607
------------ ------------
56,844,648 45,198,257
Unearned income (9,599) (25,523)
Allowance for loan losses (757,778) (740,236)
------------ ------------
Net loans $ 56,077,271 $ 44,432,498
============ ============
</TABLE>
Changes in the allowance for loan losses were as follows for the years ended
December 31:
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of period $ 740,236 $ 609,507 $ 550,000
Loans charged-off (231,283) (29,271) (72,107)
Recoveries 8,825 6,614
Provision for loan losses 240,000 160,000 125,000
--------- --------- ---------
Balance at end of period $ 757,778 $ 740,236 $ 609,507
========= ========= =========
</TABLE>
Certain directors and executive officers of the Bank and companies in which they
have significant ownership interest were customers of the Bank during 1997.
Total loans to such persons and their companies amounted to $1,837,530 as of
December 31, 1997. During 1997, payments of $253,403 were made and advances
totaled $796,000.
Information about loans that meet the definition of an impaired loan in
Statement of Financial Accounting Standards No. 114 is as follows as of December
31:
<TABLE>
<CAPTION>
1997 1996
---- ----
Recorded Related Recorded Related
Investment Allowance Investment Allowance
In Impaired For Credit In Impaired For Credit
Loans Losses Loans Losses
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Loans for which there is a related allowance for credit losses $ 64,980 $37,000 $10,614 $6,000
Loans for which there is no related allowance for credit losses
--------- ------- ------- ------
Totals $ 64,980 $37,000 $10,614 $6,000
========= ======= ======= ======
Average recorded investment in impaired loans during the
year ended December 31 $ 209,296 $45,540
========= =======
Related amount of interest income recognized during the
time, in the year ended December 31, that the loans were
impaired
Total recognized $ 0 $ 1,647
========= =======
Amount recognized using a cash-basis method
of accounting $ 0 $ 1,647
========= =======
</TABLE>
D-12
<PAGE>
NOTE 5 - PREMISES AND EQUIPMENT
The following is a summary of premises and equipment as of December 31:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Land $ 303,000 $ 204,000
Buildings 1,501,301 1,098,634
Leasehold improvements 79,877 72,177
Furniture and equipment 572,142 577,370
----------- -----------
2,456,320 1,952,181
Accumulated depreciation and amortization (632,818) (524,508)
----------- -----------
$ 1,823,502 $ 1,427,673
=========== ===========
</TABLE>
NOTE 6 - DEPOSITS
The aggregate amount of time deposit accounts (including CDs), each with a
minimum denomination of $100,000, was approximately $3,309,457 and $2,042,993 as
of December 31, 1997 and 1996, respectively.
For time deposits as of December 31, 1997, the aggregate amount of maturities
for years ended December 31, are:
1998 $17,268,387
1999 and 2000 3,715,420
Thereafter 580,515
-----------
$21,564,322
===========
NOTE 7 - ADVANCES FROM FEDERAL HOME LOAN BANK OF BOSTON
Advances consist of funds borrowed from the Federal Home Loan Bank of Boston
(FHLB). The components of these borrowings are as follows as of December 31,
1997:
Amount Maturity Rate
------ -------- ----
$2,000,000 January 2, 1998 5.78%
2,000,000 January 28, 1998 5.94%
----------
$4,000,000
==========
Advances are secured by the Bank's stock in that institution, its residential
real estate mortgage portfolio and the remaining U.S. government and agencies
obligations not otherwise pledged.
NOTE 8 - INCOME TAXES
The components of income tax expense are as follows for the years ended December
31:
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Current:
Federal $402,121 $332,495 $292,492
State 134,718 114,966 107,445
-------- -------- --------
536,839 447,461 399,937
-------- -------- --------
Deferred:
Federal 520 5,805 22,908
State 641 234 8,755
-------- -------- --------
1,161 6,039 31,663
-------- -------- --------
Total income tax expense $538,000 $453,500 $431,600
======== ======== ========
</TABLE>
D-13
<PAGE>
The reasons for the differences between the statutory federal income tax rates
and the effective tax rates are summarized as follows for the years ended
December 31:
<TABLE>
<CAPTION>
1997 1996 1995
% of % of % of
Income Income Income
------ ------ ------
<S> <C> <C> <C>
Federal income tax at statutory rate 34.0% 34.0% 34.0%
Increase (decrease) in tax resulting from:
Dividends received deduction (.3) (1.0) (.5)
Capital loss carryover 1.3 1.0
Unallowable expenses .1 .2 .5
Other (.5)
State tax, net of federal tax benefit 6.4 6.8 7.6
---- ---- ----
40.2% 40.8% 42.6%
==== ==== ====
</TABLE>
The Bank had gross deferred tax assets and gross deferred tax liabilities as
follows as of December 31:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Deferred tax assets:
Allowance for loan losses $ 186,442 $ 180,726
Deferred loan fees/costs, net 9,631 17,379
Deferred income 4,194 3,091
Interest on non-performing loans 1,936
--------- ---------
Gross deferred tax assets 202,203 201,196
--------- ---------
Deferred tax liabilities:
Unrealized gain on available-for-sale securities (35,045) (6,843)
Accelerated depreciation (39,688) (35,780)
Deferred state tax refund (4,042) (5,782)
--------- ---------
Gross deferred tax liabilities (78,775) (48,405)
--------- ---------
Net deferred tax assets $ 123,428 $ 152,791
========= =========
</TABLE>
Deferred tax assets have not been reduced by a valuation allowance because
management believes that it is more likely than not that the full amount of
deferred tax assets will be realized.
As of December 31, 1997, the Bank had no operating loss and tax credit
carryovers for tax purposes.
NOTE 9 - STOCK COMPENSATION PLAN
As of December 31, 1997, the Bank has a fixed option, stock-based compensation
plan, which is described below. The Bank applies APB Opinion 25 and related
Interpretations in accounting for its plan. Accordingly, no compensation cost
has been recognized for its fixed stock option plan. Had compensation cost been
determined based on the fair value at the grant dates for awards consistent with
the method of SFAS No. 123 the Bank's net income and earnings per share would
have been reduced to the pro forma amounts indicated below for the 1997 grants:
<TABLE>
<S> <C> <C>
Net income As reported $801,146
Pro forma $793,346
Earnings per common share As reported $1.14
Pro forma $1.13
Earnings per common share, assuming dilution As reported $1.07
Pro forma $1.06
</TABLE>
D-14
<PAGE>
Under the 1991 Employee Stock Option Plan, the Bank may grant options to its
Directors and Management for shares of common stock. To date, all options under
the plan have been granted. Under the plan, the exercise price of each option
equals the market price of the Bank's stock on the date of grant and an option's
maximum term is 10 years.
The fair value of stock options granted in 1997 was calculated using the
following assumptions: volatility of 10%; dividend yield of 2%; risk-free rate
of 6.4% and estimated life of 9 years.
A summary of the status of the Bank's plan as of December 31, 1997, 1996 and
1995 and changes during the years ending on those dates is presented below:
<TABLE>
<CAPTION>
1997 1996 1995
------------------------------ ------------------------ --------------------------
Weighted-Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price
------ -------------- ------ -------------- ------ --------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 103,200 $6.67 109,500 $6.67 109,500 $6.67
Granted 3,000 9.33 0 0
Exercised (4,500) 6.67 (6,300) 6.67 0
Forfeited 0 0 0
------- ------- -------
Outstanding at end of year 101,700 $6.75 103,200 $6.67 109,500 $6.67
======= ======= =======
Options exercisable at year-end 101,700 103,200 109,500
Weighted-average fair value of
options granted during the year $2.60 N/A N/A
</TABLE>
The following table summarizes information about fixed stock options outstanding
as of December 31, 1997:
Options Outstanding and Exercisable
-----------------------------------
Number Remaining
Exercise Price as of 12/31/97 Contractual Life
-------------- -------------- ----------------
$6.67 98,700 5 years
9.33 3,000 9.1 years
-------
6.75 101,700 5.1 years
=======
The earnings per share data, numbers of options and option prices per share
shown in this note have been adjusted to reflect the three-for-two stock split
in 1998. See Note 16.
NOTE 10 - EMPLOYEE BENEFITS
Employees who have attained age 21 are eligible for membership in the 401(k)
plan during the first quarter.
The provisions of the 401(k) plan allow eligible employees to contribute up to
15% of their annual salary with a matching contribution by the Bank for
employees that have completed one full year of service equal to 2% of all
eligible participants' salary and 50% of the participants' first 6% they
contribute. The Bank's expense under this plan was $50,635, $35,729 and $26,193
for 1997, 1996 and 1995, respectively.
NOTE 11 - REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory - and possibly additional discretionary - actions by
regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's assets,
liabilities and certain off-balance-sheet items as calculated under regulatory
accounting practices. The Bank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings and other factors.
D-15
<PAGE>
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier 1 capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1997, that the Bank
meets all capital adequacy requirements to which it is subject.
As of December 31, 1997, the most recent notification from the Federal Deposit
Insurance Corporation categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based
and Tier 1 leverage ratios as set forth in the table. There are no conditions or
events since that notification that management believes have changed the Bank's
category.
The Bank's actual capital amounts and ratios are also presented in the table.
<TABLE>
<CAPTION>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes: Action Provisions:
------ ------------------ ------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
(Dollar amounts in thousands)
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1997:
Total Capital (to Risk Weighted Assets) $7,158 12.93% $4,430 >8.0% $5,538 >10.0%
- -
Tier 1 Capital (to Risk Weighted Assets) 6,465 11.66 2,218 >4.0 3,327 > 6.0
- -
Tier 1 Capital (to Average Assets) 6,465 7.99 3,237 >4.0 4,046 > 5.0
- -
As of December 31, 1996:
Total Capital (to Risk Weighted Assets) 6,461 13.33 3,877 >8.0 4,846 >10.0
- -
Tier 1 Capital (to Risk Weighted Assets) 5,854 12.05 1,944 >4.0 2,916 > 6.0
- -
Tier 1 Capital (to Average Assets) 5,854 8.92 2,625 >4.0 3,281 > 5.0
- -
</TABLE>
NOTE 12 - COMMITMENTS AND CONTINGENT LIABILITIES
As of December 31, 1997, the Bank was obligated under non-cancelable operating
leases for bank premises and equipment expiring between 1998 and 2000. The total
minimum rental due in future periods under these existing agreements is as
follows as of December 31, 1997:
1998 $ 70,035
1999 49,925
2000 8,243
--------
Total minimum lease payments $128,203
========
Certain leases contain provisions for escalation of minimum lease payments
contingent upon increases in real estate taxes and percentage increases in the
consumer price index. The total rental expense amounted to $68,351, $52,591 and
$25,301 for the years ended December 31, 1997, 1996 and 1995, respectively.
NOTE 13 - FINANCIAL INSTRUMENTS
The Bank is party to financial instruments with off-balance sheet risk in the
normal course of business to meet the financing needs of its customers. These
financial instruments include outstanding loan commitments, unused lines of
credit and standby letters of credit. The instruments involve, to varying
degrees, elements of credit risk in excess of the amount recognized in the
balance sheets. The contract amounts of those instruments reflect the extent of
involvement the Bank has in particular classes of financial instruments.
D-16
<PAGE>
The Bank's exposure to credit loss in the event of nonperformance by the other
party to the financial instrument for loan commitments and standby letters of
credit is represented by the contractual amounts of those instruments. The Bank
uses the same credit policies in making commitments and conditional obligations
as it does for on-balance sheet instruments.
Commitments to originate loans are agreements to lend to a customer provided
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Bank evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained, if
deemed necessary by the Bank upon extension of credit, is based on management's
credit evaluation of the borrower. Collateral held varies, but may include
secured interests in mortgages, accounts receivable, inventory, property, plant
and equipment and income-producing properties.
Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance by a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers. Of the total standby letters of
credit outstanding as of December 31, 1997, $56,800 are secured by deposit
accounts held within the Bank.
The estimated fair values of the Bank's financial instruments, all of which are
held or issued for purposes other than trading, which are as follows as of
December 31:
<TABLE>
<CAPTION>
1997 1996
---- ----
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ----- -------- -----
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents $ 4,119,636 $ 4,119,636 $ 5,770,237 $ 5,770,237
Available-for-sale securities 19,949,988 19,949,988 17,431,892 17,431,892
Federal Home Loan Bank stock 375,300 375,300 189,300 189,300
Loans 56,077,271 56,246,000 44,432,498 44,380,000
Accrued interest receivable 513,310 513,310 436,980 436,980
Financial liabilities:
Deposits 72,311,130 72,362,000 63,846,900 63,928,000
Advances from Federal Home Loan Bank 4,000,000 4,000,000
</TABLE>
The carrying amounts of financial instruments shown in the above table are
included in the balance sheets under the indicated captions. Accounting policies
related to financial instruments are described in Note 2.
Notional amounts to financial instrument liabilities with off-balance sheet
credit risk are as follows as of December 31:
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
<S> <C> <C>
Outstanding loan commitments $1,036,000 $2,704,000
Unadvanced portions of commercial lines of credit 4,152,288 4,126,669
Unadvanced portions of home equity loans 3,230,039 2,534,446
Unadvanced portions of consumer loans 71,155 48,309
Unadvanced portions of construction loans 311,543 260,967
Standby letters of credit 95,830 264,300
---------- ----------
$8,896,855 $9,938,691
========== ==========
</TABLE>
There is no material difference between the notional amounts and the estimated
fair values of the above off-balance sheet liabilities.
The Bank has no derivative financial instruments subject to the provisions of
SFAS No. 119, "Disclosure About Derivative Financial Instruments and Fair Value
of Financial Instruments."
D-17
<PAGE>
NOTE 14 - SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK
Most of the Bank's business activity is with customers located within the state.
There are no concentrations of credit to borrowers that have similar economic
characteristics. The majority of the Bank's loan portfolio is comprised of loans
collateralized by real estate located in the state of Connecticut.
NOTE 15 - EARNINGS PER SHARE (EPS)
The earnings per share and dividends per share computations for 1997, 1996 and
1995 have been restated to reflect the three-for-two stock split described in
Note 16.
Reconciliation of the numerators and the denominators of the basic and diluted
per share computations for net income are as follows:
<TABLE>
<CAPTION>
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
<S> <C> <C> <C>
Year ended December 31, 1997
Basic EPS
Net income and income available to common stockholders $801,146 704,759 $1.14
Effect of dilutive securities, options 45,093
-------- -------
Diluted EPS
Income available to common stockholders and assumed
conversions $801,146 749,852 $1.07
======== ======= =====
Year ended December 31, 1996 - As restated
Basic EPS
Net income and income available to common stockholders $659,082 695,039 $ .95
Effect of dilutive securities, options 32,949
-------- -------
Diluted EPS
Income available to common stockholders and assumed
conversions $659,082 727,988 $ .91
======== ======= ======
Year ended December 31, 1995 - As restated
Basic EPS
Net income and income available to common stockholders $581,870 694,230 $ .84
Effect of dilutive securities, options 26,859
-------- -------
Diluted EPS
Income available to common stockholders and assumed
conversions $581,870 721,089 $ .81
======== ======= ======
</TABLE>
NOTE 16 - SUBSEQUENT EVENT - STOCK SPLIT
On August 28, 1998 the Bank effected a three-for-two split of common stock and
made an equivalent change in the par value of the common stock from $1.00 per
share to $.666667 per share. No change in common stock and paid-in capital was
necessary. The effect of the stock split has been retroactively reflected as of
December 1997 and 1996 in the balance sheets and December 31, 1994 through 1997
in the statements of changes in stockholders' equity. All references to the
number of common shares and per share amounts elsewhere in the financial
statements and related footnotes have been restated as appropriate to reflect
the effect of the split for all periods presented.
NOTE 17 - RECLASSIFICATION
Certain amounts in the prior year have been reclassified to be consistent with
the current year's statement presentation.
D-18
<PAGE>
NOTE 18 - SUBSEQUENT EVENT, AGREEMENT TO BE ACQUIRED
On November 3, 1998 Maritime Bank & Trust Company (Maritime) and Webster
Financial Corporation (Webster) signed a definitive agreement under which
Webster will acquire Maritime. Pursuant to the agreement, shares of Maritime
will be exchanged for shares of Webster common stock. The agreement is subject
to the approval of the shareholders of Maritime and regulators.
D-19
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to the provisions of Article 6 of Webster's Restated
Certificate of Incorporation, as amended, and the provisions of Article IX of
the Webster's Bylaws, as amended.
Webster is a Delaware corporation subject to the applicable indemnification
provisions of the General Corporation Law of the State of Delaware (the
"Delaware Corporation Law"). Section 145 of the Delaware Corporation Law
provides for the indemnification, under certain circumstances, of persons who
are or were directors, officers, employees or agents of Webster, or are or were
serving at the request of Webster in such a capacity with another business
organization or entity, against expenses, judgments, fines and amounts paid in
settlement in actions, suits or proceedings, whether civil, criminal,
administrative, or investigative, brought or threatened against or involving
such persons because of such person's service in any such capacity. In the case
of actions brought by or in the right of Webster, Section 145 provides for
indemnification only of expenses, and only upon a determination by the Court of
Chancery or the court in which such action or suit was brought that, in view of
all the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses.
Webster's Bylaws provide for indemnification of directors, officers,
trustees, employees and agents of Webster, and for those serving in such roles
with other business organizations or entities, in the event that such person was
or is made a party to (or is threatened to be made a party to) any civil,
criminal, administrative, arbitration or investigative action, suit, or
proceeding (other than an action by or in the right of Webster) by reason of the
fact that such person is or was serving in such a capacity for or on behalf of
Webster. Webster will indemnify any such person against expenses (including
attorneys' fees), judgments, fines, penalties and amounts paid in settlement if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of Webster, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. Similarly, Webster shall indemnify such persons for
expenses reasonably incurred and settlements reasonably paid in actions, suits,
or proceedings brought by or in the right of Webster, 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 Webster; provided, however, that no
indemnification shall be made against expenses in respect of any claim, issue,
or matter as to which such person is adjudged to be liable to Webster or against
amounts paid in settlement unless and only to the extent that there is a
determination made by the appropriate party set forth in the Bylaws that the
person to be indemnified is, in view of all the circumstances of the case,
fairly and reasonably entitled to indemnity for such expenses or amounts paid in
settlement. In addition, 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 acting in such capacity for another business organization or
entity at Webster's request, against any liability asserted against such person
and incurred in such capacity, or arising out of such person's status as such,
whether or not Webster would have the power or obligation to indemnify him
against such liability under the provisions of Article IX of Webster's Bylaws.
Article 6 of Webster's Restated Certificate of Incorporation provides that
no director will be personally liable to Webster or its shareholders for
monetary damages for breach of fiduciary duty as a director other than liability
for any breach of such director's duty of loyalty to Webster or its
shareholders, for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, for any payment of a
dividend or approval of a stock repurchase that is illegal under Section 174 of
the Delaware Corporation Law, or for any transaction from which the director
derived an improper personal benefit.
II-1
<PAGE>
The foregoing indemnity and insurance provisions have the effect of
reducing directors' and officers' exposure to personal liability for actions
taken in connection with their respective positions.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
Webster pursuant to the foregoing provisions, or otherwise, Webster has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Webster of
expenses incurred or paid by a director, officer or controlling person of
Webster 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, Webster will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-2
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
Exhibit
No. Exhibit
--- -------
2.1 Agreement and Plan of Merger, dated as of November 3, 1998, by and
among Webster Financial Corporation ("Webster"), Webster Bank and
Maritime Bank & Trust Company ("Maritime").
2.2 Option Agreement, dated as of November 3, 1998, between Maritime and
Webster.
2.3 Maritime Bank & Trust Company Stockholder Agreement, dated as of
November 3, 1998, by and among Webster and the stockholders of
Maritime identified therein.
5 Opinion of Hogan & Hartson L.L.P. as to the validity of the
securities registered hereunder, including the consent of that firm.
8 Form of opinion of Hogan & Hartson L.L.P as to certain tax matters,
including consent of that firm.
23.1 Consent of Hogan & Hartson L.L.P. (included as part of Exhibit 5 and
Exhibit 8).
23.2 Consent of KPMG LLP.
23.3 Consent of Shatswell, MacLeod & Company, P.C.
23.4 Consent of Ostrowski & Company, Inc.
24 Power of attorney.
99 Form of Maritime proxy card.
(B) Not required.
(C) See Appendix A to the Proxy Statement/Prospectus.
ITEM 22. UNDERTAKINGS.
(a) Webster 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 of 1933;
(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
II-3
<PAGE>
forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of the
securities offered would not exceed that which was
registered) and any deviation from the low or high end
of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) (ss.
230.424(b) of this chapter) if, in the aggregate, the
changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth
in the "Calculation of the Registration Fee" table in
the effective 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 to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
(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) Webster hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of Webster's
annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to section 15(d) of
the Securities Exchange Act of 1934) 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) Webster hereby undertakes as follows: 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), Webster 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) Webster undertakes that every prospectus (i) that is filed pursuant to
paragraph (c) immediately preceding, or (ii) that purports to meet the
requirements of section 10(a)(3) of the Securities Act of 1933 and is
used in connection with an offering of securities subject to Rule 415
(ss. 230.415 of this chapter), 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 of 1933, 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-4
<PAGE>
(e) The undertaking concerning indemnification is included as part of the
response to Item 20.
(f) Webster hereby undertakes to respond to requests for information that
is incorporated by reference into the prospectus pursuant to Items 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) Webster 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-5
<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 the City of Waterbury, State of
Connecticut, on January 25, 1999.
WEBSTER FINANCIAL CORPORATION
By: /s/ James C. Smith
----------------------------------
James C. Smith
Chairman and Chief Executive Officer
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 January 25, 1999.
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
John V. Brennan Officer and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
/s/ Richard H. Alden* Director
- -------------------------
Richard H. Alden
/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/ George T. Carpenter* Director
- -------------------------
George T. Carpenter
II-6
<PAGE>
Name: Title:
----- ------
/s/ John J. Crawford* Director
- -------------------------
John J. Crawford
/s/ Harry P. DiAdamo, Jr.* Director
- -------------------------
Harry P. DiAdamo, Jr.
/s/ Robert A. Finkenzeller* Director
- -------------------------
Robert A. Finkenzeller
/s/ Walter R. Griffin* Director
- -------------------------
Walter R. Griffin
/s/ J. Gregory Hickey* Director
- -------------------------
J. Gregory Hickey
/s/ C. Michael Jacobi* Director
- -------------------------
C. Michael Jacobi
/s/ John F. McCarthy* Director
- -------------------------
John F. McCarthy
/s/ Sister Marguerite Waite* Director
- -------------------------
Sister Marguerite Waite
By: /s/ John V. Brennan
---------------------
*By Power of Attorney
John V. Brennan
II-7
<PAGE>
EXHIBIT INDEX
Exhibit
No. Exhibit
--- -------
2.1 Agreement and Plan of Merger, dated as of November 3, 1998, by and
among Webster Financial Corporation ("Webster"), Webster Bank and
Maritime Bank & Trust Company ("Maritime").
2.2 Option Agreement, dated as of November 3, 1998, between Maritime and
Webster.
2.3 Maritime Bank & Trust Company Stockholder Agreement, dated as of
November 3, 1998, by and among Webster and the stockholders of
Maritime identified therein.
5 Opinion of Hogan & Hartson L.L.P. as to the validity of the
securities registered hereunder, including the consent of that firm.
8 Form of opinion of Hogan & Hartson L.L.P as to certain tax matters,
including consent of that firm.
23.1 Consent of Hogan & Hartson L.L.P. (included as part of Exhibit 5 and
Exhibit 8).
23.2 Consent of KPMG LLP.
23.3 Consent of Shatswell, MacLeod & Company, P.C.
23.4 Consent of Ostrowski & Company, Inc.
24 Power of attorney.
99 Form of Maritime proxy card.
II-8
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
WEBSTER FINANCIAL CORPORATION,
WEBSTER BANK
AND
MARITIME BANK & TRUST COMPANY
DATED AS OF
NOVEMBER 3, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I THE MERGER.............................................................1
1.1 The Merger.............................................................1
1.2 Effective Time.........................................................1
1.3 Effects of the Merger..................................................2
1.4 Conversion of Maritime Bank Common Stock...............................2
1.5 Conversion of Webster Bank Common Stock................................3
1.6 Options................................................................3
1.7 Charter................................................................4
1.8 By-Laws................................................................4
1.9 Directors and Officers.................................................4
1.10 Tax Consequences......................................................4
ARTICLE II EXCHANGE OF SHARES....................................................5
2.1 Webster to Make Shares Available.......................................5
2.2 Exchange of Shares.....................................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF MARITIME BANK......................6
3.1 Corporate Organization.................................................6
3.2 Capitalization.........................................................7
3.3 Authority; No Violation................................................7
3.4 Consents and Approvals.................................................8
3.5 Loan Portfolio; Reports................................................8
3.6 Financial Statements; Books and Records................................9
3.7 Broker's Fees.........................................................10
3.8 Absence of Certain Changes or Events..................................10
3.9 Legal Proceedings.....................................................10
3.10 Taxes and Tax Returns................................................10
3.11 Employee Benefit Plans...............................................11
3.12 Certain Contracts....................................................12
3.13 Agreements with Regulatory Agencies..................................12
3.14 State Takeover Laws; Certificate of Incorporation....................12
3.15 Environmental Matters................................................13
3.16 Reserves for Losses..................................................13
3.17 Properties and Assets................................................14
3.18 Insurance............................................................14
3.19 Compliance with Applicable Laws......................................15
3.20 Loans................................................................15
3.21 Affiliates...........................................................16
3.22 Ownership of Webster Common Stock....................................16
3.23 Fairness Opinion.....................................................16
3.24 Year 2000 Compliance.................................................16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF WEBSTER............................17
4.1 Corporate Organization................................................17
4.2 Capitalization........................................................17
4.3 Authority; No Violation...............................................18
4.4 Consents, Approvals and Reports.......................................18
4.5 Financial Statements; Exchange Act Filings; Books and Records.........19
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
4.6 Absence of Certain Changes or Events..................................20
4.7 Ownership of Maritime BankCommon Stock; Affiliates and Associates.....20
4.8 Employee Benefit Plans................................................20
4.9 Agreements with Regulatory Agencies...................................20
4.10 Year 2000 Compliance.................................................20
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS.............................21
5.1 Covenants of Maritime Bank............................................21
5.2 Covenants of Webster..................................................24
5.3 Merger Covenants......................................................24
5.4 Compliance with Antitrust Laws........................................24
ARTICLE VI ADDITIONAL AGREEMENTS................................................25
6.1 Regulatory Matters....................................................25
6.2 Access to Information.................................................26
6.3 Shareholder Meeting...................................................27
6.4 Legal Conditions to Merger............................................27
6.5 Stock Exchange Listing................................................27
6.6 Employees; Employment and Other Agreements............................27
6.7 Indemnification.......................................................28
6.8 Subsequent Interim and Annual Financial Statements....................29
6.9 Additional Agreements.................................................29
6.10 Advice of Changes....................................................29
6.11 Current Information..................................................30
6.12 Execution and Authorization of Bank Merger Agreement.................30
6.13 Change in Structure..................................................30
6.14 Transaction Expenses of Maritime Bank................................30
ARTICLE VII CONDITIONS PRECEDENT................................................31
7.1 Conditions to Each Party's Obligation To Effect the Merger............31
7.2 Conditions to Obligations of Webster and Webster Bank.................32
7.3 Conditions to Obligations of Maritime Bank............................33
ARTICLE VIII TERMINATION AND AMENDMENT..........................................34
8.1 Termination...........................................................34
8.2 Effect of Termination.................................................35
8.3 Amendment.............................................................35
8.4 Extension; Waiver.....................................................35
ARTICLE IX GENERAL PROVISIONS...................................................36
9.1 Closing...............................................................36
9.2 Nonsurvival of Representations, Warranties, Covenants and Agreements..36
9.3 Expenses; Breakup Fee.................................................36
9.4 Notices...............................................................37
9.5 Interpretation........................................................37
9.6 Counterparts..........................................................37
9.7 Entire Agreement......................................................38
9.8 Governing Law.........................................................38
9.9 Enforcement of Agreement..............................................38
9.10 Severability.........................................................38
9.11 Publicity............................................................38
9.12 Assignment; Limitation of Benefits...................................38
9.13 Additional Definitions...............................................39
</TABLE>
ii
EXHIBITS
A Form of Articles of Combination and Bank Merger Agreement
B Form of Option Agreement
C Form of Maritime Bank & Trust Company Stockholder Agreement
D Form of Legal Opinion of counsel to Maritime Bank & Trust Company
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of November 3, 1998 (this
"Agreement"), is entered into by and among Webster Financial Corporation, a
Delaware corporation ("Webster"), Webster Bank, a federally chartered savings
bank and wholly owned subsidiary of Webster ("Webster Bank"), and Maritime Bank
& Trust Company, a Connecticut chartered bank ("Maritime Bank"). (Webster Bank
and Maritime Bank are sometimes collectively referred to herein as the
"Constituent Banks".)
WHEREAS, the Boards of Directors of Webster, Webster Bank and Maritime Bank
have determined that it is in the best interests of their respective companies
and shareholders to consummate the business combination transaction provided for
herein in which Maritime Bank will, subject to the terms and conditions set
forth herein, merge with and into Webster Bank, with Webster Bank being the
"Surviving Bank" and a wholly owned subsidiary of Webster (the "Merger");
WHEREAS, prior to the consummation of the Merger, Webster Bank and Maritime
Bank will enter into articles of combination and bank merger agreement, in the
form attached hereto as Exhibit A (the "Bank Merger Agreement"), providing for
the Merger;
WHEREAS, as an inducement to Webster to enter into this Agreement, Maritime
Bank will enter into an option agreement, in the form attached hereto as Exhibit
B (the "Option Agreement"), with Webster immediately following the execution of
this Agreement pursuant to which Maritime Bank will grant Webster an option to
purchase, under certain circumstances, an aggregate of 141,004 newly issued
shares of common stock, par value $.67 per share, of Maritime Bank ("Maritime
Bank Common Stock") upon the terms and conditions therein contained; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER.
Subject to the terms and conditions of this Agreement, in accordance with
the Banking Law of Connecticut (the "Connecticut Banking Law") and the rules and
regulations of the Office of Thrift Supervision (the "OTS"), at the Effective
Time (as defined in Section 1.2 hereof), Maritime Bank shall merge into Webster
Bank, with Webster Bank being the Surviving Bank in the Merger. Upon
consummation of the Merger, the corporate existence of Maritime Bank shall cease
and the Surviving Bank shall continue to exist as a federally chartered savings
bank under the Home Owners' Loan Act (the "HOLA") and a wholly owned subsidiary
of Webster.
1.2 EFFECTIVE TIME.
The Merger shall become effective on the Closing Date (as defined in
Section 9.1 hereof), as set forth in the Bank Merger Agreement in the form
attached hereto as Exhibit A which shall be filed with the Secretary of State of
the State of Connecticut (the "Connecticut Secretary of State") and the
Corporate Secretary of the OTS on the Closing Date. The term "Effective Time"
shall be the date and
<PAGE>
time when the Merger becomes effective on the Closing Date, as set forth in
the Bank Merger Agreement.
1.3 EFFECTS OF THE MERGER.
At and after the Effective Time, the Merger shall have the effects set
forth in 12 C.F.R.ss. 552.13(l) and Section 36a-126(b) of the Connecticut
Banking Law.
1.4 CONVERSION OF MARITIME BANK COMMON STOCK.
(a) At the Effective Time, subject to Sections 1.4(b), 2.2(e) and
8.1(h) hereof, each share of Maritime Bank Common Stock issued and outstanding
prior to the Effective Time (other than Dissenting Shares (as such term is
defined below in this Section 1.4(e))) shall, by virtue of this Agreement and
without any action on the part of the holder thereof, be converted into and
exchangeable for that number of shares of Webster common stock, par value $.01
per share ("Webster Common Stock"), determined by dividing $26.67 by the Base
Period Trading Price (as defined below), as may be adjusted as provided below,
computed to three decimal places (the "Exchange Ratio"); provided, however, that
if the Base Period Trading Price shall be greater than $24.45, the Exchange
Ratio shall be 1.091 and if the Base Period Trading Price shall be less than
$17.50, the Exchange Ratio shall be 1.524. The number of shares of Webster
Common Stock issuable with respect to each share of Maritime Bank Common Stock,
as determined as set forth herein, is called the "Merger Consideration." For
purposes of this Agreement, the term "Base Period Trading Price" shall mean the
average of the daily closing prices per share for Webster Common Stock for the
15 consecutive trading days during which shares of Webster Common Stock are
actually traded (as reported on The Nasdaq Stock Market, Inc. National Market
Tier ("Nasdaq")) ending on the day preceding the receipt of the last required
federal bank regulatory approval or waiver required to effect the Merger (such
period herein called the "Base Period"). For the purposes of this Agreement,
references to Webster Common Stock shall be deemed to include, where
appropriate, references to the right to receive shares of Webster's Series C
Participating Preferred Stock pursuant to the Rights Agreement, dated as of
February 5, 1996, as amended, between Webster and American Stock Transfer &
Trust Company (the "Rights Agreement").
(b) All of the shares of Maritime Bank Common Stock converted into
Webster Common Stock pursuant to this Article I shall no longer be outstanding
and shall automatically be canceled and shall cease to exist, and each
certificate (each a "Certificate") previously representing any such shares of
Maritime Bank Common Stock shall thereafter represent the right to receive (i)
the number of whole shares of Webster Common Stock and (ii) cash in lieu of
fractional shares into which the shares of Maritime Bank Common Stock
represented by such Certificate have been converted pursuant to this Section
1.4(a). Certificates previously representing shares of Maritime Bank Common
Stock shall be exchanged for certificates representing whole shares of Webster
Common Stock and cash in lieu of fractional shares issued in consideration
therefor upon the surrender of such Certificates in accordance with Section 2.2
hereof, without any interest thereon. If prior to the Effective Time Webster
should split or combine its common stock, or pay a dividend or other
distribution in such common stock, then the Exchange Ratio shall be
appropriately adjusted to reflect such split, combination, dividend or
distribution.
(c) At the Effective Time, all shares of Maritime Bank Common Stock
that are owned by Maritime Bank as treasury stock and all shares of Maritime
Bank Common Stock that are owned directly or indirectly by Webster or Maritime
Bank or any of Webster's Subsidiaries (as defined in Section 9.13 hereof) (other
than shares of Maritime Bank Common Stock held directly or indirectly in trust
accounts, managed accounts and the like or otherwise held in a fiduciary
capacity that are beneficially owned by third parties (any such shares, whether
held directly or indirectly by Webster or Maritime Bank, as the case may be,
being referred to herein as "Trust Account Shares") and other than any shares of
Maritime Bank Common Stock held by Webster or Maritime Bank or any of Webster's
2
<PAGE>
Subsidiaries in respect of a debt previously contracted (any such shares,
whether held directly or indirectly by Webster or Maritime Bank, being referred
to herein as "DPC Shares")) shall be canceled and shall cease to exist and no
stock of Webster or other consideration shall be delivered in exchange therefor.
All shares of Webster Common Stock that are owned by Maritime Bank (other than
Trust Account Shares and DPC Shares) shall become treasury stock of Webster.
(d) Certificates for fractions of shares of Webster Common Stock will
not be issued. In lieu of a fraction of a share of Webster Common Stock, each
holder of Maritime Bank Common Stock otherwise entitled to a fraction of a share
of Webster Common Stock shall be entitled to receive an amount of cash equal to
(i) the fraction of a share of the Webster Common Stock to which such holder
would otherwise be entitled, multiplied by (ii) the closing time average market
value of the Webster Common Stock, which shall be deemed to be the average of
the daily closing prices per share for Webster Common Stock for the fifteen
consecutive trading days on which shares of Webster Common Stock are actually
traded (as reported on the Nasdaq) ending on the third trading day preceding the
Closing Date. Following consummation of the Merger, no holder of Maritime Bank
Common Stock shall be entitled to dividends or any other rights in respect of
any such fraction.
(e) Notwithstanding anything in this Agreement to the contrary and
unless otherwise provided by applicable law, shares of Maritime Bank Common
Stock that are issued and outstanding immediately prior to the Effective Time
and that are owned by shareholders who have properly dissented (the "Dissenting
Shares") within the meaning of Sections 33-855 through 33-872 of the Connecticut
Business Corporation Act, as amended (the "Connecticut Corporation Law"), shall
not be converted into the right to receive shares of Webster Common Stock,
unless and until such shareholders shall have failed to perfect or shall have
effectively withdrawn or lost their right of payment under applicable law. If
any such shareholder shall have failed to perfect or shall have effectively
withdrawn or lost such right of payment, each share of Maritime Bank Common
Stock held by such shareholder shall thereupon be deemed to have been converted
into the right to receive and become exchangeable for, at the Effective Time,
shares of Webster Common Stock pursuant to Section 1.4(a) hereof.
(f) Maritime Bank shall give Webster (i) prompt notice of any written
notice of intent to demand payment for shares filed pursuant to Section 33-861
of the Connecticut Corporation Law received by Maritime Bank, withdrawals of
such notices, and any other instruments served in connection with such notices
pursuant to the Connecticut Corporation Law and received by Maritime Bank and
(ii) the opportunity to direct all negotiations and proceedings with respect to
such notices under the Connecticut Corporation Law consistent with the
obligations of Maritime Bank thereunder. Maritime Bank shall not, except with
the prior written consent of Webster, (x) make any payment with respect to any
such notice, (y) offer to settle or settle any such notices or (z) waive any
failure to timely deliver a written notice in accordance with the Connecticut
Corporation Law.
1.5 CONVERSION OF WEBSTER BANK COMMON STOCK.
At the Effective Time, the shares of the common stock, par value $.01 per
share, of Webster Bank issued and outstanding immediately prior to the Effective
Time shall constitute all of the issued and outstanding shares of the Surviving
Bank.
1.6 OPTIONS.
At the Effective Time, each option granted by Maritime Bank to purchase
shares of Maritime Bank Common Stock under the 1991 Stock Option Plan (the
"Maritime Bank Stock Plan") which is outstanding and unexercised immediately
prior thereto shall be converted automatically into an option to purchase shares
of Webster Common Stock in an amount and at an exercise price determined as
provided below (and otherwise subject to the terms of the Maritime Bank Stock
Plan);
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(1) The number of shares of Webster Common Stock to be subject to the
option immediately after the Effective Time shall be equal to the
product of the number of shares of Maritime Bank Common Stock subject
to the option immediately before the Effective Time, multiplied by the
Exchange Ratio, provided that any fractional shares of Webster Common
Stock resulting from such multiplication shall be rounded down to the
nearest share; and
(2) The exercise price per share of Webster Common Stock under the
option immediately after the Effective Time shall be equal to the
exercise price per share of Maritime Bank Common Stock under the
option immediately before the Effective Time divided by the Exchange
Ratio, provided that such exercise price shall be rounded to the
nearest cent.
The adjustment provided herein shall be and is intended to be effected in a
manner which is consistent with Section 424(a) of the Internal Revenue Code of
1986, as amended (the "Code"). The duration and other terms of the option
immediately after the Effective Time shall be the same as the corresponding
terms in effect immediately before the Effective Time, except that all
references to Maritime Bank in the Maritime Bank Stock Plan (and the
corresponding references in the option agreement documenting such option) shall
be deemed to be references to Webster or Webster Bank, as appropriate.
1.7 CHARTER.
At the Effective Time, the Federal Stock Charter, as amended (the
"Charter"), of Webster Bank as in effect immediately prior to the Effective
Time, shall be the federal stock charter of the Surviving Bank.
1.8 BY-LAWS.
At the Effective Time, the By-Laws, as amended (the "By-Laws"), of Webster
Bank, as in effect immediately prior to the Effective Time, shall be the by-laws
of the Surviving Bank.
1.9 DIRECTORS AND OFFICERS.
At the Effective Time, the directors and officers of Webster Bank
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Bank. The non-employee directors of Maritime Bank serving
immediately prior to the Effective Time will be invited to serve on an advisory
board to Webster Bank after the Bank Merger for a period of up to 24 months.
Such advisory directors each will be paid for such service up to $15,000 based
on an annual retainer of $3,500 per year, payable in quarterly installments, and
quarterly meeting attendance fees of $1,000 for each meeting attended in person.
1.10 TAX CONSEQUENCES.
It is intended that the Merger shall constitute a reorganization within the
meaning of Section 368(a) of the Code, and that this Agreement shall constitute
a "plan of reorganization" for the purposes of the Code.
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ARTICLE II
EXCHANGE OF SHARES
2.1 WEBSTER TO MAKE SHARES AVAILABLE.
At or prior to the Effective Time, Webster shall deposit, or shall cause to
be deposited, with Webster's transfer agent, American Stock Transfer & Trust
Company, or such other bank, trust company or transfer agent as Webster may
select (the "Exchange Agent"), for the benefit of the holders of Certificates,
for exchange in accordance with this Article II, certificates representing the
shares of Webster Common Stock and the cash in lieu of fractional shares (such
cash and certificates for shares of Webster Common Stock, being hereinafter
referred to as the "Exchange Fund") to be issued pursuant to Section 1.4 and
paid pursuant to Section 2.2(a) hereof in exchange for outstanding shares of
Maritime Bank Common Stock.
2.2 EXCHANGE OF SHARES.
(a) As soon as practicable after the Effective Time, the Exchange
Agent shall mail to each holder of record of a Certificate or Certificates a
form letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Exchange Agent) and instructions for use in effecting
the surrender of the Certificates in exchange for certificates representing the
shares of Webster Common Stock and the cash in lieu of fractional shares into
which the shares of Maritime Bank Common Stock represented by such Certificate
or Certificates shall have been converted pursuant to this Agreement. Maritime
Bank shall have the right to review both the letter of transmittal and the
instructions prior to such documents being finalized. Upon surrender of a
Certificate for exchange and cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor (x) a certificate representing that
number of whole shares of Webster Common Stock to which such holder of Maritime
Bank Common Stock shall have become entitled pursuant to the provisions of
Article I hereof and (y) a check representing the amount of cash in lieu of
fractional shares, if any, which such holder has the right to receive in respect
of the Certificate surrendered pursuant to the provisions of this Article II,
and the Certificate so surrendered shall forthwith be canceled. No interest will
be paid or accrued on the cash in lieu of fractional shares and unpaid dividends
and distributions, if any, payable to holders of Certificates.
(b) No dividends or other distributions declared after the Effective
Time with respect to Webster Common Stock and payable to the holders of record
thereof shall be paid to the holder of any unsurrendered Certificate until the
holder thereof shall surrender such Certificate in accordance with this Article
II. After the surrender of a Certificate in accordance with this Article II, the
record holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of Webster Common Stock represented by such
Certificate. No holder of an unsurrendered Certificate shall be entitled, until
the surrender of such Certificate, to vote the shares of Webster Common Stock
into which his Maritime Bank Common Stock shall have been converted.
(c) If any certificate representing shares of Webster Common Stock is
to be issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed (or accompanied
by an appropriate instrument of transfer) and otherwise in proper form for
transfer, and that the person requesting such exchange shall pay to the Exchange
Agent in advance any transfer or other taxes required by reason of the issuance
of a certificate representing shares of Webster Common Stock in any name other
than that of the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not payable.
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(d) After the close of business on the day immediately prior to the
Effective Time, there shall be no transfers on the stock transfer books of
Maritime Bank of the shares of Maritime Bank Common Stock which were issued and
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates representing such shares are presented for transfer to the
Exchange Agent, they shall be canceled and exchanged for certificates
representing shares of Webster Common Stock as provided in this Article II.
(e) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of Maritime Bank for six months after the Effective Time shall be
returned to Webster. Any shareholders of Maritime Bank who have not theretofore
complied with this Article II shall thereafter look only to Webster for payment
of their shares of Webster Common Stock, cash in lieu of fractional shares and
unpaid dividends and distributions on Webster Common Stock deliverable in
respect of each share of Maritime Bank Common Stock such shareholder holds as
determined pursuant to this Agreement, in each case, without any interest
thereon. Notwithstanding the foregoing, none of Webster, Maritime Bank, the
Exchange Agent or any other person shall be liable to any former holder of
shares of Maritime Bank Common Stock for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(f) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by 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 deliverable in respect thereof pursuant to this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MARITIME BANK
Maritime Bank hereby makes the following representations and warranties to
Webster and Webster Bank as set forth in this Article III, each of which is
being relied upon by Webster and Webster Bank as a material inducement to enter
into and perform this Agreement. All of the disclosure schedules of Maritime
Bank referenced below and thereby required of Maritime Bank pursuant to this
Agreement, which disclosure schedules shall be cross-referenced to the specific
sections and subsections of this Agreement and delivered herewith, are referred
to herein as the "Maritime Bank Disclosure Schedule."
3.1 CORPORATE ORGANIZATION.
Maritime Bank is a Connecticut chartered bank duly organized, validly
existing and in good standing under the laws of the State of Connecticut. The
deposit accounts of Maritime Bank are insured by the Federal Deposit Insurance
Corporation (the "FDIC") through the Bank Insurance Fund to the fullest extent
permitted by law, and all premiums and assessments required in connection
therewith have been paid by Maritime Bank. Maritime Bank has the corporate power
and corporate authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted and is duly licensed or
qualified to do business in each jurisdiction in which the nature of any
business conducted by it or the character or location of any properties or
assets owned or leased by it makes such licensing or qualification necessary.
The Certificate of Incorporation and Second Amended and Restated Bylaws (the
"Bylaws") of Maritime Bank, copies of which have previously been delivered to
Webster, are true, correct and complete copies of such documents as in effect as
of the date of this Agreement.
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3.2 CAPITALIZATION.
(a) The authorized capital stock of Maritime Bank consists of
1,500,000 shares of Maritime Bank Common Stock. As of the date hereof, there are
(y) 705,023 shares of Maritime Bank Common Stock issued and outstanding and no
shares of Maritime Bank Common Stock held in Maritime Bank's treasury, and (z)
no shares of Maritime Bank Common Stock reserved for issuance upon exercise of
outstanding stock options or otherwise, except for (i) 112,500 shares of
Maritime Bank Common Stock reserved for issuance pursuant to the Maritime Bank
Stock Plan (of which options for 101,700 shares are currently outstanding) and
(ii) 141,004 shares of Maritime Bank Common Stock reserved for issuance upon
exercise of the option to be issued to Webster pursuant to the Option Agreement.
All of the issued and outstanding shares of Maritime Bank Common Stock have been
duly authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. Except for the Option Agreement and the aforementioned options to
purchase 101,700 shares of Maritime Bank Common Stock issued pursuant to the
Maritime Bank Stock Plan, Maritime Bank does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of Maritime
Bank Common Stock or any other equity security of Maritime Bank or any
securities representing the right to purchase or otherwise receive any shares of
Maritime Bank Common Stock or any other equity security of Maritime Bank. The
names of the optionees, the date of each option to purchase Maritime Bank Common
Stock granted, the number of shares subject to each such option, the expiration
date of each such option, and the price at which each such option may be
exercised under the Maritime Bank Stock Plan are set forth in Section 3.2(a) of
the Maritime Bank Disclosure Schedule. Since December 31, 1997, Maritime Bank
has not issued any shares of its capital stock or any securities convertible
into or exercisable for any shares of its capital stock, other than pursuant to
the exercise of director or employee stock options granted prior to December 31,
1997 under the Maritime Bank Stock Plan.
(b) Maritime Bank has no Subsidiaries and has not owned any
Subsidiaries.
3.3 AUTHORITY; NO VIOLATION.
(a) Maritime Bank has full corporate power and corporate authority to
execute and deliver this Agreement, the Bank Merger Agreement and the Option
Agreement and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement, the Bank Merger Agreement and the
Option Agreement and the consummation of the transactions contemplated hereby
and thereby have been duly and validly approved by the Board of Directors of
Maritime Bank. The Board of Directors of Maritime Bank has directed that this
Agreement, the Merger and the other transactions contemplated hereby be
submitted to Maritime Bank's shareholders for approval at a special meeting of
such shareholders (the "Special Meeting") and, except for the approval of this
Agreement, the Merger and the other transactions contemplated hereby by the
requisite vote of Maritime Bank's shareholders, no other corporate proceedings
on the part of Maritime Bank (except for matters related to setting the date,
time, place and record date for the Special Meeting) are necessary to approve
this Agreement, the Bank Merger Agreement or the Option Agreement or to
consummate the transactions contemplated hereby or thereby. This Agreement has
been, and the Bank Merger Agreement and the Option Agreement will be, duly and
validly executed and delivered by Maritime Bank and (assuming due authorization,
execution and delivery by Webster and Webster Bank of this Agreement, by Webster
Bank of the Bank Merger Agreement, and by Webster of the Option Agreement) will
constitute valid and binding obligations of Maritime Bank, enforceable against
Maritime Bank in accordance with their terms, except as enforcement may be
limited by general principles of equity whether applied in a court of law or a
court of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
(b) Neither the execution and delivery of this Agreement, the Bank
Merger Agreement or the Option Agreement by Maritime Bank, nor the consummation
by Maritime Bank of
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the transactions contemplated hereby or thereby, nor compliance by Maritime Bank
with any of the terms or provisions hereof or thereof, will (i) violate any
provision of the Certificate of Incorporation or Bylaws of Maritime Bank, or
(ii) assuming that the consents and approvals referred to in Section 3.4(a)
hereof are duly obtained, (x) violate any Laws (as defined in Section 9.13
hereof) applicable to Maritime Bank, or any of its properties or assets, or (y)
violate, conflict with, result in a breach of any provision of or the loss of
any benefit under, constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, result in the termination
of or a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the properties or assets of Maritime
Bank under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Maritime Bank is a party, or by which it or
any of its properties or assets may be bound or affected.
3.4 CONSENTS AND APPROVALS.
(a) Except for (i) the filing of applications and notices, as
applicable, as to the Merger with the OTS under the HOLA and the Bank Merger Act
and approval of such applications and notices, (ii) the filing of applications
and notices with the Banking Commissioner of the State of Connecticut (the
"Connecticut Commissioner") and approval of such applications and notices as to
the Merger (the "State Banking Approvals"), (iii) the filing with the
Connecticut Commissioner of an acquisition statement pursuant to Section 36a-184
of the Connecticut Banking Law prior to the acquisition of more than 10% of the
Maritime Bank Common Stock pursuant to the Option Agreement, if not exempt, (iv)
the filing of the stockholder agreement to be entered into by Webster and the
stockholders of Maritime Bank identified therein (the "Maritime Bank Stockholder
Agreement") with the Connecticut Commissioner and the approval of such
agreement, (v) the filing with the Securities and Exchange Commission (the
"SEC") of a registration statement on Form S-4, which will include the proxy
statement/prospectus to be used in soliciting the approval of Maritime Bank's
shareholders at the Special Meeting (the "Proxy Statement/Prospectus"), to
register the shares of Webster Common Stock to be issued in connection with the
Merger (including the shares of Webster Common Stock that may be issued upon the
exercise of the options referred to in Section 1.6 hereof) (the "Registration
Statement"), (vi) the approval of this Agreement by the requisite vote of the
shareholders of Maritime Bank, (vii) the filings with the OTS and the
Connecticut Secretary of State required in connection with the Bank Merger
Agreement, (viii) such filings, authorizations and approvals as are required to
be made or obtained under the securities or "Blue Sky" laws of various states or
with The Nasdaq Stock Market, Inc. (or such other exchange as may be applicable)
in connection with the issuance of the shares of Webster Common Stock pursuant
to this Agreement, and (ix) such notices, filings, authorizations, approvals or
consents that are set forth in Section 3.4(a) of the Maritime Bank Disclosure
Schedule, no consents or approvals of or filings or registrations with any
court, administrative agency or commission or other governmental authority or
instrumentality (each a "Governmental Entity") or with any third party are
necessary in connection with (1) the execution and delivery by Maritime Bank of
this Agreement, the Bank Merger Agreement and the Option Agreement, and (2) the
consummation by Maritime Bank of the Merger, the Option Agreement and the other
transactions contemplated hereby and thereby, except, in each case, for such
consents, approvals or filings, the failure of which to obtain will not have a
Material Adverse Effect (as defined in Section 9.13 hereof) on the ability of
Webster to consummate the transactions contemplated hereby or thereby.
(b) Maritime Bank hereby represents to Webster that it has no
knowledge of any reason why approval or effectiveness of any of the
applications, notices or filings referred to in Section 3.4(a) hereof cannot be
obtained or granted on a timely basis.
3.5 LOAN PORTFOLIO; REPORTS.
(a) Except as set forth at Section 3.5(a) of the Maritime Bank
Disclosure Schedule, as of December 31, 1997 and thereafter through and
including the date of this Agreement, Maritime
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Bank was not a party to any written or oral loan agreement, note or borrowing
arrangement (including, without limitation, leases, credit enhancements,
commitments, guarantees and interest-bearing assets) (collectively, "Loans"),
with any director, officer or five percent or greater shareholder of Maritime
Bank or any Affiliated Person (as defined in Section 9.13 hereof) of the
foregoing.
(b) Maritime Bank has timely filed all reports, registrations and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with (i) the FDIC, (ii) the Connecticut
Commissioner and any other state banking commissions or any other state
regulatory authority (each a "State Regulator"), (iii) the SEC and (iv) and any
self-regulatory organization ("SRO") (collectively "Regulatory Agencies").
Except for normal examinations conducted by a Regulatory Agency in the regular
course of the business of Maritime Bank, no Governmental Entity is conducting,
or has conducted, any proceeding or investigation into the business or
operations of Maritime Bank nor does Maritime Bank have knowledge of any pending
or threatened proceeding or investigation.
3.6 FINANCIAL STATEMENTS; BOOKS AND RECORDS.
(a) Maritime Bank has previously delivered to Webster true, correct
and complete copies of (a) the balance sheets of Maritime Bank as of December 31
for the years 1995, 1996, and 1997 and the related statements of income, changes
in stockholders' equity and cash flows for the years 1994 through 1997,
inclusive, in each case accompanied by the audit report of Shatswell, MacLeod &
Company, P.C., independent public accountants with respect to Maritime Bank, and
(b) the unaudited statement of position of Maritime Bank as of September 30,
1998 and the related comparative unaudited statements of earnings, changes in
stockholders' equity and cash flows for the nine month periods ended September
30, 1997 and 1998. The financial statements referred to in this Section 3.6(a)
(including the related notes, where applicable) fairly present, and the
financial statements referred to in Section 6.8 hereof will fairly present
(subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount), the results of the operations and
financial condition of Maritime Bank for the respective fiscal periods or as of
the respective dates therein set forth; each of such statements (including the
related notes, where applicable) comply, and the financial statements referred
to in Section 6.8 hereof will comply, with applicable accounting requirements
and with the published rules and regulations of the FDIC with respect thereto;
and each of such statements (including the related notes, where applicable) has
been, and the financial statements referred to in Section 6.8 hereof will be,
prepared in accordance with generally accepted accounting principles ("GAAP")
during the periods involved, except in each case as indicated in such statements
or in the notes thereto. The annual reports and quarterly reports that Maritime
Bank has sent to shareholders since December 31, 1994 do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in light of the circumstances under which they were
made, not misleading, and Maritime Bank has previously delivered or made
available to Webster true, correct and complete copies of such reports. The
books and records of Maritime Bank have been, and are being, maintained in all
material respects in accordance with GAAP and any other applicable legal and
accounting requirements.
(b) Except and to the extent (i) reflected, disclosed or provided for
in the financial statements as of December 31, 1997 referred to above, (ii) of
liabilities incurred since December 31, 1997 in the ordinary course of business
and consistent with past practice, and (iii) of liabilities related to the
Agreement, Maritime Bank has no liabilities, whether absolute, accrued,
contingent or otherwise.
(c) The minute books of Maritime Bank contain records of all meetings
and other corporate action held of its shareholders and Board of Directors
(including committees thereof) that are complete and accurate in all material
respects.
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3.7 BROKER'S FEES.
Neither Maritime Bank nor any of its officers or directors has employed any
broker or finder or incurred any liability for any broker's fees, commissions or
finder's fees in connection with any of the transactions contemplated by this
Agreement, the Bank Merger Agreement or the Option Agreement, except that
Maritime Bank has engaged, and will pay a fee to Ostrowski & Company, Inc. ("O &
Co.") in accordance with the terms of a letter agreement between O & Co. and
Maritime Bank dated July 28, 1998, a true, complete and correct copy of which
has been previously delivered by Maritime Bank to Webster.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in Maritime Bank's balance sheet as of
December 31, 1997 referred to in Section 3.6(a) hereof or Maritime Bank's
balance sheet as of September 30, 1998 referred to in Section 3.6(a) hereof,
since December 31, 1997 (i) Maritime Bank has not incurred any material
liability, except as contemplated by this Agreement or in the ordinary course of
its business consistent with its past practices, and (ii) no event has occurred
which has had, or is likely to have, individually or in the aggregate, a
Material Adverse Effect on Maritime Bank.
(b) Since December 31, 1997, Maritime Bank has carried on its
businesses in the ordinary and usual course consistent with its past practices.
3.9 LEGAL PROCEEDINGS.
(a) Maritime Bank is not a party to any, and there are no pending or
threatened, legal, administrative, arbitration or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against
Maritime Bank or which challenge the validity or propriety of the transactions
contemplated by this Agreement, the Bank Merger Agreement or the Option
Agreement.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon Maritime Bank or its assets.
3.10 TAXES AND TAX RETURNS.
Maritime Bank has duly filed all federal and state tax returns required to
be filed by it on or prior to the date hereof (all such returns being accurate
and complete in all material respects) and has duly paid or made provision for
the payment of all material taxes and other governmental charges which have been
incurred or are due or claimed to be due from it by federal and state taxing
authorities on or prior to the date hereof other than taxes or other charges (a)
which (x) are not yet delinquent or (y) are being contested in good faith and
set forth at Section 3.10 of the Maritime Bank Disclosure Schedule and (b) which
have not been finally determined. All liability with respect to the income tax
returns of Maritime Bank has been satisfied for all years to and including 1997.
The Internal Revenue Service (the "IRS") has not notified Maritime Bank of, or
otherwise asserted, that there are any material deficiencies with respect to any
income tax returns of Maritime Bank. There are no material disputes pending, or
claims asserted for, taxes or assessments upon Maritime Bank, nor has Maritime
Bank been requested to give any currently effective waivers extending the
statutory period of limitation applicable to any federal or state income tax
return for any period. In addition, federal and state returns which are accurate
and complete in all material respects have been filed by Maritime Bank for all
periods for which returns were due with respect to income tax withholding,
social security and unemployment taxes and the amounts shown on such federal and
state returns to be due and payable have been paid in full or adequate provision
therefor has been included by Maritime Bank in its financial statements as of
December 31, 1997 and September 30, 1998.
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3.11 EMPLOYEE BENEFIT PLANS.
(a) Section 3.11(a) of the Maritime Bank Disclosure Schedule sets
forth a true and complete list of each employee benefit plan (within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), arrangement or agreement that is maintained or contributed
to as of the date of this Agreement, or that has within the last six years been
maintained or contributed to, by Maritime Bank or any other entity which
together with Maritime Bank would be deemed a "single employer" within the
meaning of Section 4001 of ERISA or Code Sections 414(b), (c) or (m) or under
which Maritime Bank has any liability (collectively, the "Plans").
(b) Maritime Bank has heretofore delivered to Webster true, correct
and complete copies of each of the Plans and all related documents, including
but not limited to (i) the actuarial report for such Plan (if applicable) for
each of the last six years, (ii) the most recent determination letter from the
IRS (if applicable) for such Plan, (iii) the current summary plan description
and any summaries of material modifications, (iv) all annual reports (Form 5500
series) for each Plan filed for the preceding six plan years, (v) all agreements
with fiduciaries and service providers relating to the Plan, and (vi) all
substantive correspondence relating to any such Plan addressed to or received
from the IRS, the Department of Labor, the Pension Benefit Guaranty Corporation
or any other governmental agency.
(c) (i) Each of the Plans has been operated and administered in all
material respects in compliance with applicable Laws, including but not limited
to ERISA and the Code; (ii) each of the Plans intended to be "qualified" within
the meaning of Section 401(a) of the Code is so qualified; (iii) with respect to
each Plan which is subject to Title IV of ERISA, the present value of accrued
benefits under such Plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such Plan's actuary
with respect to such Plan, did not, as of its latest valuation date, exceed the
then current value of the assets of such Plan allocable to such accrued
benefits; (iv) no Plan provides benefits, including, without limitation, death
or medical benefits (whether or not insured), with respect to current or former
employees of Maritime Bank beyond their retirement or other termination of
service, other than (w) coverage mandated by applicable Law, (x) death benefits
or retirement benefits under a Plan that is an "employee pension plan," as that
term is defined in Section 3(2) of ERISA, (y) deferred compensation benefits
under a Plan that are accrued as liabilities on the books of Maritime Bank, or
(z) benefits the full cost of which is borne by the current or former employee
(or his beneficiary); (v) no liability under Title IV of ERISA has been incurred
by Maritime Bank that has not been satisfied in full, and no condition exists
that presents a material risk to Maritime Bank incurring a material liability
thereunder; (vi) no Plan is a "multiemployer pension plan," as such term is
defined in Section 3(37) of ERISA; (vii) all contributions or other amounts
payable by Maritime Bank as of the Effective Time with respect to each Plan and
all other liabilities of each such entity with respect to each Plan, in respect
of current or prior plan years have been paid or accrued in accordance with
generally accepted accounting practices and Section 412 of the Code; (viii)
Maritime Bank has not engaged in a transaction in connection with which Maritime
Bank could be subject to either a civil penalty assessed pursuant to Section 409
or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976 of the
Code; (ix) to the knowledge of Maritime Bank, there are no pending, threatened
or anticipated claims (other than routine claims for benefits) by, on behalf of
or against any of the Plans or any trusts related thereto; (x) all Plans could
be terminated as of the Effective Time without any liability materially in
excess of the amounts accrued with respect to such Plans on the September 30,
1998 financial statements referenced in Section 3.6(a) hereof; (xi) no Plan,
program, agreement or other arrangement, either individually or collectively,
provides for any payment by Maritime Bank that would not be deductible under
Code Sections 162(a)(1), 162(m) or 404 or that would constitute a "parachute
payment" within the meaning of Code Section 280G; (xii) no "accumulated funding
deficiency" as defined in Section 302(a)(2) of ERISA or Section 412 of the Code,
whether or not waived, and no "unfunded current liability" as determined under
Section 412(l) of the Code exists with respect to any Plan; and (xiii) no Plan
has experienced a "reportable event" (as such
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term is defined in Section 4043(b) of ERISA and the regulations thereunder) that
is not subject to an administrative or statutory waiver from the reporting
requirement.
3.12 CERTAIN CONTRACTS.
(a) Except as set forth at Section 3.12(a) of the Maritime Bank
Disclosure Schedule, Maritime Bank is not a party to or bound by any contract,
arrangement or commitment (i) with respect to the employment of any directors,
officers, employees or consultants, (ii) which, upon the consummation of the
transactions contemplated by this Agreement, the Bank Merger Agreement or the
Option Agreement will (either alone or upon the occurrence of any additional
acts or events) result in any payment (whether of severance pay or otherwise)
becoming due from Webster, Maritime Bank, Webster Bank, the Surviving Bank or
any of Webster's Subsidiaries to any director, officer or employee thereof,
(iii) which materially restricts the conduct of any line of business by Maritime
Bank, (iv) with or to a labor union or guild (including any collective
bargaining agreement) or (v) (including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan) any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement, the Bank Merger Agreement or the Option Agreement, or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement, the Bank Merger Agreement or
the Option Agreement. Maritime Bank has previously delivered to Webster true,
correct and complete copies of all employment, consulting and deferred
compensation agreements to which Maritime Bank is a party. Section 3.12(a) of
the Maritime Bank Disclosure Schedule sets forth a list of all material
contracts (as defined in Item 601(b)(10) of Regulation S-K) of Maritime Bank.
Each contract, arrangement or commitment of the type described in this Section
3.12(a), whether or not set forth in Section 3.12(a) of the Maritime Bank
Disclosure Schedule, is referred to herein as a "Maritime Bank Contract," and
Maritime Bank has not received notice of, nor do any of its executive officers
know of, any violation of any Maritime Bank Contract.
(b) (i) Each Maritime Bank Contract is valid and binding and in full
force and effect, (ii) Maritime Bank has in all material respects performed all
obligations required to be performed by it to date under each Maritime Bank
Contract, and (iii) no event or condition exists which constitutes or, after
notice or lapse of time or both, would constitute, a material default on the
part of Maritime Bank under any such Maritime Bank Contract.
3.13 AGREEMENTS WITH REGULATORY AGENCIES.
Neither Maritime Bank nor any of its affiliates is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or has adopted
any board resolutions at the request of (each, whether or not set forth at
Section 3.13 of the Maritime Bank Disclosure Schedule, a "Regulatory Agreement")
any Governmental Entity that restricts the conduct of its business or that in
any manner relates to its capital adequacy, its credit policies, its management
or its business, nor has Maritime Bank been advised by any Governmental Entity
that it is considering issuing or requesting any Regulatory Agreement.
3.14 STATE TAKEOVER LAWS; CERTIFICATE OF INCORPORATION.
The Board of Directors of Maritime Bank has approved this Agreement, the
Bank Merger Agreement and the Option Agreement pursuant to Section 13.3 of
Maritime Bank's Certificate of Incorporation such that the voting and price
provisions of Sections 13.2 and 13.3(b) of the Certificate of Incorporation will
not apply to this Agreement, the Bank Merger Agreement or the Option Agreement,
or any of the transactions contemplated hereby or thereby, and such approval is
irrevocable within the meaning of Section 13.3(d) of Maritime Bank's Certificate
of Incorporation. The Board of Directors of Maritime Bank has approved Maritime
Bank entering into this Agreement, the Bank Merger Agreement and the Option
Agreement, and the transactions contemplated hereby and thereby, such
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that under the Connecticut Banking Law, the Connecticut Corporation Law and
Maritime Bank's Certificate of Incorporation, the only vote of Maritime Bank
stockholders necessary to consummate the transactions contemplated hereby
(including the Merger and issuance under the Option Agreement) is the approval
of this Agreement, the Merger and the other transactions contemplated hereby by
the affirmative vote of at least two-thirds of the issued and outstanding shares
of Maritime Bank Common Stock.
3.15 ENVIRONMENTAL MATTERS.
(a) Maritime Bank is in compliance in all material respects with all
applicable federal and state laws and regulations relating to pollution or
protection of the environment (including without limitation, laws and
regulations relating to emissions, discharges, releases and threatened releases
of Hazardous Material (as hereinafter defined), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials;
(b) There is no suit, claim, action, proceeding, investigation or
notice pending or to the knowledge of Maritime Bank's directors and executive
officers threatened (or past or present actions or events that could form the
basis of any such suit, claim, action, proceeding, investigation or notice), in
which Maritime Bank has been or, with respect to threatened suits, claims,
actions, proceedings, investigations or notices may be, named as a defendant (x)
for alleged noncompliance (including by any predecessor), with any environmental
law, rule or regulation or (y) relating to any material release or threatened
release into the environment of any Hazardous Material, whether or not occurring
at or on a site owned, leased or operated by Maritime Bank;
(c) To the knowledge of Maritime Bank's directors and executive
officers, during the period of Maritime Bank's ownership or operation of any of
its properties, there has not been any material release of Hazardous Material
in, on, under or affecting any such property.
(d) To the knowledge of Maritime Bank's executive officers, Maritime
Bank has not made or participated in any loan to any person who is subject to
any suit, claim, action, proceeding, investigation or notice, pending or
threatened, with respect to (i) any alleged noncompliance as to any property
securing such loan with any environmental law, rule or regulation, or (ii) the
release or the threatened release into the environment of any Hazardous Material
at a site owned, leased or operated by such person on any property securing such
loan.
(e) For purposes of this Section 3.15, the term "Hazardous Material"
means any hazardous waste, petroleum product, polychlorinated biphenyl,
chemical, pollutant, contaminant, pesticide, radioactive substance, or other
toxic material, or other material or substance (in each such case, other than
small quantities of such substances in retail containers) regulated under any
applicable environmental or public health statute, law, ordinance, rule or
regulation.
(f) No real property owned or leased by Maritime Bank as other real
estate owned ("OREO") or otherwise, or owned or controlled by Maritime Bank as a
trustee or fiduciary meets the statutory criteria of an "Establishment" as that
term is defined pursuant to Section 22a-134(3) of the General Statutes of
Connecticut.
3.16 RESERVES FOR LOSSES.
All reserves or other allowances for possible losses reflected in Maritime
Bank's most recent financial statements referred to in Section 3.6(a) hereof as
of December 31, 1997 and September 30, 1998 complied with all Laws and are
adequate under GAAP. Maritime Bank has not been notified by the FDIC, the
Connecticut Commissioner or Maritime Bank's independent auditor, in writing or
otherwise, that such reserves are inadequate or that the practices and policies
of Maritime Bank in
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establishing such reserves and in accounting for delinquent and classified
assets generally fail to comply with applicable accounting or regulatory
requirements, or that the FDIC, the Connecticut Commissioner or Maritime Bank's
independent auditor believes such reserves to be inadequate or inconsistent with
the historical loss experience of Maritime Bank. Maritime Bank has previously
furnished Webster with a complete list of all extensions of credit and OREO that
have been classified by any bank examiner (regulatory or internal) as other
loans specially mentioned, special mention, substandard, doubtful, loss,
classified or criticized, credit risk assets, concerned loans or words of
similar import. Maritime Bank agrees to update such list no less frequently than
monthly after the date of this Agreement until the earlier of the Closing Date
or the date that this Agreement is terminated in accordance with Section 8.1
hereof. All OREO held by Maritime Bank is being carried net of reserves at the
lower of cost or net realizable value.
3.17 PROPERTIES AND ASSETS.
Section 3.17 of the Maritime Bank Disclosure Schedule lists (i) all real
property owned by Maritime Bank; (ii) each real property lease, sublease or
installment purchase arrangement to which Maritime Bank is a party; (iii) a
description of each contract for the purchase, sale, or development of real
estate to which Maritime Bank is a party; and (iv) all items of Maritime Bank's
tangible personal property and equipment with a book value of $25,000 or more or
having an annual lease payment of $10,000 or more. Except for (a) items
reflected in Maritime Bank's financial statements as of December 31, 1997
referred to in Section 3.6(a) hereof, (b) exceptions to title that do not
interfere materially with Maritime Bank's use and enjoyment of owned or leased
real property (other than OREO), (c) liens for current real estate taxes not yet
delinquent, or being contested in good faith, properly reserved against (and
reflected on the financial statements referred to in Section 3.6(a) above), (d)
properties and assets sold or transferred in the ordinary course of business
consistent with past practices since December 31, 1997, and (e) items listed in
Section 3.17 of the Maritime Bank Disclosure Schedule, Maritime Bank has good
and, as to owned real property, marketable and insurable title to all its
properties and assets, reflected in the financial statements of Maritime Bank as
of December 31, 1997, free and clear of all liens, claims, charges and other
encumbrances. Maritime Bank, as lessee, has the right under valid and subsisting
leases to occupy, use and possess all property leased by it, and there has not
occurred under any such lease any material breach, violation or default by
Maritime Bank, and Maritime Bank has not experienced any material uninsured
damage or destruction with respect to such properties since December 31, 1997.
All properties and assets used by Maritime Bank are in good operating condition
and repair suitable for the purposes for which they are currently utilized and
comply in all material respects with all Laws relating thereto now in effect or
scheduled to come into effect. Maritime Bank enjoys peaceful and undisturbed
possession under all leases for the use of all property under which it is the
lessee, and all leases to which Maritime Bank is a party are valid and binding
obligations in accordance with the terms thereof. Maritime Bank is not in
material default with respect to any such lease, and there has occurred no
default by Maritime Bank or event which with the lapse of time or the giving of
notice, or both, would constitute a material default under any such lease. There
are no Laws, conditions of record, or other impediments which interfere with the
intended use by Maritime Bank of any of the property owned, leased, or occupied
by it.
3.18 INSURANCE.
Section 3.18 of the Maritime Bank Disclosure Schedule contains a true,
correct and complete list of all insurance policies and bonds maintained by
Maritime Bank, including the name of the insurer, the policy number, the type of
policy and any applicable deductibles, and all such insurance policies and bonds
(or other insurance policies and bonds that have, from time to time, in respect
of the nature of the risks insured against and amount of coverage provided, been
substantially similar in kind and amount to that customarily carried by parties
similarly situated who own properties and engage in businesses substantially
similar to that of Maritime Bank) are in full force and effect and have been in
full force and effect as of the times they were supposed to cover. As of the
date hereof, Maritime Bank has not received any notice of cancellation or
amendment of any such policy or bond or is in default
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under any such policy or bond, no coverage thereunder is being disputed and all
claims thereunder have been filed in a timely fashion. The existing insurance
carried by Maritime Bank is and will continue to be, in respect of the nature of
the risks insured against and the amount of coverage provided, substantially
similar in kind and amount to that customarily carried by parties similarly
situated who own properties and engage in businesses substantially similar to
that of Maritime Bank, and is sufficient for compliance by Maritime Bank with
all requirements of Law and agreements to which Maritime Bank is subject or is
party. True, correct and complete copies of all such policies and bonds
reflected at Section 3.18 of the Maritime Bank Disclosure Schedule, as in effect
on the date hereof, have been delivered to Webster.
3.19 COMPLIANCE WITH APPLICABLE LAWS.
Maritime Bank has complied in all material respects with all Laws
applicable to it or to the operation of its business. Maritime Bank has not
received any notice of any alleged or threatened claim, violation, or liability
under any such Laws that has not heretofore been cured and for which there is no
remaining liability.
3.20 LOANS.
As of the date hereof:
(a) All loans owned by Maritime Bank, or in which Maritime Bank has an
interest, comply in all material respects with all Laws, including, but not
limited to, applicable usury statutes, underwriting and recordkeeping
requirements and the Truth in Lending Act, the Equal Credit Opportunity Act, and
the Real Estate Settlement Procedures Act, and other applicable consumer
protection statutes and the regulations thereunder.
(b) All loans owned by Maritime Bank, or in which Maritime Bank has an
interest, have been made or acquired by Maritime Bank in accordance with board
of director-approved loan policies and all of such loans are collectible, except
to the extent reserves have been made against such loans in Maritime Bank's
financial statements at September 30, 1998 referred to in Section 3.6(a) hereof.
Maritime Bank holds mortgages contained in its loan portfolio for its own
benefit to the extent of its interest shown therein; such mortgages evidence
liens having the priority indicated by their terms, subject, as of the date of
recordation or filing of applicable security instruments, only to such
exceptions as are discussed in attorneys' opinions regarding title or in title
insurance policies in the mortgage files relating to the loans secured by real
property or are not material as to the collectability of such loans; and all
loans owned by Maritime Bank are with full recourse to the borrowers, and
Maritime Bank has taken no action which would result in a waiver or negation of
any rights or remedies available against the borrower or guarantor, if any, on
any loan. All applicable remedies against all borrowers and guarantors are
enforceable except as may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting creditors' rights and except as may be limited by
the exercise of judicial discretion in applying principles of equity. Except as
set forth at Section 3.20 of the Maritime Bank Disclosure Schedule, all loans
purchased or originated by Maritime Bank and subsequently sold by Maritime Bank
have been sold without recourse to Maritime Bank and without any liability under
any yield maintenance or similar obligation. True, correct and complete copies
of loan delinquency reports as of September 30, 1998 prepared by Maritime Bank,
which reports include all loans delinquent or otherwise in default, have been
furnished to Webster. True, correct and complete copies of the currently
effective lending policies and practices of Maritime Bank also have been
furnished to Webster.
(c) Except as set forth at Section 3.20(c) of the Maritime Bank
Disclosure Schedule, each outstanding loan participation sold by Maritime Bank
was sold with the risk of non-payment of all or any portion of that underlying
loan to be shared by each participant (including Maritime Bank) proportionately
to the share of such loan represented by such participation without recourse of
such
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other lender or participant to Maritime Bank for payment or repurchase of the
amount of such loan represented by the participation or liability under any
yield maintenance or similar obligation. Maritime Bank has properly fulfilled
its contractual responsibilities and duties in any loan in which it acts as the
lead lender or servicer and has complied with its duties as required under
applicable regulatory requirements.
(d) Maritime Bank has properly perfected or caused to be properly
perfected all security interests, liens, or other interests in any collateral
securing any loans made by it.
3.21 AFFILIATES.
Each director, executive officer and other person who is an "affiliate"
(for purposes of Rule 145 under the Securities Act of 1933, as amended (the
"Securities Act")) of Maritime Bank is listed at Section 3.21 of the Maritime
Bank Disclosure Schedule. Each director (including the President and Chief
Executive Officer) and any other affiliate of Maritime Bank who is not an
executive officer has delivered to Webster, concurrently with the execution of
this Agreement, the Maritime Bank Stockholder Agreement in the form attached
hereto as Exhibit C. The Maritime Bank Stockholder Agreement has been duly and
validly executed and delivered by each person that is a party thereto (assuming
due authorization, execution and delivery by Webster) and upon approval by the
Connecticut Commissioner, will constitute the valid and binding obligation of
such person, enforceable against such person in accordance with its terms,
except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
3.22 OWNERSHIP OF WEBSTER COMMON STOCK.
Except as set forth at Section 3.22 of the Maritime Bank Disclosure
Schedule, neither Maritime Bank nor any of its affiliates or associates (as
defined in the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(i) beneficially own, directly or indirectly, or (ii) is a party to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, in each case, any shares of outstanding capital stock of
Webster (other than those agreements, arrangements or understandings
specifically contemplated hereby).
3.23 FAIRNESS OPINION.
Maritime Bank has received an opinion from O & Co. to the effect that, in
its opinion, the consideration to be paid to stockholders of Maritime Bank
hereunder is fair to such stockholders from a financial point of view (the
"Fairness Opinion"), and O & Co. has consented to the inclusion of the Fairness
Opinion in the Registration Statement, it being understood that O & Co. shall
have the right to review and comment upon the Registration Statement.
3.24 YEAR 2000 COMPLIANCE.
Maritime Bank has taken all reasonable steps necessary to address the
software, accounting and record keeping issues raised in order to be
substantially Year 2000 compliant on or before the end of 1999 and Maritime Bank
does not expect the future cost of addressing such issues to be material.
Maritime Bank has not received a rating of less than satisfactory from any bank
regulatory agency with respect to Year 2000 compliance. Maritime Bank is in
compliance with all guidelines provided by the FDIC and the Federal Financial
Institution's Examination Council regarding Year 2000 issues.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF WEBSTER
Webster, on behalf of itself and its wholly owned subsidiary, Webster Bank,
hereby makes the following representations and warranties to Maritime Bank as
set forth in this Article IV, each of which is being relied upon by Maritime
Bank as a material inducement to enter into and perform this Agreement.
4.1 CORPORATE ORGANIZATION.
(a) Webster is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Webster has the corporate
power and corporate authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties or
assets owned or leased by it makes such licensing or qualification necessary.
Webster is duly registered as a savings and loan holding company with the OTS
under HOLA. The Restated Certificate of Incorporation, as amended ("Certificate
of Incorporation"), and Bylaws, as amended ("Bylaws"), of Webster, copies of
which have previously been made available to Maritime Bank, are true, correct
and complete copies of such documents as in effect as of the date of this
Agreement.
(b) Webster Bank is a federal savings bank chartered by the OTS under
the laws of the United States with its main office in the State of Connecticut.
Webster Bank has the corporate power and corporate authority to own or lease all
of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties or assets owned or leased by it makes such licensing or
qualification necessary. The Charter and By-Laws of Webster Bank, copies of
which have previously been made available to Maritime Bank, are true, correct
and complete copies of such documents as in effect as of the date of this
Agreement.
4.2 CAPITALIZATION.
(a) The authorized capital stock of Webster consists of 50,000,000
shares of Webster Common Stock, of which 37,943,394 shares were outstanding (net
of 410,030 treasury shares) at September 30, 1998 and 3,000,000 shares of serial
preferred stock, par value $.01 per share ("Webster Preferred Stock"), none of
which were outstanding at September 30, 1998. At such date, there were options
outstanding to purchase 2,357,590 shares of Webster Common Stock. All of the
issued and outstanding shares of Webster Common Stock have been duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. As of the
date of this Agreement, except as set forth above, Webster does not have and is
not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of Webster Common Stock or Webster Preferred Stock or any other
equity security of Webster or any securities representing the right to purchase
or otherwise receive any shares of Webster Common Stock or Webster Preferred
Stock, other than pursuant to the Rights Agreement. The shares of Webster Common
Stock to be issued pursuant to the Merger are authorized and, at the Effective
Time, all such shares will be validly issued, fully paid, nonassessable and free
of preemptive rights, with no personal liability attaching to the ownership
thereof.
(b) The authorized capital stock of Webster Bank consists of 2,000
shares of common stock, par value $.01 per share, 1000 of which are issued and
outstanding, and 1,000 shares of serial preferred stock, par value $.01 per
share, none of which are issued and outstanding. The outstanding shares of
common stock of Webster Bank are owned by Webster free and clear of all liens,
charges, encumbrances and security interests whatsoever, and all of such shares
are duly authorized
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and validly issued and fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to ownership thereof.
4.3 AUTHORITY; NO VIOLATION.
(a) Webster has full corporate power and corporate authority to
execute and deliver this Agreement and the Option Agreement and to consummate
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly approved by the Board
of Directors of Webster. No other corporate proceedings on the part of Webster
are necessary to approve this Agreement or the Option Agreement or to consummate
the transactions contemplated hereby or thereby. This Agreement has been, and
the Option Agreement will be, duly and validly executed and delivered by Webster
and (assuming due authorization, execution and delivery by Maritime Bank) will
constitute valid and binding obligations of Webster, enforceable against Webster
in accordance with their terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally.
(b) Webster Bank has full corporate power and authority to execute and
deliver this Agreement and the Bank Merger Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Bank Merger Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly approved by the Board
of Directors of Webster Bank and by Webster as the sole shareholder of Webster
Bank. All corporate proceedings on the part of Webster Bank necessary to
consummate the transactions contemplated hereby and thereby will have been taken
prior to the Effective Time. This Agreement has been, and the Bank Merger
Agreement will be, duly and validly executed and delivered by Webster Bank and
(assuming due authorization, execution and delivery by Maritime Bank) will
constitute valid and binding obligations of Webster Bank, enforceable against
Webster Bank in accordance with their terms, except as enforcement may be
limited by general principles of equity whether applied in a court of law or a
court of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
(c) Neither the execution and delivery of this Agreement by Webster
and Webster Bank, the Bank Merger Agreement by Webster Bank, or the Option
Agreement by Webster, nor the consummation by Webster or Webster Bank, as the
case may be, of the transactions contemplated hereby or thereby, nor compliance
by Webster or Webster Bank with any of the terms or provisions hereof or
thereof, will (i) violate any provision of the Certificate of Incorporation or
Bylaws of Webster or the Charter or By-Laws of Webster Bank, as the case may be,
or (ii) assuming that the consents and approvals referred to in Section 4.4
hereof are duly obtained, (x) violate any Laws applicable to Webster, Webster
Bank or any of their respective properties or assets, or (y) violate, conflict
with, result in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of Webster or
Webster Bank under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Webster or Webster Bank is a party, or by
which they or any of their respective properties or assets may be bound or
affected.
4.4 CONSENTS, APPROVALS AND REPORTS.
(a) Except for (i) the filing of applications and notices, as
applicable, as to the Merger with the OTS under the HOLA and the Bank Merger Act
and approval of such applications and notices, (ii) the filing and approval of
the State Banking Approvals, (iii) the filing with the Connecticut
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Commissioner of an acquisition statement pursuant to Section 36a-184 of the
Connecticut Banking Law prior to the acquisition of more than 10% of the
Maritime Bank Common Stock pursuant to the Option Agreement, if not exempt, (iv)
the filing of the Maritime Bank Stockholder Agreement with the Connecticut
Commissioner and the approval of such agreement, (v) the filing with the SEC of
the Registration Statement, (vi) the approval of this Agreement by the requisite
vote of the shareholders of Maritime Bank, (vii) the filings with the OTS and
the Connecticut Secretary of State required in connection with the Bank Merger
Agreement, (viii) such filings, authorizations and approvals as are required to
be made or obtained under the securities or "Blue Sky" laws of various states or
with The Nasdaq Stock Market, Inc. (or such other exchange as may be applicable)
in connection with the issuance of the shares of Webster Common Stock pursuant
to this Agreement, and (ix) any necessary notices, filings, authorizations,
approvals or consents of third parties, no consents or approvals of or filings
or registrations with any Governmental Entity or third party are necessary in
connection with (1) the execution and delivery by Webster and Webster Bank of
this Agreement, (2) the execution and delivery by Webster Bank of the Bank
Merger Agreement, (3) the execution and delivery by Webster of the Option
Agreement, (4) the consummation by Webster of the transactions contemplated
hereby, and (5) the consummation by Webster Bank of the Merger, except, in each
case, for such consents, approvals or filings, the failure of which to obtain
will not have a Material Adverse Effect on the ability of Maritime Bank to
consummate the transactions contemplated hereby or thereby.
(b) Webster hereby represents to Maritime Bank that it has no
knowledge of any reason why approval or effectiveness of any of the
applications, notices or filings referred to in Section 4.4(a) hereof cannot be
obtained or granted on a timely basis.
(c) Webster and Webster Bank have filed all reports, registrations and
statements, together with any amendments required to be made with respect
thereto, that they were required to file since December 31, 1994, with (i) the
OTS, (ii) the State Regulators, (iii) the SEC and (iv) the Regulatory Agencies.
Except for normal examinations conducted by a Regulatory Agency in the regular
course of the business of Webster and its Subsidiaries, no Governmental Entity
is conducting, or has conducted, any proceeding or investigation into the
business or operations of Webster since December 31, 1994.
4.5 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
Webster has previously delivered to Maritime Bank true, correct and
complete copies of (a) the consolidated statements of condition of Webster and
its Subsidiaries as of December 31 for the fiscal years 1996 and 1997 and the
related consolidated statements of income, comprehensive income, shareholders'
equity and cash flows for the fiscal years ended 1995 through 1997, inclusive,
as reported in Webster's Current Report on Form 8-K filed with the SEC on July
23, 1998 under the Exchange Act, in each case accompanied by the audit report of
KPMG LLP, independent public accountants with respect to Webster, and (b) the
unaudited consolidated statement of condition of Webster and its Subsidiaries as
of September 30, 1998 and the related comparative unaudited statements of
operations and cash flows for the nine month periods ended September 30, 1997
and 1998. The financial statements referred to in this Section 4.5 (including
the related notes, where applicable) fairly present, and the financial
statements referred to in Section 6.8 hereof will fairly present (subject, in
the case of the unaudited statements, to recurring audit adjustments normal in
nature and amount), the results of the consolidated operations and consolidated
financial condition of Webster and its Subsidiaries for the respective fiscal
periods or as of the respective dates therein set forth; each of such statements
(including the related notes, where applicable) comply, and the financial
statements referred to in Section 6.8 hereof will comply, with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto; and each of such statements (including the related notes,
where applicable) has been, and the financial statements referred to in Section
6.8 hereof will be, prepared in accordance with GAAP during the periods
involved, except as indicated in such statements or in the notes thereto or, in
the case of unaudited statements, as permitted by Form 10-Q. Webster's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997 and all
subsequently filed
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reports under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act comply in
all material respects with the appropriate requirements for such reports under
the Exchange Act, and Webster has previously delivered or made available to
Maritime Bank true, correct and complete copies of such reports. The books and
records of Webster and Webster Bank have been, and are being, maintained in all
material respects in accordance with GAAP and any other applicable legal and
accounting requirements.
4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as disclosed in Webster's filings with the SEC on any of Forms 10-K,
10-Q or 8-K during 1998, true, correct and complete copies of which have
previously been delivered to Maritime Bank, since December 31, 1997, no event
has occurred which has had, individually or in the aggregate, a Material Adverse
Effect on Webster.
4.7 OWNERSHIP OF MARITIME BANK COMMON STOCK; AFFILIATES AND ASSOCIATES.
Except as contemplated by this Agreement, neither Webster nor any of its
affiliates or associates (as defined in the Exchange Act) (i) beneficially own,
directly or indirectly, or (ii) is a party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of, in
each case, more than five percent of the outstanding capital stock of Maritime
Bank, excluding the shares of Maritime Bank Common Stock issuable pursuant to
the Option Agreement to be executed subsequent to the execution of the
Agreement.
4.8 EMPLOYEE BENEFIT PLANS.
Webster has heretofore made available for inspection, or delivered (if
requested) to Maritime Bank true, correct and complete copies of each employee
benefit plan arrangement or agreement that is maintained as of the date of this
Agreement (the "Webster Plans") by Webster or any of its Subsidiaries. No
"accumulated funding deficiency" as defined in Section 302(a)(2) of ERISA or
Section 412 of the Code, whether or not waived, and no "unfunded current
liability" as determined under Section 412(l) of the Code exists with respect to
any Webster Plan. The Webster Plans are in compliance in all material respects
with the applicable requirements of ERISA and the Code.
4.9 AGREEMENTS WITH REGULATORY AGENCIES.
Neither Webster nor any of its affiliates is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or has adopted
any board resolutions at the request of any Governmental Entity that restricts
the conduct of its business or that in any manner relates to its capital
adequacy, its credit policies, its management or its business, nor has Webster,
nor Webster Bank been advised by any Governmental Entity that it is considering
issuing or requesting any Regulatory Agreement.
4.10 YEAR 2000 COMPLIANCE.
Webster and Webster Bank have taken all reasonable steps necessary to
address the software, accounting and record keeping issues raised in order to be
substantially Year 2000 compliant on or before the end of 1999 and Webster does
not expect the future cost of addressing such issues to be material except as
described in Webster's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997. Neither Webster nor Webster Bank has received a rating of
less than satisfactory from any bank regulatory agency with respect to Year 2000
compliance. Webster and Webster Bank are in compliance with all guidelines
provided by the OTS and the Federal Financial Institution's Examination Council
regarding Year 2000 issues.
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ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 COVENANTS OF MARITIME BANK.
During the period from the date of this Agreement and continuing until the
Effective Time, except as expressly contemplated or permitted by this Agreement,
the Bank Merger Agreement or the Option Agreement or with the prior written
consent of Webster, Maritime Bank shall carry on its businesses in the ordinary
course consistent with past practices and consistent with prudent banking
practices. Maritime Bank will use its reasonable efforts to (x) preserve its
business organization intact, (y) keep available to itself and Webster the
present services of the employees of Maritime Bank and (z) preserve for itself
and Webster the goodwill of the customers of Maritime Bank and others with whom
business relationships exist. Without limiting the generality of the foregoing,
and except as set forth in the Maritime Bank Disclosure Schedule or as otherwise
contemplated by this Agreement or consented to by Webster in writing, Maritime
Bank shall not:
(a) declare or pay any dividends on, or make other distributions in
respect of, any of its capital stock (except for the payment of regular
quarterly cash dividends by Maritime Bank on the Maritime Bank Common Stock in
accordance with Section 5.1(a) of the Maritime Bank Disclosure Schedule with
declaration, record and payment dates corresponding to the quarterly dividends
paid by Maritime Bank during its fiscal year ended December 31, 1997); provided,
however, that under no circumstances shall Maritime Bank declare, set aside or
pay any dividends if it would result in the holders of Maritime Bank Common
Stock receiving more than four dividend payments in either of 1998 or 1999, when
considered with anticipated Webster dividends based on past practice, nor shall
Maritime Bank be prohibited from declaring, setting aside or paying dividends
consistent herewith if the Closing Date is such that holders of Maritime Bank
Common Stock would receive fewer than four dividends in fiscal 1998, when
considered with anticipated Webster dividends based on past practice, and it
being further understood that the parties hereto intend for Maritime Bank to pay
its regular quarterly cash dividends to stockholders as to any completed fiscal
quarter prior to the Effective Time;
(b) (i) split, combine or reclassify any shares of its capital stock
or issue, authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock except upon
the exercise or fulfillment of rights or options issued or existing pursuant to
the Maritime Bank Stock Plan in accordance with their present terms, all to the
extent outstanding and in existence on the date of this Agreement, and except
pursuant to the Option Agreement, or (ii) repurchase, redeem or otherwise
acquire (except for the acquisition of Trust Account Shares and DPC Shares, as
such terms are defined in Section 1.4(c) hereof), any shares of the capital
stock of Maritime Bank, or any securities convertible into or exercisable for
any shares of the capital stock of Maritime Bank;
(c) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares, or enter into any agreement with respect to any of the
foregoing, other than (i) the issuance of Maritime Bank Common Stock pursuant to
stock options or similar rights to acquire Maritime Bank Common Stock granted
pursuant to the Maritime Bank Stock Plan and outstanding prior to the date of
this Agreement, in each case in accordance with their present terms and (ii)
pursuant to the Option Agreement;
(d) amend its Certificate of Incorporation, Bylaws or other similar
governing documents;
(e) authorize or permit any of its officers, directors, employees or
agents to, directly or indirectly, solicit, initiate or encourage any inquiries
relating to, or the making of any proposal from, hold substantive discussions or
negotiations with or provide any information to, any person, entity or
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group (other than Webster) concerning any Acquisition Transaction (as defined
below). Notwithstanding the foregoing, Maritime Bank may provide information in
connection with a possible Acquisition Transaction if the Board of Directors of
Maritime Bank following receipt of written advice of counsel, reasonably
determines in the exercise of its fiduciary duty that such information must be
furnished. Maritime Bank shall promptly communicate to Webster the material
terms of any proposal, whether written or oral, which it may receive in respect
of any Acquisition Transaction and whether it is providing information in
connection with, or which may lead to, an Acquisition Transaction with a third
party. Maritime Bank will promptly cease and cause to be terminated any existing
activities, discussions or negotiations previously conducted with any parties
other than Webster with respect to any of the foregoing. As used in this
Agreement, "Acquisition Transaction" shall mean any offer, proposal or
expression of interest relating to (i) any tender or exchange offer, (ii)
merger, consolidation or other business combination involving Maritime Bank, or
(iii) the acquisition in any manner of a substantial equity interest in, or a
substantial portion of the assets and/or liabilities, out of the ordinary course
of business, of, Maritime Bank other than the transactions contemplated or
permitted by this Agreement, the Bank Merger Agreement and the Option Agreement;
(f) make capital expenditures aggregating in excess of $25,000;
(g) enter into any new line of business;
(h) acquire or agree to acquire, by merging or consolidating with, or
by purchasing an equity interest in or the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire any assets, other than in
connection with foreclosures, settlements in lieu of foreclosure or troubled
loan or debt restructurings, or in the ordinary course of business consistent
with prudent banking practices;
(i) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue or in any of the conditions to the Merger set forth in
Article VII not being satisfied, or in a violation of any provision of this
Agreement, the Bank Merger Agreement or the Option Agreement, except, in every
case, as may be required by applicable law;
(j) change its methods of accounting in effect at December 31, 1997
except as required by changes in GAAP or regulatory accounting principles as
concurred to by Webster's independent auditors;
(k) (i) except as required by applicable law or to maintain
qualification pursuant to the Code, adopt, amend, renew or terminate any Plan or
any other agreement, arrangement, plan or policy relating to one or more of its
current or former directors, officers, employees or independent contractors,
(ii) increase in any manner the compensation of any employee or director or pay
any benefit not required by any plan or agreement as in effect as of the date
hereof (including, without limitation, the granting of stock options, stock
appreciation rights, restricted stock, stock units or performance units or
shares), (iii) enter into, modify or renew any contract, agreement, commitment
or arrangement providing for the payment to any director, officer or employee of
compensation or benefits, (iv) hire any new employee at an annual compensation
in excess of $20,000, (v) pay expenses of any employees or directors for
attending conventions or similar meetings which conventions or meetings are held
after the date hereof, (vi) promote to a rank of vice president or more senior
any employee, (vii) pay any retention or other bonuses, or any severance, to any
employee, (viii) make any contribution to any Plan that is subject to Title IV
of ERISA in excess of the amount required to satisfy applicable minimum funding
requirements under ERISA and the Code, or (ix) make any nondeductible
contribution to any Plan;
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(l) incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity;
(m) sell, purchase, enter into a lease, relocate, open or close any
banking or other office, or file an application pertaining to such action with
any Governmental Entity;
(n) make any equity investment or commitment to make such an
investment in real estate or in any real estate development project, other than
in connection with foreclosure, settlements in lieu of foreclosure, or troubled
loan or debt restructuring, in the ordinary course of business consistent with
past banking practices;
(o) make any new loans to, modify the terms of any existing loan to,
or engage in any other transactions (other than routine banking transactions)
with, any Affiliated Person of Maritime Bank;
(p) make any investment, or incur deposit liabilities, other than in
the ordinary course of business consistent with past practices, including
deposit pricing, and which would not change the risk profile of Maritime Bank
based on its existing deposit and lending policies or make any equity
investments;
(q) 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;
(r) originate (i) any loans except in accordance with existing
Maritime Bank lending policies, (ii) commercial business loans in excess of
$250,000, (iii) unsecured consumer loans in excess of $10,000, (iv) commercial
real estate first mortgage loans in excess of $250,000 as to any loan or
$500,000 in the aggregate as to related loans, or loans to related persons, or
(v) land acquisition loans to borrowers who intend to construct a residence on
such land in excess of the lesser of 75% of the appraised value of such land or
$100,000, except in each case for loans for which written applications have been
received by Maritime Bank as of the date hereof and as set forth in Section
5.1(r) of the Maritime Bank Disclosure Schedule; provided, however, that (x)
Maritime Bank may renew existing lines of credit upon substantially the same
terms and conditions in accordance with existing Maritime Bank lending policies
without prior consultation with Webster, and (y) if Maritime Bank submits to
Webster a written proposal for an exception to the lending limitations set forth
in this Section 5.1(r), unless Webster notifies Maritime Bank within five
business days after receipt of the written proposal, Webster shall be deemed to
have consented to the proposal (for purposes of this provision, notice shall be
given in accordance with Section 5.1(r) of the Maritime Bank Disclosure
Schedule;
(s) 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 investments in any investment security with a maturity of
greater than one year;
(t) sell or purchase any mortgage loan servicing rights; or
(u) agree or commit to do any of the actions set forth in (a) - (t)
above.
The consent of Webster to any action by Maritime Bank that is not permitted by
any of the preceding paragraphs shall be evidenced by a writing signed by the
Chairman, Chief Executive Officer and President or any Executive Vice President
of Webster.
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5.2 COVENANTS OF WEBSTER.
During the period from the date of this Agreement and continuing until the
Effective Time, except as expressly contemplated or permitted by this Agreement
or the Option Agreement or with Maritime Bank's prior written consent, Webster
shall not, and shall not permit Webster Bank to:
(a) take any action that will result in (i) any of Webster's
representations and warranties set forth in this Agreement being or becoming
untrue, unless the failure of such representations or warranties to be true
would not, individually or in the aggregate, have a Material Adverse Effect on
Webster, or (ii) any of the conditions to the Merger set forth in Article VII
not being satisfied or in a violation of any provision of this Agreement, the
Bank Merger Agreement or the Option Agreement, except, in every case, as may be
required by applicable law; or
(b) take any other action that would materially adversely affect the
ability of Webster and Webster Bank to consummate the transactions contemplated
by this Agreement.
5.3 MERGER COVENANTS.
(a) Notwithstanding that Maritime Bank believes that it has
established all reserves and taken all provisions for possible loan losses
required by GAAP and applicable laws, rules and regulations, Maritime Bank
recognizes that Webster may have adopted different loan, accrual and reserve
policies (including loan classifications and levels of reserves for possible
loan losses). In that regard, and in general, from and after the date of this
Agreement to the Effective Time, Maritime Bank and Webster shall consult and
cooperate with each other in order to formulate the plan of integration for the
Merger, including, among other things, with respect to conforming, based upon
such consultation, Maritime Bank's loan, accrual and reserve policies to those
policies of Webster to the extent appropriate, provided, that any change in
Maritime Bank's policies in connection with such matters need not be effected
until the parties receive all necessary governmental and stockholder approvals
and consents to consummate the transactions contemplated hereby.
(b) If it becomes necessary under Nasdaq rules or applicable laws to
obtain Webster shareholder approval of this Agreement, the Merger or the other
transactions contemplated hereby, Webster shall take all steps necessary to
obtain the approval of its shareholders as promptly as possible. In connection
therewith, Webster shall take all steps necessary to duly call, give notice and
convene a meeting of its shareholders for such purpose.
5.4 COMPLIANCE WITH ANTITRUST LAWS.
Each of Webster and Maritime Bank shall use its reasonable best efforts to
resolve objections, if any, which may be asserted with respect to the Merger
under antitrust laws, including, without limitation, the Hart-Scott-Rodino Act.
In the event a suit is threatened or instituted challenging the Merger as
violative of antitrust laws, each of Webster and Maritime Bank shall use its
reasonable best efforts to avoid the filing of, or resist or resolve such suit.
Webster and Maritime Bank shall use their reasonable best efforts to take such
action as may be required: (a) by the Antitrust Division of the Department of
Justice or the Federal Trade Commission in order to resolve such objections as
either of them may have to the Merger under antitrust laws, or (b) by any
federal or state court of the United States, in any suit brought by a private
party or governmental entity challenging the Merger as violative of antitrust
laws, in order to avoid the entry of, or to effect the dissolution of, any
injunction, temporary restraining order, or other order which has the effect of
preventing the consummation of the Merger. Reasonable best efforts shall not
include, among other things and to the extent Webster so desires, the
willingness of Webster to accept an order agreeing to the divestiture, or the
holding separate, of any assets of Webster or Maritime Bank.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS.
(a) Upon the execution and delivery of this Agreement, Webster and
Maritime Bank (as to information to be included therein pertaining to Maritime
Bank) shall promptly cause to be prepared and filed with the SEC the
Registration Statement for the purpose of registering the Webster Common Stock
to be issued in the Merger. Webster and Maritime Bank shall use their reasonable
best efforts to have the Registration Statement declared effective by the SEC as
soon as possible after the filing. The parties shall cooperate in responding to
and considering any questions or comments from the SEC staff regarding the
information contained in the Registration Statement. If at any time after the
Registration Statement is filed with the SEC, and prior to the Closing Date, any
event relating to Maritime Bank is discovered which should be set forth in an
amendment of, or a supplement to, the Registration Statement (including, without
limitation, any change in the Fairness Opinion), Maritime Bank shall promptly
inform Webster and shall furnish Webster with all necessary information relating
to such event whereupon Webster shall promptly cause an appropriate amendment to
the Registration Statement to be filed with the SEC. Upon the effectiveness of
such amendment, Maritime Bank (if prior to the meeting of shareholders pursuant
to Section 6.3 hereof) will take all necessary action as promptly as practicable
to permit an appropriate amendment or supplement to be transmitted to its
shareholders entitled to vote at such meeting. Webster shall also use reasonable
efforts to obtain all necessary state securities law or "Blue Sky" permits and
approvals required to carry out the transactions contemplated by this Agreement
and the Bank Merger Agreement and Maritime Bank shall furnish all information
concerning Maritime Bank and the holders of Maritime Bank Common Stock as may be
reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including without limitation the Merger). Maritime Bank and Webster
shall have the right to review in advance, and to the extent practicable each
will consult the other on, in each case subject to applicable laws relating to
the exchange of information, all the information relating to Maritime Bank or
Webster and Webster Bank, as the case may be, which appears in any filing made
with, or written materials submitted to, any third party or any Governmental
Entity in connection with the transactions contemplated by this Agreement;
provided, however, that nothing contained herein shall be deemed to provide
either party with a right to review any information provided to any Governmental
Entity on a confidential basis in connection with the transactions contemplated
hereby. In exercising the foregoing right, each of the parties hereto shall act
reasonably and as promptly as practicable. The parties hereto agree that they
will consult with each other with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties and Governmental
Entities necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other apprised of the status of
matters relating to contemplation of the transactions contemplated herein.
(c) Maritime Bank shall, upon request, furnish Webster with all
information concerning Maritime Bank and its directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with the Registration Statement, the Proxy Statement/Prospectus or
any other statement, filing, notice or application made by or on behalf of
Webster or Webster Bank to any Governmental Entity in connection with the Merger
or the other transactions contemplated by this Agreement.
(d) Webster and Maritime Bank shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for
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consummation of the transactions contemplated by this Agreement which causes
such party to believe that there is a reasonable likelihood that any Requisite
Regulatory Approval (as defined in Section 7.1(c) hereof) will not be obtained
or that the receipt of any such approval will be materially delayed.
6.2 ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable Laws relating to
the exchange of information, Maritime Bank shall accord to the officers,
employees, accountants, counsel and other representatives of Webster and Webster
Bank access, during normal business hours during the period prior to the
Effective Time, to all its properties, books, contracts, commitments and records
and, during such period, Maritime Bank shall make available to Webster (i) a
copy of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to the requirements of federal
securities laws or federal or state banking laws and (ii) all other information
concerning its business, properties and personnel as Webster may reasonably
request. Webster shall receive notice of all meetings of the Maritime Bank's
Board of Directors and any committees thereof, and of any management committees
(in all cases, at least as timely as all Maritime Bank representatives to such
meetings are required to be provided notice). Up to two representatives of
Webster shall be permitted to attend all meetings of the Board of Directors
(except for the portion of such meetings which relate to the Merger or an
Acquisition Transaction or such other matters deemed confidential ("Confidential
Matters") of Maritime Bank) and such meetings of committees of the Board of
Directors and management of Maritime Bank which Webster desires. Webster will
hold all such information in confidence to the extent required by, and in
accordance with, the provisions of the confidentiality agreement which Webster
entered into with Maritime Bank and O& Co. dated August 18, 1998 (the
"Confidentiality Agreement").
(b) Upon reasonable notice and subject to applicable Laws relating to
the exchange of information, Webster shall, and shall cause Webster Bank to,
afford to the officers, employees, accountants, counsel and other
representatives of Maritime Bank, access, during normal business hours during
the period prior to the Effective Time, to such information regarding Webster as
shall be reasonably necessary for Maritime Bank to fulfill its obligations
pursuant to this Agreement or which may be reasonably necessary for Maritime
Bank to confirm that the representations and warranties of Webster contained
herein are true and correct and that the covenants of Webster contained herein
have been performed in all material respects. Maritime Bank will hold all such
information in confidence to the extent required by, and in accordance with, the
provisions of the Confidentiality Agreement.
(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein.
(d) Maritime Bank shall provide Webster with true, correct and
complete copies of all financial and other information provided to directors of
Maritime Bank in connection with meetings of their Boards of Directors or
committees thereof, which information shall be provided to Webster concurrently
with its provision to the directors of Maritime Bank.
(e) Maritime Bank acknowledges that Webster is in or may be in the
process of acquiring other businesses, banks and financial institutions and that
in connection with such acquisitions, information concerning Maritime Bank may
be required to be included in the registration statements, if any, for the sale
of securities of Webster or in SEC reports in connection with such acquisitions.
Maritime Bank agrees to provide Webster with any information, certificates,
documents or other materials about Maritime Bank as are reasonably necessary to
be included in such other SEC reports or registration statements, including
registration statements which may be filed by Webster prior to the Effective
Time. Maritime Bank shall use its reasonable best efforts to cause its attorneys
and accountants to provide Webster and any underwriters for Webster with any
consents, comfort letters, opinion letters, reports or information which are
necessary to complete the
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registration statements and applications for any such acquisition or issuance of
securities. Webster shall reimburse Maritime Bank for reasonable expenses thus
incurred by Maritime Bank should the transactions contemplated by this Agreement
be terminated for any reason.
6.3 SHAREHOLDER MEETING.
Maritime Bank shall take all steps necessary to duly call, give notice of,
convene and hold the Special Meeting of its shareholders within 42 days after
the Registration Statement becomes effective for the purpose of voting upon the
approval of this Agreement, the Merger and the other transactions contemplated
hereby. Management and the Board of Directors of Maritime Bank shall recommend
to Maritime Bank's shareholders approval of this Agreement, the Merger, and the
other transactions contemplated hereby, together with any matters incident
thereto, and shall oppose any third party proposal or other action that is
inconsistent with this Agreement or the consummation of the transactions
contemplated hereby, unless the Board of Directors of Maritime Bank reasonably
determines, based upon the written advice of Maritime Bank's legal counsel, that
such recommendation or opposition, as the case may be, would constitute a breach
of the exercise of its fiduciary duty. Maritime Bank and Webster shall
coordinate and cooperate with respect to the foregoing matters.
6.4 LEGAL CONDITIONS TO MERGER.
Each of Webster and Maritime Bank shall use their reasonable best efforts
(a) to take, or cause to be taken, all actions necessary, proper or advisable to
comply promptly with all legal requirements which may be imposed on such party
with respect to the Merger and, subject to the conditions set forth in Article
VII hereof, to consummate the transactions contemplated by this Agreement and
(b) to obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity and any other third party which is required to be obtained by Maritime
Bank or Webster in connection with the Merger and the other transactions
contemplated by this Agreement.
6.5 STOCK EXCHANGE LISTING.
Webster shall cause the shares of Webster Common Stock to be issued in the
Merger and pursuant to options referred to herein to be approved for quotation
on Nasdaq (or such other exchange on which the Webster Common Stock has become
listed, or approved for listing) prior to or at the Effective Time.
6.6 EMPLOYEES; EMPLOYMENT AND OTHER AGREEMENTS.
(a) To the extent permissible under the applicable provisions of the
Code and ERISA, for purposes of crediting periods of service for eligibility to
participate and vesting, but not for benefit accrual purposes, under the Webster
Bank 401(k) Plan and the Webster Bank Employee Stock Ownership Plan (but not
under the Webster Bank Defined Benefit Pension Plan), in the case of individuals
who are employees of Maritime Bank at the Effective Time and who become
employees of Webster Bank, periods of service with Maritime Bank before the
Effective Time shall be treated as if such service had been with Webster Bank.
Individuals who are employees of Maritime Bank at the Effective Time and who
become employees of Webster Bank shall be eligible to participate in the Webster
Bank Defined Benefit Pension Plan and in any other employee benefit plan (within
the meaning of ERISA Section 3(3)) maintained by Webster Bank on the same terms
and conditions as apply generally to other employees of Webster Bank.
(b) Webster Bank will pay severance in accordance with Maritime Bank's
written severance policies, true, correct and complete copies of which are set
forth at Section 6.6(b) of the Maritime Bank Disclosure Schedule.
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(c) Webster will cause Webster Bank to offer a position of at-will
employment to each of Maritime Bank's non-officer or non-managerial branch
office personnel in good standing as of the Effective Time at their existing
branch location or within 20 miles of the employee's place of employment as of
the Effective Time. In addition, Webster will use its reasonable best efforts in
connection with reviewing applicants for employment positions to give Maritime
Bank employees who are not offered positions at the Effective Time the same
consideration as is afforded Webster or Webster Bank employees for such position
in accordance with existing formal or informal policies. Webster will provide
outplacement assistance to Maritime Bank employees who are not offered positions
at the Effective Time.
(d) Following the Merger, Webster agrees that it shall honor the
existing written deferred compensation, employment, change of control and
severance contracts with directors and employees of Maritime Bank that are
specifically listed at Section 3.12(a) of the Maritime Bank Disclosure Schedule;
provided, however, that in making the foregoing agreement, except as otherwise
required by law, Webster will honor such contracts only to the extent that, as
represented at Section 3.11 hereof, none of such deferred compensation,
employment, change of control and severance contracts, nor any other Plan,
program, agreement or other arrangement, either individually or collectively,
provides for any payment by Maritime Bank that would not be deductible under
Code Sections 162(a)(1), 162(m) or 404 or that would constitute a "parachute
payment" within the meaning of Code Section 280G.
6.7 INDEMNIFICATION.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative, in which
any person who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or officer or
employee of Maritime Bank (the "Indemnified Parties") is, or is threatened to
be, made a party based in whole or in part on, or arising in whole or in part
out of, or pertaining to (i) the fact that he is or was a director, officer or
employee of Maritime Bank or any of their respective predecessors or (ii) this
Agreement or any of the transactions contemplated hereby, whether in any case
asserted or arising before or after the Effective Time, the parties hereto agree
to cooperate and defend against and respond thereto to the extent permitted by
applicable law and the Certificate of Incorporation and Bylaws of Maritime Bank.
It is understood and agreed that after the Effective Time, Webster shall
indemnify and hold harmless, as and to the fullest extent permitted by
applicable law and the Certificate of Incorporation and Bylaws of Webster or the
Charter and By-Laws of Webster Bank, as the case may be, each such Indemnified
Party against any losses, claims, damages, liabilities, costs, expenses
(including reasonable attorney's fees and expenses) judgments, fines and amounts
paid in settlement in connection with any such threatened or actual claim,
action, suit, proceeding or investigation, and in the event of any such
threatened or actual claim, action, suit, proceeding or investigation (whether
asserted or arising before or after the Effective Time), the Indemnified Parties
may retain counsel reasonably satisfactory to Webster; provided, however, that
(1) Webster shall have the right to assume the defense thereof and upon such
assumption Webster shall not be liable to any Indemnified Party for any legal
expenses of other counsel or any other expenses subsequently incurred by any
Indemnified Party in connection with the defense thereof, except that if Webster
elects not to assume such defense or counsel for the Indemnified Parties
reasonably advises the Indemnified Parties that there are issues which raise
conflicts of interest between Webster and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to Webster, and
Webster shall pay the reasonable fees and expenses of such counsel for the
Indemnified Parties, (2) Webster shall be obligated pursuant to this paragraph
to pay for only one firm of counsel for each Indemnified Party, and (3) Webster
shall not be liable for any settlement effected without its prior written
consent (which consent shall not be unreasonably withheld or delayed). Webster
shall have no obligation to advance expenses incurred in connection with a
threatened or pending action, suit or preceding in advance of final disposition
of such action, suit or proceeding, unless (i) Webster would be permitted to
advance such expenses pursuant to the General Corporation Law of the State of
Delaware (the "Delaware
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Corporation Law") and Webster's Certificate of Incorporation or Bylaws, and (ii)
Webster receives an undertaking by the Indemnified Party to repay such amount if
it is determined that such party is not entitled to be indemnified by Webster
pursuant to the Delaware Corporation Law and Webster's Certificate of
Incorporation or Bylaws. Any Indemnified Party wishing to claim indemnification
under this Section 6.7, upon learning of any such claim, action, suit,
proceeding or investigation, shall notify Webster thereof; provided, however,
that the failure to so notify shall not affect the obligations of Webster under
this Section 6.7 except to the extent such failure to notify materially
prejudices Webster. Webster's obligations under this Section 6.7 continue in
full force and effect for a period of two years from the Effective Time;
provided, however, that all rights to indemnification in respect of any claim
asserted or made within such period shall continue until the final disposition
of such claim.
(b) Webster shall use commercially reasonable efforts to cause the
persons serving as officers and directors of Maritime Bank immediately prior to
the Effective Time to be covered by a directors' and officers' liability
insurance policy ("Tail Insurance") of substantially the same coverage and
amounts containing terms and conditions which are generally not less
advantageous than Maritime Bank's current policy with respect to acts or
omissions occurring prior to the Effective Time which were committed by such
officers and directors in their capacity as such for an aggregate premium cost
for the Tail Insurance of not more than $100,000 and for a period not less than
two years.
6.8 SUBSEQUENT INTERIM AND ANNUAL FINANCIAL STATEMENTS.
As soon as reasonably available, but in no event more than 45 days after
the end of each fiscal quarter (other than the fourth fiscal quarter), Webster
will deliver to Maritime Bank its Quarterly Reports on Form 10-Q as filed with
the SEC under the Exchange Act, and Maritime Bank will deliver promptly to
Webster its unaudited financial statements for each fiscal quarter (other than
the fourth fiscal quarter). Webster shall deliver to Maritime Bank its Current
Reports on Form 8-K and Annual Reports on Form 10-K promptly after filing such
reports with the SEC. Maritime Bank will deliver promptly to Webster any
shareholder communications.
6.9 ADDITIONAL AGREEMENTS.
In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement or the Bank
Merger Agreement, or to vest the Surviving Bank with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, the proper officers and directors of each party to this
Agreement and Webster's Subsidiaries shall take all such necessary action as may
be reasonably requested by Webster.
6.10 ADVICE OF CHANGES.
Webster and Maritime Bank shall promptly advise the other party of any
change or event that, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect on it or to cause or
constitute a material breach of any of its representations, warranties or
covenants contained herein. From time to time prior to the Effective Time,
Maritime Bank will promptly supplement or amend its disclosure schedule
delivered in connection with the execution of this Agreement to reflect any
matter which, if existing, occurring or known at the date of this Agreement,
would have been required to be set forth or described in such disclosure
schedule or which is necessary to correct any information in such disclosure
schedule which has been rendered inaccurate thereby. No supplement or amendment
to such disclosure schedule shall have any effect for the purpose of determining
satisfaction of the conditions set forth in Sections 7.2(a) hereof, as the case
may be, or the compliance by Maritime Bank with the covenants set forth in
Section 5.1 hereof.
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6.11 CURRENT INFORMATION.
During the period from the date of this Agreement to the Effective Time,
Maritime Bank will cause one or more of its designated representatives to confer
on a regular and frequent basis (not less than monthly) with representatives of
Webster and to report the general status of the ongoing operations of Maritime
Bank. Maritime Bank will promptly notify Webster of any material change in the
normal course of business or in the operation of the properties of Maritime Bank
and of any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the institution
or the threat of litigation involving Maritime Bank, and will keep Webster fully
informed of such events.
6.12 EXECUTION AND AUTHORIZATION OF BANK MERGER AGREEMENT.
Prior to the Effective Time, (a) Webster shall approve the Bank Merger
Agreement as the sole shareholder of Webster Bank, and (b) Webster Bank and
Maritime Bank shall execute and deliver the Bank Merger Agreement.
6.13 CHANGE IN STRUCTURE.
Webster may elect to modify the structure of the transactions contemplated
by this Agreement as noted herein so long as (i) there are no material adverse
federal income tax consequences to the Maritime Bank shareholders as a result of
such modification, (ii) the consideration to be paid to the Maritime Bank
shareholders under this Agreement is not thereby changed or reduced in amount,
and (iii) such modification will not be reasonably likely to delay materially or
jeopardize receipt of any Requisite Regulatory Approvals. In the event that
Webster elects to change the structure of the Merger, the parties agree to
modify this Agreement and the various exhibits hereto to reflect such revised
structure. In such event, Webster shall prepare appropriate amendments to this
Agreement and the exhibits hereto for execution by the parties hereto. Webster
and Maritime Bank agree to cooperate fully with each other to effect such
amendments.
6.14 TRANSACTION EXPENSES OF MARITIME BANK.
(a) For planning purposes, Maritime Bank shall, within 15 days from
the date hereof, provide Webster with its estimated budget of
transaction-related expenses reasonably anticipated to be payable by Maritime
Bank in connection with this transaction, including the fees and expenses of
counsel, accountants, investment bankers and other professionals. Maritime Bank
shall promptly notify Webster if or when it determines that it will expect to
exceed its budget.
(b) Promptly after the execution of this Agreement, Maritime Bank
shall ask all of its attorneys and other professionals to render current and
correct invoices for all unbilled time and disbursements. Maritime Bank shall
accrue and/or pay all of such amounts as soon as possible.
(c) Maritime Bank shall advise Webster monthly of all out-of-pocket
expenses which Maritime Bank has incurred in connection with this transaction.
(d) Webster, in reasonable consultation with Maritime Bank, shall make
all arrangements with respect to the printing and mailing of the Proxy
Statement/Prospectus. Webster, if it deems necessary, also shall engage (at
Webster's expense) a proxy solicitation firm to assist in the solicitation of
proxies for the Special Meeting of Maritime Bank's shareholders. Maritime Bank
agrees to cooperate as to such matters.
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ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(A) SHAREHOLDER APPROVAL.
This Agreement, the Merger and the other transactions contemplated
hereby shall have been approved and adopted by the affirmative vote of the
holders of at least two-thirds of the issued and outstanding shares of Maritime
Bank Common Stock entitled to vote thereon.
(B) STOCK EXCHANGE LISTING.
The shares of Webster Common Stock which shall be issued in the Merger
(including the Webster Common Stock that may be issued upon exercise of the
options referred to in Section 1.6 hereof) upon consummation of the Merger shall
have been authorized for quotation on the Nasdaq (or such other exchange on
which the Webster Common Stock may become listed).
(C) OTHER APPROVALS.
All regulatory approvals required to consummate the transactions
contemplated hereby shall have been obtained and shall remain in full force and
effect and all statutory waiting periods in respect thereof shall have expired
(all such approvals and the expiration of all such waiting periods being
referred to herein as the "Requisite Regulatory Approvals"). No Requisite
Regulatory Approval shall contain a non-customary condition that Webster
reasonably determines to be burdensome or otherwise alter the benefits for which
it bargained in this Agreement.
(D) REGISTRATION STATEMENT.
The Registration Statement shall have become effective under the
Securities Act, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC.
(E) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY.
No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger or any of the other transactions
contemplated by this Agreement, the Bank Merger Agreement or the Option
Agreement shall be in effect. No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits, restricts or makes illegal consummation of
the Merger.
(F) FEDERAL TAX OPINION.
Webster shall have received from Hogan & Hartson L.L.P., Webster's
special counsel, an opinion to Webster and Maritime Bank, in form and substance
reasonably satisfactory to Webster and Maritime Bank, substantially to the
effect that on the basis of facts, representations, and assumptions set forth in
such opinion which are consistent with the state of facts existing at the time
of such opinion, the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code. In rendering
such opinion, such counsel may require and, to the
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extent such counsel deems necessary or appropriate, may rely upon
representations made in certificates of officers of Maritime Bank, Webster,
Webster Bank, their respective affiliates and others.
7.2 CONDITIONS TO OBLIGATIONS OF WEBSTER AND WEBSTER BANK.
The obligation of Webster and Webster Bank to effect the Merger is also
subject to the satisfaction or waiver by Webster at or prior to the Effective
Time of the following conditions:
(A) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Maritime Bank set forth in this
Agreement shall be true and correct as of the date of this Agreement and (except
to the extent such representations and warranties speak as of an earlier date)
as of the Closing Date as though made on and as of the Closing Date; provided,
however, that for purposes of this paragraph, such representations and
warranties shall be deemed to be true and correct, unless the failure or
failures of such representations and warranties to be so true and correct,
individually or in the aggregate, would have a Material Adverse Effect on
Maritime Bank. Such determination of aggregate Material Adverse Effect shall be
made as if there were no materiality qualifications in such representations and
warranties. Webster shall have received a certificate signed on behalf of
Maritime Bank by the Chief Executive Officer and President of Maritime Bank to
the foregoing effect.
(B) PERFORMANCE OF COVENANTS AND AGREEMENTS.
Maritime Bank shall have performed in all material respects all
covenants and agreements required to be performed by it under this Agreement at
or prior to the Closing Date. Webster shall have received a certificate signed
on behalf of Maritime Bank by the Chief Executive Officer and President of
Maritime Bank to such effect.
(C) CONSENTS UNDER AGREEMENTS.
The consent, approval or waiver of each person (other than the
Requisite Regulatory Approvals) whose consent or approval shall be required in
connection with the transactions contemplated hereby or in order to permit the
succession by the Surviving Bank pursuant to the Merger to any obligation, right
or interest of Maritime Bank under any loan or credit agreement, note, mortgage,
indenture, lease, license or other agreement or instrument shall have been
obtained except for those, the failure of which to obtain, will not result in a
Material Adverse Effect on the Surviving Bank.
(D) NO PENDING GOVERNMENTAL ACTIONS.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
(E) LEGAL OPINION.
Webster shall have received the opinion of Tyler, Cooper & Alcorn,
LLP, counsel to Maritime Bank, dated the Closing Date, in the form attached
hereto as Exhibit D. As to any matter in such opinion which involves matters of
fact, such counsel may rely upon the certificates of officers and directors of
Maritime Bank and of public officials, reasonably acceptable to Webster.
(F) ACCOUNTANT'S COMFORT LETTER.
Maritime Bank shall have caused to be delivered on the respective
dates thereof to Webster "comfort letters" from Shatswell, MacLeod & Company,
P.C., Maritime Bank's independent
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public accountants, dated the date on which the Registration Statement or last
amendment thereto shall become effective, and dated the date of the Closing
(defined in Section 9.1 hereof), and addressed to Webster and Maritime Bank,
with respect to Maritime Bank's financial data presented in the Proxy
Statement/Prospectus, which letters shall be based upon Statements on Auditing
Standards Nos. 72 and 76.
(G) WEBSTER SHAREHOLDER APPROVAL.
If approval of the Agreement, the Merger or the other transactions
contemplated hereby by the holders of Webster Common Stock becomes necessary as
referenced in Section 5.3(b) hereof, the required approval of Webster's
shareholders shall be obtained.
7.3 CONDITIONS TO OBLIGATIONS OF MARITIME BANK.
The obligation of Maritime Bank to effect the Merger is also subject to the
satisfaction or waiver by Maritime Bank at or prior to the Effective Time of the
following conditions:
(A) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Webster set forth in this
Agreement shall be true and correct as of the date of this Agreement and (except
to the extent such representations and warranties speak as of an earlier date)
as of the Closing Date as though made on and as of the Closing Date; provided,
however, that for purposes of this paragraph, such representations and
warranties shall be deemed to be true and correct, unless the failure or
failures of such representations and warranties to be so true and correct,
individually or in the aggregate, would have a Material Adverse Effect on
Webster. Such determination of aggregate Material Adverse Effect shall be made
as if there were no materiality qualifications in such representations and
warranties. Maritime Bank shall have received a certificate signed on behalf of
Webster by each of the Chairman, Chief Executive Officer and President and the
Chief Financial Officer, Executive Vice President and Treasurer of Webster to
the foregoing effect.
(B) PERFORMANCE OF COVENANTS AND AGREEMENTS.
Webster and Webster Bank shall have each performed in all material
respects all covenants and agreements required to be performed by it under this
Agreement at or prior to the Closing Date. Maritime Bank shall have received a
certificate signed on behalf of Webster by each of the Chairman, Chief Executive
Officer and President and the Chief Financial Officer, Executive Vice President
and Treasurer of Webster to the foregoing effect.
(C) CONSENTS UNDER AGREEMENTS.
The consent or approval or waiver of each person (other than the
Requisite Regulatory Approvals) whose consent or approval shall be required in
connection with the transactions contemplated hereby under any loan or credit
agreement, note, mortgage, indenture, lease, license or other agreement or
instrument to which Webster or Webster Bank is a party or is otherwise bound
shall have been obtained, except for those, the failure of which to obtain, will
not result in a Material Adverse Effect on Webster.
(D) NO PENDING GOVERNMENTAL ACTIONS.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
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ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION.
This Agreement may be terminated at any time prior to the Effective Time,
whether before or after approval of the matters presented in connection with the
Merger by the shareholders of Maritime Bank:
(a) by mutual consent of Webster and Maritime Bank in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board;
(b) by either Webster or Maritime Bank upon written notice to the
other party (i) 30 days after the date on which any request or application for a
Requisite Regulatory Approval shall have been denied or withdrawn at the request
or recommendation of the Governmental Entity which must grant such Requisite
Regulatory Approval, unless within the 30-day period following such denial or
withdrawal the parties agree to file, and have filed with the applicable
Governmental Entity, a petition for rehearing or an amended application,
provided, however, that no party shall have the right to terminate this
Agreement pursuant to this Section 8.1(b), if such denial or request or
recommendation for withdrawal shall be due to the failure of the party seeking
to terminate this Agreement to perform or observe the covenants and agreements
of such party set forth herein;
(c) by either Webster or Maritime Bank if the Merger shall not have
been consummated on or before September 30, 1999, unless the failure of the
Closing to occur by such date shall be due to the failure of the party seeking
to terminate this Agreement to perform or observe the covenants and agreements
of such party set forth herein;
(d) by Webster or by Maritime Bank (provided that Maritime Bank is not
in breach of its obligations under Section 6.3 hereof) if the approval of the
shareholders of Maritime Bank required for the consummation of the Merger shall
not have been obtained by reason of the failure to obtain the required vote at a
duly held meeting of shareholders or at any adjournment or postponement thereof;
(e) by either Webster or Maritime Bank (provided that the terminating
party is not then in breach of any representation, warranty, covenant or other
agreement contained herein that, individually or in the aggregate, would give
the other party the right to terminate this Agreement) if there shall have been
a breach of any of the representations or warranties set forth in this Agreement
on the part of the other party, if such breach, individually or in the
aggregate, has had or is likely to have a Material Adverse Effect on the
breaching party, and such breach shall not have been cured within 30 days
following receipt by the breaching party of written notice of such breach from
the other party hereto or such breach, by its nature, cannot be cured prior to
the Closing;
(f) by either Webster or Maritime Bank (provided that the terminating
party is not then in breach of any representation, warranty, covenant or other
agreement contained herein that, individually or in the aggregate, would give
the other party the right to terminate this Agreement) if there shall have been
a material breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, and such breach shall not have been
cured within 30 days following receipt by the breaching party of written notice
of such breach from the other party hereto or such breach, by its nature, cannot
be cured prior to the Closing; and
(g) by Webster, if the management of Maritime Bank or its Board of
Directors, for any reason, (i) fails to call and hold within 42 days of the
effectiveness of the Registration Statement the Special Meeting of Maritime
Bank's shareholders to consider and approve this Agreement, the Merger and the
other transactions contemplated hereby, (ii) fails to recommend to shareholders
the approval of
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this Agreement, the Merger and the transactions contemplated hereby, (iii) fails
to oppose any third party proposal that is inconsistent with the transactions
contemplated by this Agreement or (iv) violates Section 5.1(e) of this Agreement
or would have violated Section 5.1(e) but for the fiduciary duty exception.
(h) by Maritime Bank, upon written notice delivered to Webster, as
provided below in this subsection (h), if the Base Period Trading Price shall be
less than $17.50, unless Webster elects, as provided below in this subsection
(h), that the Exchange Ratio shall be adjusted to equal that number obtained by
dividing $26.67 by the Base Period Trading Price, rounded to three decimal
places (the "Adjusted Exchange Ratio"). If Maritime Bank elects to exercise its
termination right pursuant to this subsection (h), it shall give written notice
to Webster within three business days following the end of the Base Period.
During the three business-day period commencing with its receipt of such notice,
Webster shall have the option of agreeing to change the Exchange Ratio to the
Adjusted Exchange Ratio. If Webster makes the election contemplated by the
preceding sentence, then within such three business-day period Webster shall
give written notice to Maritime Bank of such election and the Adjusted Exchange
Ratio, whereupon no termination shall have occurred pursuant to this subsection
(h) and this Agreement shall remain in effect in accordance with its terms
(except as the Exchange Ratio shall have been so modified), and any references
in this Agreement to "Exchange Ratio" shall thereafter be deemed to refer to the
Adjusted Exchange Ratio pursuant to this subsection (h).
8.2 EFFECT OF TERMINATION.
In the event of termination of this Agreement by either Webster or Maritime
Bank. as provided in Section 8.1 hereof, this Agreement shall forthwith become
void and have no effect except (i) the last sentences of Sections 6.2(a) and
6.2(b) and Sections 8.2, 9.2 and 9.3 hereof shall survive any termination of
this Agreement, and (ii) notwithstanding anything to the contrary contained in
this Agreement, no party shall be relieved or released from any liabilities or
damages arising out of its willful or intentional breach of any provision of
this Agreement.
8.3 AMENDMENT.
Subject to compliance with applicable law, this Agreement may be amended by
the parties hereto, by action taken or authorized by their respective Board of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the shareholders of Maritime Bank; provided,
however, that after any approval of the transactions contemplated by this
Agreement by Maritime Bank's shareholders, there may not be, without further
approval of such shareholders, any amendment of this Agreement which reduces the
amount or changes the form of the consideration to be delivered to Maritime Bank
shareholders hereunder other than as contemplated by this Agreement. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
8.4 EXTENSION; WAIVER.
At any time prior to the Effective Time, the parties hereto, by action
taken or authorized by their respective Boards of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party, but such extension or waiver
or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
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ARTICLE IX
GENERAL PROVISIONS
9.1 CLOSING.
Subject to the terms and conditions of this Agreement, the closing of the
Merger (the "Closing") will take place at 10:00 a.m. at the main offices of
Webster on (i) the fifth day after the later to occur of (x) the date the last
Requisite Regulatory Approval is received and all applicable waiting periods
have expired and (y) the date the approval of Maritime Bank's shareholders is
received, (ii) if elected by Webster, the last business day of the month in
which the date specified in the immediately preceding clause occurs, or (iii)
such other date, place and time as the parties may agree (the "Closing Date").
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
None of the representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement (other than
pursuant to the Option Agreement, which shall terminate in accordance with its
terms) shall survive the Effective Time, except for those covenants and
agreements contained herein and therein which by their terms apply in whole or
in part after the Effective Time.
9.3 EXPENSES; BREAKUP FEE.
All costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense. All filing and other fees paid to the SEC in connection with this
Agreement shall be borne by Webster. In the event that this Agreement is
terminated by either Webster or Maritime Bank by reason of a material breach
pursuant to Sections 8.1(e) or (f) hereof or by Webster pursuant to Section
8.1(g) hereof, the other party shall pay all documented, reasonable costs and
expenses up to $100,000 incurred by the terminating party in connection with
this Agreement and the transactions contemplated hereby, plus a breakup fee of
$350,000. Except as set forth in the next sentence, in the event that this
Agreement is terminated by Webster under Section 8.1(d) hereof by reason of
Maritime Bank shareholders not having given any required approval, Maritime Bank
shall pay all documented, reasonable costs and expenses up to $100,000 incurred
by Webster in connection with this Agreement and the transactions contemplated
hereby. In the event that this Agreement is terminated by Webster under Section
8.1(d) by reason of Maritime Bank shareholders not having given any required
approval, and there shall have been prior to the Special Meeting a "Third Party
Public Event" (as defined below), Maritime Bank shall pay all documented,
reasonable costs and expenses up to $100,000 incurred by Webster in connection
with this Agreement and the transactions contemplated hereby, plus a breakup fee
of $350,000. For purposes of this Section 9.3, a "Third Party Public Event"
shall refer to any of the following events: (i) any person (as defined at
Sections 3(a)(9) and 13(d)(3) of the Exchange Act and the rules and regulations
thereunder), other than Webster or any Webster Subsidiary, shall have made a
bona fide proposal to Maritime Bank or, by a public announcement or written
communication that is or becomes the subject of public disclosure, to Maritime
Bank's shareholders to engage in an Acquisition Transaction (including, without
limitation, any situation in which any person other than Webster or any Webster
Subsidiary shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act), or shall have filed a registration statement under the Securities
Act, with respect to a tender offer or exchange offer to purchase any shares of
Maritime Bank Common Stock such that, upon consummation of such offer, such
person would have beneficial ownership of 10.0% or more of the then outstanding
shares of Maritime Bank Common Stock); or (ii) any director, officer, 5% or
greater shareholder or affiliate of Maritime Bank shall have, by any means which
becomes the subject of public disclosure, communicated opposition to this
Agreement, the Merger or other transactions contemplated hereby, or otherwise
takes action to influence the vote of Maritime Bank shareholders against this
Agreement, the Merger and the transactions contemplated hereby.
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9.4 NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, mailed by registered or certified
mail (return receipt requested) or delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Webster or Webster Bank, to:
Webster Financial Corporation
Webster Plaza
145 Bank Street
Waterbury, Connecticut 06702
Attn.: James C. Smith
Chairman and Chief Executive Officer
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, DC 20004
Attn.: Stuart G. Stein, Esq.
and
(b) if to Maritime Bank & Trust Company, to:
Maritime Bank & Trust Company
130 Westbrook Road
Essex, Connecticut 06426-1149
Attn.: William R. Attridge
Chief Executive Officer and President
with a copy (which shall not constitute notice) to:
Tyler, Cooper & Alcorn, LLP
CityPlace/35th Floor
Hartford, CT 06103-3488
Attn.: William W. Bouton, Esq.
9.5 INTERPRETATION.
When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of or an Exhibit or Schedule to
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
9.6 COUNTERPARTS.
This Agreement may be executed in counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
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9.7 ENTIRE AGREEMENT.
This Agreement (including the disclosure schedules, documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the
Confidentiality Agreement, the Bank Merger Agreement, the Option Agreement and
the Maritime Bank Stockholder Agreement.
9.8 GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the laws
of the State of Delaware, without regard to any applicable conflicts of law
rules.
9.9 ENFORCEMENT OF AGREEMENT.
The parties hereto agree that irreparable damage would occur in the event
that the provisions of this Agreement were not performed in accordance with its
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions thereof in
any court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
9.10 SEVERABILITY.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
9.11 PUBLICITY.
Except as otherwise required by law or the rules of Nasdaq (or such other
exchange on which the Webster Common Stock may become listed), so long as this
Agreement is in effect, neither Webster nor Maritime Bank shall, or shall permit
any of Webster's Subsidiaries to, issue or cause the publication of any press
release or other public announcement with respect to, or otherwise make any
public statement concerning, the transactions contemplated by this Agreement,
the Bank Merger Agreement, the Option Agreement or the Maritime Bank Stockholder
Agreement without the consent of the other party, which consent shall not be
unreasonably withheld.
9.12 ASSIGNMENT; LIMITATION OF BENEFITS.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns. Except as otherwise specifically provided in Section 6.7 hereof,
this Agreement (including the documents and instruments referred to herein) is
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder, and the covenants, undertakings and agreements set out
herein shall be solely for the benefit of, and shall be enforceable only by, the
parties hereto and their permitted assigns.
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9.13 ADDITIONAL DEFINITIONS.
In addition to any other definitions contained in this Agreement, the
following words, terms and phrases shall have the following meanings when used
in this Agreement.
"Affiliated Person": any director, officer or 5% or greater shareholder,
spouse or other person living in the same household of such director, officer or
shareholder, or any company, partnership or trust in which any of the foregoing
persons is an officer, 5% or greater shareholder, general partner or 5% or
greater trust beneficiary.
"Laws": any and all statutes, laws, ordinances, rules, regulations, orders,
permits, judgments, injunctions, decrees, case law and other rules of law
enacted, promulgated or issued by any Governmental Entity.
"Material Adverse Effect": with respect to Webster or Maritime Bank, as the
case may be, means a condition, event, change or occurrence that is reasonably
likely to have a material adverse effect upon (A) the financial condition,
results of operations, business or properties of Webster or Maritime Bank (other
than as a result of changes in laws or regulations or accounting rules of
general applicability or interpretations thereof), or (B) the ability of Webster
or Maritime Bank to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement, the Bank Merger Agreement and, in
the case of Maritime Bank, the Option Agreement.
"Subsidiary": with respect to any party means any corporation, partnership
or other organization, whether incorporated or unincorporated, which is
consolidated with such party for financial reporting purposes.
39
<PAGE>
IN WITNESS WHEREOF, Webster, Webster Bank and Maritime Bank have caused
this Agreement to be executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
<TABLE>
<CAPTION>
ATTEST: WEBSTER FINANCIAL CORPORATION
<S> <C>
By: /s/ Harriet Munrett Wolfe By: /s/ James C. Smith
----------------------------------- -------------------------------------------
Harriet Munrett Wolfe James C. Smith
Senior Vice President, Counsel Chairman and Chief Executive Officer
and Secretary
WEBSTER BANK
ATTEST:
By: /s/ Harriet Munrett Wolfe By: /s/ James C. Smith
----------------------------------- -------------------------------------------
Harriet Munrett Wolfe James C. Smith
Senior Vice President, Counsel Chairman and Chief Executive Officer
and Secretary
MARITIME BANK & TRUST COMPANY
ATTEST:
By: /s/ Nicolas Lewitz, Jr. By: /s/ William R. Attridge
----------------------------------- -------------------------------------------
Nicholas Lewitz, Jr. William R. Attridge
Secretary Chief Executive Officer and President
</TABLE>
EXHIBIT 2.2
OPTION AGREEMENT
This OPTION AGREEMENT, dated as of November 3, 1998 (this
"Agreement"), is entered into between MARITIME BANK & TRUST COMPANY, a
Connecticut charted bank ("Issuer"), and WEBSTER FINANCIAL CORPORATION, a
Delaware corporation ("Grantee").
WITNESSETH:
WHEREAS, Grantee, Webster Bank, a wholly owned subsidiary of
Grantee, and Issuer have entered into an Agreement and Plan of Merger, dated as
of the date hereof (the "Plan"), which was executed by the parties thereto prior
to the execution of this Agreement; and
WHEREAS, as a condition and inducement to Grantee's entering
into the Plan and in consideration therefor, Issuer has agreed to grant Grantee
the Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Plan, the parties
hereto agree as follows:
SECTION 1. Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 141,004 fully paid and nonassessable shares of common stock, par value $.67
per share of Issuer ("Issuer Common Stock") (which number of shares is equal to
19.99% of the number of outstanding shares of Issuer Common Stock on the date
hereof), at a price per share equal to $22.00 (the "Initial Price"); provided,
however, that in the event Issuer issues or agrees to issue any additional
shares of Issuer Common Stock (other than shares issued upon the exercise of
options outstanding as of the date of the Plan in accordance with their terms
pursuant to the Issuer's 1991 Stock Option Plan), or grants one or more options
to purchase additional shares of Issuer Common Stock at a price less than the
Initial Price, as adjusted pursuant to Section 5(b) hereof, such price shall be
equal to such lesser price (such price, as adjusted, is hereinafter referred to
as the "Option Price"). The number of shares of Issuer Common Stock that may be
received upon the exercise of the Option and the Option Price are subject to
adjustment as herein set forth.
SECTION 2. (a) Grantee may exercise the Option, in whole or part, at
any time and from time to time following the occurrence of a Purchase Event (as
defined below); provided, however, that the Option shall terminate and be of no
further force and effect upon the earliest to occur of the following events
(which are collectively referred to as an "Exercise Termination Event"):
(i) The time immediately prior to the Effective Time;
(ii) 12 months after the first occurrence of a Purchase
Event;
(iii) 12 months after the termination of the Plan following
the occurrence of a Preliminary Purchase Event (as defined below),
unless clause (vii) of this Section 2(a) is applicable;
(iv) upon the termination of the Plan, prior to the
occurrence of a Purchase Event or Preliminary Purchase Event, by Issuer
pursuant to Sections 8.1 (e) or (f) of the Plan, both parties pursuant
to Section 8.1(a) of the Plan, or by either party pursuant to Section
8.1(b) or (c) of the Plan;
<PAGE>
(v) 12 months after the termination of the Plan, by either
party pursuant to Section 8.1(d) of the Plan based on the required vote
of Issuer's shareholders not being received;
(vi) 12 months after the termination of the Plan, by
Grantee pursuant to Section 8.1(e) or (f) thereof as a result of a
breach by Issuer, unless such breach was willful or intentional; or
(vii) 24 months after the termination of the Plan, by
Grantee pursuant to Section 8.1(e) or (f) thereof as a result of a
willful or intentional breach by Issuer.
(b) The term "Preliminary Purchase Event" shall mean any of
the following events or transactions occurring on or after the date hereof and
prior to an Exercise Termination Event:
(i) Issuer without having received Grantee's prior written
consent, shall have entered into any letter of intent or definitive
agreement to engage in an Acquisition Transaction (as defined below)
with any Person (as defined below) other than Grantee or any of its
subsidiaries (each a "Grantee Subsidiary") or the Board of Directors of
Issuer shall have recommended that the shareholders of Issuer approve
or accept any Acquisition Transaction with any Person (as the term
"person" is defined in Sections 3(a)9 and 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the rules and
regulations thereunder) other than Grantee or any Grantee Subsidiary.
For purposes of this Agreement "Acquisition Transaction" shall mean (x)
a merger, consolidation or other business combination involving Issuer,
(y) a purchase, lease or other acquisition of all or substantially all
of the assets and/or liabilities of Issuer, (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange
or otherwise) of Beneficial Ownership (as the term "beneficial
ownership" is defined in Regulation 13d-3(a) of the Exchange Act) of
securities representing 10.0% or more of the voting power of Issuer;
(ii) Any Person (other than Grantee, any Grantee Subsidiary
or any current affiliate of Issuer) shall have acquired Beneficial
Ownership of 10.0% or more of the outstanding shares of Issuer Common
Stock;
(iii) (a) Any Person (other than Grantee or any Grantee
Subsidiary) shall have made a bona fide proposal to Issuer or, by a
public announcement or written communication that is or becomes the
subject of public disclosure, to Issuer's shareholders to engage in an
Acquisition Transaction (including, without limitation, any situation
in which any Person other than Grantee or any Grantee Subsidiary shall
have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act), or shall have filled a registration statement under the
Securities Act of 1933, as amended (the "Securities Act") or the
securities rules and regulations of any federal bank regulatory
authority, with respect to a tender offer or exchange offer to purchase
any shares of Issuer Common Stock such that, upon consummation of such
offer, such person would have Beneficial Ownership of 10.0% or more of
the then outstanding shares of Issuer Common Stock (such an offer being
referred to herein as a "Tender Offer" or an "Exchange Offer",
respectively)), and (b) the shareholders of Issuer do not approve the
Merger, as defined in the Plan, at the Special Meeting of the Issuer's
shareholders referenced in the Plan;
(iv) There shall exist a willful or intentional breach
under the Plan by Issuer and such breach would entitle Grantee to
terminate the Plan;
(v) The Special Meeting of Issuer's shareholders held for
the purpose of voting on the Plan shall not have been held pursuant to
the Plan or shall have been canceled
2
<PAGE>
prior to termination of the Plan, or for any reason whatsoever Issuer's
Board of Directors shall have failed to recommend, or shall have
withdrawn or modified in a manner adverse to Grantee the recommendation
of Issuer's Board of Directors, that Issuer's shareholders approve the
Plan, or if Issuer or Issuer's Board of Directors fails to oppose any
proposal by any Person (other than Grantee or any Grantee Subsidiary);
or
(vi) Any Person (other than Grantee or any Grantee
Subsidiary) shall have filed an application or notice with the Board of
Governors of the Federal Reserve System (the "FRB"), the Federal
Deposit Insurance Corporation (the "FDIC"), the Connecticut Banking
Commissioner (the "Commissioner"), or other regulatory or
administrative agency or commission (each, a "Governmental Authority")
for approval to engage in an Acquisition Transaction.
(c) The term "Purchase Event" shall mean any of the following
events or transactions occurring on or after the date hereof and prior to an
Exercise Termination Event:
(i) The acquisition by any Person (other than Grantee or
any Grantee Subsidiary) of Beneficial Ownership (other than on behalf
of the Issuer) of 25% or more of the then outstanding Issuer Common
Stock; or
(ii) The occurrence of a Preliminary Purchase Event
described in Section 2(b)(i) except that the percentage referred to in
clause (z) thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event known to Issuer;
provided, however, that the giving of such notice by Issuer shall not be a
condition to the right of Grantee to exercise the Option.
(e) In the event that Grantee is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the "Option
Notice," the date of which being hereinafter referred to as the "Notice Date")
specifying (i) the total number of shares of Issuer Common Stock it will
purchase pursuant to such exercise and (ii) the time (which shall be on a
business day that is not less than three nor more than 10 business days from the
Notice Date) on which the closing of such purchase shall take place (the
"Closing Date"); such closing to take place at the principal office of the
Issuer; provided, however, that, if prior notification to or approval of the
FDIC, the FRB, the Commissioner or any other Governmental Authority is required
in connection with such purchase (each, a "Notification" or an "Approval," as
the case may be), (a) Grantee shall promptly file the required notice or
application for approval ("Notice/Application"); (b) Grantee shall expeditiously
process the Notice/Application; and (c) for the purpose of determining the
Closing Date pursuant to clause (ii) of this sentence, the period of time that
otherwise would run from the Notice Date shall instead run from the later of (x)
in connection with any Notification, the date on which any required notification
periods have expired or been terminated and (y) in connection with any Approval,
the date on which such approval has been obtained and any requisite waiting
period or periods shall have expired. For purposes of Section 2(a) hereof, any
exercise of the Option shall be deemed to occur on the Notice Date relating
thereto. On or prior to the Closing Date, Grantee shall have the right to revoke
its exercise of the Option by written notice to the Issuer given not less than
three business days prior to the Closing Date.
(f) At the closing referred to in Section 2(e) hereof, Grantee
shall pay to Issuer the aggregate purchase price for the number of shares of
Issuer Common Stock specified in the Option Notice in immediately available
funds by wire transfer to a bank account designated by Issuer; provided,
however, that failure or refusal of Issuer to designate such a bank account
shall not preclude Grantee from exercising the Option.
3
<PAGE>
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in Section 2(f) hereof, Issuer shall
deliver to Grantee a certificate or certificates representing the number of
shares of Issuer Common Stock specified in the Option Notice and, if the Option
should be exercised in part only, a new Option evidencing the rights of Grantee
thereof to purchase the balance of the shares of Issuer Common Stock purchasable
hereunder.
(h) Upon the giving by Grantee to Issuer of an Option Notice
and the tender of the applicable purchase price in immediately available funds
on the Closing Date, unless prohibited by applicable law, Grantee shall be
deemed to be the holder of record of the number of shares of Issuer Common Stock
specified in the Option Notice, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Issuer Common Stock shall not then actually be delivered to Grantee. Issuer
shall pay all expenses and other charges that may be payable in connection with
the preparation, issuance and delivery of stock certificates under this Section
2 in the name of Grantee.
SECTION 3. Issuer agrees: (i) that it shall at all times until the
termination of this Agreement have reserved for issuance upon the exercise of
the Option that number of authorized and reserved shares of Issuer Common Stock
equal to the maximum number of shares of Issuer Common Stock at any time and
from time to time issuable hereunder, all of which shares will, upon issuance
pursuant hereto, be duly authorized, validly issued, fully paid, nonassessable,
and delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights; (ii) that it will not, by
amendment of its certificate of incorporation or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all reasonable action as may from time to time be
requested by the Grantee, at Grantee's expense (including (x) complying with all
premerger notification, reporting and waiting period requirements specified in
15 U.S.C. ss. 18a and regulations promulgated thereunder and (y) in the event
prior approval of or notice to the FDIC, the FRB, the Commissioner or any other
Governmental Authority, under the Change in Bank Control Act of 1978, as
amended, the Bank Holding Company Act, as amended, Section 36a-181 or Section
36a-184, as applicable, of the Connecticut Bank Holding Company Act, or any
other applicable federal or state banking law, is necessary before the Option
may be exercised, cooperating with Grantee in preparing such applications or
notices and providing such information to each such Governmental Authority as it
may require in order to permit Grantee to exercise the Option and Issuer duly
and effectively to issue shares of Issuer Common Stock pursuant hereto; and (iv)
to take all action provided herein to protect the rights of Grantee against
dilution.
SECTION 4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer, for other
agreements providing for Options of different denominations entitling the holder
thereof to purchase, on the same terms and subject to the same conditions as are
set forth herein, in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any agreements and related options for which this Agreement (and the
Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date.
SECTION 5. The number of shares of Issuer Common Stock purchasable upon
the exercise of the Option shall be subject to adjustment from time to time as
follows:
(a) In the event of any change in the type or number of shares
of Issuer Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions,
4
<PAGE>
conversions, exchanges of shares or other issuances of additional shares (other
than pursuant to the exercise of the Option), the type and number of shares of
Issuer Common Stock purchasable upon exercise hereof shall be appropriately
adjusted and proper provision shall be made so that, in the event that any
additional shares of Issuer Common Stock are to be issued or otherwise become
outstanding as a result of any such change (other than pursuant to an exercise
of the Option), the number of shares of Issuer Common Stock that remain subject
to the Option shall be increased or decreased (as applicable) so that, after
such issuance and together with the shares of Issuer Common Stock previously
issued pursuant to the exercise of the Option (as adjusted on account of any of
the foregoing changes in the Issuer Common Stock), the Option shall equal 19.9%
of the number of shares of Issuer Common Stock then issued and outstanding.
(b) Whenever the number of shares of Issuer Common Stock
purchasable upon exercise hereof is adjusted as provided in this Section 5, the
Option Price shall be adjusted by multiplying the Option Price by a fraction,
the numerator of which shall be equal to the number of shares of Issuer Common
Stock purchasable prior to the adjustment and the denominator of which shall be
equal to the number of shares of Issuer Common Stock purchasable after the
adjustment.
SECTION 6. (a) Upon the occurrence of a Purchase Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
(whether on its own behalf or on behalf of any subsequent holder of the Option
(or part thereof) or of any of the shares of Issuer Common Stock issued pursuant
hereto), promptly prepare and keep current an offering circular which meets the
standards of a shelf registration statement filed with the Securities and
Exchange Commission under the Securities Act covering any shares issued and
issuable pursuant to the Option and shall use its best efforts to cause such
prospectus to be updated and to remain current and effective for a period not in
excess of 24 months, in order to permit the sale or other disposition of any
shares of Issuer Common Stock issued upon total or partial exercise of the
Option ("Option Shares") in accordance with any plan of disposition requested by
Grantee. Grantee shall provide all information reasonably requested by Issuer
for inclusion in any offering circular or, if applicable, registration statement
to be filed hereunder. In connection with any such offering circular, Issuer and
Grantee shall provide each other with representations, warranties, indemnities
and other agreements customarily given in connection with such registration. If
requested by Grantee, Issuer and Grantee shall become a party to any
underwriting agreement relating to the sale of such shares, but only to the
extent of obligating themselves in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements.
(b) In the event that Grantee requests Issuer to prepare an
offering circular or, if applicable, to file a registration statement following
the failure to obtain any approval required to exercise the Option as described
in Section 9 hereof, the closing of the sale or other disposition of the Issuer
Common Stock or other securities pursuant to such offering circular or, if
applicable, registration statement shall occur substantially simultaneously with
the exercise of the Option.
(c) Concurrently with the preparation and filing of a
registration statement under Section 6(a) hereof, Issuer shall also make all
filings required to comply with state securities laws in such number of states
as Grantee may reasonably request.
SECTION 7. (a) Upon the occurrence of a Purchase Event that occurs
prior to an Exercise Termination Event, (i) at the request (the date of such
request being the "Option Repurchase Request Date") of Grantee, Issuer shall
repurchase, subject to compliance with applicable law and out of funds legally
available therefor, the Option from Grantee at a price (the "Option Repurchase
Price") equal to the amount by which (A) the market/offer price (as defined
below) exceeds (B) the Option Price, multiplied by the number of shares for
which the Option may then be exercised and (ii) at the request (the date of such
request being the "Option Share Repurchase Request Date") of the owner of Option
Shares from time to time (the "Owner"), Issuer shall repurchase such number of
the Option Shares from the Owner as the Owner shall designate at a price (the
"Option Share
5
<PAGE>
Repurchase Price") equal to the market/offer price multiplied by the number of
Option Shares so designated. The term "market/offer price" shall mean the
highest of (i) the price per share of Issuer Common Stock at which a tender
offer or exchange offer therefor has been made after the date hereof and on or
prior to the Option Repurchase Request Date or the Option Share Repurchase
Request Date, as the case may be, (ii) the price per share of Issuer Common
Stock paid or to be paid by any third party pursuant to an agreement with Issuer
(whether by way of a merger, consolidation or otherwise), (iii) the average of
the 20 highest last sale prices for shares of Issuer Common Stock as reported
within the 90-day period ending on the Option Repurchase Request Date or the
Option Share Repurchase Request Date, as the case may be, and (iv) in the event
of a sale of all or substantially all of Issuer's assets, the sum of the price
paid in such sale for such assets and the current market value of the remaining
assets of Issuer as determined by an investment banking firm selected by Grantee
or the Owner, as the case may be, and reasonably acceptable to Issuer, divided
by the number of shares of Issuer Common Stock outstanding at the time of such
sale. In determining the market/offer price, the value of consideration other
than cash shall be the value determined by an investment banking firm selected
by Grantee or the Owner, as the case may be, and reasonably acceptable to
Issuer. The investment banking firm's determination shall be conclusive and
binding on all parties.
(b) Grantee or the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and/or any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that Grantee or
the Owner, as the case may be, elects to require Issuer to repurchase the Option
and/or the Option Shares in accordance with the provisions of this Section 7. As
promptly as practicable, and in any event within 30 business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto, Issuer shall deliver or
cause to be delivered to Grantee the Option Repurchase Price or to the Owner the
Option Share Repurchase Price.
(c) Issuer hereby undertakes to use its reasonable best
efforts to obtain all required regulatory, shareholder and legal approvals and
to file any required notices as promptly as practicable in order to accomplish
any repurchase contemplated by this Section 7. Nonetheless, to the extent that
Issuer is prohibited under applicable law or regulation from repurchasing any
Option and/or any Option Shares in full, Issuer shall promptly so notify Grantee
and/or the Owner and thereafter deliver or cause to be delivered, from time to
time, to Grantee 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, within five business days after the date
on which Issuer is no longer so prohibited; provided, however, that if Issuer at
any time after delivery of a notice of repurchase pursuant to Section 7(b)
hereof is prohibited as referred to above, from delivering to Grantee and/or the
Owner, as appropriate, the Option Repurchase Price or the Option Share
Repurchase Price, respectively, in full, Grantee or the Owner, as appropriate,
may revoke its notice of repurchase of the Option or the Option Shares either in
whole or in part whereupon, in the case of a revocation in part, Issuer shall
promptly (i) deliver to Grantee and/or the Owner, as appropriate, that portion
of the Option Purchase Price or the Option Share Repurchase Price that Issuer is
not prohibited from delivering after taking into account any such revocation and
(ii) deliver, as appropriate, either (A) to Grantee, a new Agreement evidencing
the right of Grantee to purchase that number of shares of Issuer Common Stock
equal to the number of shares of Issuer Common Stock purchasable immediately
prior to the delivery of the notice of repurchase less the number of shares of
Issuer Common Stock covered by the portion of the Option repurchased or, (B) to
the Owner, a certificate for the number of Option Shares covered by the
revocation.
(d) Issuer shall not enter into any agreement with any Person
(other than Grantee or a Grantee Subsidiary) for an Acquisition Transaction
unless the other Person assumes all the obligations of Issuer pursuant to this
Section 7 in the event that Grantee or the Owner elects, in its sole discretion,
to require such other Person to perform such obligations.
6
<PAGE>
SECTION 8. (a) In the event that prior to an Exercise Termination
Event, Issuer shall enter into a letter of intent or definitive agreement (i) to
consolidate or merge with any Person (other than Grantee or a Grantee
Subsidiary), and Issuer shall not be the continuing or surviving corporation of
such consolidation or merger, (ii) to permit any Person (other than Grantee or a
Grantee Subsidiary) to merge into Issuer, and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Issuer Common Stock shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other property or the then
outstanding shares of Issuer Common Stock shall after such merger represent less
than 50% of the outstanding shares and share equivalents of the merged company,
or (iii) to sell or otherwise transfer all or substantially all of its assets to
any Person (other than Grantee or a Grantee Subsidiary) then, and in each such
case, such letter of intent or definitive agreement governing such transaction
shall make proper provision so that the Option shall, upon the consummation of
such transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option (the "Substitute Option"), at the
election of Grantee, of either (x) the Acquiring Corporation (as defined below)
or (y) any person that controls the Acquiring Corporation (the Acquiring
Corporation and any such controlling person being hereinafter referred to as the
"Substitute Option Issuer").
(b) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock (as is hereinafter defined) as is equal to
the market/offer price (as defined in Section 7 hereof) multiplied by the number
of shares of Issuer Common Stock for which the Option was theretofore
exercisable, divided by the Average Price (as hereinafter defined). The exercise
price of the Substitute Option per share of the Substitute Common Stock (the
"Substitute Purchase Price") shall then be equal to the Option Price multiplied
by a fraction in which the numerator is the number of shares of Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares for which the Substitute Option is exercisable.
(c) The Substitute Option shall otherwise have the same terms
as the Option, provided, that if the terms of the Substitute Option cannot, for
legal reasons, be the same as the Option, such terms shall be as similar as
possible and in no event less advantageous to Grantee, provided, further that
the terms of the Substitute Option shall include (by way of example and not
limitation) provisions for the repurchase of the Substitute Option and
Substitute Common Stock by the Substitute Option Issuer on the same terms and
conditions as provided in Section 7 hereof.
(d) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing
or surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving corporation, and (iii) the transferee of all or
any substantial part of Issuer's assets.
(ii) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the Substitute
Option.
(iii) "Average Price" shall mean the average closing price
of a share of Substitute Common Stock for the one-year period
immediately preceding the consolidation, merger or sale in question,
but in no event higher than the closing price of the shares of
Substitute Common Stock on the day preceding such consolidation, merger
or sale; provided, that if Issuer is the issuer of the Substitute
Option, the Average Price shall be computed with respect to a share of
Issuer Common Stock issued by Issuer, the corporation merging into
Issuer or by any company which controls or is controlled by such
merging corporation, as Grantee may elect.
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<PAGE>
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.99% of the shares of
Substitute Common Stock outstanding immediately prior to the issuance of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than such number of shares of Substitute Common Stock but for this
clause (e), the Substitute Option Issuer shall make a cash payment to Grantee
equal to the excess of (i) the value of the Substitute Option without giving
effect to the limitation in this clause (e) over (ii) the value of the
Substitute Option after giving effect to the limitation in this clause (e). This
difference in value shall be determined by a nationally recognized investment
banking firm selected by Grantee and the Substitute Option Issuer. In addition,
the provisions of Section 5(a) hereof shall not apply to the issuance of any
Substitute Option and for purposes of applying Section 5(a) hereof thereafter to
any Substitute Option, the percentage referred to in Section 5(a) hereof shall
thereafter equal the percentage that the percentage of the shares of Substitute
Common Stock subject to the Substitute Option bears to the number of shares of
Substitute Common Stock outstanding.
SECTION 9. Notwithstanding Sections 2, 6 and 7 hereof, if Grantee has
given the notice referred to in one or more of such Sections, the exercise of
the rights specified in any such Section shall be extended (a) if the exercise
of such rights requires obtaining regulatory approvals (including any required
waiting periods) to the extent necessary to obtain all regulatory approvals for
the exercise of such rights, and (b) to the extent necessary to avoid liability
under Section 16(b) of the Exchange Act by reason of such exercise; provided,
that in no event shall any closing date occur more than 12 months after the
related notice date, and, if the closing date shall not have occurred within
such period due to the failure to obtain any required approval by the OTS, the
FDIC, the Commissioner or any other Governmental Authority despite the best
efforts of Issuer or the Substitute Option Issuer, as the case may be, to obtain
such approvals, the exercise of the rights shall be deemed to have been
rescinded as of the related notice date. In the event (a) Grantee receives
official notice that an approval of the OTS, the FDIC, the Commissioner or any
other Governmental Authority required for the purchase and sale of the Option
Shares will not be issued or granted or (b) a closing date has not occurred
within 12 months after the related notice date due to the failure to obtain any
such required approval, Grantee shall be entitled to exercise the Option in
connection with the concurrent resale of the Option Shares pursuant to a
registration statement as provided in Section 6 hereof. Nothing contained in
this Agreement shall restrict Grantee from specifying alternative means of
exercising rights pursuant to Sections 2, 6 or 7 hereof in the event that the
exercising of any such rights shall not have occurred due to the failure to
obtain any required approval referred to in this Section 9.
SECTION 10. Issuer hereby represents and warrants to Grantee as
follows:
(a) Issuer has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly approved by
the Board of Directors of Issuer and no other corporate proceedings on the part
of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly executed and
delivered by, and constitutes a valid and binding obligation of, Issuer,
enforceable against Issuer in accordance with its terms, subject to any required
Governmental Approval, and except as enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally and except that
the availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
shares of Issuer Common Stock equal to the maximum number of shares of Issuer
8
<PAGE>
Common Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized, validly issued,
fully paid, nonassessable, and will be delivered free and clear of all claims,
liens, encumbrances and security interests and not subject to any preemptive
rights.
SECTION 11. Neither of the parties hereto may assign any of its rights
or delegate any of its obligations under this Agreement or the Option created
hereunder to any other Person without the express written consent of the other
party, except that Grantee may assign this Agreement to a wholly owned
subsidiary of Grantee and Grantee may assign its rights hereunder in whole or in
part after the occurrence of a Preliminary Purchase Event. The term "Grantee" as
used in this Agreement shall also be deemed to refer to Grantee's permitted
assigns.
SECTION 12. Each of Grantee and Issuer will use its reasonable efforts
to make all filings with, and to obtain consents of, all third parties and
Governmental Authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
FDIC, the FRB, the Commissioner and any other Governmental Authority for
approval to acquire the shares issuable hereunder.
SECTION 13. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and that
the obligations of the parties hereto shall be enforceable by either party
hereto through injunctive or other equitable relief. Both parties further agree
to waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have for any
failure to perform this Agreement.
SECTION 14. If any term, provision, covenant or restriction contained
in this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that Grantee is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7 hereof, the full number of shares of Issuer
Common Stock provided in Section 1 hereof (as adjusted pursuant hereto), it is
the express intention of Issuer to allow Grantee to acquire or to require Issuer
to repurchase such lesser number of shares as may be permissible without any
amendment or modification hereof.
SECTION 15. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in the manner and at the respective addresses of the parties set forth in the
Plan.
SECTION 16. This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto shall be governed by and
construed in accordance with the laws of the State of Delaware (but not
including the choice of law rules thereof).
SECTION 17. This Agreement may be executed in counterparts, each of
which shall be considered one and the same agreement and each of which shall be
deemed to be an original, and shall become effective when counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart.
SECTION 18. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder.
9
<PAGE>
SECTION 19. Except as otherwise expressly provided herein or in the
Plan, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
SECTION 20. Capitalized terms used in this Agreement and not defined
herein but defined in the Plan shall have the meanings assigned thereto in the
Plan.
SECTION 21. Nothing contained in this Agreement shall be deemed to
authorize or require Issuer or Grantee to breach any provision of the Plan or
any provision of law applicable to the Grantee or Issuer.
SECTION 22. In the event that any selection or determination is to be
made by Grantee or the Owner hereunder and at the time of such selection or
determination there is more than one Grantee or Owner, such selection shall be
made by a majority in interest of such Grantees or Owners.
SECTION 23. In the event of any exercise of the option by Grantee,
Issuer and such Grantee shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
SECTION 24. Except to the extent Grantee exercises the Option, Grantee
shall have no rights to vote or receive dividends or have any other rights as a
shareholder with respect to shares of Issuer Common Stock covered hereby.
10
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Option
Agreement to be executed and delivered on its behalf by their respective
officers thereunto duly authorized, all as of the date first above written.
MARITIME BANK & TRUST COMPANY
By: /s/ William R. Attridge
----------------------------------------
William R. Attridge
Chief Executive Officer and President
WEBSTER FINANCIAL CORPORATION
By: /s/ James C. Smith
----------------------------------------
James C. Smith
Chairman and Chief Executive Officer
EXHIBIT 2.3
MARITIME BANK & TRUST COMPANY
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT, dated as of November 3, 1998, is entered into
by and among Webster Financial Corporation, a Delaware corporation ("Webster"),
and the 10 stockholders of Maritime Bank & Trust Company, a Connecticut
chartered bank ("Maritime Bank"), named on Schedule I hereto (collectively, the
"Stockholders"), who are the directors (including the President and Chief
Executive Officer) of Maritime Bank and the only "affiliates" (for purposes of
Rule 145 under the Securities Act of 1933, as amended) of Maritime Bank other
than the executive officers of Maritime Bank.
WHEREAS, Webster, Webster Bank, a wholly owned subsidiary of Webster
("Webster Bank"), and Maritime Bank have entered into an Agreement and Plan of
Merger, dated as of the date hereof (the "Agreement"), which is conditioned upon
the execution of this Stockholder Agreement and which provides for, among other
things, the acquisition of Maritime Bank by Webster, to be effected by the
merger of Maritime Bank with and into Webster Bank, in a stock-for-stock
transaction (the "Merger"); and
WHEREAS, in order to induce Webster to enter into or proceed with the
Agreement, each of the Stockholders agrees to, among other things, vote in favor
of the Agreement, the Merger and the other transactions contemplated by the
Agreement in his/her capacity as a stockholder of Maritime Bank;
NOW, THEREFORE in consideration of the premises, the mutual covenants and
agreements set forth herein and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. OWNERSHIP OF MARITIME BANK COMMON STOCK. Each Stockholder represents
and warrants that the number of shares of Maritime Bank common stock, par value
$.67 per share ("Maritime Bank Common Stock"), set forth opposite such
Stockholder's name on Schedule I hereto is the total number of shares of
Maritime Bank Common Stock over which such person has "beneficial ownership"
within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, except that the provisions of Rule 13d-3(d)(1)(i) shall be considered
without any limit as to time.
2. AGREEMENTS OF THE STOCKHOLDERS. Each Stockholder covenants and agrees
that:
(a) Such Stockholder shall, at any meeting of the holders of Maritime
Bank Common Stock called for the purpose, vote or cause to be voted all shares
of Maritime Bank Common Stock in which such Stockholder has the sole or shared
right to vote (whether owned as of the date hereof or hereafter acquired) (i) in
favor of the Agreement, the Merger and the other transactions contemplated by
the Agreement and (ii) against any plan or proposal pursuant to which Maritime
Bank is to be acquired by or merged with, or pursuant to which Maritime Bank
proposes to sell all or substantially all of its assets and liabilities to, any
person, entity or group (other than Webster or any affiliate thereof).
(b) Such Stockholder shall not, prior to the consummation of the
Merger or the earlier termination of this Stockholder Agreement in accordance
with its terms, sell, pledge, transfer
<PAGE>
or otherwise dispose of his/her shares of Maritime Bank Common Stock over which
such stockholder has sole or shared dispositive power; provided, however, that
this Section 2(b) shall not apply to a pledge existing as of October 20, 1998.
(c) Such Stockholder shall not in his/her capacity as a stockholder of
Maritime Bank directly or indirectly encourage or solicit or hold discussions or
negotiations with, or provide any information to, any person, entity or group
(other than Webster or an affiliate thereof) concerning any merger, sale of all
or substantially all of the assets or liabilities not in the ordinary course of
business, sale of shares of capital stock or similar transaction involving
Maritime Bank. Nothing herein shall impair such Stockholder's fiduciary
obligations as a director of Maritime Bank.
(d) Such Stockholder shall use his/her best efforts to take or cause
to be taken all action, and to do or cause to be done all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the Merger contemplated by the Agreement.
(e) Such Stockholder shall comply with all applicable federal and
state securities laws in connection with any sale of Webster common stock, par
value $.01 per share ("Webster Common Stock") received in exchange for Maritime
Bank Common Stock in the Merger, including the trading and volume limitations as
to sales by affiliates contained in Rule 145 under the Securities Act of 1933,
as amended.
(f) Except as set forth in the attached Schedule II, such Stockholder
has no present plan or intent, and as of the effective time of the Merger, shall
have no present plan or intent, to engage in a sale, exchange, transfer (other
than an intrafamily gift), distribution (including a distribution by a
corporation to its shareholders), redemption, or reduction in any way of such
Stockholder's risk of ownership by short sale or otherwise, or other disposition
(not including a bona fide pledge), directly or indirectly, with respect to any
of the shares of Webster Common Stock to be received by such Stockholder upon
the Merger (except for cash received for fractional shares).
3. TERMINATION. The parties agree and intend that this Stockholder
Agreement is a valid and binding agreement enforceable against the parties
hereto and that damages and other remedies at law for the breach of this
Stockholder Agreement are inadequate. This Stockholder Agreement may be
terminated at any time prior to the consummation of the Merger by the mutual
written consent of the parties hereto and shall be automatically terminated in
the event that the Agreement is terminated in accordance with its terms;
provided, however, that if the holders of Maritime Bank Common Stock fail to
approve the Agreement or Maritime Bank fails to hold a stockholders' meeting to
vote on the Agreement, then (i) Section 2(a) clause (ii) hereof shall continue
in effect as to any plan or proposal received by Maritime Bank from any person,
entity or group (other than Webster or any affiliate thereof) prior to the
termination of the Agreement or within 135 days after such termination and (ii)
Section 2(b) hereof shall continue in effect, except upon consummation of such
plan or proposal.
4. NOTICES. Notices may be provided to Webster and the Stockholders in
the manner specified in the Agreement, with all notices to the Stockholders
being provided to them at the addresses set forth at Schedule I.
5. GOVERNING LAW. This Stockholder Agreement shall be governed by the
laws of the State of Delaware, without giving effect to the principles of
conflicts of laws thereof.
6. COUNTERPARTS. This Stockholder Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and each of which shall be deemed an original, and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
party, it being understood that all parties need not sign the same counterpart.
2
<PAGE>
7. HEADINGS. The Section headings contained herein are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Stockholder Agreement.
8. REGULATORY APPROVAL. If any provision of this Stockholder Agreement
requires the approval of any regulatory authority in order to be enforceable,
then such provision shall not be effective until such approval is obtained;
provided, however, that the foregoing shall not affect the enforceability of any
other provision of this Stockholder Agreement.
[Signature Page Follows]
3
<PAGE>
IN WITNESS WHEREOF, Webster Financial Corporation, by a duly authorized
officer, and each of the Stockholders have caused this Stockholder Agreement to
be executed and delivered as of the day and year first above written.
WEBSTER FINANCIAL CORPORATION
By: /s/ James C. Smith
---------------------------
James C. Smith
Chairman and Chief Executive Officer
STOCKHOLDERS:
/s/ William R. Attridge /s/ Diana Atwood-Johnson
- ------------------------------ -------------------------------
William R. Attridge Diana Atwood-Johnson
/s/ H. Judson Carr /s/ Eleanor D. Champion
- ------------------------------ -------------------------------
H. Judson Carr Eleanor D. Champion
/s/ William A. Childress /s/ Nicholas Lewitz, Jr.
- ------------------------------ -------------------------------
William A. Childress Nicholas Lewitz, Jr.
/s/ Stanley F. Prymas /s/ Samuel J. Riggio
- ------------------------------ -------------------------------
Stanley F. Prymas Samuel J. Riggio
/s/ Gene R. Schiavone /s/ George W. Whelan IV
- ------------------------------ -------------------------------
Gene R. Schiavone George W. Whelan IV
4
<PAGE>
SCHEDULE I
Number of Shares of Maritime Bank
Name and Address of Stockholder Common Stock Beneficially Owned
- -------------------------------- ----------------------------------
William R. Attridge 19,782
5 Saltus Road
Old Saybrook, CT 06475
Diana Atwood Johnson 64,200
12 Tantummaheag Road
Old Lyme, CT 06371
H. Judson Carr 66,900
61 River Road
Essex, CT 06426
Eleanor D. Champion 3,000
104 N. Main Street
Essex, CT 06426
William A. Childress 300
43 Sheffield Street
Old Saybrook, CT 06475
Nicholas Lewitz, Jr. 32,550
198 Fairview Road
Westbrook, CT 06475
Stanley F. Prymas 44,475
26 Hemlock Terrace Extension
Deep River, CT 06417
Samuel J. Riggio 27,450
10 Warsaw Street
Deep River, CT 06417
Gene R. Schiavone 27,600
Box 580
Essex, CT 06426
George W. Whelen IV 56,175
18 Hill Road
Old Saybrook, CT 06475
<PAGE>
SCHEDULE II
None.
EXHIBIT 5
HOGAN & HARTSON L.L.P.
555 THIRTEENTH STREET, N.W.
WASHINGTON, D.C. 20004
January 25, 1999
Board of Directors
Webster Financial Corporation
Webster Plaza
Waterbury, Connecticut 06702
Ladies and Gentlemen:
We are acting as special counsel to Webster Financial Corporation, a
Delaware corporation ("Webster"), in connection with its registration statement
on Form S-4 (the "Registration Statement") filed with the Securities and
Exchange Commission relating to the proposed offering of up to 880,136 shares of
Webster's common stock, par value $.01 per share, all of which shares (the
"Shares") are to be issued by Webster in accordance with the terms of the
Agreement and Plan of Merger, dated as of November 3, 1998, by and among
Webster, Webster Bank and Maritime Bank & Trust Company (the "Agreement"). This
opinion letter is furnished to you at your request to enable you to fulfill the
requirements of Item 601(b)(5) of Regulation S-K, 17 C.F.R. ss. 229.601(b)(5),
in connection with the Registration Statement.
For purposes of this opinion letter, we have examined copies of the
following documents:
1. An executed copy of the Registration Statement.
2. An executed copy of the Agreement.
3. The Restated Certificate of Incorporation of Webster, with amendments
thereto, as certified by the Secretary of Webster on the date hereof
as then being complete, accurate and in effect.
4. The Bylaws of Webster, with amendments thereto, as certified by the
Secretary of Webster on the date hereof as then being complete,
accurate and in effect.
5. Resolutions of the Board of Directors of Webster adopted at a meeting
held on October 26, 1998, as certified by the Secretary of Webster on
the date hereof as then being complete, accurate and in effect,
relating to, among other things, the issuance of the Shares and
arrangements in connection therewith.
In our examination of the aforesaid documents, we have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity, accuracy
<PAGE>
Board of Directors
Webster Financial Corporation
January 25, 1999
Page 2
and completeness of all documents submitted to us, and the conformity with the
original documents of all documents submitted to us as certified, telecopied,
photostatic, or reproduced copies. This opinion letter is given, and all
statements herein are made, in the context of the foregoing.
This opinion letter is based as to matters of law solely on the General
Corporation Law of the State of Delaware. We express no opinion herein as to any
other laws, statutes, regulations, or ordinances.
Based upon, subject to and limited by the foregoing, we are of the opinion
that following (i) effectiveness of the Registration Statement, (ii) issuance of
the Shares pursuant to the terms of the Agreement, and (iii) receipt by Webster
of the consideration for the Shares specified in the Agreement and resolutions
of the Board of Directors, the Shares will be validly issued, fully paid and
nonassessable under the General Corporation Law of the State of Delaware.
We assume no obligation to advise you of any changes in the foregoing
subsequent to the delivery of this opinion letter. This opinion letter has been
prepared solely for your use in connection with the filing of the Registration
Statement on the date of this opinion letter and should not be quoted in whole
or in part or otherwise be referred to, nor filed with or furnished to any
governmental agency or other person or entity, without the prior written consent
of this firm.
We hereby consent to the filing of this opinion letter as Exhibit 5 to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Proxy Statement/Prospectus constituting a part of the
Registration Statement. In giving this consent, we do not thereby admit that we
are an "expert" within the meaning of the Securities Act of 1933, as amended.
Very truly yours,
HOGAN & HARTSON L.L.P.
EXHIBIT 8
[FORM OF TAX OPINION]
________ __, 1999
Board of Directors
Webster Financial Corporation
Webster Plaza
Waterbury, Connecticut 06702
Board of Directors
Maritime Bank & Trust Company
130 Westbrook Road
Essex, Connecticut 06426-1149
Gentlemen/Ladies:
This opinion is being delivered to you in accordance with Section 7.1(f) of
the Agreement and Plan of Merger (the "Agreement"), dated as of November 3,
1998, by and among Webster Financial Corporation ("Webster"), a Delaware
corporation, Webster Bank ("Webster Bank"), a federally chartered savings bank
and a wholly owned subsidiary of Webster, and Maritime Bank & Trust Company
("Maritime Bank"), a Connecticut-chartered commercial bank. Pursuant to the
Agreement, Maritime Bank will be merged with and into Webster Bank (the
"Merger").
In connection with the preparation of this opinion, we have examined and
with your consent relied upon the following documents (including all exhibits
and schedules thereto): (1) the Agreement; (2) the Registration Statement on
Form S-4 of Webster (File No. 333-_________) filed with the Securities and
Exchange Commission on January __, 1999, as amended by Pre-Effective Amendment
No. 1 thereto filed with the Securities and Exchange Commission on _________ __,
1999 (the "Registration Statement") and/or the Proxy Statement/Prospectus of
Webster and Maritime Bank; (3) representations and certifications made to us by
Webster (attached hereto as Exhibit A); (4) representations and certifications
made to us by Maritime Bank (attached hereto as Exhibit B); (5) such other
instruments and documents related to the formation, organization and operation
of Webster, Webster Bank and Maritime Bank or to the consummation of the Merger
and the transactions contemplated thereby as we have deemed necessary or
appropriate. 1/
The Proposed Transaction
Based solely upon our review of the documents set forth above, and upon
such information as Webster, Webster Bank and Maritime Bank have provided to us
(which we have not attempted to verify in any respect), and in reliance upon
such documents and information, we understand that the proposed transaction and
the relevant facts with respect thereto are as follows:
- ----------
1/ All capitalized terms used herein and not otherwise defined shall have the
same meaning as they have in the Agreement. All section references, unless
otherwise indicated, are to the Internal Revenue Code of 1986, as amended (the
"Code").
<PAGE>
Webster is the owner of all of the outstanding stock of Webster Bank.
Through Webster Bank, Webster provides financial services to individuals,
families and businesses through over 100 banking offices, three commercial
banking centers and more than 174 ATMs located in New Haven, Fairfield,
Litchfield, Hartford and Middlesex Counties in Connecticut, in addition to
telephone banking, video banking and PC banking. On November 11, 1998, Webster
announced that it had signed a definitive merger agreement to acquire Village
Bancorp, Inc. ("Village"), the holding company of The Village Bank & Trust
Company ("Village Bank") (the "Village Merger"). Pursuant to the Village Merger,
Village will merge with and into Webster and Village Bank will merge with and
into Webster Bank.
Maritime Bank is a Connecticut-chartered commercial bank headquartered in
Essex, Connecticut. Maritime Bank is engaged principally in the business of
attracting deposits from the general public and investing those deposits in
residential real estate loans, and in consumer and small business loans.
Maritime Bank currently serves customers from three banking offices located in
Middlesex and New London Counties, Connecticut.
The purpose of the Merger is to enable Webster to acquire the assets and
business of Maritime Bank. After the Merger, Maritime Bank's three branch
banking offices will remain open and will be operated as banking offices of
Webster Bank. The Merger will result in an expansion of Webster Bank's primary
market area to include Maritime Bank's banking offices in Middlesex County,
where Webster currently operates banking offices, and New London County,
Connecticut, where Webster currently does not have any offices. Webster Bank
expects to achieve reductions in the current operating expenses of Maritime Bank
upon the consolidation of Maritime Bank's operations into Webster Bank.
It is proposed that pursuant to the Agreement, the Banking Law of
Connecticut, the Home Owners' Loan Act and the rules and regulations of the
Office of Thrift Supervision thereunder, Maritime Bank merge with and into
Webster Bank. As a result of the Merger, Maritime Bank's corporate existence
will cease and Webster Bank will be the surviving bank and a wholly-owned
subsidiary of Webster. As the surviving bank, Webster Bank will succeed to all
of the assets and liabilities of Maritime Bank.
By virtue of the Merger, each share of Maritime Bank Common Stock issued
and outstanding prior to the Effective Time (other than Dissenting Shares and
certain other shares) will be converted into and exchangeable for that number of
shares of Webster Common Stock, determined by dividing $26.67 by the Base Period
Trading Price, as may be adjusted as provided in the Agreement. Certificates for
fractions of shares of Webster Common Stock will not be issued. In lieu of a
fraction of a share of Webster Common Stock, each holder of Maritime Bank Common
Stock otherwise entitled to a fraction of a share of the Webster Common Stock
will be entitled to receive an amount of cash equal to (i) the fraction of a
share of the Webster Common Stock to which such holder would otherwise be
entitled, multiplied by (ii) the closing time average market value of the
Webster Common Stock, which shall be deemed to be the average of the daily
closing prices per share for Webster Common Stock for the fifteen consecutive
trading days on which shares of Webster Common Stock are actually traded ending
on the third trading day preceding the Closing Date. Shares of Maritime Bank
Common Stock that are issued and outstanding immediately prior to the Effective
Time and that are owned by shareholders who have properly dissented within the
meaning of the applicable provisions of the Connecticut Business Corporation Act
will not be converted into the right to receive shares of Webster Common Stock,
unless and until such shareholders have failed to perfect or have effectively
withdrawn or lost their right to payment under applicable law.
At the Effective Time, each option granted by Maritime Bank to purchase
shares of Maritime Bank Common Stock under the Maritime Bank Stock Plan which is
outstanding and unexercised immediately prior thereto will be converted
automatically into an option to purchase shares of Webster Common Stock, with
adjustment in the number of shares and exercise price to reflect the Exchange
Ratio.
<PAGE>
Assumptions and Representations
In connection with rendering this opinion, we have assumed or obtained
representations (and, with your consent, are relying thereon, without any
independent investigation or review thereof, although we are not aware of any
material facts or circumstances contrary to or inconsistent therewith) that:
1. All information contained in each of the documents we have examined and
relied upon in connection with the preparation of this opinion is accurate and
completely describes all material facts relevant to our opinion, all copies are
accurate and all signatures are genuine. We have also assumed that there has
been (or will be by the Effective Time of the Merger) due execution and delivery
of all documents where due execution and delivery are prerequisites to the
effectiveness thereof.
2. The Merger will be consummated in accordance with applicable state and
federal law and will qualify as a statutory merger under applicable state and
federal law.
3. All representations made in the exhibits hereto are true, correct, and
complete in all material respects. Any representation or statement made "to the
best of knowledge" or similarly qualified is correct without such qualification.
4. The Merger will be consummated in accordance with the Agreement and as
described in the Proxy Statement/Prospectus (including satisfaction of all
covenants and conditions to the obligations of the parties without amendment or
waiver thereof); each of Webster, Webster Bank and Maritime Bank will comply
with all reporting obligations with respect to the Merger required under the
Code and the Treasury Regulations thereunder; and the Agreement and all other
documents and instruments referred to therein or in the Proxy
Statement/Prospectus are valid and binding in accordance with their terms.
Opinion - Federal Income Tax Consequences
Based upon and subject to the assumptions and qualifications set forth
herein, it is our opinion that for Federal income tax purposes the Merger will
qualify as a reorganization within the meaning of Section 368(a) of the Code.
In addition to the assumptions set forth above, this opinion is subject to
the exceptions, limitations and qualifications set forth below:
1. This opinion represents and is based upon our best judgment regarding
the application of relevant current provisions of the Code and interpretations
of the foregoing as expressed in existing court decisions, administrative
determinations (including the practices and procedures of the Internal Revenue
Service (the "IRS") in issuing private letter rulings, which are not binding on
the IRS except with respect to the taxpayer that receives such a ruling) and
published rulings and procedures all as of the date hereof. An opinion of
counsel merely represents counsel's best judgment with respect to the probable
outcome on the merits and is not binding on the IRS or the courts. There can be
no assurance that positions contrary to our opinions will not be taken by the
IRS, or that a court considering the issues would not hold contrary to such
opinions. Neither Webster nor Maritime Bank has requested a ruling from the IRS
(and no ruling will be sought) as to any of the federal income tax consequences
addressed in this opinion. Furthermore, no assurance can be given that future
legislative, judicial or administrative changes, on either a prospective or
retroactive basis, would not adversely affect the accuracy of the opinion
expressed herein. Nevertheless, we undertake no responsibility to advise you of
any new developments in the law or in the application or interpretation of the
federal income tax laws.
2. This letter addresses only the specific tax opinion set forth above.
This letter does not address any other federal, state, local or foreign tax
consequences that may result from the
<PAGE>
Merger or any other transaction (including any transaction undertaken in
connection with the Merger).
3. We express no opinion regarding, among other things, the tax
consequences of the Merger (including the opinion set forth above) as applied to
specific shareholders of Maritime Bank or that may be relevant to particular
classes of Maritime Bank shareholders, such as dealers in securities, corporate
shareholders subject to the alternative minimum tax, foreign persons, and
holders of shares acquired upon exercise of stock options or in other
compensatory transactions. In addition, we express no opinion regarding the tax
consequences to a holder of an option to purchase shares of Maritime Bank Common
Stock who receives an option to purchase shares of Webster Common Stock in
exchange therefor pursuant to the Merger.
4. Our opinion set forth herein is based upon the description of the
contemplated transactions as set forth above in the section captioned "The
Proposed Transaction," the Agreement and the Proxy Statement/Prospectus. If the
actual facts relating to any aspect of the transactions differ from this
description in any material respect, our opinion may become inapplicable. No
opinion is expressed as to any transaction other than those set forth in the
section captioned "The Proposed Transaction," the Agreement and the Proxy
Statement/Prospectus or to any transaction whatsoever, including the Merger, if
all the transactions described in the section captioned "The Proposed
Transaction," the Agreement and the Proxy Statement/Prospectus are not
consummated in accordance with the terms of the section captioned "The Proposed
Transaction," the Agreement and the Proxy Statement/Prospectus and without
waiver or breach of any material provision thereof or if all of the
representations, warranties, statements and assumptions upon which we relied are
not true and accurate at all relevant times. In the event any one of the
statements, representations, warranties or assumptions upon which we have relied
to issue this opinion is incorrect, our opinion might be adversely affected and
may not be relied upon.
This opinion is provided to Webster and Maritime Bank only, and without our
prior consent, may not be relied upon, used, circulated, quoted or otherwise
referred to in any manner by any person, firm, governmental authority or entity
whatsoever other than reliance thereon by Webster, Maritime Bank and the
Maritime Bank shareholders. Notwithstanding the prior sentence, we hereby
consent to the use of the opinion letter as an exhibit to the Registration
Statement and to the use of our name in the Registration Statement and the
filing of our opinion with the Office of Thrift Supervision. In giving the
consent, we do not thereby admit that we are an "expert" within the meaning of
the Securities Act of 1933, as amended.
Sincerely yours,
Exhibit 23.2
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 Prospectus.
/s/ KPMG LLP
Hartford, Connecticut
January 25, 1999
Exhibit 23.3
Consent of Independent Accountants
We consent to the incorporation in this registration statement on Form S-4 of
Webster Financial Corporation, of our report dated January 30, 1998, except for
Note 16 as to which the date is August 28, 1998 and Note 18 as to which the date
is November 3, 1998, on our audits of the financial statements of Maritime Bank
& Trust Company as of December 31, 1997 and 1996 and for each of the years in
the three-year period ended December 31, 1997 and to the reference to our firm
under the heading "Experts" in the Proxy Statement/Prospectus.
/s/ Shatswell, MacLeod & Company, P.C.
Shatswell, MacLeod & Company, P.C.
West Peabody, Massachusetts
January 25, 1999
Exhibit 23.4
Consent of Ostrowski & Company, Inc.
We hereby consent to the use of our name in the Form S-4 Registration Statement
of Webster Financial Corporation ("Webster") and any amendments thereto relating
to the registration of shares of Webster's common stock to be issued in
connection with Webster's proposed acquisition of Maritime Bank & Trust Company.
We also consent to the inclusion of our opinion letter dated November 3, 1998 as
an appendix to the Proxy Statement/Prospectus included as part of the
Registration Statement, and the references to our opinion included in the Proxy
Statement/Prospectus.
/s/ Ostrowski & Company, Inc.
Cranford, New Jersey
January 25, 1999
Exhibit 24
POWER OF ATTORNEY
FOR THE ACQUISITION OF MARITIME BANK & TRUST COMPANY
Each director whose signature appears below appoints James C. Smith or John
V. Brennan, jointly and severally, each in his own capacity, as true and lawful
attorneys-in-fact, with full power of substitution in such director's name,
place and stead, in any and all capacities to sign the Registration Statement on
Form S-4 and any amendments to the Form S-4, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
This Power of Attorney may be signed in counterparts.
[Signatures on following page]
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney on
October 26, 1998.
/s/ Richard H. Alden /s/ Achille A. Apicella
- ------------------------- ----------------------------
Richard H. Alden Achille A. Apicella
/s/ Joel S. Becker /s/ O. Joseph Bizzozero, Jr.
- ------------------------- ----------------------------
Joel S. Becker O. Joseph Bizzozero, Jr.
/s/ George T. Carpenter /s/ John J. Crawford
- ------------------------- ----------------------------
George T. Carpenter John J. Crawford
/s/ Harry P. DiAdamo, Jr. /s/ Robert A. Finkenzeller
- ------------------------- ----------------------------
Harry P. DiAdamo, Jr. Robert A. Finkenzeller
/s/ Walter R. Griffin /s/ J. Gregory Hickey
- ------------------------- ----------------------------
Walter R. Griffin J. Gregory Hickey
/s/ C. Michael Jacobi /s/ John F. McCarthy
- ------------------------- ----------------------------
C. Michael Jacobi John F. McCarthy
/s/ James C. Smith /s/ Sister Marguerite Waite
- ------------------------- ----------------------------
James C. Smith Sister Marguerite Waite
Exhibit 99
REVOCABLE PROXY
MARITIME BANK & TRUST COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Maritime Bank & Trust Company ("Maritime")
hereby appoints Diana Atwood-Johnson and H. Judson Carr, or any of them, with
full power of substitution in each, as proxies to cast all votes which the
undersigned shareholder is entitled to cast at the special meeting of
shareholders to be held at ___ __.m. on ______ __, 1999 at Maritime's main
headquarters, 130 Westbrook Road, Essex, Connecticut, and at any adjournments or
postponements thereof, upon the following matters. The undersigned shareholder
hereby revokes any proxy or proxies heretofore given.
This proxy will be voted as directed by the undersigned shareholder. UNLESS
CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED: (1) TO APPROVE AND ADOPT
AN AGREEMENT AND PLAN OF MERGER, DATED AS OF NOVEMBER 3, 1998, AMONG WEBSTER
FINANCIAL CORPORATION, WEBSTER BANK AND MARITIME, THE MERGER PROVIDED FOR
THEREIN, PURSUANT TO WHICH MARITIME WILL BE ACQUIRED BY WEBSTER FINANCIAL
CORPORATION, AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE AGREEMENT AND PLAN
OF MERGER AND (2) OTHERWISE IN ACCORDANCE WITH THE DETERMINATION OF A MAJORITY
OF THE MARITIME BOARD OF DIRECTORS. The undersigned shareholder may revoke this
proxy at any time before it is voted by (i) delivering to the Secretary of
Maritime a written notice of revocation before the shareholder meeting, (ii)
delivering to Maritime a duly executed proxy bearing a later date before the
shareholder meeting, or (iii) attending the shareholder meeting and voting in
person. The undersigned shareholder hereby acknowledges receipt of the Notice of
Special Meeting of Maritime and the 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)
--------------
SEE
REVERSE SIDE
--------------
<PAGE>
--------------
X
--------------
Please mark your
votes as this.
-------------
COMMON
Proposal 1: To approve and adopt an Agreement and Plan of Merger, dated as of
November 3, 1998, among Webster Financial Corporation, Webster
Bank and Maritime Bank & Trust Company, the merger provided for
therein, pursuant to which Maritime Bank & Trust Company will be
acquired by Webster Financial Corporation, and the other
transactions contemplated by the Agreement and Plan of Merger.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Other Matters: The proxies are authorized to vote upon such other business as
may properly come before the shareholder meeting, or any
adjournments or postponements of the meeting, including, without
limitation, a motion to adjourn the shareholder meeting to
another time and/or place for the purpose of soliciting
additional proxies in order to approve the Agreement and Plan of
Merger and the merger provided for therein or otherwise, in
accordance with the determination of a majority of the Maritime
Bank & Trust Company Board of Directors.
Date:
-----------------------------
-----------------------------
-----------------------------
Signature of Shareholder 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.
