EXHIBIT 3
Summary of Rights to
Purchase Series C Participating Preferred Stock
February 16, 1996
On February 5, 1996, the Board of Directors of Webster Financial
Corporation (the "Company") declared a dividend distribution of one Right for
each outstanding share of its Common Stock to shareholders of record at the
close of business on February 16, 1996. Each Right entitles the registered
holder to purchase from the Company a unit consisting of one one-thousandth of a
share (a "Unit") of Series C Participating Preferred Stock, par value $.01 per
share (the "Series C Stock"), at a Purchase Price of $100 per unit, subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement dated as of February 5, 1996 (the "Rights Agreement") between the
Company and Chemical Mellon Shareholder Services, L.L.C., as Rights Agent.
Initially, no separate Rights Certificates will be distributed and
ownership of the Rights will be evidenced by the ownership of all Common Stock
certificates representing shares then outstanding. However, the Rights will
separate from the Common Stock and a Distribution Date will occur upon the
earliest of (i) 10 business days following a public announcement that a person
or group of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the outstanding shares of Common Stock (the "Stock Acquisition Date"), (ii)
10 business days following the commencement of a tender offer or exchange offer
which, if consummated, would result in a person or group beneficially owning 15%
or more of such outstanding shares of Common Stock, or (iii) 10 business days
after the Board of Directors of the Company has declared any person to be an
"Adverse Person."
The Board of Directors of the Company, by a majority vote, shall
declare a person to be an "Adverse Person" upon making (i) a determination that
such person, alone or together with its affiliates and associates, has or will
become the Beneficial Owner of 10% or more of the outstanding shares of Common
Stock (provided that any such determination will not be effective until such
Person has become the Beneficial Owner of 10% or more of the outstanding shares
of Common Stock) and (ii) a determination, after reasonable inquiry and
investigation, including consultation with such persons as the Board of
Directors deems appropriate, that (a) such beneficial ownership by such person
is intended to cause, is reasonably likely to cause or will cause the Company to
repurchase the Common Stock beneficially owned by such person or to cause
pressure on the Company to take action or enter into a transaction or series of
transactions intended to provide such person with short-term financial gain
under
circumstances where the Board of Directors believes that the best long-term
interests of the Company and its shareholders would not be served by taking such
action or entering into such transactions or series of transactions at that time
or (b) such beneficial ownership is causing or is reasonably likely to cause a
material adverse impact (including, but not limited to, impairment of
relationships with customers or impairment of the Company's ability to maintain
its competitive position) on the business or prospects of the Company or (c)
such beneficial ownership is otherwise determined to be not in the best
interests of the Company and its shareholders, employees, customers and
communities in which the Company and its subsidiaries do business. However, the
Board of Directors may not declare a person to be an Adverse Person if, prior to
the time that the person acquired 10% or more of the shares of Common Stock then
outstanding, such person provided to the Board of Directors in writing a
statement of the person's purpose and intentions with respect to the acquisition
of the Common Stock, and the Board of Directors deemed it appropriate not to
declare the person an Adverse Person. The Board of Directors may impose
conditions on its determination (such as the person not acquiring more than a
specified amount of the Common Stock).
Until the Distribution Date (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such Common
Stock certificates, (ii) new Common Stock certificates issued after February 16,
1996 will contain a notation incorporating the Rights Agreement by reference,
and (iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on February 4, 2006, unless earlier redeemed by
the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
In the event that the Board of Directors determines that a person is an
Adverse Person or a person becomes the beneficial owner of 15% or more of the
then outstanding shares of Common Stock, each holder of a Right, after the end
of the redemption period, will thereafter have the right to receive (x) upon
exercise and payment of the exercise price, Common Stock (or, in certain
circumstances, cash, property or other securities of the Company) having a value
equal to two times the exercise price of the Right or (y) at the discretion of
the Board of Directors, upon exercise and without payment of the exercise price,
Common Stock (or, in certain circumstances, cash, property or other securities
of the Company) having a value equal to the difference between the exercise
price of the Right and the value of the
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consideration which would be payable under clause (x). Notwithstanding any of
the foregoing, following the occurrence of any of the events set forth in this
paragraph, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person or Adverse
Person will be null and void. However, Rights are not exercisable following the
occurrence of either of the events set forth above until such time as the Rights
are no longer redeemable by the Company as set forth below.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving corporation, or (ii) 50%
or more of the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights which previously have been voided as set forth
above) will thereafter have the right to receive, upon exercise, common stock of
the acquiring company having a value equal to two times the exercise price of
the Right. The events set forth in this paragraph and in the preceding paragraph
are referred to as the "Triggering Events."
At any time after a person or group of affiliated or associated persons
becomes an Acquiring Person, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which have become
void), in whole or in part, at an exchange ratio of one share of Common Stock
per Right (subject to adjustment).
The Purchase Price payable, and the number of Units of Series C Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Series C Stock, (ii) if holders of the Series C Stock are granted certain rights
or warrants to subscribe for Series C Stock or convertible securities at less
than the current market price of the Series C Stock, or (iii) upon the
distribution to holders of the Series C Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above). With certain exceptions, no
adjustment in the Purchase Price will be required until cumulative adjustments
amount to at least 1% of the Purchase Price.
No fractional Units will be issued and, in lieu thereof, an adjustment
in cash will be made based on the market price of the Series C Stock on the last
trading date prior to the date of exercise.
In general, the Board of Directors may cause the Company to redeem the
Rights in whole, but not in part, at a price of $.01 per Right, at any time
until 10 business days following the Stock Acquisition Date or such period as
may be extended. Under certain circumstances, the decision to redeem the Rights
will require the concurrence of a majority of the Continuing Directors (who
generally are those directors who were directors of the Company on February 5,
1996 or who subsequently became directors and whose elections or nominations
were approved by a majority of the Continuing
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Directors). Moreover, redemption would not be permitted after 10 business days
following the effective date of any declaration by the Board of Directors that
any person is an Adverse Person. After the redemption period has expired, the
Company's right of redemption may be reinstated if an Acquiring Person reduces
his beneficial ownership to less that 10% of the outstanding shares of Common
Stock in a transaction or series of transactions not involving the Company and
there are no other Acquiring Persons or Adverse Persons. Immediately upon the
action of the Board of Directors ordering redemption of the Rights, the Rights
will terminate and the only right of the holders of Rights will be to receive
the $.01 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for stock (or other consideration) of the Company or for common
stock of the acquiring company as set forth above.
Other than those provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board in order to cure any ambiguity, defect or inconsistency or to make changes
which do not adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person), or to shorten or lengthen any time period
under the Rights Agreement; provided, however, no amendment to adjust the time
period governing redemption may be made at such time as the Rights are not
redeemable.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on a Current
Report on Form 8-K. A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is incorporated herein by reference.
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