Document:

avlr-ex1012_274.htm

 

Exhibit 10.12

 

AVALARA, INC.

EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement (this “Agreement”) is entered into as of January 6, 2019, by and between Amit Mathradas (“Executive”) and Avalara, Inc., a Washington corporation (the “Company”).

Certain capitalized terms in this Agreement have the meanings set forth in Appendix A attached to this Agreement, which is incorporated into this Agreement in its entirety.

	
1.
	
EMPLOYMENT

	
 
	
1.1
	
Position

The Company agrees to employ Executive, and Executive agrees to accept employment by the Company, as its President and Chief Operating Officer and report to the Company’s Chief Executive Officer. Subject to Section 3.3, changes may be made from time to time by the Company in its sole discretion to the duties, reporting relationships and title of Executive. Executive will perform the duties as are commensurate and consistent with Executive’s position and will devote Executive’s full working time, attention and efforts to the Company and to discharging the responsibilities of Executive’s position, and such other duties as may be assigned from time to time by the Company that relate to the business of the Company and are reasonably consistent with Executive’s position. Executive agrees to comply with the Company’s standard policies and procedures, including the Company’s Proprietary Information and Inventions Agreement, and with all applicable laws and regulations.

	
 
	
1.2
	
Outside Activities

During Executive’s employment, Executive will not engage in any business activity that, in the reasonable judgment of the Board of Directors, conflicts with the duties of Executive under this Agreement, whether or not such activity is pursued for gain, profit or other advantage. During Executive’s employment, Executive further agrees not to assist any person or organization in competing with the Company, in preparing to compete with the Company or in hiring any employees of the Company. In signing this Agreement, Executive warrants that Executive is available to perform his duties at the Company without restriction, conflict of interest or breach of any contract or obligation Executive may have entered into with a third party (such as a former employer).

	
 
	
1.3
	
Term

Unless earlier terminated as provided in this Agreement, the term of this Agreement shall begin on Executive’s first day of employment with Avalara (the “Effective Date”) and terminate four years from the Effective Date.

	
2.
	
COMPENSATION AND BENEFITS

The Company agrees to pay or cause to be paid to Executive and Executive agrees to accept in exchange for the services rendered hereunder the following compensation and benefits:

	
 
	
2.1
	
Annual Salary

Executive’s compensation shall consist of an annual base salary (the “Salary”) of $450,000, payable in semi-monthly installments in accordance with the payroll practices of the Company. The Salary may be subject to periodic change while Executive is employed hereunder.

 

 

	
 
	
2.2
	
Bonus and Equity Awards

(a)Bonus. Executive shall be eligible to participate in the Company’s incentive bonus plans as may be adopted from time to time by the Board of Directors (or the Compensation and Leadership Development Committee thereof (the “Committee”)), subject to and in accordance with the terms and conditions of such plans. Executive shall be eligible to receive an annual target bonus of 80% of Salary.

(b)Equity Awards

(i)Restricted Stock Units. Subject to the approval of the Board of Directors (or the Committee), Executive will be granted restricted stock units (“RSUs”) to acquire shares of the Company’s Common Stock under the Company’s 2018 Equity Incentive Plan. The terms of the RSU grant will be detailed under separate cover. Subject to Board (or Committee approval), the number of RSUs granted to Executive will be equal to $4,200,000, divided by the average closing price of the Company’s Common Stock during the calendar month preceding the grant date of the RSUs. The RSUs will vest 20% on each of the first, second and third anniversaries of the vesting commencement date and 40% on the fourth anniversary of the vesting commencement date (which vesting commencement date will be the fifth day of the month in which the grant is approved), subject to Executive’s continued employment or service on each vest date. Following a vest date, Executive will receive one share of Common Stock for each vested RSU.

(ii)Stock Options. Subject to the approval of the Board of Directors (or the Committee), Executive will be granted a stock option to purchase shares of the Company’s Common Stock under the Company’s 2018 Equity Incentive Plan. The number of shares subject to the stock option will be determined as of the grant date, based on a target equity value as of such date of $1,800,000 and converted to a number of shares in a manner based on the Company’s financial accounting valuations for stock options. The exercise price for each share will be equal to the closing price of one share of Common Stock, as reported on the New York Stock Exchange on the grant date. The terms of the stock option grant will be detailed under separate cover. The stock option will vest in accordance with a vesting schedule to be determined by the Board of Directors (or the Committee) but the standard employee vesting is a 1 year cliff with 25% vesting and then 1/48 (of the original amount) vesting each month thereafter for the next 36 months, subject to continued employment or service on each vest date. 

(ii)Additional RSU’s and Stock Options.  The parties acknowledge and intend that Executive will be eligible to receive additional equity awards annually during Executive’s employment, based on the recommendation of the Chief Executive Officer and approval of the Board of Directors (or the Committee).

	
 
	
2.3
	
Benefits

Executive shall be eligible to participate, subject to and in accordance with applicable eligibility requirements, in such employee benefit plans, policies, programs and arrangements as are generally provided to the Company’s other similarly situated executives, which shall include, at a minimum, basic health, dental and vision insurance.

	
 
	
2.4
	
Vacation and Other Paid Time-Off Benefits

Each calendar year, Executive shall be entitled to at least four (4) weeks of paid vacation and sick days per year, in accordance with the plans, policies, programs and arrangements of the Company applicable to similarly situated executives of the Company generally; notwithstanding, Executive also shall be provided such holidays as the Company makes available to all of its other employees.

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2.5
	
Sign on Bonus

Provided Executive accepts this offer, the Company will pay to Executive a one-time signing bonus in the amount of $300,000, less deductions required by law (the “Signing Bonus”), payable in two installments. Fifty percent (50%) of the Signing Bonus will be paid on your first regularly scheduled payroll date after the Effective Date, and the remaining 50% will be paid on the first regularly scheduled payroll date in September 2019. Should the Company terminate Executive’s employment for Cause or should Executive choose to leave or announce his intention to leave the Company for any reason other than Good Reason, in either case prior to the one-year anniversary of the Effective Date, Executive will be obligated to return to the Company the entire Signing Bonus previously paid to him and will cease to be eligible to receive any then unpaid portion of the Signing Bonus. Should the Company terminate Executive’s employment without Cause or Executive terminate with Good Reason, Executive will not be required to return to the Company any portion of the Signing Bonus previously paid to him.

	
 
	
2.6
	
Relocation

Executive shall be entitled to relocation assistance of up to $100,000 to cover the moving expenses of household goods, temporary housing, lease termination and/or other miscellaneous relocation expenses as appropriate. Executive shall be required to provide receipts and documentation for relocation expenses in accordance with the Company’s regular accounting and relocation policies.

	
3.
	
TERMINATION

	
 
	
3.1
	
Employment at Will

Executive acknowledges and understands that employment with the Company is at will and can be terminated by either party for no reason or for any reason not otherwise specifically prohibited by law. Nothing in this Agreement is intended to alter Executive’s at-will employment status or obligate the Company to continue to employ Executive for any specific period of time, or in any specific role or geographic location. Except as expressly provided for in this Agreement, upon any termination of employment, Executive shall not be entitled to receive any payments or benefits under this Agreement other than unpaid Salary earned through the date of termination and unused vacation that has accrued as of the date of Executive’s termination of employment that would be payable under the Company’s standard policy.

	
 
	
3.2
	
Automatic Termination on Death or Total Disability

This Agreement and Executive’s employment hereunder shall terminate automatically upon the death or Total Disability of Executive. “Total Disability” shall mean Executive’s inability, with reasonable accommodation, to perform the duties of Executive’s position for a period or periods aggregating ninety (90) days in any period of one hundred eighty (180) consecutive days as a result of physical or mental illness, loss of legal capacity or any other cause beyond Executive’s control. Executive and the Company hereby acknowledge that Executive’s ability to perform Executive’s duties is the essence of this Agreement. Termination hereunder shall be deemed to be effective (a) at the end of the calendar month in which Executive’s death occurs or (b) immediately upon a determination by the Board of Directors (or the Committee) of Executive’s Total Disability. In the case of termination of employment under this Section 3.2, Executive shall not be entitled to receive any payments or benefits under this Agreement other than unpaid Salary earned through the date of termination and unused vacation that has accrued as of the date of Executive’s termination of employment that would be payable under the Company’s standard policy.

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3.3
	
Termination of Employment Without Cause or for Good Reason

(a)If (1) the Company terminates Executive’s employment without Cause or 
(2) Executive resigns for Good Reason, (both as defined in Appendix A), then Executive shall be entitled to receive the following termination payments and benefits; provided, however, that this Section 3.3 shall not apply to, and shall have no effect in connection with, any termination to which Section 3.2 of this Agreement applies:

(i)an amount equal to twelve (12) months’ Salary at the rate in effect immediately prior to termination (or, if Executive terminates employment for Good Reason due to a material reduction in Executive’s then-in-effect base Salary, immediately prior to such reduction); provided, however, that in the event such termination occurs within twelve (12) months following a Change in Control, such amount shall be equal to eighteen (18) months’ Salary, such amount payable to Executive in accordance with the terms below;

(ii)in the event such termination occurs within twelve (12) months following a Change in Control, an amount equal to Executive’s target Bonus for the calendar year in which such termination occurs, such amount pro-rated for the number of full months worked in such calendar year prior to termination and payable to Executive in accordance with the terms below;

(iii)if Executive and his spouse and eligible children are entitled to, and timely (and properly) elect to, continue their coverage (or the coverage of any one of them) under the Company’s group health plans pursuant to Section 4980B of the Internal Revenue Code of 1986, as amended (“COBRA”), the Company shall pay the premiums (or reimburse Executive for any premiums paid by Executive (or Executive’s spouse or eligible children)) for such COBRA continuation coverage for a period of six (6) months following the last day of the month containing Executive’s date of termination (“COBRA Continuation Date”) or until Executive is no longer entitled to COBRA continuation coverage under the Company’s group health plans, whichever period is shorter; provided, however, that in the event such termination occurs within twelve (12) months following a Change in Control, such COBRA continuation coverage shall be for a period of twelve (12) months following the COBRA Continuation Date or until Executive is no longer entitled to COBRA continuation coverage under the group health plans of the Company or, if applicable, those of a Successor Company, whichever period is shorter. Notwithstanding the foregoing or any other provision in this Agreement to the contrary, the Company may unilaterally amend this Section 3.3(a)(iii) or eliminate the benefit provided hereunder to the extent it deems necessary to avoid the imposition of excise taxes, penalties or similar charges on the Company or any of its subsidiaries or affiliates, including, without limitation, under Section 4980D of the Code;

(iv)in the event such termination occurs within twelve (12) months following a Change in Control, full acceleration of Executive’s then unvested equity awards that vest based on continued employment or service (the payments and benefits set forth in Section 3.3(a)(i)- are collectively referred to herein as “Severance Payments”); and

(v)unpaid Salary earned through the date of termination and unused vacation that has accrued and would be payable under the Company’s standard policy (collectively, the “Accrued Obligations”), payable in a lump sum on the next regularly scheduled payroll date following the date on which Executive’s employment terminated.

(b)As a condition to receiving the payments and benefits under this Section 3.3 other than the Accrued Obligations, Executive must timely execute (and not revoke within the applicable revocation period specified therein) a general release and waiver of claims against the Company, which release and waiver shall be in a form acceptable to the Company, and in substantially the form attached hereto as Appendix B (the “Release”). To be timely, the Release must become effective (i.e., Executive must have executed the Release and any revocation period must have expired without Executive’s revoking the Release) no later than sixty (60) days (or such earlier date specified in the Release) after the latter of 

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Executive’s date of termination or the Company’s provision of the execution copy of the Release document (the “Release Deadline”). If the Release does not become effective and irrevocable by the Release Deadline, Executive will not have any right or entitlement to any of the Severance Payments described in this Section 3.3. In addition, payment of the amounts and benefits under this Section 3.3 is contingent on Executive’s full and continued compliance with the Company’s Proprietary Information and Inventions Agreement, as the same may be amended from time to time.

(c)Notwithstanding the foregoing, termination of employment by Executive will not be for Good Reason unless (1) Executive notifies the Company in writing of the existence of the condition that Executive believes constitutes Good Reason within thirty (30) days of the initial existence of such condition (which notice specifically identifies such condition), (2) the Company fails to remedy such condition within fifteen (15) days after the date on which it receives such notice (the “Remedial Period”), and (3) Executive actually terminates employment within thirty (30) days after the expiration of the Remedial Period and before the Company remedies such condition.

(d)Subject to Section 3.3(b), Severance Payments to which Executive becomes entitled under Sections 3.3(a)(i) and (ii) shall be made to Executive in approximately equal installments through the Company’s regularly scheduled payroll during the twelve (12) or, if applicable, eighteen (18) month period immediately following Executive’s date of termination. Severance Payments shall commence on the first regularly scheduled payroll date following the date on which Executive’s Release becomes effective; provided, however, that if the maximum period during which Executive can consider and revoke the Release begins in one calendar year and ends in the subsequent calendar year, payments shall not be made or commence to be made until the later of the effective date of Executive’s Release and the first business day of such subsequent calendar year, regardless of when Executive’s Release becomes effective. The first such Severance Payment shall include payment of all amounts that otherwise would have been paid under Sections 3.3(a)(i) and (ii) prior to such date had such payments commenced as of the first regularly scheduled payroll date occurring immediately after Executive’s date of termination, and any payments made thereafter shall continue as provided herein. Notwithstanding the foregoing, if any payments and benefits payable pursuant to Section 3.3(a) constitute a “deferral of compensation” subject to Code Section 409A (after taking into account, to the maximum extent possible, any applicable exemptions), then the applicable provisions of Section 13 shall apply.

	
 
	
3.4
	
Code Section 280G

(a)Notwithstanding anything in this Agreement to the contrary, in the event that Executive becomes entitled to receive or receives any payment or benefit under this Agreement or under any other plan, agreement or arrangement with the Company, any person whose actions result in a Change in Control or any other person affiliated with the Company or such person (all such payments and benefits being referred to herein as the “Total Payments”) and it is determined that any of the Total Payments will be subject to any excise tax pursuant to Code Section 4999, or any similar or successor provision (the “Excise Tax”), the Company shall pay to Executive either (1) the full amount of the Total Payments or (2) an amount equal to the Total Payments, reduced by the minimum amount necessary to prevent any portion of the Total Payments from being an “excess parachute payment” (within the meaning of Code Section 280G) (the “Capped Payments”), whichever of the foregoing amounts results in the receipt by Executive, on an after-tax basis, of the greatest amount of Total Payments notwithstanding that all or some portion of the Total Payments may be subject to the Excise Tax. For purposes of determining whether Executive would receive a greater after-tax benefit from the Capped Payments than from receipt of the full amount of the Total Payments, (i) there shall be taken into account any Excise Tax and all applicable federal, state and local taxes required to be paid by Executive in respect of the receipt of such payments and (ii) such payments shall be deemed to be subject to federal income taxes at the highest rate of federal income taxation applicable to individuals that is in effect for the calendar year in which the effective date of the Change in Control occurs, and state and local income taxes at the highest rate of taxation applicable to individuals in the state and locality of Executive’s residence on the effective date of the Change in Control, net of the maximum reduction in federal income taxes that could be obtained from deduction of such state and local taxes (as determined by assuming that such deduction is subject to the maximum limitation applicable to itemized deductions under Code Section 68 and any other limitations applicable to the deduction of state and local income taxes under the Code).

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(b)All computations and determinations called for by this Section 3.4 shall be made by a reputable independent public accounting firm or independent tax counsel appointed by the Company (the “Firm”). All determinations made by the Firm under this Section 3.4 shall be conclusive and binding on both the Company and Executive, and the Firm shall provide its determinations and any supporting calculations to the Company and Executive within ten (10) business days after Executive’s employment terminates under any of the circumstances described in Section 3.3, or such earlier time as is requested by the Company. For purposes of making its determinations under this Section 3.4, the Firm may rely on reasonable, good faith interpretations concerning the application of Code Sections 280G and 4999. The Company and Executive shall furnish to the Firm such information and documents as the Firm may reasonably request in making its determinations. The Company shall bear all fees and expenses charged by the Firm in connection with its services.

(c)In the event that Section 3.4(a) applies and a reduction is required to be applied to the Total Payments thereunder, the Total Payments shall be reduced by the Company in its reasonable discretion  in  the  following  order:  (1) reduction  of  any  Total  Payments  that  are  subject  to  Code Section 409A on a pro-rata basis or such other manner that complies with Code Section 409A, as determined by the Company, and (2) reduction of  any  Total  Payments  that  are  exempt  from  Code Section 409A.

	
4.
	
ASSIGNMENT

This Agreement is personal to Executive and shall not be assignable by Executive. The Company may assign its rights hereunder to (a) any other corporation or entity resulting from any merger, consolidation or other reorganization to which the Company is a party; (b) any other corporation, partnership, association or other person to which the Company may transfer all or substantially all of the assets and business of the Company existing at such time; or (c) any subsidiary, parent or other affiliate of the Company. All of the terms and provisions of this Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns.

	
5.
	
AMENDMENTS IN WRITING

No amendment, modification, waiver, termination or discharge of any provision of this Agreement, or consent to any departure therefrom by either party hereto, shall in any event be effective unless the same shall be in writing, specifically identifying this Agreement and the provision intended to be amended, modified, waived, terminated or discharged and signed by the Company and Executive, and each such amendment, modification, waiver, termination or discharge shall be effective only in the specific instance and for the specific purpose for which given. No provision of this Agreement shall be varied, contradicted or explained by any oral agreement, course of dealing or performance or any other matter not set forth in an agreement in writing and signed by the Company and Executive.

	
6.
	
NOTICES

Every notice relating to this Agreement shall be in writing and shall be given by personal delivery, by a reputable same-day or overnight courier service (charges prepaid), by registered or certified mail (postage prepaid, return receipt requested) or by facsimile to the recipient with a confirmation copy to follow the next day to be delivered by personal delivery or by a reputable same- day or overnight courier service to the appropriate party’s address or fax number below (or such other address and fax number as a party may designate by notice to the other parties):

 

	
If to the Company:
	
 
	
255 S. King Street, Suite 1800

	
 
	
 
	
Seattle, WA 98104

	
 
	
 
	
Attn: General Counsel

	
 
	
 
	
 

	
If to Executive:
	
 
	
Address on record at the Company

 

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7.
	
APPLICABLE LAW

This Agreement shall in all respects, including all matters of construction, validity and performance, be governed by, and construed and enforced in accordance with, the laws of the State of Washington, without regard to any rules governing conflicts of laws.

	
8.
	
ENTIRE AGREEMENT

This Agreement, on and as of the Effective Date, constitutes the entire agreement between the Company and Executive with respect to the subject matter hereof, and all prior or contemporaneous oral or written communications, understandings or agreements between the Company and Executive with respect to such subject matter are hereby superseded in their entirety, except as otherwise provided herein.

	
9.
	
SEVERABILITY

If any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any action in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

	
10.
	
WAIVERS

No delay or failure by any party hereto in exercising, protecting, or enforcing any of its rights, titles, interests, or remedies hereunder, and no course of dealing or performance with respect thereto, shall constitute a waiver thereof. The express waiver by a party hereto of any right, title, interest, or remedy in a particular instance or circumstance shall not constitute a waiver thereof in any other instance or circumstance. All rights and remedies shall be cumulative and not exclusive of any other rights or remedies.

	
11.
	
HEADINGS

All headings used herein are for convenience only and shall not in any way affect the construction of, or be taken into consideration in interpreting, this Agreement.

	
12.
	
COUNTERPARTS

This Agreement, and any amendment or modification entered into pursuant to Section 5, may be executed in any number of counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute one and the same instrument.

	
13.
	
CODE SECTION 409A

The Company makes no representations or warranties to Executive with respect to any tax, economic or legal consequences of this Agreement or any payments or other benefits provided hereunder, including without limitation under Code Section 409A, and no provision of this Agreement shall be interpreted or construed to transfer any liability for failure to comply with Code Section 409A from Executive or any other individual to the Company or any of its affiliates. Executive, by executing this Agreement, shall be deemed to have waived any claim against the Company and its affiliates with respect to any such tax, economic or legal consequences. However, the parties intend that this Agreement and the payments and benefits provided hereunder be exempt from the requirements of Code Section 409A, and the rules and regulations issued thereunder, to the maximum extent possible, whether  pursuant  to  the  short-term  deferral  exception  described  in  Treasury  Regulation   Section 1.409A-1(b)(4), the 

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involuntary separation pay plan exception described in Treasury Regulation Section 1.409A-1(b)(9)(iii), or otherwise. To the extent Code Section 409A is applicable to this Agreement, the parties intend that this Agreement and any payments and benefits hereunder comply with the deferral, payout and other limitations and restrictions imposed under Code Section 409A so as to avoid the imputation of any tax, penalty or interest under Code Section 409A. Notwithstanding anything herein to the contrary, this Agreement shall be construed, interpreted, operated and administered in a manner consistent with such intentions. Without limiting the generality of the foregoing, and notwithstanding any other provision of this Agreement to the contrary:

(a)To the extent Code Section 409A is applicable to this Agreement, a termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of amounts or benefits upon or following a termination of employment unless such termination constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder (a “Separation from Service”), and, for purposes of any such provision of this Agreement, references to “terminate,” “termination,” “termination of employment,” “resigns” and like terms shall mean Separation from Service.

(b)If Executive is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of Executive’s Separation from Service, Executive shall not be entitled to any payment or benefit on account of Executive’s Separation from Service, until the earlier of (1) the date that is six (6) months after Executive’s Separation from Service for any reason other than death or (2) the date of Executive’s death. The provisions of this Section 3(b) shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Code Section 409A on Executive. Any amounts otherwise payable to Executive upon or in the six (6) month period following Executive’s Separation from Service that are not so paid by reason of this Section 13(b) shall be paid (without interest) as soon as practicable (and in all events within thirty (30) days) after the date that is six (6) months after Executive’s Separation from Service (or, if earlier, as soon as practicable, and in all events within thirty (30) days, after the date of Executive’s death).

(c)Each payment made under this Agreement shall be treated as a separate payment and the right to a series of installment payments under this Agreement, including, without limitation, under Section 3.3, shall be treated as a right to a series of separate and distinct payments.

(d)With regard to any provision in this Agreement that provides for reimbursement of expenses or in-kind benefits (except for any expense, reimbursement or in-kind benefit provided pursuant to this Agreement that does not constitute a “deferral of compensation,” within the meaning of Treasury Regulation Section 1.409A-1(b)), (i) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during any calendar year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (ii) such payment shall be made within thirty (30) days following the submission of appropriate documentation required by the Company and in no event later than the last day of the calendar year following the calendar year in which the expense was incurred, and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

	
14.
	
EMPLOYMENT TAXES

All payments made pursuant to this Agreement shall be subject to withholding of all applicable income, employment and other taxes.

(Signature Page Follows)

 

 

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IN WITNESS WHEREOF, the parties have executed and entered into this Agreement as of the date first set forth above.

 

	
EXECUTIVE:

	
 

	
/s/ Amit Mathradas

	
Amit Mathradas

	
 

	
COMPANY:

	
 

	
AVALARA, INC.

	
 

	
By:
	
/s/ Alesia Pinney

 

 

 

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APPENDIX A

DEFINITIONS

Capitalized terms used below that are not defined in this Appendix A have the meanings set forth in the Executive Employment Agreement (the “Agreement”) to which this Appendix A is attached. As used in the Agreement,

 

1.“Cause” means the occurrence of one or more of the following events:

 

(i)Executive’s gross negligence with respect to the business and affairs of the Company;

 

(ii)Executive’s willful disregard or neglect of Executive’s duties, including Executive’s violation of any material Company policy that continues for a period of ten (10) days following written notice thereof by the Company to Executive;

 

(iii)Executive’s act, or omission to act, intended to cause harm or damage to the business, property, operations, financial condition or reputation of the Company;

 

(iv)Executive’s material breach of any of the provisions of any written agreement between Executive and the Company breach that is not cured, to the extent susceptible to cure, within thirty (30) days after the Company has given written notice to Executive describing such breach;

 

(v)Executive’s commission of any act of embezzlement, fraud, theft and/or financial dishonesty with respect to the Company, including without limitation misappropriation of funds, properties and/or assets;

 

(vi)Executive’s breach of Executive’s fiduciary obligations, or disloyalty, to the Company;

 

(vii)Executive’s material breach of the Proprietary Information and Inventions Agreement between Executive and the Company; or

 

(viii)Executive’s conviction of, or plea of guilty or nolo contendere to, a felony or a crime involving theft, fraud, dishonesty, misrepresentation or sexual harassment.

 

The existence or non-existence of Cause shall be determined in good faith by the Company’s Board of Directors.

 

2.“Change in Control” has the meaning of “Change in Control” as defined in the Company’s 2018 Equity Incentive Plan.

 

3.“Code” means the Internal Revenue Code of 1986, as amended.

 

4.“Effective Date” has the meaning set forth in Section 1.3 of the Agreement.

5.“Good Reason” means, without Executive’s express, written consent:

 

(i)any material breach by the Company of the Agreement;

 

(ii)a material reduction in Executive’s level of responsibility, duties or authority;

 

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(iii)a material reduction in Executive’s then-in-effect base salary (other than a reduction that is equal in percentage to, or smaller than, that imposed upon other executives in the Company); or

 

(iv)relocation of Executive’s principal office to a location more than fifty (50) miles from Executive’s then-current principal office.

 

6.“Severance Payments” has the meaning set forth in Section 3.3(a)(iv) of the Agreement.

 

7.“Successor Company” means the surviving company or successor company (or parent company thereof) in connection with a Change in Control. References to “Company” in the Agreement with respect to Severance Payments payable following a qualifying termination of employment following a Change in Control shall also include a Successor Company, as applicable.

 

 

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APPENDIX B

 

FORM OF WASHINGTON RELEASE

 

In consideration for the payments and benefits to be provided pursuant to Section 3.3 of the Executive Employment Agreement (“Agreement”) entered into by and between    (“Executive”) and Avalara, Inc., a Washington corporation (the “Company”), with an effective date of ________, Executive agrees to the following:

 

(a)Executive represents that Executive has not filed any complaints, charges or lawsuits against the Company with any governmental agency or any court or before any arbitrator. To the extent prohibited by law, this paragraph does not prevent Executive from filing a charge or complaint or participating in government investigations. Nothing in this Release (this “Release”) is intended to or will be used in any way to limit Executive’s rights to communicate with a governmental agency, as provided for, protected under or warranted by applicable law. By signing this Release, Executive is waiving Executive’s right to recover any individual relief (including back pay, front pay, reinstatement or other legal or equitable relief) in any charge, complaint, or lawsuit or other proceeding brought by Executive or on Executive’s behalf by any third party, except for any right Executive may have to receive a payment from a governmental agency (and not the Company) for information provided to the governmental agency. Executive understands that he may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (1) is made (x) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney and (y) solely for the purpose of reporting or investigating a suspected violation of law; or (2) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding.

 

(b)Executive expressly waives all claims against the Company and releases the Company, and any of the Company’s past, present or future parent, affiliated, related, and/or subsidiary entities, and all of the past and present directors, shareholders, officers, general or limited partners, employees, agents, and attorneys, and agents and representatives of such entities, and employee benefit plans in which Executive is or has been a participant by virtue of his or her employment with the Company (collectively, the “Releasees”), from any claims that Executive may have against the Company or the Releasees. It is understood that this Release includes, but is not limited to, any claims arising directly or indirectly out of, relating to, or in any other way involving in any manner whatsoever, (1) Executive’s employment with the Company or its subsidiaries or the termination thereof or (2) Executive’s status at any time as a holder of any securities of the Company, including any claims for wages, stock or stock options, employment benefits or damages of any kind whatsoever arising out of any contracts, express or implied, any covenant of good faith and fair dealing, express or implied, any legal restriction on the Company’s right to terminate employment, or any federal, state or other governmental statute or ordinance, including, without limitation, the Employee Retirement Income Security Act of 1974, Title VII of the Civil Rights Act of 1964, the federal Age Discrimination in Employment Act, the Americans With Disabilities Act, the Family and Medical Leave Act, the Washington Law Against Discrimination Act, the Washington Family and Parental Leave Act, or any other legal limitation on the employment relationship; provided, however, notwithstanding anything to the contrary set forth herein, that this Release shall not extend to (i) benefit claims under employee pension benefit plans in which Executive is a participant by virtue of Executive’s employment with the Company or its subsidiaries or to benefit claims under employee welfare benefit plans for occurrences (e.g., medical care, death, or onset of disability) arising after the execution of this Release by Executive, (ii) Executive’s rights to severance pay and benefits under the Agreement; (iii) any claims Executive may have for indemnification pursuant to law, contract or Company policy, (iv) any claims for coverage under any applicable directors’ and officers’ insurance policy in accordance with the terms of such policy, or (v) any claims arising from events that occur after the date Executive signs this Release.

 

B-1

 

Executive understands that this Release includes a release of claims arising under the Age Discrimination in Employment Act (ADEA). Executive understands and warrants that Executive has been given a period of twenty-one (21) days to review and consider this Release or forty-five (45) days if Executive’s termination is part of a group reduction in force. Executive further warrants that Executive understands that, with respect to the release of age discrimination claims only, Executive has a period of seven (7) days after execution of this Release to revoke the release of age discrimination claims by notice in writing to the Company.

 

EXECUTIVE ACKNOWLEDGES ALL OF THE FOLLOWING:

 

(A)I HAVE CAREFULLY READ AND HAVE VOLUNTARILY SIGNED THIS RELEASE;

 

(B)I FULLY UNDERSTAND THE FINAL AND BINDING EFFECT OF THIS RELEASE, INCLUDING THE WAIVER OF CLAIMS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT; AND

 

(C)PRIOR TO SIGNING THIS RELEASE, I HAVE BEEN ADVISED OF MY RIGHT TO CONSULT, AND HAVE BEEN GIVEN ADEQUATE TIME TO REVIEW MY LEGAL RIGHTS, WITH AN ATTORNEY OF MY CHOICE.

 

 

	
	
 

	
Executive Signature

	
 

	
 

	
Executive Name (Print)

	
 

	
 

	
Date

 

B-2Document

Exhibit 4.1

DESCRIPTION OF THE REGISTRANT’S SECURITIES 
REGISTERED PURSUANT TO SECTION 12 OF THE 
SECURITIES EXCHANGE ACT OF 1934

As of December 31, 2019, Webster Financial Corporation (“Webster Financial” or the “Company”) had two classes of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): (i) common stock, $0.01 par value per share (the “common stock”); and (ii) depositary shares (the “depositary shares”), each representing 1/1000th interest in a share of 5.25% Series F Non-Cumulative Perpetual Preferred Stock (the “Series F Preferred Stock”).  Each of the Company’s securities registered under Section 12 of the Exchange Act are listed on The New York Stock Exchange.
DESCRIPTION OF COMMON STOCK

The following is a description of the rights of common stock and related provisions of the Company’s Fourth Amended & Restated Certificate of Incorporation (the “Certificate of Incorporation”), the Company’s Bylaws (as amended, effective June 9, 2014) (the “Bylaws”), and applicable Delaware law. The description herein does not contain all of the information that you may find useful or that may be important to you. You should refer to the provisions of our Certificate of Incorporation, Bylaws and the applicable provisions of the Delaware General Corporation Law (“DGCL”) law and federal law governing bank holding companies because they, and not the summaries, define the rights of holders of shares of our common stock.
 
Where You Can Find More Information

Our common stock is traded on the New York Stock Exchange under the symbol WBS. Webster's internet address is www.websterbank.com and investor relations internet address is www.wbst.com. Webster makes available free of charge on these websites its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, definitive proxy statements, and amendments, if any, to those documents filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as soon as practicable after it electronically files such material with, or furnishes it to, the United States Securities and Exchange Commission (SEC). These documents are also available to the public on the Internet at the SEC's website at www.sec.gov.  Information on Webster’s website and its investor relations website is not incorporated by reference herein. You can obtain copies of our Certificate of Incorporation and Bylaws from these resources

General 

Our Certificate of Incorporation provides the authority to issue 200,000,000 shares of common stock, par value $.01 per share.  Each share of our common stock has the same relative rights and is identical in all respects to each other share of our common stock. Our 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. 

Voting Rights 

Holders of our common stock are entitled to one vote per share on each matter properly submitted to stockholders for their vote, including the election of directors. Holders of our common stock do not have the right to cumulate their votes for the election of directors, which means that the holders of more than 50% of the shares of common stock voting for the election of directors can elect 100% of the directors standing for election at any meeting if they choose to do so. In that event, the holders of the remaining shares voting for the election of directors will not be able to elect any person or persons to our board of directors at that meeting.

 
Liquidation Rights 

The holders of our common stock and the holders of any class or series of stock entitled to participate with the holders of our common stock as to the distribution of assets in the event of any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, will become entitled to participate equally in the distribution of any of our assets remaining after we have paid, or provided for the payment of, all of our debts and liabilities and after we have paid, or set aside for payment, to the holders of any class of stock having preference over the common stock in the event of liquidation, dissolution or winding-up, the full preferential amounts, if any, to which they are entitled.
 
Dividends

The holders of our common stock and any class or series of stock entitled to participate with the holders of our common stock are entitled to receive dividends declared by our board of directors out of any assets legally available for distribution. The board may not declare, and we may not pay, dividends or other distributions, unless we have paid or the board has declared or set aside all accumulated dividends and any sinking fund, retirement fund or other retirement payments on any class of stock having preference as to payments of dividends over our common stock. As a holding company, our ability to pay distributions is affected by the ability of our subsidiaries to pay dividends. The ability of our bank subsidiary, and our ability, to pay dividends in the future is, and could in the future be further, influenced by bank regulatory requirements and capital guidelines.

Miscellaneous
 
The holders of our common stock have no preemptive or conversion rights for any shares that may be issued. Our common stock is not subject to additional calls or assessments, and all shares of our common stock currently outstanding are fully paid and nonassessable. All shares of common stock offered pursuant to a prospectus supplement, or issuable upon conversion, exchange or exercise of the Preferred Stock or other convertible securities, will, when issued, be fully paid and non-assessable, which means that the full purchase price of the shares will have been paid and the holders of the shares will not be assessed any additional monies for the shares.
 
Some Important Charter Provisions

Any amendment to our Certificate of Incorporation must be approved by at least two-thirds of our board of directors at a duly constituted meeting called for that purpose and also by stockholders 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 is required to amend the provisions regarding amendment of our 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 stockholders, greenmail, and stockholder action by written consent. In addition, the provisions regarding business combinations may be amended only by the affirmative vote of at least 80% of the shares entitled to vote on the matter. Our Bylaws may be amended by the affirmative vote of at least two-thirds of the board of directors or by stockholders by the affirmative vote of at least two-thirds of the total votes eligible to be voted, at a duly constituted meeting called for that purpose. 

Our Certificate of Incorporation also provides that no individual, firm, corporation or other entity may, alone or based on shared power, make any offer to buy or acquire, any solicitation of an offer to sell, any tender offer for, or any request or invitation for tender of, 10% or more of our outstanding shares of capital stock generally entitled to vote for directors without either:

(1)        receiving the approval of at least two-thirds of our directors then in office; or 

(2)        obtaining approval from the appropriate federal regulatory authorities pursuant to applicable laws and regulations.

Our Certificate of Incorporation requires that business combinations between the Company, or any majority-owned subsidiary of the Company, and a 10% or more stockholder or its affiliates or associates, referred to collectively in this section as the “interested stockholder,” be approved either by:

(1)        at least 80% of the total number of outstanding shares of capital stock entitled to vote generally in the election of directors; 

(2)        at least two-thirds of our continuing directors, which means those directors unaffiliated with the interested stockholder and serving before the interested stockholder became an interested stockholder; or 

(3)        meet specified price and procedure requirements that provide for consideration per share generally equal to or greater than that paid by the interested stockholder when it acquired its block of stock.

The types of business combinations with an interested stockholder covered by this provision include:

•any merger, consolidation or share exchange; 

•any sale, lease, exchange, mortgage, pledge or other transfer of assets other than in the usual and regular course of business; 

•any issuance or transfer of equity securities having an aggregate market value in excess of 5% of the aggregate market value of our outstanding shares; 

•the adoption of any plan or proposal of liquidation proposed by or on behalf of an interested stockholder; or 

•any reclassification of securities, recapitalization of the Company or any merger or consolidation of the Company with any of its subsidiaries or any other transaction which has the effect of increasing the proportionate ownership of the interested stockholder.

These provisions may have the effect of deterring hostile takeovers or delaying changes in control or management of the Company. Our Certificate of Incorporation excludes our employee stock purchase plans and other employee benefit plans from the definition of interested stockholder. Since the terms of our Certificate of Incorporation and Bylaws may differ from the general information we are providing, you should only rely on the actual provisions of our Certificate of Incorporation and Bylaws. If you would like to read our Certificate of Incorporation and Bylaws, you may request a copy from us by following the directions under the heading “Where You Can Find More Information.”

NYSE Listing 

Our common stock is listed on the New York Stock Exchange under the symbol “WBS.” 

Transfer Agent and Registrar 

The transfer agent and registrar for our common stock is Broadridge Corporate Issuer Solutions, Inc.  

DESCRIPTION OF SERIES F PREFERRED STOCK

The following is a brief description of the material terms of the Series F Preferred Stock. The following summary of the terms and provisions of the Series F Preferred Stock does not purport to be complete in all respects, and is qualified in its entirety by reference to the pertinent sections of our Certificate of Incorporation, including the Certificate of Designations creating the Series F Preferred Stock, Bylaws, and the applicable provisions of the DGCL and federal law governing bank holding companies, because they, and not the summaries, define the rights of holders of shares of our Series F Preferred Stock.

General

The 5.25% Series F Non-Cumulative, Perpetual Preferred Stock is a single series of our authorized preferred stock. We have issued 6,000,000 depositary shares, representing 6,000 shares of issued and outstanding Series F Preferred Stock. Shares of Series F Preferred Stock, upon issuance against full payment of the purchase price for the depositary shares, will be validly issued, fully paid and nonassessable. The depositary is the sole holder of shares of Series F Preferred Stock. The holders of depositary shares are required to exercise their proportional rights in the Series F Preferred Stock through the depositary, as described herein. 

With respect to the payment of dividends and distributions upon liquidation, dissolution or winding-up of our business and affairs, the Series F Preferred Stock will rank (i) senior to our common stock and each other series of preferred stock we may issue (unless expressly provided otherwise in the certificate of designations creating such preferred stock), (ii) pari passu with each other series of our preferred stock which expressly provides in the certificate of designations creating such preferred stock that it will rank pari passu with the Series F Preferred Stock, and (iii) junior to all existing and future indebtedness and other non-equity claims on us and to each other series of our preferred stock which expressly provides in the certificate of designations creating such preferred stock that it will rank senior to the Series F Preferred Stock. We have no other series of preferred stock outstanding.
 
The Series F Preferred Stock is not convertible into, or exchangeable for, shares of any other class or series of our capital stock or other securities. The Series F Preferred Stock is perpetual and has no maturity date.

We reserve the right to re-open this series and issue additional shares of the Series F Preferred Stock either through public or private sales at any time and from time to time, without notice to or consent of holders of the Series F Preferred Stock. In the event we issue additional shares of Series F Preferred Stock, we will cause a corresponding number of additional depositary shares to be issued. The additional shares would form a single series with all previously issued shares of Series F Preferred Stock. In addition, we may from time to time, without notice to or consent of holders of the Series F Preferred Stock, issue additional shares of preferred stock that rank equally with or junior to the Series F Preferred Stock with respect to the payment of dividends (whether such dividends are cumulative or non-cumulative) and distributions upon our liquidation, dissolution or winding-up.

Dividends

Dividends on the Series F Preferred Stock are not cumulative and are not mandatory. If our board of directors (or a duly authorized committee of our board of directors) does not declare a dividend on the Series F Preferred Stock in respect of a dividend period, then no dividend shall be deemed to have accrued for such dividend period, no dividend shall be payable on the applicable dividend payment date, and we will have no obligation to pay any dividend for that dividend period, whether or not our board of directors (or a duly authorized committee of our board of directors) declares a dividend for any future dividend period with respect to the Series F Preferred Stock or at any future time with respect to any other class or series of our capital stock.

References to the “accrual” (or similar terms) of dividends in this “Description of Series F Preferred Stock” refer only to the determination of the amount of such dividend and do not imply that any right to a dividend arises prior to the date on which a dividend is declared.

Holders of Series F Preferred Stock will be entitled to receive, when, as and if declared by our board of directors (or a duly authorized committee of our board of directors), out of assets legally available for the payment of dividends under the DGCL, non-cumulative cash dividends at a rate equal to 5.25% of the $25,000 per share liquidation amount of the Series F Preferred Stock (equivalent to $25 per depositary share) per annum, payable in arrears on each dividend payment date with respect to the dividend period (or portion thereof) ending on the day preceding such respective dividend payment date.

If declared by our board of directors (or a duly authorized committee of our board of directors), we will pay dividends on the Series F Preferred Stock quarterly on March 15, June 15, September 15 and December 15 of each year (beginning on March 15, 2018), each such date referred to as a dividend payment date. If any dividend payment date falls on a day other than a business day, then any dividend declared and otherwise payable on that dividend payment date will be paid on the next business day without any adjustment to the amount of dividends paid. A business day means any means each Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on which banking institutions in New York, New York are generally authorized or obligated by law or executive order to close.

A dividend period for the Series F Preferred Stock is the period from, and including, a dividend payment date to, but excluding, the next dividend payment date, except that the initial dividend period for shares of the Series F Preferred Stock issued in connection with this offering will commence on and include the date we first issue such shares of Series F Preferred Stock. Dividends payable on the Series F Preferred Stock will be computed on the basis of a 360-day year consisting of twelve 30-day months. Dollar amounts resulting from that calculation will be rounded to the nearest cent, with one-half cent being rounded upward. We will not pay interest or any sum of money instead of interest on any dividend payment that may be in arrears on the Series F Preferred Stock.

Dividends will be payable to holders of record of Series F Preferred Stock as they appear on our stock register on the applicable record date, which shall be the 15th calendar day before the applicable dividend payment date, or such other record date, no more than 60 calendar days nor less than 10 calendar days before the applicable dividend payment date, as shall be fixed by our board of directors (or a duly authorized committee of our board of directors) (the “dividend record date”). A dividend record date established for the Series F Preferred Stock need not be a business day. The corresponding record dates for the depositary shares will be the same as the record dates for the Series F Preferred Stock.

Dividends on the Series F Preferred Stock will cease to accrue on the redemption date, if any, as described below under “—Redemption.”

Priority Regarding Dividends

So long as any share of Series F Preferred Stock remains outstanding, unless (i) the full dividends for the most recently completed dividend period have been declared and paid (or declared and a sum sufficient for the payment thereof has been set aside) on all outstanding shares of Series F Preferred Stock and (ii) we are not in default on our obligation to redeem any shares of Series F Preferred Stock that have been called for redemption:

•no dividend shall be declared, paid or set aside for payment and no distribution shall be declared, made or set aside for payment on any junior stock (as defined below) (other than (i) a dividend payable solely in junior stock or (ii) any dividend in connection with the implementation of a stockholders’ rights plan, or the redemption or repurchase of any rights under any such plan);

•no shares of junior stock shall be repurchased, redeemed or otherwise acquired for consideration by us, directly or indirectly, other than (i) as a result of a reclassification of junior stock for or into other junior stock, (ii) the exchange or conversion of junior stock for or into other junior stock, (iii) through the use of the proceeds of a substantially contemporaneous sale of other shares of junior stock, (iv) purchases, redemptions or other acquisitions of shares of the junior stock in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants, (v) purchases of shares of junior stock pursuant to a contractually binding requirement to buy junior stock existing prior to the most recently completed dividend period, including under a contractually binding stock repurchase plan, or (vi) the purchase of fractional interests in shares of junior stock pursuant to the conversion or exchange provisions of such stock or the security being converted or exchanged, nor shall any monies be paid to or made available for a sinking fund for the redemption of any such securities by us; and

•no shares of dividend parity stock (as defined below) shall be repurchased, redeemed or otherwise acquired for consideration by us, directly or indirectly, during a dividend period, other than (i) pursuant to pro rata offers to purchase all, or a pro rata portion, of the Series F Preferred Stock and such dividend parity stock, (ii) as a result of a reclassification of dividend parity stock for or into other dividend parity stock, (iii) the exchange or conversion of dividend parity stock for or into other dividend parity stock or junior stock, (iv) through the use of the proceeds of a substantially contemporaneous sale of other shares of dividend parity stock, (v) purchases of shares of dividend parity stock pursuant to a contractually binding requirement to buy dividend parity stock existing prior to the most recently completed dividend period, including under a contractually binding stock repurchase plan, or (vi) the purchase of fractional interests in shares of dividend parity stock pursuant to the conversion or exchange provisions of such stock or the security being converted or exchanged, nor shall any monies be paid to or made available for a sinking fund for the redemption of any such securities by us.

When dividends are not paid in full upon the shares of Series F Preferred Stock and any dividend parity stock, all dividends paid or declared for payment on a dividend payment date with respect to the Series F Preferred Stock and the dividend parity stock will be shared based on the ratio between the then-current dividends due on shares of Series F Preferred Stock and (i) in the case of any series of non-cumulative dividend parity stock, the aggregate of the current and unpaid dividends due on such series of preferred stock and (ii) in the case of any series of cumulative dividend parity stock, the aggregate of the current and accumulated and unpaid dividends due on such series of preferred stock.

Subject to the foregoing, and not otherwise, such dividends (payable in cash, securities or otherwise) as may be determined by our board of directors (or a duly authorized committee of our board of directors) may be declared and paid on any class or series of junior stock or any dividend parity stock from time to time out of assets legally available for such payment, and the holders of Series F Preferred Stock will not be entitled to participate in any such dividend. Holders of the Series F Preferred Stock will not be entitled to receive any dividends not declared by our board of directors (or a duly authorized committee of our board of directors) and no interest, or sum of money in lieu of interest, shall be payable in respect of any dividend not so declared.

As used in this “Description of Series F Preferred Stock”: 

•“junior stock” means our common stock and any other class or series of our capital stock now or hereafter authorized, issued or outstanding that, by its terms, does not expressly provide that it ranks pari passu with or senior to the Series F Preferred Stock as to (i) payment of dividends and (ii) distributions upon our liquidation, dissolution or winding-up; and 

•“dividend parity stock” means any other class or series of our capital stock now or hereafter authorized, issued or outstanding that, by its terms, expressly provides that it ranks pari passu with the Series F Preferred Stock as to the payment of dividends (regardless whether such capital stock bears dividends on a non-cumulative or cumulative basis).

Restrictions on the Payment of Dividends

The payment of dividends on the Series F Preferred Stock is subject to the priority provisions and other restrictions described above in “—Dividends.” Our ability to pay dividends on the Series F Preferred Stock is also dependent on our ability to receive dividends from our subsidiaries. 

Further, dividends on the Series F Preferred Stock will not be declared, paid or set aside for payment if we fail to comply, or if and to the extent such act would cause us to fail to comply, with applicable laws and regulations, including any capital adequacy guidelines or regulations of the Board of Governors of the Federal Reserve (the “Federal Reserve”) (or, as and if applicable, the capital adequacy guidelines or regulations of any successor appropriate federal banking agency (as defined in Section 3(q) of the Federal Deposit Insurance Act)). The Certificate of Designations creating the Series F Preferred Stock explicitly provides that dividends on the Series F Preferred Stock may not be declared or set aside for payment if and to the extent such dividends would cause us to fail to comply with the applicable capital adequacy guidelines.

Redemption

No Mandatory Redemption

The Series F Preferred Stock is perpetual and has no maturity date. The Series F Preferred Stock is not subject to any mandatory redemption, sinking fund, or other similar provisions.

Neither the holders of Series F Preferred Stock nor holders of depositary shares will have the right to require the redemption or repurchase of the Series F Preferred Stock.

Optional Redemption

We may redeem the Series F Preferred Stock at our option, through a resolution duly adopted by our board of directors (or a duly authorized committee of our board of directors), in whole or in part, from time to time, subject to the approval of the appropriate federal banking agency, on December 15, 2022 or any dividend payment date occurring thereafter, at a price equal to $25,000 per share (equivalent to $25 per depositary share), plus (except as otherwise provided) the per share amount of any declared and unpaid dividends (without accumulation of any undeclared dividends) on the Series F Preferred Stock prior to the date fixed for redemption (the “redemption date”).

Redemption Following a Regulatory Capital Treatment Event

Notwithstanding the foregoing, following our good faith determination that an event has occurred that would constitute a regulatory capital treatment event (as defined below), we may, at our option, subject to the approval of the appropriate federal banking agency, provide notice of our intent to redeem in accordance with the procedures described below, and subsequently redeem, in whole but not in part, at a redemption price equal to $25,000 per share (equivalent to $25 per depositary share), plus any declared and unpaid dividends, without accumulation of any undeclared dividends.

A “regulatory capital treatment event” means our good faith determination that, as a result of (i) any amendment to, or change (including any announced prospective change) in, the laws or regulations of the United States or any political subdivision of or in the United States that is enacted or becomes effective (or will become effective) after the initial issuance of any share of Series F Preferred 

Stock; (ii) any proposed change in those laws or regulations that is announced or becomes effective (or will become effective) after the initial issuance of any share of Series F Preferred Stock; or (iii) any official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying those laws or regulations that is announced after the initial issuance of any share of Series F Preferred Stock, there is more than an insubstantial risk that we will not be entitled to treat the full liquidation value of the shares of Series F Preferred Stock then outstanding as “Tier 1 Capital” (or its equivalent) for purposes of the capital adequacy guidelines or regulations promulgated by the Federal Reserve (or, as and if applicable, the capital adequacy guidelines or regulations of any successor appropriate federal banking agency), as then in effect and applicable, for as long as any share of Series F Preferred Stock is outstanding.

Redemption Procedures and Limitations

If any shares of Series F Preferred Stock are redeemed, the redemption price payable to the holder of any shares called for redemption will be payable on the applicable redemption date against the surrender to us or our agent of any certificate(s) evidencing the shares called for redemption. Any declared but unpaid dividends payable on a redemption date but occurring after the dividend record date for any dividend period shall not be paid to the holder of Series F Preferred Stock entitled to receive the redemption price, but will instead be paid to the holder of record of the redeemed shares on the dividend record date relating to the applicable dividend payment date
.
If any shares of Series F Preferred Stock are to be redeemed, a notice of redemption shall be given by first class mail to the holders of record of the Series F Preferred Stock to be redeemed at their respective last addresses appearing on the books of Webster (provided that, if the Series F Preferred Stock is held in book-entry form through the Depository Trust Company (“DTC”), we may give such notice in any manner permitted by DTC). Any notice of redemption shall be mailed at least 30 days and no more than 60 days before the redemption date, and each notice of redemption will include a statement setting forth:

•the redemption date;

•the number of shares of the Series F Preferred Stock to be redeemed and, if less than all the shares held by the holder are to be redeemed, the number of shares of Series F Preferred Stock to be redeemed from the holder;

•the redemption price; and

•the place or places where the certificates evidencing shares of Series F Preferred Stock are to be surrendered for payment of the redemption price.

Any notice of redemption mailed or otherwise delivered as described above shall be conclusively presumed to have been duly given, whether or not any holder of the Series F Preferred Stock receives such notice. Failure to duly give notice of redemption, or any defect in such notice, to any holder of shares of Series F Preferred Stock designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Series F Preferred Stock.

In case of any redemption of only part of the shares of the Series F Preferred Stock at the time outstanding, the shares to be redeemed shall be selected either pro rata or by lot.

If notice of redemption has been duly given and, if on or before the redemption date specified in such notice, we have set aside all funds necessary for the redemption, separate and apart from our other assets, in trust for the pro rata benefit of the holders of the shares of Series F Preferred Stock called for redemption, so as to be and continue to be available therefor, or deposited with a bank or trust company selected by our board of directors (or any duly authorized committee of our board of directors) (the “redemption depository”) in trust for the pro rata benefit of the holders of the shares of Series F Preferred 

Stock called for redemption, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date all shares of Series F Preferred Stock called for redemption shall cease to be outstanding, all dividends with respect to such shares of Series F Preferred Stock shall cease to accrue after the redemption date, and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption from the redemption depository at any time after the redemption date from the funds so deposited, without interest. We shall be entitled to receive, from time to time, from the redemption depository any interest accrued on such funds, and the holders of any shares called for redemption shall have no claim to any such interest. Any funds so deposited and unclaimed at the end of three years from the redemption date shall, to the extent permitted by law, be released or repaid to us, and in the event of such repayment, the holders of record of the shares of Series F Preferred Stock called for redemption shall be determined to be our unsecured creditors for an amount equivalent to the amount deposited as stated above for the redemption of such shares and so repaid to us, but shall in no event be entitled to any interest.

Under the Federal Reserve’s current risk-based capital guidelines applicable to bank holding companies, any redemption of the Series F Preferred Stock is subject to prior approval by the Federal Reserve. The Certificate of Designations creating the Series F Preferred Stock explicitly provides that any redemption of the Series F Preferred Stock is subject to our receipt of any required prior approval by the Federal Reserve and to the satisfaction of any conditions set forth in the capital guidelines or regulations of the Federal Reserve applicable to redemption of the Series F Preferred Stock. 

See below “Description of Depositary Shares—Redemption of Depositary Shares” for information about redemption of the depositary shares relating to the Series F Preferred Stock.

Liquidation Rights

In the event we liquidate, dissolve or wind-up our business and affairs, either voluntarily or involuntarily, holders of the Series F Preferred Stock are entitled to receive a liquidating distribution of $25,000 per share (equivalent to $25 per depositary share), plus the per share amount of any declared and unpaid dividends prior to the date of payment of such liquidating distribution (but without any amount in respect of dividends that have not been declared prior to such payment date), after satisfaction of liabilities or obligations to creditors and subject to the rights of holders of any securities ranking senior to Series F Preferred Stock with respect to distributions upon the voluntary or involuntary liquidation, dissolution or winding-up of our business and affairs, and before we make any distribution of assets to the holders of our common stock or any other class or series of our capital stock ranking junior to the Series F Preferred Stock with respect to distributions upon our liquidation, dissolution or winding-up. After payment of the full amount of the liquidating distribution described above, the holders of the Series F Preferred Stock shall not be entitled to any further participation in any distribution of our assets.

In any such distribution, if our assets or the proceeds thereof are not sufficient to pay the full liquidation preferences (as defined below) to all holders of the Series F Preferred Stock and all holders of liquidation parity stock (as defined below), if any, as to such distribution with the Series F Preferred Stock, the amounts paid to the holders of Series F Preferred Stock and liquidation parity stock, if any, will be paid pro rata in accordance with the respective aggregate liquidation preferences of the Series F Preferred Stock and such liquidation parity stock. 

As used in this “Description of Series F Preferred Stock,” “liquidation preference” means, with respect to any class or series of our capital stock, the amount otherwise payable upon such class or series of capital stock in connection with any distribution upon our liquidation, dissolution or winding-up (assuming no limitation on our assets available for such distribution), including an amount equal to any declared but unpaid dividends (and in the case of any holder of capital stock on which dividends cumulate, an amount equal to any unpaid, accrued, cumulative dividends, whether or not declared, as applicable).

If the liquidation preference has been paid in full to all holders of Series F Preferred Stock and liquidation parity stock, if any, the holders of our common stock or any other class or series of shares ranking junior to the Series F Preferred Stock with respect to distributions upon our liquidation, dissolution or winding-up shall be entitled to receive all our remaining assets or the proceeds thereof according to their respective rights and preferences.

Our merger or consolidation with any other entity, including a merger or consolidation in which the holders of Series F Preferred Stock receive cash, securities or property for their shares, or the sale, lease or exchange of all or substantially all of our assets (for cash, securities or other property), shall not constitute a liquidation, dissolution or winding-up of our business or affairs.

As used in this “Description of Series F Preferred Stock,” “liquidation parity stock” means any other class or series of our capital stock now or hereafter authorized, issued or outstanding that, by its terms, expressly provides that it ranks pari passu with the Series F Preferred Stock as to the payment of distributions upon our liquidation, dissolution or winding-up.

Voting Rights

General

Except as provided below or as may be required by law, the holders of the Series F Preferred Stock have no voting power, and no right to vote on any matter at any time, either as a separate series or class or together with any other series or class of shares of our capital stock, and are not entitled to participate in meetings of holders of our common stock or to call a meeting of the holders of any one or more classes or series of our capital stock for any purpose. Each holder of Series F Preferred Stock has one vote per share (except as otherwise indicated below) on any matter on which holders of Series F Preferred Stock are entitled to vote, including when acting by written consent.

All voting rights conferred on the Series F Preferred Stock shall not apply if, at or prior to the time when the act with respect to which such vote or consent would otherwise be required shall be effected, all outstanding shares of Series F Preferred Stock have been redeemed or called for redemption upon proper notice and sufficient funds for the redemption have been set aside.

Right to Elect Two Directors upon Nonpayment

If and when dividends on the Series F Preferred Stock have not been declared and paid in an aggregate amount in full for at least six quarterly dividend periods (whether or not consecutive) (a “non-payment event”), the authorized number of directors then constituting our board of directors will automatically be increased by two. Holders of the Series F Preferred Stock, together with the holders of all other affected classes and series of voting parity stock (as defined below), voting as a single class, will be entitled to elect the two additional members of our board of directors (the “preferred stock directors”) at any annual or special meeting of stockholders at which directors are to be elected or any special meeting of the holders of the Series F Preferred Stock and any voting parity stock for which dividends have not been paid, called as provided below; provided that the election of any such directors will not cause us to violate the corporate governance requirements of the New York Stock Exchange (or any other exchange or other trading facility on which our securities may be listed or traded) that listed or quoted companies must have a majority of independent directors; and provided further that our board of directors shall, at no time, include more than two preferred stock directors.

At any time after this voting power has vested as described above, our Corporate Secretary may, and upon the written request of holders of record of at least 20% of the aggregate number of outstanding shares F Preferred Stock and voting parity stock for the election of the preferred stock directors. Notice for a special meeting will be given in a similar manner to

that provided in our Bylaws for a special meeting of the stockholders, or as required by law. If our Corporate Secretary is required to call a meeting but does not do so within 20 days after receipt of any such request, then any holder of shares of the Series F Preferred Stock may (at our expense) call such meeting, upon notice as provided in this section, and for that purpose only such holder of Series F Preferred Stock will have access to our stock books. The preferred stock directors elected at any such special meeting will hold office until the next annual meeting of our stockholders unless they have been previously terminated as described below. In case any vacancy occurs among the preferred stock directors, a successor will be elected by our board of directors to serve until the next annual meeting of the stockholders upon the nomination of the then remaining preferred stock directors or if none remains in office, by the vote of the holders of record of a majority of the outstanding shares of the Series F Preferred Stock and all voting parity stock for which dividends have not been paid, voting as a single class. Any preferred stock director may be removed at any time without cause by the holders of record of a majority of the outstanding shares of Series F Preferred Stock and all voting parity stock, when they have the voting rights described above (voting together as a single class). The preferred stock directors shall each be entitled to one vote per director on any matter.

Whenever full dividends have been paid on the Series F Preferred Stock for four consecutive dividend periods after a non-payment event, then the right of the holders of the Series F Preferred Stock to elect the preferred stock directors will cease (but subject always to the same provisions for the vesting of these voting rights in the case of any non-payment event in respect of future dividend periods). When the rights of the Series F Preferred Stock and any voting parity stock to elect preferred stock directors have all ceased, the terms of office of all preferred stock directors will immediately terminate and the number of directors constituting our board of directors will be reduced accordingly.

As used in the “Description of Series F Preferred Stock,” “voting parity stock” means our outstanding Series E Preferred Stock and any and all series of dividend parity stock having voting rights to elect directors upon the non-payment of dividends equivalent to those described above.

Under regulations adopted by the Federal Reserve, if the holders of any series of preferred stock are or become entitled to vote for the election of directors, such series will be deemed a class of voting securities and a company holding 25% or more of the series, or 5% or more if it otherwise is deemed by the Federal Reserve to exercise a “controlling influence” over us, will be subject to regulation as a bank holding company under the Bank Holding Company Act of 1956, as amended (“BHC Act”). In addition, at the time the series is deemed a class of voting securities, any other bank holding company will be required to obtain the prior approval of the Federal Reserve under the BHC Act to acquire or retain more than 5% of that series. Any other person (other than a bank holding company) will be required to obtain the non-objection of the Federal Reserve under the Change in Bank Control Act of 1978, as amended, to acquire or retain 10% or more of that series of voting securities.

Other Voting Rights

So long as any shares of Preferred Stock remain outstanding, in addition to any other vote or consent of stockholders required by law or our Certificate of Incorporation, the affirmative vote or consent of the holders of at least two-thirds of all of the then-outstanding shares of Series F Preferred Stock entitled to vote thereon, voting separately as a single class, shall be required to:

•authorize or increase the authorized amount of, or issue shares of, any class or series of our capital stock ranking senior to the Series F Preferred Stock with respect to payment of dividends or as to distributions upon our liquidation, dissolution or winding-up, or issue any obligation or security convertible into or evidencing the right to purchase any such class or series of our capital stock; or

•amend the provisions of our Certificate of Incorporation, including the Certificate of Designations creating the Series F Preferred Stock or any other series of preferred stock, 

so as to materially and adversely affect the special powers, preferences, privileges or rights of the                         Series F Preferred Stock, taken as a whole

When determining the application of the supermajority voting rights described in this section, the authorization, creation and issuance, or an increase in the authorized or issued amount of, junior stock or any series of preferred stock, or any securities convertible into or exchangeable or exercisable for junior stock or any series of preferred stock, that ranks equally with the Series F Preferred Stock with respect to the payment of dividends (whether such dividends are cumulative or non-cumulative) and as to distributions upon our liquidation, dissolution or winding-up shall not be deemed to adversely affect the powers, preferences, privileges or rights, and shall not require the affirmative vote or consent of, the holders of any outstanding shares of Series F Preferred Stock.

Voting Rights under Delaware Law

Delaware law provides that the holders of preferred stock will have the right to vote separately as a class on any amendment to our Certificate of Incorporation that would increase or decrease the aggregate number of authorized shares of such class, increase or decrease the par value of the shares of such class, or alter or change the powers, preferences, or special rights of the shares of such class so as to affect them adversely. If any such proposed amendment would alter or change the powers, preferences or special rights of one or more series of preferred stock so as to affect them adversely, but would not so affect the entire class of preferred stock, only the shares of the series so affected shall be considered a separate class for purposes of this vote on the amendment. This right is in addition to any voting rights that may be provided for in our Certificate of Incorporation or the Certificate of Designations creating the Series F Preferred Stock.

Changes for Clarification

We may, without the consent of the holders of Series F Preferred Stock, amend, alter, supplement or repeal any terms of the Series F Preferred Stock, so long as such action does not adversely affect the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, in order to (i) to cure any ambiguity, or to cure, correct or supplement any provision contained in the Certificate of Designations creating the Series F Preferred Stock that may be defective or inconsistent or (ii) to make any provision with respect to matters or questions arising with respect to the Series F Preferred Stock that is not inconsistent with the provisions of the Certificate of Designations creating the Series F Preferred Stock.

Other Preferred Stock

Our authorized capital stock include 3,000,000 shares of preferred stock, par value $0.01 per share, as reflected in our Certificate of Incorporation. Our board of directors is authorized without further shareholder action to cause the issuance of additional shares of preferred stock. Any additional preferred stock may be issued in one or more series, each with preferences, limitations, designations, conversion or exchange rights, voting rights, dividend rights, redemption provisions, voluntary and involuntary liquidation rights and other rights as our board of directors may determine at the time of issuance.

Depositary, Transfer Agent and Registrar

Broadridge Corporate Issuer Solutions, Inc. is the depositary, transfer agent and registrar for the Series F Preferred Stock. We may, in our sole discretion, remove the depositary in accordance with the agreement between us and the depositary; provided that we will appoint a successor depositary who will accept such appointment prior to the effectiveness of its removal. 

DESCRIPTION OF DEPOSITARY SHARES

The following is a brief description of the material terms of the depositary shares. The following summary does not purport to be complete in all respects, and is qualified in its entirety by reference to the pertinent sections of the Deposit Agreement (as defined below), the form of depositary receipts evidencing the depositary shares, and our Certificate of Incorporation, including the Certificate of Designations creating the Series F Preferred Stock, Bylaws, and the applicable provisions of the DGCL and federal law governing bank holding companies, because they, and not the summaries, define the rights of holders of our depositary shares.

General

We have issued 6,000,000 depositary shares representing proportional fractional interests in 6,000 shares of our Series F Preferred Stock. Each depositary share represents a 1/1,000th interest in a share of our Series F Preferred Stock, and is evidenced by depositary receipts. We have deposited the underlying shares of the Series F Preferred Stock with a depositary pursuant to a deposit agreement among us, Broadridge Corporate Issuer Solutions, Inc., acting as depositary, and the holders from time to time of the depositary receipts evidencing the depositary shares (the “Deposit Agreement”). Subject to the terms of the Deposit Agreement, each holder of a depositary share is entitled, through the depositary, in proportion to the applicable fraction of a share of Preferred Stock represented by such depositary share, to all the rights and preferences of the Series F Preferred Stock represented thereby (including dividend, voting, redemption and liquidation rights).

In this “Description of Depositary Shares,” references to “holders” of depositary shares mean those who own depositary shares registered in their own names on the books that we or the depositary maintain for this purpose. DTC is the only registered holder of the depositary receipts representing the depositary shares. References to “holders” of depositary shares do not include indirect holders who own beneficial interests in depositary shares registered in street name or issued in book-entry form through DTC. Please review the special considerations that apply to indirect holders described in the section entitled “Book-Entry Procedures and Settlement.”

Dividends and Other Distributions

Each dividend payable on a depositary share is in an amount equal to 1/1,000th of the dividend declared and payable on the related share of the Series F Preferred Stock.

The depositary will distribute any cash dividends or other cash distributions received in respect of the deposited Series F Preferred Stock to the record holders of depositary shares relating to the underlying Series F Preferred Stock in proportion to the number of depositary shares held by the holders. If we make a distribution other than in cash, the depositary will distribute any such amounts of the securities or property received by it to the record holders of depositary shares entitled to those distributions, unless it determines that the distribution cannot be made proportionally among those holders or that it is not feasible to make a distribution. In that event, the depositary may, with our approval, sell the property and distribute the net proceeds from the sale to the holders of the depositary shares.

Record dates for the payment of dividends and other matters relating to the depositary shares will be the same as the corresponding record dates for the Series F Preferred Stock.

The amounts distributed to holders of depositary shares will be reduced by any amounts required to be withheld by the depositary or by us on account of taxes or other governmental charges. The depositary may refuse to make any payment or distribution, or any transfer, exchange, or withdrawal of any depositary shares or the shares of the Series F Preferred Stock until such taxes or other governmental charges are paid.

Redemption of Depositary Shares

If we redeem the Series F Preferred Stock represented by the depositary shares, the depositary shares will be redeemed from the proceeds received by the depositary resulting from the redemption of the Series F Preferred Stock held by the depositary. The redemption price per depositary share is expected to be equal to 1/1,000th of the redemption price per share payable with respect to the Series F Preferred Stock (or $25 per depositary share), plus any declared and unpaid dividends, without accumulation of any undeclared dividends.

Whenever we redeem shares of Series F Preferred Stock held by the depositary, the depositary will redeem, as of the same redemption date, the number of depositary shares representing shares of Series F Preferred Stock so redeemed. If fewer than all of the outstanding depositary shares are redeemed, the depositary will select the depositary shares to be redeemed pro rata, by lot or by any other equitable manner as we may decide. The depositary will mail notice of redemption to record holders of the depositary receipts not less than 30 and not more than 60 days prior to the date fixed for redemption of the Series F Preferred Stock and the related depositary shares.

Voting the Series F Preferred Stock

Because each depositary share represents a 1/1,000th interest in a share of the Series F Preferred Stock, holders of depositary receipts will be entitled to 1/1,000th of a vote per depositary share under those limited circumstances in which holders of the Series F Preferred Stock are entitled to a vote.
When the depositary receives notice of any meeting at which the holders of the Series F Preferred Stock are entitled to vote, the depositary will mail or transmit by such other method approved by the depositary, in its reasonable discretion, the information contained in the notice to the record holders of the depositary shares relating to the Series F Preferred Stock. Each record holder of the depositary shares on the record date, which will be the same date as the record date for the Series F Preferred Stock, may instruct the depositary to vote the amount of the Series F Preferred Stock represented by the holder’s depositary shares. To the extent possible, the depositary will vote the amount of the Series F Preferred Stock represented by depositary shares in accordance with the instructions it receives. We will agree to take all reasonable actions that the depositary determines are necessary to enable the depositary to vote as instructed. If the depositary does not receive specific instructions from the holders of any depositary shares representing the Series F Preferred Stock, it will not vote the amount of the Series F Preferred Stock represented by such depositary shares.

Preemptive and Conversion Rights

The holders of the depositary shares do not have any preemptive or conversion rights.

Depositary, Transfer Agent and Registrar

Broadridge Corporate Issuer Solutions, Inc. is the depositary, transfer agent and registrar for the depositary shares.

Form of Preferred Stock and Depositary Shares

The depositary shares are issued in book-entry form through DTC.  The Series F Preferred Stock are issued in registered form to the depositary.

Listing of Depositary Shares

The depositary shares are listed on the New York Stock Exchange under the symbol “WBS PrF.” 

The Deposit Agreement

Amendment and Termination of the Deposit Agreement

We and the depositary may generally amend the form of depositary receipt evidencing the depositary shares and any provision of the Deposit Agreement at any time without the consent of the holders of depositary shares. However, any amendment (other than any change in the fees of any depositary, depositary’s agent, transfer agent, or registrar, as the case may be) that materially and adversely alters the rights of the holders will not be effective unless such amendment has been approved by holders of depositary shares representing at least a two-thirds of the depositary shares then outstanding.

The Deposit Agreement may be terminated by us or the depositary if:

•all outstanding depositary shares have been redeemed;

•there has been made a final distribution in respect of the Series F Preferred Stock in connection with our liquidation, dissolution or winding-up, and such distribution has been distributed to the holders of depositary shares; or

•there has been consent of holders of depositary shares representing not less than two-thirds of the depositary shares outstanding.

Resignation and Removal of Depositary

The depositary may resign at any time by delivering a notice to us of its election to do so. We may remove the depositary at any time by providing notice. Any such resignation or removal will take effect upon the appointment of a successor depositary and its acceptance of such appointment. The successor depositary must, generally, be appointed within 60 days after delivery of the notice of resignation or removal and be a person with a principal office in the United States and having a combined capital and surplus (along with its affiliates) of at least $50 million. If a successor is not appointed within 60 days, the outgoing depositary may petition a court to do so.

Miscellaneous

The depositary will not be liable for any delays or failures in performance of its obligations under the Deposit Agreement resulting from acts beyond its reasonable control. The depositary will not be obligated to appear in, prosecute or defend any legal proceeding relating to any depositary shares or preferred stock unless reasonably satisfactory indemnity is furnished.

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