<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 22, 1997
REGISTRATION NO. 333-29387
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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FIRST WESTERN BANCORP, INC.
(Exact name of registrant as specified in its charter)
FIRST WESTERN CAPITAL TRUST I
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
PENNSYLVANIA 6712 25-1461570
(State of other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification
incorporation or Code Number) No.)
organization)
DELAWARE 6289 23-2907459
(State or other (Primary Standard (I.R.S. Employer
jurisdiction or Industrial Classification Identification
organization) Code Number) No.)
</TABLE>
101 EAST WASHINGTON STREET
NEW CASTLE, PENNSYLVANIA 16101
TELEPHONE: (412) 652-8550
(Address, including zip code, and telephone number including area code, of
registrant's principal executive office)
101 EAST WASHINGTON STREET
NEW CASTLE, PENNSYLVANIA 16101
TELEPHONE: (412) 652-8550
(Address, including zip code, and telephone number including area code, of
registrant's principal executive office)
ROBERT H. YOUNG
EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER, SECRETARY AND TREASURER
FIRST WESTERN BANCORP, INC.
101 EAST WASHINGTON STREET
NEW CASTLE, PENNSYLVANIA 16101
(412) 652-8550
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES TO:
J. ROBERT VAN KIRK, ESQ.
KIRKPATRICK & LOCKHART LLP
1500 OLIVER BUILDING
PITTSBURGH, PENNSYLVANIA 15222
THOMAS S. MANSELL, ESQ.
SENIOR VICE PRESIDENT, LEGAL COUNSEL
AND ASSISTANT SECRETARY
FIRST WESTERN BANCORP, INC.
101 EAST WASHINGTON STREET
NEW CASTLE, PENNSYLVANIA 16101
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this
Registration Statement.
If any of the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JULY 22, 1997
PROSPECTUS
FIRST WESTERN CAPITAL TRUST I
OFFER TO EXCHANGE ITS SERIES B 9.875% CAPITAL SECURITIES,
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, FOR ANY AND ALL
OF ITS OUTSTANDING SERIES A 9.875% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER SERIES B 9.875% CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
FIRST WESTERN BANCORP, INC.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1997, UNLESS EXTENDED.
First Western Capital Trust I, a trust formed under the laws of the State of
Delaware (the "Trust"), hereby offers, upon the terms and subject to the
conditions set forth in this Prospectus (as the same may be amended or
supplemented from time to time, the "Prospectus") and in the accompanying Letter
of Transmittal and related documents (which, together with the Prospectus,
constitute the "Exchange Offer"), to exchange up to $25,000,000 aggregate
Liquidation Amount (as defined herein) of its Series B 9.875% Capital Securities
(the "Series B Capital Securities"), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement (as defined herein) of which this Prospectus is a part,
for an identical Liquidation Amount of its outstanding Series A 9.875% Capital
Securities (the "Series A Capital Securities"), of which $25,000,000 aggregate
Liquidation Amount is outstanding. Pursuant to the Exchange Offer, First Western
Bancorp, Inc., a Pennsylvania corporation (the "Corporation" or "First
Western"), is also exchanging a guarantee (the "Series B Capital Securities
Guarantee") of the payment of Distributions (as defined herein) and payments on
liquidation or redemption of the Series B Capital Securities and new Series B
9.875% Junior Subordinated Deferrable Interest Debentures due February 1, 2027
(the "Series B Junior Subordinated Debentures"), for its guarantee (the "Series
A Capital Securities Guarantee") of the payment of Distributions and payment on
liquidation or redemption of its Series A Capital Securities and its outstanding
Series A 9.875% Junior Subordinated Deferrable Interest Debentures (the "Series
A Junior Subordinated Debentures"), of which $25,774,000 aggregate principal
amount is outstanding, and is exchanging a like aggregate principal amount of
Series B Junior Subordinated Debentures for the Series A Junior Subordinated
Debentures. The Series B Junior Subordinated Debentures and the Series B Capital
Securities Guarantee also have been registered under the Securities Act. (The
Series A Capital Securities, the Series A Capital Securities Guarantee and the
Series A Junior Subordinated Debentures are collectively referred to herein as
the "Series A Securities," and the Series B Capital Securities, the Series B
Capital Securities Guarantee and the Series B Junior Subordinated Debentures are
collectively referred to herein as the "Series B Securities.")
The terms of the Series B Securities are identical in all material respects
to the respective terms of the Series A Securities, except that (i) the Series B
Capital Securities have been registered under the Securities Act and therefore
will not be subject to certain restrictions on transfer applicable to the Series
A Capital Securities, and (ii) the Series B Capital Securities and the Series B
Junior Subordinated Debentures will not provide for any increase in the
distribution rate thereon or the interest rate thereon, respectively, since the
Series A Securities provided for such increases only in the event that the
Series B Securities were not registered under the Securities Act within the
certain specified periods. (See "Description of the Series A Securities.") The
Series B Capital Securities are being offered for exchange in order to satisfy
certain obligations of the Trust under the registration rights agreement dated
as of February 11, 1997 (the "Registration Rights Agreement") among the
Corporation, the Trust and the Initial Purchaser (as defined herein). In the
event that the Exchange Offer is consummated, any Series A Capital Securities
which remain outstanding after consummation of the Exchange Offer and the Series
B Capital Securities issued in the Exchange Offer will vote together as a single
class for purposes of determining whether holders of the requisite percentage in
outstanding Liquidation Amount thereof have taken certain actions or exercised
certain rights under the Trust Agreement (as defined herein).
(Continued on next page)
------------------------
SEE "RISK FACTORS" COMMENCING ON PAGE 15 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY HOLDERS WHO TENDER SERIES A CAPITAL SECURITIES IN THE EXCHANGE
OFFER.
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE> 3
(Continued from the previous page)
The Series B Capital Securities and the Series A Capital Securities
(together, the "Capital Securities") represent undivided beneficial interests in
the assets of the Trust. The Corporation is the owner of all of the beneficial
interests represented by common securities of the Trust (the "Common Securities"
and, collectively with the Capital Securities, the "Trust Securities"). The
Chase Manhattan Bank is the Property Trustee of the Trust. The Trust exists for
the sole purpose of issuing the Trust Securities and investing the proceeds
thereof in the Junior Subordinated Debentures (as defined herein), first by
acquiring the Series A Junior Subordinated Debentures and then by exchanging the
Series A Subordinated Debentures for the Series B Junior Subordinated Debentures
(together, the "Junior Subordinated Debentures") in the Exchange Offer. The
Junior Subordinated Debentures will mature on February 1, 2027 (the "Stated
Maturity"). The Capital Securities will have a preference under certain
circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise over the Common Securities. The amount
payable on the Capital Securities in the event of any liquidation of the Trust
is $1,000 per Capital Security (the "Liquidation Amount"), plus accumulated and
unpaid Distributions. (See "Description of Capital Securities--Subordination of
Common Securities.")
Holders of the Capital Securities are entitled to receive cumulative cash
distributions arising from the payment of interest on the Junior Subordinated
Debentures, accruing from February 11, 1997 and payable semi-annually in arrears
on February 1 and August 1 of each year, commencing August 1, 1997, at the
annual rate of 9.875% of the Liquidation Amount of $1,000 per Capital Security
("Distributions"). So long as no Debenture Event of Default has occurred and is
continuing, the Corporation has the right to defer payments of interest on the
Junior Subordinated Debentures at any time and from time to time for a period
not exceeding 10 consecutive semi-annual periods with respect to each deferral
period (each, an "Extension Period"), provided that no Extension Period shall
end on a date other than an Interest Payment Date (as defined herein) or extend
beyond the Stated Maturity. Upon the termination of any such Extension Period
and the payment of all amounts then due, the Corporation may elect to begin a
new Extension Period, subject to the requirements set forth herein. If and for
so long as interest payments on the Junior Subordinated Debentures are so
deferred, Distributions on the Capital Securities will also be deferred and the
Corporation will not be permitted, subject to certain exceptions described
herein, to declare or pay any cash distributions with respect to the
Corporation's capital stock or to make any payment with respect to debt
securities of the Corporation that rank pari passu with or junior to the Junior
Subordinated Debentures. During an Extension Period, interest on the Junior
Subordinated Debentures will continue to accrue (and the amount of Distributions
to which holders of the Capital Securities are entitled will continue to
accumulate) at the rate of 9.875% per annum, compounded semi-annually, and
holders of Capital Securities will be required to accrue such deferred interest
income for United States federal income tax purposes prior to the receipt of the
cash attributable to such income. See "Description of Junior Subordinated
Debentures--Option to Extend Interest Payment Date" and "Certain Federal Income
Tax Consequences--Interest Income and Original Issue Discount."
The Corporation has, through the Guarantee, the Common Guarantee, the Trust
Agreement, the Junior Subordinated Debentures and the Indenture (each as defined
herein), taken together as a whole, fully, irrevocably and unconditionally
guaranteed all of the Trust's obligations under the Capital Securities. See
"Relationship Among the Capital Securities, the Junior Subordinated Debentures
and the Guarantee--Full and Unconditional Guarantee." The Guarantee and the
Common Guarantee guarantee payments of Distributions and payments on liquidation
or redemption of the Capital Securities, but in each case only to the extent
that the Trust holds funds on hand legally available therefor and has failed to
make such payments, as described herein. See "Description of Guarantee." If the
Corporation fails to make a required payment on the Junior Subordinated
Debentures, the Trust will not have sufficient funds to make the related
payments, including Distributions, on the Capital Securities. The Guarantee and
the Common Guarantee will not cover any such payment when the Trust does not
have sufficient funds on hand legally available therefor. In such event, a
holder of Capital Securities may institute a legal proceeding directly against
the Corporation to enforce its rights in respect of such payment. See
"Description of Junior Subordinated Debentures-- Enforcement of Certain Rights
by Holders of Capital Securities." The obligations of the Corporation under the
Guarantee, the Common Guarantee and the Junior Subordinated Debentures are
subordinate and junior
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in right of payment to all Senior Indebtedness (as defined in "Description of
Junior Subordinated Debentures--Subordination"). At March 31, 1997, the
Corporation had Senior Indebtedness of $5.577 million. See "Risk
Factors--Ranking of Subordinated Obligations under the Guarantee and the Junior
Subordinated Debentures; Limitation on Source of Funds."
The Capital Securities are subject to mandatory redemption in a Like Amount
(as defined herein), (i) in whole but not in part, on the Stated Maturity upon
repayment of the Junior Subordinated Debentures at a redemption price equal to
the principal amount of, plus accrued and unpaid interest on, the Junior
Subordinated Debentures (the "Maturity Redemption Price"), (ii) in whole but not
in part, at any time prior to February 1, 2007, contemporaneously with the
optional prepayment of the Junior Subordinated Debentures by the Corporation,
upon the occurrence and continuation of a Special Event (as defined herein) at a
redemption price equal to the Special Event Prepayment Price (as defined
herein), and (iii) in whole or in part, on or after February 1, 2007,
contemporaneously with the optional prepayment by the Corporation of the Junior
Subordinated Debentures, at a redemption price equal to the Optional Prepayment
Price (as defined herein). Any of the Maturity Redemption Price, the Special
Event Redemption Price and the Optional Redemption Price may be referred to
herein as the "Redemption Price." See "Description of Capital
Securities--Redemption."
Subject to the Corporation having received prior approval of the Board of
Governors of the Federal Reserve System (the "Federal Reserve") to do so if then
required under applicable capital guidelines or policies of the Federal Reserve
and any other required regulatory approvals, the Junior Subordinated Debentures
are prepayable prior to the Stated Maturity at the option of the Corporation (i)
on or after February 1, 2007 (the "Initial Optional Prepayment Date"), in whole
or in part, at a prepayment price (the "Optional Prepayment Price") equal to
104.938% of the principal amount thereof on February 1, 2007, declining ratably
on each February 1 thereafter to 100% on or after February 1, 2017 or (ii) at
any time prior to the Initial Optional Prepayment Date, in whole but not in
part, upon the occurrence and continuation of a Special Event, at a prepayment
price (the "Special Event Prepayment Price") equal to, for each Capital
Security, the Make-Whole Amount (as defined below) for a corresponding $1,000
principal amount of Junior Subordinated Debentures together with accrued
distributions to, but excluding, the date fixed for redemption. The "Make-Whole
Amount" shall be equal to the greater of (a) 100% of the principal amount
thereof or (b) the sum, as determined by a Quotation Agent (as defined herein),
of the present values of the remaining scheduled payments of principal and
interest on the Junior Subordinated Debentures, discounted to the prepayment
date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Adjusted Treasury Rate (as defined herein) plus, in the case of
each of clauses (a) and (b), accrued and unpaid interest thereon to the date of
prepayment. Either of the Optional Prepayment Price or the Special Event
Prepayment Price may be referred to herein as the "Prepayment Price." See
"Description of Junior Subordinated Debentures--Optional Prepayment" and
"--Special Event Prepayment."
The Corporation has the right at any time to terminate the Trust and cause
a Like Amount of the Junior Subordinated Debentures to be distributed to the
holders of the Capital Securities in liquidation of the Trust, subject to (i)
the Corporation having received an opinion of counsel to the effect that such
distribution will not be a taxable event to holders of Capital Securities and
(ii) the prior approval of the Federal Reserve to do so if then required under
applicable capital guidelines or policies of the Federal Reserve and the receipt
of any other required regulatory approvals. Unless the Junior Subordinated
Debentures are distributed to the holders of the Capital Securities, in the
event of a liquidation of the Trust as described herein, after satisfaction of
liabilities to creditors of the Trust as required by applicable law, the holders
of the Capital Securities generally will be entitled to receive a Liquidation
Amount of $1,000 per Capital Security plus accumulated and unpaid Distributions
thereon to the date of payment. See "Description of Capital
Securities--Liquidation of the Trust and Distribution of Junior Subordinated
Debentures."
As used herein, (i) the "Indenture" means the Indenture dated as of
February 11, 1997, as amended and supplemented from time to time, between the
Corporation and The Chase Manhattan Bank, as trustee (the "Debenture Trustee"),
relating to the Junior Subordinated Debentures, (ii) the "Trust Agreement" means
the Declaration of Trust dated February 4, 1997, as amended by the Amended and
Restated Declaration of Trust dated February 11, 1997 relating to the Trust
among the Corporation, as Sponsor, The Chase
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Manhattan Bank, as Property Trustee (the "Property Trustee"), Chase Manhattan
Bank Delaware, as Delaware Trustee (the "Delaware Trustee"), and the
Administrative Trustees named therein (collectively, with the Property Trustee
and Delaware Trustee, the "Issuer Trustees"), (iii) the "Guarantee" means the
Series A Capital Securities Guarantee Agreement dated February 11, 1997 relating
to the Series A Capital Securities between the Corporation and The Chase
Manhattan Bank, as Guarantee Trustee (the "Guarantee Trustee") and (iv) the
"Common Guarantee" means the Common Securities Guarantee Agreement dated
February 11, 1997 relating to the Common Securities.
THE CAPITAL SECURITIES WILL BE ISSUED, AND MAY BE TRANSFERRED, ONLY IN
BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 (100 CAPITAL
SECURITIES). ANY TRANSFER, SALE OR OTHER DISPOSITION OF CAPITAL SECURITIES IN A
BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE
VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT
TO BE THE HOLDER OF SUCH CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT
LIMITED TO THE RECEIPT OF DISTRIBUTIONS ON SUCH CAPITAL SECURITIES, AND SUCH
TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL
SECURITIES.
Based upon certain interpretive letters issued by the staff of the United
States Securities and Exchange Commission (the "Commission") to third parties in
unrelated transactions, the Corporation is of the view that holders of Series A
Capital Securities (other than any holder who is an "affiliate" of the
Corporation within the meaning of Rule 405 under the Securities Act) who
exchange their Series A Capital Securities for Series B Capital Securities
pursuant to the Exchange Offer generally may offer such Series B Capital
Securities for resale, resell such Series B Capital Securities, and otherwise
transfer such Series B Capital Securities without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
such Series B Capital Securities are acquired in the ordinary course of the
holder's business and such holder has no arrangement with any person to
participate in a distribution of such Series B Capital Securities. Each broker-
dealer that receives Series B Capital Securities for its own account in exchange
for Series A Capital Securities must acknowledge that it will deliver a
prospectus in connection with any resale of such Series B Capital Securities.
(See "Plan of Distribution.") In addition, to comply with the securities laws of
certain jurisdictions, if applicable, the Series B Capital Securities may not be
offered or sold unless they have been registered or qualified for sale in such
jurisdiction or in compliance with an available exemption from registration or
qualification. If a holder of Series A Capital Securities does not exchange such
Series A Capital Securities for Series B Capital Securities pursuant to the
Exchange Offer, such Series A Capital Securities will continue to be subject to
the restrictions on transfer contained in the legend thereon. In general, the
Series A Capital Securities may not be offered or sold unless registered under
the Securities Act, except pursuant to an exemption from, or in a transaction
not subject to, the Securities Act and applicable state securities laws. Holders
of Series A Capital Securities do not have any appraisal or dissenters' rights
under the Delaware General Corporation Law in connection with the Exchange
Offer. (See "Risk Factors--Consequences of a Failure to Exchange Series A
Capital Securities" and "The Exchange Offer--Resales of Series B Capital
Securities.")
Each holder of Series A Capital Securities who wishes to exchange Series A
Capital Securities for Series B Capital Securities in the Exchange Offer will be
required to represent that (i) it is not an "affiliate" of the Corporation or
the Trust, (ii) any Series B Capital Securities to be received by it are being
acquired in the ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such Series B Capital Securities, and (iv) if
such holder is not a broker-dealer, such holder is not engaged in, and does not
intend to engage in, a distribution (within the meaning of the Securities Act)
of such Series B Capital Securities. In addition, the Corporation and the Trust
may require such holder, as a condition to such holder's eligibility to
participate in the Exchange Offer, to furnish to the Corporation and the Trust
(or an agent thereof) in writing information as to the number of "beneficial
owners" (within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934, as amended) on behalf of whom such holder holds the Series A Capital
Securities to be exchanged in the Exchange Offer. Each broker-dealer that
receives Series B Capital Securities for its own account pursuant to
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the Exchange Offer must acknowledge that it acquired the Series A Capital
Securities for its own account as the result of market-making activities or
other trading activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such Series B Capital Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
Based upon the position taken by the staff of the Division of Corporation
Finance of the Commission in the interpretive letters referred to above, the
Corporation and the Trust believe that broker-dealers who acquired Series A
Capital Securities for their own accounts, as a result of market-making
activities or other trading activities ("Participating Broker-Dealers"), may
fulfill their prospectus delivery requirements with respect to the Series B
Capital Securities received upon exchange of such Series A Capital Securities
with a prospectus meeting the requirements of the Securities Act, which may be
the prospectus prepared for the Exchange Offer so long as it contains a
description of the plan of distribution with respect to the resale of such
Series B Capital Securities. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
during the period referred to below in connection with resales of Series B
Capital Securities received in exchange for Series A Capital Securities where
such Series A Capital Securities were acquired by such Participating
Broker-Dealer for its own account as a result of market-making or other trading
activities. Subject to certain provisions set forth in the Registration Rights
Agreement, the Corporation and the Trust have agreed that this Prospectus, as it
may be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such Series B Capital Securities
until , 1997 or, if earlier, when all such Series B Capital Securities have been
disposed of by such Participating Broker-Dealer. (See "Plan of Distribution.").
Any Participating Broker-Dealer who is an "affiliate" of the Corporation or the
Trust must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. (See "The Exchange
Offer-Resales of Series B Capital Securities.")
In that regard, each Participating Broker-Dealer who surrenders Series A
Capital Securities pursuant to the Exchange Offer will be deemed to have agreed,
by execution of the Letter of Transmittal or delivery of an Agent's Message (as
defined herein), that, upon receipt of notice from the Corporation or the Trust
of the occurrence of any event or the discovery of any fact which makes any
statement contained or incorporated by reference in this Prospectus untrue in
any material respect or which causes this Prospectus to omit to state a material
fact necessary in order to make the statements contained or incorporated by
reference herein, in light of the circumstances under which they were made, not
misleading or of the occurrence of certain other events specified in the
Registration Rights Agreement, such Participating Broker-Dealer will suspend the
sale of Series B Capital Securities (or the Series B Junior Subordinated
Debentures or the Series B Capital Securities Guarantee, as applicable) pursuant
to this Prospectus until the Corporation or the Trust has amended or
supplemented this Prospectus to correct such misstatement or omission and has
furnished copies of the amended or supplemented Prospectus to such Participating
Broker-Dealer or the Corporation or the Trust has given notice that the sale of
the Series B Capital Securities (or the Series B Capital Securities Guarantee or
the Series B Junior Subordinated Debentures, as applicable) may be resumed, as
the case may be.
Prior to the Exchange Offer, the Series A Capital Securities were eligible
for quotation on the Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") System of the National Association of Securities Dealers,
Inc. The Series B Capital Securities will be a new issue of securities for which
there currently is no market. Accordingly, there can be no assurance as to the
development or liquidity of any market for Series B Capital Securities. Neither
the Corporation nor the Trust currently intends to apply for listing of the
Series B Capital Securities on any securities exchange or for quotation through
the National Association of Securities Dealers Automated Quotation System
("NASDAQ").
Any Series A Capital Securities not tendered and accepted in the Exchange
Offer will remain outstanding and will be entitled to all the same rights and
will be subject to the same limitations applicable thereto under the Trust
Agreement (except for those rights which terminate upon consummation of the
Exchange Offer). Following consummation of the Exchange Offer, the holders of
Series A Capital Securities will continue to be subject to all of the existing
restrictions upon transfer thereof and neither the Corporation
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nor the Trust will have any further obligation to such holders (other than under
certain limited circumstances) to provide for registration under the Securities
Act of the Series A Capital Securities held by them. To the extent that Series A
Capital Securities are tendered and accepted in the Exchange Offer, a holder's
ability to sell untendered Series A Capital Securities could be adversely
affected. (See "Risk Factors--Consequences of a Failure to Exchange Series A
Capital Securities.")
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF SERIES A CAPITAL SECURITIES ARE URGED TO READ THIS
PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING
WHETHER TO TENDER THEIR SERIES A CAPITAL SECURITIES PURSUANT TO THE EXCHANGE
OFFER.
Series A Capital Securities may be tendered for exchange on or prior to
5:00 p.m., New York City time, on , 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by the Corporation and the Trust (in which case the term "Expiration Date" shall
mean the latest date and time to which the Exchange Offer is extended). Tenders
of Series A Capital Securities may be withdrawn at any time on or prior to the
Expiration Date. The Exchange Offer is not conditioned upon any minimum
Liquidation Amount of Series A Capital Securities being tendered for exchange.
However, the Exchange Offer is subject to certain events and conditions which
may be waived by the Corporation or the Trust and to the terms and provisions of
the Registration Rights Agreement. Series A Capital Securities may be tendered
in whole or in part in a Liquidation Amount of not less than $100,000 (100
Series A Capital Securities) and or any integral multiple of $1,000 Liquidation
Amount (1 Series A Capital Security) in excess thereof. The Corporation has
agreed to pay all expenses of the Exchange Offer. (See "The Exchange Offer--Fees
and Expenses.") Each Series B Capital Security will pay cumulative Distributions
from the most recent Distribution Date for the Series A Capital Securities
surrendered in exchange for such Series B Capital Securities or, if no
Distributions have been paid on such Series A Capital Securities, from February
11, 1997. Holders of the Series A Capital Securities whose Series A Capital
Securities are accepted for exchange will not receive accumulated Distributions
on such Series A Capital Securities for any period from and after the last
Distribution Date for such Series A Capital Securities or, if no such
Distributions have been paid, will not receive any accumulated Distributions on
such Series A Capital Securities, and will be deemed to have waived the right to
receive any Distributions on such Series A Capital Securities accumulated from
and after such Distribution Date or, if no such Distributions have been paid or
duly provided for, from and after February 11, 1997. This Prospectus, together
with the Letter of Transmittal, is being sent to all registered holders of
Series A Capital Securities as of , 1997.
Neither the Corporation nor the Trust will receive any cash proceeds from
the issuance of the Series B Capital Securities offered hereby. No
dealer-manager is being used in connection with this Exchange Offer. (See "Use
of Proceeds" and "Plan of Distribution.")
------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE CORPORATION OR THE TRUST. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF
ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY
PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
AFFAIRS OF THE CORPORATION OR THE TRUST SINCE THE DATE HEREOF.
6
<PAGE> 8
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Commission's regional offices at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661. Copies of such material may also be obtained by
mail from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. Such information may also be
accessed electronically by means of the Commission's home page on the Internet
(http://www.sec.gov.). The Corporation's common stock is traded on the Nasdaq
National Market. Such reports, proxy statements and other information concerning
the Corporation may also be inspected at the offices of the National Association
of Securities Dealers, Inc., 1735 K Street, N.W., Washington D.C. 20006.
No separate financial statements of the Trust have been included herein.
The Corporation and the Trust do not consider that such financial statements
would be material to holders of the Capital Securities because the Trust is a
special purpose entity, has no independent operations and is not engaged in and
does not propose to engage in any activity other than holding as trust assets
the Junior Subordinated Debentures, issuing the Trust Securities and engaging in
incidental activities. See "First Western Capital Trust I," "Description of
Capital Securities," "Description of Junior Subordinated Debentures" and
"Description of Guarantee." In addition, the Corporation does not expect that
the Trust will file reports, proxy statements and other information under the
Exchange Act with the Commission.
The Corporation and the Trust have filed with the Commission a registration
statement on Form S-4 (herein, together with all amendments and exhibits,
referred to as the "Registration Statement") under the Securities Act with
respect to the offering made hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain portions of which
are omitted in accordance with the rules and regulations of the Commission. Such
additional information may be obtained from the Commission's principal office in
Washington, D.C. as set forth above. For further information, reference is
hereby made to the Registration Statement, including the exhibits filed as a
part thereof or otherwise incorporated herein. Statements made in this
Prospectus as to the contents of any documents referred to are not necessarily
complete, and in each instance reference is made to such exhibit for a more
complete description and each such statement is modified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission are
incorporated into this Prospectus by reference:
1. The Corporation's Annual Report on Form 10-K for the year ended December
31, 1996;
2. The Corporation's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997; and
3. The Corporation's Current Report on Form 8-K for an event dated May 30,
1997.
All documents subsequently filed by the Corporation pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to
the termination of the Exchange Offer shall be deemed to be incorporated by
reference into this Prospectus and to be a part of this Prospectus from the date
of filing of such document. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this Prospectus,
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented
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<PAGE> 9
or otherwise modified from time to time. Statements contained in this Prospectus
as to the contents of any contract or other document referred to herein do not
purport to be complete, and where reference is made to the particular provisions
of such contract or other document, such provisions are qualified in all
respects by reference to all of the provisions of such contract or other
document. The Corporation will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference herein (other
than exhibits not specifically incorporated by reference into the texts of such
documents). Requests for such documents should be directed to: Linda M.
Spinelli, Stock Transfer Supervisor, First Western Bancorp, Inc., P.O. Box 1488,
New Castle, Pennsylvania 16103-1488.
8
<PAGE> 10
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus and the information
incorporated by reference herein.
FIRST WESTERN
First Western, headquartered in New Castle, Pennsylvania, is a
multi-institutional holding company which provides retail and commercial banking
and trust services through 41 community banking offices in western Pennsylvania
and northeastern Ohio. First Western was incorporated under the laws of the
Commonwealth of Pennsylvania in 1982. First Western has two wholly-owned banking
subsidiaries: First Western Bank, National Association ("First Western Bank,
N.A.") and First Western Bank, Federal Savings Bank ("First Western Bank,
F.S.B." and, together with First Western Bank, N.A., the "Banks"). First Western
also has three wholly-owned nonbank subsidiaries, First Western Trust Services
Company ("Trust Services"); First Western Investment Services Company
("Investment Services"); and the Trust. (The Banks, Trust Services, Investment
Services and the Trust are collectively referred to as the "Subsidiaries.") At
March 31, 1997, First Western had total assets of approximately $1.7 billion,
net loans (including loans held for sale) of approximately $1.0 billion,
deposits of approximately $1.2 billion and shareholders' equity of approximately
$127.4 million.
First Western offers a variety of financial services through its
Subsidiaries. The Banks provide a full range of retail and commercial banking
products, including personal and commercial checking accounts, savings and time
deposit accounts, money market demand accounts, safe deposit facilities,
installment and other consumer loans, short and long-term credit facilities, and
consumer and commercial mortgages to individuals and small to medium sized
businesses. First Western also offers a number of products through Trust
Services, including corporate trust, personal trust, custody and account
administration services and financial services such as investment planning and
managed assets. Through third party providers, First Western makes available
credit cards, mutual funds and annuities for its customers.
See "First Western--Recent Developments" for a discussion of certain recent
developments.
First Western's principal executive offices are located at 101 East
Washington Street, New Castle, Pennsylvania 16101 and its telephone number is
(412) 652-8550.
FIRST WESTERN CAPITAL TRUST I
The Trust is a statutory business trust formed under Delaware law pursuant
to (i) the Trust Agreement executed by the Corporation, as Sponsor, The Chase
Manhattan Bank, as Property Trustee, and Chase Manhattan Bank Delaware, as
Delaware Trustee, and the three individual Administrative Trustees named
therein, and (ii) the filing of a certificate of trust with the Delaware
Secretary of State. The Trust's business and affairs are conducted by the Issuer
Trustees: the Property Trustee, the Delaware Trustee, and the three individual
Administrative Trustees, who are officers of the Corporation. The Trust exists
for the exclusive purposes of (i) issuing and selling the Trust Securities, (ii)
using the proceeds from the sale of the Trust Securities to acquire the Junior
Subordinated Debentures issued by the Corporation and (iii) engaging in only
those other activities necessary, advisable or incidental thereto (such as
registering the transfer of the Trust Securities). The Junior Subordinated
Debentures will be the sole assets of the Trust and, accordingly, payments under
the Junior Subordinated Debentures will be the sole revenue of the Trust. All of
the Common Securities of the Trust are owned by the Corporation. The principal
executive offices of the Trust are c/o First Western Bancorp, Inc., 101 East
Washington Street, New Castle, Pennsylvania 16101 and its telephone number is
(412) 652-8550.
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<PAGE> 11
THE EXCHANGE OFFER
The Exchange Offer.............. Up to $25,000,000 aggregate Liquidation
Amount of 9.875% Series B Capital Securities
are being offered in exchange for a like
aggregate Liquidation Amount of Series A
Capital Securities. Series A Capital
Securities may be tendered for exchange in
whole or in part in a Liquidation Amount of
not less than $100,000 (100 Series A Capital
Securities) or any integral multiple of
$1,000 Liquidation Amount (1 Series A
Capital Security) in excess thereof. The
Corporation and the Trust are making the
Exchange Offer in order to satisfy their
obligations under the Registration Rights
Agreement relating to the Series A Capital
Securities.
(For a description of the procedures for
tendering Series A Capital Securities, see
"The Exchange Offer--Procedures for
Tendering Series A Capital Securities.")
Expiration Date................. 5:00 p.m., New York City time, on
, 1997 (such time on such date
being hereinafter called the "Expiration
Date") unless the Exchange Offer is extended
by the Corporation and the Trust (in which
case the term "Expiration Date" shall mean
the latest date and time to which the
Exchange Offer is extended). (See "The
Exchange Offer--Expiration Date; Extensions;
Amendments.")
Conditions to the Exchange
Offer........................... The Exchange Offer is subject to certain
conditions, which may be waived by the
Corporation and the Trust in their sole
discretion. The Exchange Offer is not
conditioned upon any minimum Liquidation
Amount of Series A Capital Securities being
tendered. (See "The Exchange
Offer--Conditions to the Exchange Offer.")
The Corporation and the Trust reserve the
right in their sole and absolute discretion,
subject to applicable law, at any time and
from time to time, (i) to delay the
acceptance of the Series A Capital
Securities for exchange, (ii) to terminate
the Exchange Offer if certain specified
conditions have not been satisfied, (iii) to
extend the Expiration Date of the Exchange
Offer and retain all Series A Capital
Securities tendered pursuant to the Exchange
Offer, subject, however, to the right of
holders of Series A Capital Securities to
withdraw their tendered Series A Capital
Securities, or (iv) to waive any condition
or otherwise amend the terms of the Exchange
Offer in any respect. (See "The Exchange
Offer--Expiration Date; Extensions;
Amendments.")
Withdrawal Rights............... Tenders of Series A Capital Securities may
be withdrawn at any time on or prior to the
Expiration Date by delivering a written
notice of such withdrawal to the Exchange
Agent (as defined hereafter) in conformity
with certain procedures set forth below
under "The Exchange Offer--Withdrawal
Rights."
Procedures for Tendering Series
A Capital Securities.......... Tendering holders of Series A Capital
Securities must complete and sign a Letter
of Transmittal in accordance with the
instructions contained herein and forward
the same by mail, facsimile or hand
delivery, together with any other required
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<PAGE> 12
documents, to the Exchange Agent, either
with the Series A Capital Securities to be
tendered or in compliance with the specified
procedures for guaranteed delivery of Series
A Capital Securities. Certain brokers,
dealers, commercial banks, the Trust and
other nominees may also effect tenders by
book-entry transfer, including an Agent's
Message in lieu of the Letter of
Transmittal. Holders of Series A Capital
Securities registered in the name of a
broker, dealer, commercial bank, trust
company or other nominee are urged to
contact such person promptly if they wish to
tender Series A Capital Securities pursuant
to the Exchange Offer. (See "The Exchange
Offer--Procedures for Tendering Series A
Capital Securities.") Letters of Transmittal
and certificates representing Series A
Capital Securities should not be sent to the
Corporation or the Trust. Such documents
should only be sent to the Exchange Agent.
Questions regarding how to tender and
requests for information should be directed
to the Exchange Agent. See "The Exchange
Offer--Exchange Agent."
Sales of Series B Capital
Securities...................... The Corporation and the Trust believe that
Series B Capital Securities issued pursuant
to this Exchange Offer in exchange for
Series A Capital Securities may be offered
for resale, resold and otherwise transferred
by a holder thereof (other than a holder who
is a broker-dealer) without further
compliance with the registration and
prospectus delivery requirements of the
Securities Act, provided that such Series B
Capital Securities are acquired in the
ordinary course of such holder's business
and that such holder is not participating,
and has no arrangement or understanding with
any person to participate, in a distribution
(within the meaning of the Securities Act)
of such Series B Capital Securities.
However, any holder of Series A Capital
Securities who is an "affiliate" of the
Corporation or the Trust or who intends to
participate in the Exchange Offer for the
purpose of distributing the Series B Capital
Securities, or any broker-dealer who
purchased the Series A Capital Securities
from the Trust to resell pursuant to Rule
144A or any other available exemption under
the Securities Act, (a) will not be
permitted or entitled to tender such Series
A Capital Securities in the Exchange Offer
and (b) must comply with the registration
and prospectus delivery requirements of the
Securities Act in connection with any sale
or other transfer of such Series A Capital
Securities unless such sale is made pursuant
to an exemption from such requirements. In
addition, as described below, if any
broker-dealer holds Series A Capital
Securities acquired for its own account as a
result of market-making or other trading
activities ("Participating Broker-Dealers")
and exchanges such Series A Capital
Securities for Series B Capital Securities,
then such broker-dealer must deliver a
prospectus meeting the requirements of the
Securities Act in connection with any
resales of such Series B Capital Securities.
Each holder of Series A Capital Securities
who wishes to exchange Series A Capital
Securities for Series B Capital Securities
in the Exchange Offer will be required to
represent
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<PAGE> 13
that (i) it is not an "affiliate" of the
Corporation or the Trust, (ii) any Series B
Capital Securities to be received by it are
being acquired in the ordinary course of its
business, (iii) it has no arrangement or
understanding with any person to participate
in a distribution (within the meaning of the
Securities Act) of such Series B Capital
Securities, and (iv) if such holder is not a
broker-dealer, such holder is not engaged
in, and does not intend to engage in, a
distribution (within the meaning of the
Securities Act) of such Series B Capital
Securities. Each broker-dealer that receives
Series B Capital Securities for its own
account pursuant to the Exchange Offer must
acknowledge that it acquired the Series A
Capital Securities for its own account as
the result of market-making activities or
other trading activities and must agree that
it will deliver a prospectus meeting the
requirements of the Securities Act in
connection with any resale of such Series B
Capital Securities. The Letter of
Transmittal states that by so acknowledging
and by delivering a prospectus, a
broker-dealer will not be deemed to admit
that it is an "underwriter" within the
meaning of the Securities Act. Participating
Broker-Dealers may fulfill their prospectus
delivery requirements with respect to the
Series B Capital Securities received upon
exchange of such Series A Capital Securities
with a Prospectus meeting the requirements
of the Securities Act, which may be this
Prospectus, as it may be amended or
supplemented from time to time, for a period
ending 90 days after the Expiration Date or,
if earlier, when all such Series B Capital
Securities have been disposed of by such
Participating Broker-Dealer. (See "Plan of
Distribution.") Any Participating
Broker-Dealer who is an "affiliate" of the
Corporation or the Trust and any
Participating Broker-Dealer who purchased
the Series A Capital Securities from the
Trust to resell the Series A Capital
Securities must comply with the registration
and prospectus delivery requirements of the
Securities Act in connection with any resale
transaction. (See "The Exchange
Offer--Resales of Series B Capital
Securities.")
Exchange Agent.................. The Chase Manhattan Bank. See "The Exchange
Offer--Exchange Agent."
Use of Proceeds................. Neither the Corporation nor the Trust will
receive any cash proceeds from the issuance
of the Series B Capital Securities offered
hereby. (See "Use of Proceeds.")
Certain United States Federal
Income Tax Considerations;
ERISA
Considerations................ Holders of Series A Capital Securities
should review the information set forth
under "Certain Federal Income Tax
Consequences" and "ERISA Considerations"
prior to tendering Series A Capital
Securities in the Exchange Offer.
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<PAGE> 14
THE SERIES B CAPITAL SECURITIES
Securities Offered.............. Up to $25,000,000 aggregate Liquidation
Amount of the Trust's 9.875% Series B
Capital Securities which have been
registered under the Securities Act
(Liquidation Amount $1,000 per Series B
Capital Security). The Series B Capital
Securities will be issued and the Series A
Capital Securities were issued under the
Trust Agreement. The Series B Capital
Securities and any Series A Capital
Securities which remain outstanding after
consummation of the Exchange Offer will
constitute a single series of Capital
Securities under the Trust Agreement and,
accordingly, will vote together as a single
class for purposes of determining whether
holders of the requisite percentage in
outstanding Liquidation Amount thereof have
taken certain actions or exercised certain
rights under the Trust Agreement. (See "Risk
Factors--Consequences of a Failure to
Exchange Series A Capital Securities.") The
terms of the Series B Capital Securities are
identical in all material respects to the
terms of the Series A Capital Securities ,
except that the Series B Capital Securities
have been registered under the Securities
Act and therefore are not subject to certain
restrictions on transfer applicable to the
Series A Capital Securities and will not
provide for any increase in the Distribution
rate thereon. The Series A Capital
Securities provided for such increase if
they were not registered under the
Securities Act within the time period
specified by the Series A Capital
Securities. (See "Description of the Series
A Capital Securities.")
Distribution Dates.............. February 1 and August 1 of each year,
commencing on the first such date following
the original issuance of the Series B
Capital Securities.
Extension Periods............... Distributions on the Series B Capital
Securities will be deferred for the duration
of any Extension Period elected by the
Corporation with respect to the payment of
interest on the Junior Subordinated
Debentures. No Extension Period will exceed
10 consecutive semi-annual periods or extend
beyond the Stated Maturity. (See
"Description of Junior Subordinated
Debentures--Option to Extend Interest
Payment Date" and "Certain Federal Income
Tax Consequences--Interest Income and
Original Issue Discount.")
Ranking......................... The Series B Capital Securities will rank
pari passu, and payments thereon will be
made pro rata, with the Common Securities
except as described under "Description of
Capital Securities--Subordination of Common
Securities." The Junior Subordinated
Debentures will rank pari passu with all
other junior subordinated debentures (if
any) issued by the Corporation (the "Other
Debentures"), which are issued and sold (if
at all) to other trusts established by the
Corporation (if any), in each case similar
to the Trust ("Other Trusts"), and will
constitute unsecured obligations of the
Corporation and will rank subordinate and
junior in right of payment to all Senior
Indebtedness to the extent and in the manner
set forth in the
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<PAGE> 15
Indenture. See "Description of Junior
Subordinated Debentures." The Guarantee will
rank pari passu with all other guarantees
(if any) issued by the Corporation with
respect to capital securities (if any)
issued by Other Trusts ("Other Guarantees")
and will constitute an unsecured obligation
of the Corporation and will rank subordinate
and junior in right of payment to all Senior
Indebtedness to the extent and in the manner
set forth in the Guarantee Agreement. See
"Description of Guarantee." In addition,
because the Corporation is a holding
company, the Junior Subordinated Debentures
and the Guarantee will be effectively
subordinated to all existing and future
liabilities of the Corporation's
subsidiaries, including the Banks' deposit
liabilities. See "Description of Junior
Subordinated Debentures--Subordination."
Redemption...................... The Series B Capital Securities are subject
to mandatory redemption in a Like Amount,
(i) in whole but not in part, on the Stated
Maturity Date upon repayment of the Junior
Subordinated Debentures, (ii) in whole but
not in part, at any time prior to February
1, 2007, contemporaneously with the optional
prepayment of the Junior Subordinated
Debentures by the Corporation upon the
occurrence and continuation of a Special
Event (as defined herein) and (iii) in whole
or in part, on or after February 1, 2007,
contemporaneously with the optional
prepayment by the Corporation of the Junior
Subordinated Debentures, in each case at the
applicable Redemption Price. See
"Description of Capital
Securities--Redemption" and "Description of
Junior Subordinated Debentures--Special
Event Prepayment."
Ratings......................... The Series A Capital Securities were, and
the Series B Capital Securities are expected
to be, rated BB+ by Duff & Phelps Credit
Rating Co. and B+ by Standard & Poor's
Ratings Services.
Absence of Market for the
Series B Capital Securities... The Series B Capital Securities will be a
new issue of securities for which there
currently is no market. Accordingly, there
can be no assurance as to the development or
liquidity of any market for the Series B
Capital Securities. The Trust and the
Corporation do not intend to apply for
listing of the Series B Capital Securities
on any securities exchange or for quotation
through the NASDAQ National Market System.
Risk Factors.................... For a discussion of considerations relevant
to an investment in the Series B Capital
Securities, see "Risk Factors."
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<PAGE> 16
RISK FACTORS
Prospective investors in the Series B Capital Securities received in the
Exchange Offer should carefully review the information contained elsewhere in
this Prospectus and should particularly consider the following matters.
Information contained in this Prospectus contains "forward-looking statements"
which can be identified by the use of forward-looking terminology such as
"believes," "expects," "may," "will," "should," "projected," "contemplates" or
"anticipates" or the negative thereof or other variations thereon or comparable
terminology. See, e.g., "Summary--First Western Bancorp" and "First Western
Bancorp." No assurance can be given that the future results covered by the
forward-looking statements will be achieved. The following matters constitute
cautionary statements identifying important factors with respect to such
forward-looking statements, including certain risks and uncertainties, that
could cause actual results to vary materially from the future results covered in
such forward-looking statements. Other factors, such as the general state of the
economy, could also cause actual results to vary materially from the future
results covered in such forward-looking statements.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES; LIMITATIONS ON SOURCE OF FUNDS
The obligations of the Corporation under the Guarantee issued by it for the
benefit of the holders of Capital Securities, as well as under the Junior
Subordinated Debentures, will be unsecured and rank subordinate and junior in
right of payment to all Senior Indebtedness. At March 31, 1997, the Corporation
had Senior Indebtedness of $5.577 million outstanding. Because the Corporation
is a holding company, the right of the Corporation to participate in any
distribution of assets of any subsidiary upon such subsidiary's liquidation or
reorganization or otherwise (and thus the ability of holders of the Capital
Securities to benefit indirectly from such distribution) is subject to the prior
claims of creditors of that subsidiary (including depositors, in the case of the
Banks), except to the extent that the Corporation may itself be recognized as a
creditor of that subsidiary. At March 31, 1997, the Subsidiaries of the
Corporation had total liabilities (excluding liabilities owed to the
Corporation) of $1.565 billion. Accordingly, the Junior Subordinated Debentures
will be effectively subordinated to all existing and future liabilities of the
Corporation's Subsidiaries (including the Corporation's Subsidiaries' deposit
liabilities, which aggregated $1.2 billion at March 31, 1997) and all
liabilities of any future subsidiaries of the Corporation. None of the
Indenture, the Guarantee or the Trust Agreement places any limitation on the
amount of secured or unsecured debt, including Senior Indebtedness, that may be
incurred by the Corporation or any subsidiary. See "Description of
Guarantee--Status of the Guarantee" and "Description of Junior Subordinated
Debentures--General" and "--Subordination."
The ability of the Trust to pay amounts due on the Capital Securities is
solely dependent upon the Corporation making payments on the Junior Subordinated
Debentures as and when required.
There are regulatory limitations on the payment of dividends directly or
indirectly to the Corporation from the Banks. As of March 31, 1997, under OCC
(as defined herein) regulations, the total capital available for payment of
dividends by First Western Bank, N.A. to the Corporation was approximately $14.9
million, and under OTS (as defined herein) regulations, the total capital
available for payment of dividends by First Western Bank, F.S.B. to the
Corporation was approximately $6.6 million, for a total of approximately $21.5
million. However, the OCC and OTS have the power to prohibit any act, including
the payment of dividends, if such act would reduce bank capital to a point that,
in their opinion, would render the bank undercapitalized and thus constitute an
unsafe or unsound banking practice.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSIDERATIONS
So long as no Debenture Event of Default shall have occurred and be
continuing, the Corporation will have the right under the Indenture to defer
payments of interest on the Junior Subordinated Debentures at any time or from
time to time for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period shall end on
a date other than an Interest Payment Date or extend beyond the Stated Maturity.
As a consequence of any such deferral, semi-annual Distributions on
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<PAGE> 17
the Capital Securities by the Trust will be deferred (and the amount of
Distributions to which holders of the Capital Securities are entitled will
accumulate additional Distributions thereon at the rate of 9.875% per annum,
compounded semi-annually, but not exceeding the interest rate then accruing on
the Junior Subordinated Debentures) from the relevant payment date for such
Distributions during any such Extension Period. During the pendency of any
Extension Period, the Corporation generally will be prohibited from declaring or
paying dividends on the Corporation's capital stock. See "Description of Capital
Securities--Distributions."
Prior to the termination of any such Extension Period, the Corporation may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods, end on
a date other than an Interest Payment Date or to extend beyond the Stated
Maturity. Upon the termination of any Extension Period and the payment of all
interest then accrued and unpaid on the Junior Subordinated Debentures (together
with interest thereon at the annual rate of 9.875%, compounded semi-annually, to
the extent permitted by applicable law), the Corporation may elect to begin a
new Extension Period, subject to the above requirements. There is no limitation
on the number of times that the Corporation may elect to begin an Extension
Period. See "Description of Capital Securities--Distributions" and "Description
of Junior Subordinated Debentures--Option to Extend Interest Payment Date."
Should the Corporation exercise its right to defer payments of interest on
the Junior Subordinated Debentures, each holder of Capital Securities will be
required to accrue income (as original issue discount ("OID")) in respect of the
deferred stated interest allocable to its Capital Securities for United States
federal income tax purposes, which will be allocated but not distributed to
holders of Capital Securities. As a result, each holder of Capital Securities
will recognize income for United States federal income tax purposes in advance
of the receipt of cash and will not receive the cash related to such income from
the Trust if the holder disposes of the Capital Securities prior to the record
date for the payment of Distributions thereafter. See "Certain Federal Income
Tax Consequences--Interest Income and Original Issue Discount" and "--Sales of
Capital Securities."
Should the Corporation elect to exercise its right to defer payments of
interest on the Junior Subordinated Debentures in the future, the market price
of the Capital Securities is likely to be affected. A holder that disposes of
its Capital Securities during an Extension Period, therefore, might not receive
the same return on its investment as a holder that continues to hold its Capital
Securities. In addition, merely as a result of the existence of the
Corporation's right to defer payments of interest on the Junior Subordinated
Debentures, the market price of the Capital Securities may be more volatile than
the market prices of other securities on which OID accrues and that are not
subject to such deferrals.
SPECIAL EVENT REDEMPTION
Upon the occurrence and continuation of a Special Event (as defined under
"Description of Junior Subordinated Debentures--Special Event Prepayment") prior
to February 1, 2007, the Corporation has the right to prepay the Junior
Subordinated Debentures in whole (but not in part) at the Special Event
Prepayment Price within 90 days following the occurrence of such Special Event
and therefore cause a mandatory redemption of the Capital Securities at the
Special Event Redemption Price. The exercise of such right is subject to the
Corporation having received any required regulatory approval. See "Description
of Capital Securities--Redemption."
POSSIBLE TAX LAW CHANGES
On February 6, 1997, as part of President Clinton's Fiscal 1998 Budget
Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") that, among other things, would treat as equity for federal income
tax purposes a corporate debt instrument with a term of more than 15 years
issued to a related party (other than a corporation), where the instrument is
not shown on the issuer's balance sheet because the holder is consolidated with
the issuer on such balance sheet and the holder or some other related party
issues a related instrument not shown as indebtedness on such balance sheet (the
"Debt/Equity Provision"). The Proposed Legislation is proposed to be effective
for instruments issued on or after the date on
16
<PAGE> 18
which the first congressional committee action is taken. On June 9, 1997, the
Chairman of the House Committee on Ways and Means, Representative Archer,
introduced the Chairman's Mark relating to Revenue Reconciliation Provisions
(the "1997 Tax Bill"). The 1997 Tax Bill as amended by the House Committee on
Ways and Means does not contain provisions similar to the Debt/Equity Provision.
It is expected that, if the Proposed Legislation were enacted, such
legislation will not apply to the Series A Junior Subordinated Debentures since
they were issued prior to the date of any committee action. Moreover, even if
the Exchange Offer is consummated after the actual effective date of the
Proposed Legislation, the exchange of the Series A Securities for the Series B
Securities will not cause the Series B Junior Subordinated Debentures to be
subject to the Proposed Legislation.
There can be no assurance, however, that current or future legislative
proposals, if enacted, or final legislation will not affect the ability of the
Corporation to deduct interest on the Junior Subordinated Debentures. Such a
change could give rise to a Tax Event, which would permit the Corporation to
cause a redemption of the Capital Securities, as described more fully under
"Description of Capital Securities-- Redemption."
POSSIBLE ADVERSE EFFECT ON MARKET PRICES
There can be no assurance as to the market prices for Capital Securities or
Junior Subordinated Debentures distributed to the holders of Capital Securities
if a termination of the Trust were to occur. Accordingly, the Capital Securities
or the Junior Subordinated Debentures may trade at a discount from the price
that the investor paid to purchase the Capital Securities. Because holders of
Capital Securities may receive Junior Subordinated Debentures in liquidation of
the Trust and because Distributions are otherwise limited to payments on the
Junior Subordinated Debentures, prospective recipients of Class B Capital
Securities are also making an investment decision with regard to the Junior
Subordinated Debentures and should carefully review all the information
regarding the Junior Subordinated Debentures contained herein. See "Description
of Junior Subordinated Debentures."
RIGHTS UNDER THE GUARANTEE
The Chase Manhattan Bank acts as Guarantee Trustee and holds the Guarantee
for the benefit of the holders of the Capital Securities. The Chase Manhattan
Bank also acts as Property Trustee and as Debenture Trustee under the Indenture.
Chase Manhattan Bank Delaware acts as Delaware Trustee under the Trust
Agreement. The Guarantee will guarantee to the holders of the Capital Securities
the following payments, to the extent not paid by or on behalf of the Trust: (i)
any accumulated and unpaid Distributions required to be paid on the Capital
Securities, to the extent that the Trust has funds on hand legally available
therefor at such time, (ii) the applicable Redemption Price with respect to the
Capital Securities called for redemption, to the extent that the Trust has funds
on hand legally available therefor at such time, and (iii) upon a voluntary or
involuntary termination and liquidation of the Trust (unless the Junior
Subordinated Debentures are distributed to holders of the Capital Securities),
the lesser of (a) the aggregate of the Liquidation Amount and all accumulated
and unpaid Distributions to the date of payment, to the extent that the Trust
has funds on hand legally available therefor at such time and (b) the amount of
assets of the Trust remaining available for distribution to holders of the
Capital Securities at such time. The holders of a majority in Liquidation Amount
of the Capital Securities will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the Guarantee or to direct the exercise of any trust power
conferred upon the Guarantee Trustee. Any holder of the Capital Securities may
institute a legal proceeding directly against the Corporation to enforce its
rights under the Guarantee without first instituting a legal proceeding against
the Trust, the Guarantee Trustee or any other person or entity. If the
Corporation defaults on its obligation to pay amounts payable under the Junior
Subordinated Debentures, the Trust will not have sufficient funds for the
payment of Distributions or amounts payable on redemption of the Capital
Securities or otherwise, and, in such event, holders of the Capital Securities
will not be able to rely upon the Guarantee for payment of such amounts.
Instead, in the event a Debenture Event of Default shall have occurred and be
continuing and such event is attributable to the failure of the Corporation to
pay the principal of (or premium, if any) or interest (including Additional Sums
(as defined below) and Compounded Interest
17
<PAGE> 19
(as defined below), if any) or Liquidated Damages, if any, on the Junior
Subordinated Debentures on the payment date on which such payment is due and
payable, then a holder of Capital Securities may institute a legal proceeding
directly against the Corporation for enforcement of payment to such holder of
the principal of (or premium, if any) or interest (including Additional Sums and
Compounded Interest, if any) or Liquidated Damages, if any, on such Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Capital Securities of such holder (a "Direct Action").
Notwithstanding any payments made to a holder of Capital Securities by the
Corporation in connection with a Direct Action, the Corporation shall remain
obligated to pay the principal of (and premium, if any) and interest (including
Additional Sums and Compounded Interest, if any) or Liquidated Damages, if any,
on the Junior Subordinated Debentures, and the Corporation shall be subrogated
to the rights of the holder of such Capital Securities with respect to payments
on the Capital Securities to the extent of any payments made by the Corporation
to such holder in any Direct Action. Except as described herein, holders of
Capital Securities can not exercise directly any other remedy available to the
holders of the Junior Subordinated Debentures or assert directly any other
rights in respect of the Junior Subordinated Debentures. See "Description of
Junior Subordinated Debentures--Enforcement of Certain Rights by Holders of
Capital Securities," "Description of Junior Subordinated Debentures-- Debenture
Events of Default" and "Description of Guarantee." The Trust Agreement provides
that each holder of Capital Securities by acceptance thereof agrees to the
provisions of the Indenture.
LIMITED VOTING RIGHTS
Holders of Capital Securities will generally have limited voting rights
relating only to the modification of the Capital Securities, the termination or
liquidation of the Trust, and the exercise of the Trust's rights as holder of
Junior Subordinated Debentures. Holders of Capital Securities will not be
entitled to vote to appoint, remove or replace the Property Trustee or the
Delaware Trustee, and such voting rights are vested exclusively in the holder of
the Common Securities except upon the occurrence of certain events described
herein. The Property Trustee, the Administrative Trustees and the Corporation
may amend the Trust Agreement without the consent of holders of Capital
Securities to ensure that the Trust will be classified for United States federal
income tax purposes as a grantor trust even if such action adversely affects the
interests of such holders. Holders of Capital Securities will have no voting
rights with respect to any matters submitted to a vote of the Corporation's
stockholders. See "Description of Capital Securities--Voting Rights; Amendment
of the Trust Agreement" and "--Removal of Issuer Trustees."
CONSEQUENCES OF A FAILURE TO EXCHANGE SERIES A CAPITAL SECURITIES
The Series A Capital Securities have not been registered under the
Securities Act or any state securities laws and therefore may not be offered,
sold or otherwise transferred except in compliance with the registration
requirements of the Securities Act and any other applicable securities laws, or
pursuant to an exemption therefrom or in a transaction not subject thereto, and
in each case in compliance with certain other conditions and restrictions.
Series A Capital Securities which remain outstanding after consummation of the
Exchange Offer will continue to bear a legend reflecting such restrictions on
transfer. In addition, upon consummation of the Exchange Offer, holders of
Series A Capital Securities which remain outstanding will not be entitled to any
rights to have such Series A Capital Securities registered under the Securities
Act or to any similar rights under the Registration Rights Agreement (subject to
certain limited exceptions). The Corporation and the Trust do not intend to
register under the Securities Act any Series A Capital Securities which remain
outstanding after consummation of the Exchange Offer (subject to limited
exceptions, if applicable).
A holder's ability to sell untendered Series A Capital Securities could be
adversely affected. In addition, although the Series A Capital Securities have
been designated for trading in the PORTAL market, to the extent that Series A
Capital Securities are tendered and accepted in connection with the Exchange
Offer, any trading market for Series A Capital Securities which remain
outstanding after the Exchange Offer could be adversely affected.
The Series B Capital Securities and any Series A Capital Securities which
remain outstanding after consummation of the Exchange Offer will constitute a
single series of Capital Securities under the Trust Agreement and, accordingly,
will vote together as a single class for purposes of determining whether holders
of
18
<PAGE> 20
the requisite percentage in outstanding Liquidation Amount thereof have taken
certain actions or exercised certain rights under the Trust Agreement.
The Series A Capital Securities provide that, if the registration statement
relating to the Exchange Offer is not declared effective by the Commission by
August 10, 1997, the Distribution rate borne by the Series A Capital Securities
will increase by 0.25% per annum (not to exceed in the aggregate 0.25%)
commencing on August 10, 1997, until such registration statement is declared
effective. In the event the Exchange Offer is not consummated on the 45th day
after the date such registration statement became effective, the Distribution
rate borne by the Series A Capital Securities will increase by 0.25% per annum
(not to exceed in the aggregate 0.25%), commencing the 46th day after such
effective date. (See "The Exchange Offer.") Following consummation of the
Exchange Offer, the Series A Capital Securities will not be entitled to any
increase in the Distribution rate thereon. The Series B Capital Securities will
not be entitled to any such increase in the Distribution rate thereon.
ABSENCE OF PUBLIC MARKET; TRADING CHARACTERISTICS OF THE CAPITAL SECURITIES
The Series A Capital Securities were issued to a relatively small number of
beneficial owners. The Series A Capital Securities have not been registered
under the Securities Act and will be subject to restrictions on transferability
to the extent that they are not exchanged for the Series B Capital Securities.
Although the Series B Capital Securities will generally be permitted to be
resold or otherwise transferred by the holders (who are not affiliates of the
Corporation or the Trust) without compliance with the registration requirements
under the Securities Act, they will constitute a new issue of securities with no
established trading market. Capital Securities may be transferred by the holders
thereof only in blocks having a Liquidation Amount of not less than $100,000
(100 Capital Securities). Accordingly, no assurance can be given that an active
public or other market will develop for the Series B Capital Securities or as to
the liquidity of or the trading market for the Series B Capital Securities. If
an active public market does not develop, the market price and liquidity of the
Series B Capital Securities may be adversely affected.
The Corporation does not intend to have the Capital Securities quoted on
the NASDAQ National Market System or listed on any securities exchange. The
Capital Securities may trade at prices that do not fully reflect the value of
accrued but unpaid interest with respect to the underlying Junior Subordinated
Debentures. A holder of the Capital Securities that disposes of its Capital
Securities between record dates for payments of Distributions (and consequently
does not receive a Distribution from the Trust for the period prior to such
disposition) will nevertheless be required to include accrued but unpaid
interest on the Junior Subordinated Debentures through the date of disposition
in income as ordinary income and to add such amount to its adjusted tax basis in
the Capital Securities that it sold. Such holder will recognize a capital loss
to the extent the selling price (which may not fully reflect the value of
accrued but unpaid interest) is less than its adjusted tax basis (which will
include accrued but unpaid interest). Subject to certain limited exceptions,
capital losses cannot be applied to offset ordinary income for United States
federal income tax purposes. (See "Certain Federal Income Tax
Consequences--Sales of Capital Securities.")
If a public trading market develops for the Series B Capital Securities,
future trading prices of such securities will depend upon many factors,
including, among other things, prevailing interest rates, the Corporation's
results of operations and the market for similar securities. Depending upon
prevailing interest rates, the market for similar securities and other factors,
including the financial condition of the Corporation, the Series B Capital
Securities may trade at a discount.
Notwithstanding the registration of the Series B Capital Securities in the
Exchange Offer, holders who are "affiliates" (as defined under Rule 405 of the
Securities Act) of the Corporation or the Trust may publicly offer for sale or
resell the Series B Capital Securities only in compliance with the provisions of
Rule 144 under the Securities Act.
Each broker-dealer that receives Series B Capital Securities for its own
account in exchange for Series A Capital Securities, where such Series A Capital
Securities were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such Series B Capital Securities.
(See "Plan of Distribution.")
19
<PAGE> 21
EXCHANGE OFFER PROCEDURES
Issuance of the Series B Capital Securities in exchange for Series A
Capital Securities pursuant to the Exchange Offer will be made only after a
timely receipt by the Exchange Agent of such Series A Capital Securities, a
properly completed and duly executed Letter of Transmittal or Agent's Message in
lieu thereof, and all other required documents. Therefore, holders of the Series
A Capital Securities desiring to tender such Series A Capital Securities in
exchange for Series B Capital Securities should allow sufficient time to ensure
timely delivery. Neither the Corporation, the Trust, nor the Exchange Agent is
under any duty to give notification of defects or irregularities with respect to
the tenders of Series A Capital Securities for exchange.
EXCHANGE OF CAPITAL SECURITIES FOR JUNIOR SUBORDINATED DEBENTURES
The Corporation has the right at any time to terminate the Trust and, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, cause the Junior Subordinated Debentures to be distributed to the holders
of the Capital Securities and Common Securities in liquidation of the Trust,
subject to (i) the Corporation having received an opinion of counsel to the
effect that such distribution will not be a taxable event to holders of Capital
Securities and (ii) the prior approval of the Federal Reserve to do so if then
required under applicable capital guidelines or policies of the Federal Reserve
and the receipt of any other required regulatory approval. See "Description of
Capital Securities--Liquidation of the Trust and Distribution of Junior
Subordinated Debentures."
20
<PAGE> 22
USE OF PROCEEDS
Neither the Corporation nor the Trust will receive any cash proceeds from
the issuance of the Series B Capital Securities offered hereby. In consideration
for issuing the Series B Capital Securities in exchange for Series A Capital
Securities as described in this Prospectus, the Trust will receive Series A
Capital Securities in like Liquidation Amount. The Series A Capital Securities
will be retired and canceled.
The net proceeds to the Trust from the offering of the Series A Capital
Securities were approximately $25,000,000 (before deducting expenses associated
with the offering). All of the proceeds from the sale of the Series A Capital
Securities were invested by the Trust in the Series A Junior Subordinated
Debentures. The Corporation intends to use, and has used a portion of, the
proceeds from the sale of the Junior Subordinated Debentures for general
corporate purposes, including, but not limited to, one or more of the following:
repurchases of shares of the Corporation's common stock; investments in and
advances to the Corporation's Subsidiaries; and financing future acquisitions of
financial institutions, as well as banking and other assets. As of the date of
this Prospectus, the Corporation has not entered into any agreements or
understandings with respect to any potential acquisition of financial
institutions referred to in the preceding sentence. The precise amount and
timing of the application of all of such net proceeds for such corporate
purposes will depend on the funding requirements and the availability of other
funds to the Corporation and its Subsidiaries. Pending such application by the
Corporation, such net proceeds have been temporarily invested in short-term
interest-bearing securities and, to a lesser extent, in certain other capital
securities similar to the Capital Securities.
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES
The following table sets forth the ratios of earnings to combined fixed
charges of the Corporation on a consolidated basis for the respective periods
indicated.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------------ ------------
1996 1995 1994 1993 1992 1997 1996
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratios of Earnings to Combined Fixed Charges:
Including interest on deposits............. 1.35x 1.37x 1.48x 1.47x 1.34x 1.52x 1.37x
Excluding interest on deposits............. 2.11x 2.41x 2.72x 3.07x 3.39x 2.67x 2.36x
</TABLE>
For purposes of computing the ratios of earnings to combined fixed charges,
earnings represent net income (loss) before extraordinary items and cumulative
effect of changes in accounting principles plus applicable income taxes and
fixed charges. Fixed charges, excluding interest on deposits, include gross
interest expense (other than on deposits) and the proportion deemed
representative of the interest factor of rent expense, net of income from
subleases. Fixed charges, including gross interest on deposits, include all
interest expense and the proportion deemed representative of the interest factor
of rent expense, net of income from subleases.
21
<PAGE> 23
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
the Corporation as of March 31, 1997. The following data should be read in
conjunction with the financial information included in documents incorporated
herein by reference or included herein. See "Incorporation of Certain Documents
by Reference."
<TABLE>
<CAPTION>
MARCH 31, 1997
--------------
<S> <C>
(IN THOUSANDS)
Long-term debt............................................................... $ 5,577
--------
Corporation-obligated mandatorily redeemable capital securities of subsidiary
trust holding solely junior subordinated debentures of the
Corporation(1)............................................................. $ 23,807
--------
Stockholders' equity:
Preferred stock, no stated value, 4,000,000 shares authorized, none
issued.................................................................. $ --
Common stock, par value $5.00 per share, 20,000,000 shares authorized,
7,845,302 shares issued, 7,545,716 shares outstanding................... 39,227
Additional paid-in capital................................................. 22,089
Retained earnings.......................................................... 75,075
Net unrealized loss on securities available for sale, net of deferred
taxes................................................................... (1,026)
Treasury stock, at cost, 265,300 shares.................................... (7,043)
Unallocated common stock held by employee stock ownership plan (34,286
shares)................................................................. (900)
--------
Total stockholders' equity................................................... $127,422
--------
Total capitalization......................................................... $156,806
========
</TABLE>
- ---------
(1) Reflects the Capital Securities, net of unamortized debt issue costs of
$1.193 million. The Trust is a subsidiary of the Corporation and holds the
Junior Subordinated Debentures as its sole asset.
22
<PAGE> 24
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data below should be read in connection
with the financial information included in the Corporation's 1996 Annual Report
on Form 10-K and its Quarterly Report on Form 10-Q for the quarter ended March
31, 1997. See "Available Information," "Incorporation of Certain Documents by
Reference" and "First Western." Interim unaudited data for the three months
ended March 31, 1997 and 1996 reflect, in the opinion of management of the
Corporation, all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of such data. Results for the three months
ended March 31, 1997 are not necessarily indicative of results which may be
expected for any other interim period or for the year as a whole.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
------------------------ ------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Interest income........... 31,319 30,057 125,483 $ 119,832 $ 99,167 $ 95,706 $ 96,224
Interest expense.......... 17,096 16,096 67,214 64,872 46,613 44,372 47,838
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income....... 14,223 13,961 58,269 54,960 52,554 51,334 48,386
Provision for possible
loan losses............. 1,974 1,290 8,288 3,982 3,650 3,435 3,755
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after
provision for possible
loan losses............. 12,249 12,671 49,981 50,978 48,904 47,899 44,631
Other income.............. 7,556(1) 2,867 15,714(1) 11,021 8,649 7,718 8,445
Other expenses............ 10,974 9,638 42,264(2) 38,027 35,275 34,943 37,026
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income
taxes................... 8,831 5,900 23,431 23,972 22,278 20,674 16,050
Income tax expense........ 2,959 1,731 6,304 7,226 6,718 6,343 4,839
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income................ $ 5,872 $ 4,169 $ 17,127 $ 16,746 $ 15,560 $ 14,331 $ 11,211
========== ========== ========== ========== ========== ========== ==========
PER SHARE DATA:
Earnings per share........ $ 0.76 $ 0.53 $ 2.20 $ 2.13 $ 1.98 $ 1.83 $ 1.52
Cash dividends per
share................... $ 0.20 $ 0.18 $ 0.74 $ 0.69 $ 0.63 $ 0.54 $ 0.49
Weighted average shares
outstanding............. 7,731 7,859 7,779 7,849 7,855 7,814 7,398
Book value per share
(period end)............ $ 16.89 $ 15.74 $ 16.74 $ 15.67 $ 13.65 $ 12.94 $ 11.19
BALANCE SHEET DATA (AT
PERIOD END):
Assets.................... $1,703,650 $1,674,893 $1,695,778 $1,603,264 $1,454,573 $1,390,349 $1,235,255
Investment securities and
mortgage-backed
securities.............. 266,055 297,758 276,559 259,565 336,397 293,122 100,962
Securities available for
sale.................... 327,355 261,947 201,282 246,980 67,670 223,492 316,202
Loans held for sale....... 13,474 2,651 124,515 3,510 -- -- --
Loans, net of unearned
income.................. 1,008,244 1,043,828 989,910 1,024,106 978,562 815,642 718,074
Allowance for possible
loan losses............. 17,315 14,404 16,054 14,148 12,943 11,102 10,846
Deposits.................. 1,177,015 1,170,026 1,148,903 1,177,683 1,029,409 961,140 961,223
Federal funds purchased
and other short-term
borrowings.............. 35,614 42,940 33,202 3,598 34,847 35,300 28,270
Repurchase agreements and
secured lines of
credit.................. 162,400 183,789 212,070 121,658 128,461 146,688 22,164
Advances from the Federal
Home Loan Bank.......... 144,000 126,670 144,000 111,670 128,121 120,950 84,500
Long-term debt............ 5,577 6,236 5,967 8,133 10,318 11,397 13,533
Shareholders' equity...... 127,422 121,621 127,721 121,688 106,079 100,000 85,605
</TABLE>
- ---------
(1) Reflects gain from sale of credit card portfolio.
(2) Reflects expenses related to recapitalization of the SAIF.
23
<PAGE> 25
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
------------------------ ------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE BALANCE SHEET DATA:
Assets.................... $1,712,915 $1,619,203 $1,674,732 $1,582,694 $1,389,508 $1,322,896 $1,157,540
Interest-earning assets... 1,655,533 1,557,348 1,612,081 1,521,625 1,337,636 1,267,341 1,104,964
Investment securities and
mortgage-backed
securities.............. 269,160 275,868 283,141 325,067 331,281 111,407 384,219
Securities available for
sale.................... 265,711 248,863 247,116 148,295 113,769 403,107 8,007
Loans, net of unearned
income.................. 1,072,444 1,030,802 1,079,881 1,044,191 891,411 750,849 706,010
Allowance for possible
loan losses............. 16,194 14,255 15,148 13,555 12,114 11,658 9,595
Deposits.................. 1,153,382 1,159,861 1,056,589 1,156,136 994,478 967,936 939,734
Federal funds purchased
and other short-term
borrowings.............. 35,868 35,779 55,731 24,872 21,069 17,194 11,113
Repurchase agreements and
secured lines of
credit.................. 187,052 146,259 194,006 128,287 119,755 94,172 27,798
Advances from the Federal
Home Loan Bank.......... 144,000 118,538 117,721 127,541 121,742 104,237 70,531
Long-term debt............ 5,815 7,865 6,904 9,318 11,009 12,942 13,873
Interest-bearing
liabilities............. 1,435,161 1,371,209 1,430,951 1,350,383 1,176,588 1,112,110 983,257
Shareholders' equity...... 128,741 119,912 121,801 113,255 102,432 91,066 76,057
SELECTED FINANCIAL RATIOS:
Return on average
assets.................. 1.39% 1.04% 1.02% 1.06% 1.12% 1.08% 0.97%
Return on average
equity.................. 18.50 13.98 14.06 14.79 15.19 15.74 14.74
Net interest margin....... 3.64 3.78 3.78 3.78 4.12 4.22 4.54
Shareholders' equity to
total assets............ 7.48 7.26 7.53 7.59 7.29 7.19 6.93
Tier 1 capital ratio...... 14.37(3) 11.33 11.43 11.25 11.69 12.39 11.42
Total capital ratio....... 15.62(3) 12.58 12.68 12.51 12.97 13.72 12.84
Tier 1 leverage ratio..... 8.54(3) 7.05 7.10 6.99 7.60 6.98 6.84
Allowance for possible
loan losses to total
loans................... 1.69 1.38 1.44 1.38 1.32 1.36 1.51
Allowance for possible
loan losses to loans
past due 90 days or more
and nonaccrual loans.... 294.72 174.60 244.20 185.98 272.78 155.36 111.31
Allowance for possible
loan losses to
nonaccrual loans........ 362.98 256.96 311.91 285.31 450.16 214.07 124.45
Net chargeoffs to average
loans................... 0.27 0.40 0.59 0.27 0.20 0.42 0.25
Nonperforming assets to
total assets............ 0.30 0.34 0.33 0.32 0.28 0.50 0.80
</TABLE>
- ---------
(3) Reflects the issuance of Capital Securities in February 1997.
24
<PAGE> 26
FIRST WESTERN
GENERAL
First Western, headquartered in New Castle, Pennsylvania, is a
multi-institutional holding company which provides retail and commercial banking
and trust services through 41 community banking offices in western Pennsylvania
and northeastern Ohio. First Western was incorporated under the laws of the
Commonwealth of Pennsylvania in 1982. First Western has two wholly-owned banking
subsidiaries: First Western Bank, N.A. and First Western Bank, F.S.B. First
Western also has three wholly-owned nonbank subsidiaries, Trust Services,
Investment Services and the Trust. At March 31, 1997, First Western had total
assets of approximately $1.7 billion, net loans (including loans held for sale)
of approximately $1.0 billion, deposits of approximately $1.2 billion and
shareholders' equity of approximately $127.4 million.
First Western offers a variety of financial services through its
Subsidiaries. The Banks provide a full range of retail and commercial banking
products, including personal and commercial checking accounts, savings and time
deposit accounts, money market demand accounts, safe deposit facilities,
installment and other consumer loans, short and long-term credit facilities, and
consumer and commercial mortgages to individuals and small to medium sized
businesses. First Western also offers a number of products through Trust
Services, including corporate trust, personal trust, custody and account
administration services and financial services such as investment planning and
managed assets. Through third party providers, First Western makes available
credit cards, mutual funds and annuities for its customers.
First Western's principal executive offices are located at 101 East
Washington Street, New Castle, Pennsylvania 16101 and its telephone number is
(412) 652-8550.
First Western Bank, N.A.
First Western Bank, N.A. traces its history in New Castle, Pennsylvania to
1855. First Western Bank, N.A. is a member of the Federal Reserve System. Most
of its deposits are insured by the Bank Insurance Fund ("BIF") of the FDIC, with
certain deposits acquired from the former Resolution Trust Corporation insured
by the Savings Association Insurance Fund ("SAIF") of the FDIC. As of March 31,
1997, First Western Bank, N.A. had 22 community banking offices in Lawrence,
Beaver, Butler and Allegheny Counties, Pennsylvania. At March 31, 1997, First
Western Bank, N.A. had total assets of approximately $1.1 billion.
First Western Bank, F.S.B.
First Western Bank, F.S.B. traces its history in Sharon, Pennsylvania to
1872. The deposits of First Western Bank, F.S.B. are insured by the SAIF. As of
March 31, 1997, First Western Bank, F.S.B. had 19 community banking offices in
Mercer, Erie, Butler and Venango Counties, Pennsylvania and Ashtabula and Lake
Counties, Ohio. At March 31, 1997, First Western Bank, F.S.B. had total assets
of approximately $616 million.
Trust Services
Trust Services, a Pennsylvania trust company, commenced operations in
January 1991. At March 31, 1997, Trust Services held, as agent or fiduciary,
trust assets of approximately $495 million in market value. Trust Services
maintains offices in New Castle, Beaver, Hermitage and Erie, Pennsylvania, at
the offices of the Banks. Trust Services provides personal and corporate trust
services to customers in the market areas served by the Banks, as well as
financial services such as managed asset allocation, and other investment
services.
Investment Services
Investment Services was formed on December 26, 1996 as a Delaware
investment company for the purpose of holding investment securities for First
Western.
Trust
For a description of the Trust, see "First Western Capital Trust I."
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RECENT DEVELOPMENTS
Second Quarter Results
For the second quarter ended June 30, 1997, First Western had net income of
$4.88 million, an increase of 16.6% from net income of $4.19 million in the
second quarter of 1996. Earnings per share were $0.64 per share in the second
quarter compared to $0.54 per share in the second quarter of 1996, with the
increase due in part to a reduced number of shares outstanding. For the year to
date, net income was $10.75 million compared to $8.36 million in the prior year.
Earnings per share were $1.40 per share for the first six months of 1997
compared to $1.07 per share for the first six months of 1996. Second quarter
earnings improved primarily due to a $2.34 million decrease in the loan loss
provision from the same period in the prior year, resulting from improved credit
quality. First Western also had gains of $964,000 on sales of mortgage and
credit card loans and its credit card merchant transaction processing business.
Net interest income increased by $357,000, which together with the decrease in
the loan loss provision and the gains on loan sales, offset higher expenses and
reduced income from securities sales.
For the second quarter of 1997, net interest income increased by 2.5% to
$14.86 million as the net interest margin improved to 3.80% from 3.75% a year
earlier. The sale of lower-yielding mortgage loans during the first quarter of
1997 improved overall yields in the mortgage portfolio and helped offset some of
the yield erosion related to the sale of the credit card portfolio.
The second quarter 1997 provision for loan losses was $954,000, down
significantly from $3.29 million in the second quarter of 1996, which was
characterized by a rise in consumer loan charge-offs. Net chargeoffs for the
second quarter of 1997 were $797,000, compared to $1.76 million a year earlier.
For the year to date, net interest income increased 2.2% to $29.09 million,
as a result of a 3.4% increase in average earning assets, which was offset
somewhat by a slightly lower net interest margin of 3.72%, compared to 3.76% in
1996. The loan loss provision for the year to date 1997 was $2.93 million, as
compared to $4.58 million through the first six months of 1996. Net loan
chargeoffs through the second quarter of 1997 were $1.51 million, or 0.29% of
total loans, compared to $2.79 million or 0.54% of loans in 1996.
Other income for the second quarter of 1997 improved 8.6% to $3.58 million,
from $3.30 million a year earlier. The improvement was largely the result of
one-time factors, including gains on the completion of the credit card loan
sale, as well as the sales of mortgage loans and the credit card merchant
transaction business, and was offset by reduced income from gains on securities
sales. Excluding these items, other income for the quarter rose 2.6%, to $2.60
million, from $2.53 million a year ago, as higher fee income from trust services
and deposit accounts offset a decline in credit card fees. For the year to date,
other income rose 80.7%, to $11.14 million, from $6.16 million in the first six
months of 1996, primarily as the result of the factors cited above, as well as
the first-quarter gain of approximately $4.8 million on the credit card sale.
Expenses for the second quarter of 1997 increased 10.9% to $10.36 million,
from $9.33 million in the 1996 second quarter, primarily as the result of
$631,000 in minority interest expense on trust preferred securities issued in
February 1997. Excluding that expense, non-interest expense rose 4.2%, a result
of higher employee salary and benefit costs.
For the year to date, expenses rose 12.4%, to $21.33 million, from $18.97
million in the year-ago period. The increase in expenses was the result of the
trust preferred expense of $971,000 and higher expenses for salaries and
benefits, advertising, professional fees and other costs, somewhat offset by
lower deposit insurance premiums.
The financial results discussed above do not reflect the stock split
referred to below.
Stock Split; Cash Dividend
The Board of Directors of First Western declared a three-for-two stock
split in the form of a 50% stock dividend to be distributed August 5, 1997 to
shareholders of record July 28, 1997. Fractional shares will be paid in cash
based on the average of the five days' high and low trading prices through the
record date, as adjusted for the stock split.
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The Board of Directors of First Western also declared an increased
quarterly cash dividend of $0.22 per share, payable August 5, 1997 to
shareholders of record July 28, 1997. This represents an increase of 10% from
the prior rate of $0.20 per share, and raises the annualized rate to $0.88 per
share. The dividend is payable on 7,477,000 shares outstanding prior to the
stock split.
SUPERVISION AND REGULATION
First Western is registered as a bank holding company under the Bank
Holding Company Act of 1956. As such, First Western is subject to the provisions
of that act and to supervision by the Federal Reserve Board.
Under Federal Reserve Board regulations, a bank holding company is required
to serve as a source of financial and managerial strength to its subsidiary
banks and may not conduct its operations in an unsafe or unsound manner. In
addition, it is the Federal Reserve Board's policy that in serving as a source
of strength to its subsidiary banks, a bank holding company should stand ready
to use available resources to provide adequate capital funds to its subsidiary
banks during periods of financial stress or adversity and should maintain the
financial flexibility and capital raising capacity to obtain additional
resources for assisting its subsidiary banks. A bank holding company's failure
to meet its obligations to serve as a source of strength to its subsidiary banks
will generally be considered by the Federal Reserve Board to be an unsafe and
unsound banking practice or a violation of the Federal Reserve Board regulations
or both.
By virtue of its acquisition of First Federal of Western Pennsylvania, now
First Western Bank, F.S.B., in November 1990, First Western became subject to
regulation by the Office of Thrift Supervision (the "OTS") as a savings and loan
holding company. As such, First Western was subject to OTS examination and
reporting requirements relating to savings and loan holding companies. On
September 30, 1996, President Clinton signed into law the Economic Growth and
Regulatory Paperwork Reduction Act, which exempts bank holding companies, such
as First Western, from OTS examination and reporting requirements as savings and
loan holding companies. Thus, First Western is no longer subject to supervision
as a savings and loan holding company and is only subject to supervision as a
bank holding company.
Federal and state laws and regulations govern many aspects of the business
of First Western's banking Subsidiaries, including permissible types, amounts,
and terms of loans, investments, and acceptances, amounts of reserves against
deposits and restrictions on dividends and other intercompany transactions. The
operations of such subsidiaries are subject to examination and regulation by one
or more of the following: the Federal Reserve Board, the Office of the
Comptroller of the Currency (the "OCC"), the FDIC and the OTS. First Western
Bank, N.A. is a national bank and is subject to the supervision of, and
regulation by, the OCC. First Western Bank, F.S.B. is a federally chartered
savings bank and is subject to the supervision of, and regulation by, the OTS
and the FDIC. First Western Bank, N.A. and First Western Bank, F.S.B. are
individually subject to regulatory capital requirements that are generally
comparable to those imposed on First Western.
First Western is a legal entity separate and distinct from its Subsidiaries
and there are various legal and regulatory limitations concerning the extent to
which these Subsidiaries can finance or otherwise provide funds to First
Western.
Certain restrictions exist regarding the ability of the Subsidiaries to pay
dividends to First Western, which are the primary source of First Western's
revenues, in addition to management and service fees. Under OCC regulations, the
total capital available for payment of dividends from First Western Bank, N.A.
was approximately $14.9 million at March 31, 1997. Under OTS regulations, the
total amount available for payment of dividends by First Western Bank, F.S.B.
was approximately $6.6 million at March 31, 1997. These bodies have the power to
prohibit any act, including the payment of dividends, if, in their opinion, such
act would constitute an unsafe or unsound banking practice.
First Western is required to maintain minimum amounts of capital to total
"risk-weighted" assets, as defined by the banking regulators. At March 31, 1997,
First Western is required to have minimum Tier I and Total capital ratios of
4.00% and 8.00%, respectively. First Western's actual ratios at March 31, 1997
were 14.37% and 15.62%, respectively. First Western's leverage ratio at March
31, 1997 was 8.54%. Most institutions are expected to maintain Tier I leverage
capital ratios of at least 100 to 200 basis points above the 3.00% guideline
minimum depending on risk profiles and other facts. Although a specific minimum
has not
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been established for First Western, management believes it is in compliance with
the Tier I leverage ratio requirement at March 31, 1997.
First Western's banking Subsidiaries are also subject to certain
restrictions imposed by federal law on extensions of credit and certain other
transactions with First Western, including borrowing from these Subsidiaries
unless the loans are both well-secured and limited in amount to no more than 10%
of the lending subsidiary's capital and surplus.
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FIRST WESTERN CAPITAL TRUST I
The Trust is a statutory business trust formed under Delaware law pursuant
to (i) the Trust Agreement executed by the Corporation, as Sponsor, The Chase
Manhattan Bank, as Property Trustee, Chase Manhattan Bank Delaware, as Delaware
Trustee, and the Administrative Trustees named therein, and (ii) the filing of a
certificate of trust with the Delaware Secretary of State on February 4, 1997.
The Trust Agreement was amended and restated in its entirety as of February 11,
1997 (as so amended and restated, the "Trust Agreement"). The Trust was formed
for the exclusive purposes of (i) issuing and selling the Series A Capital
Securities and the Common Securities, (ii) using the proceeds from the sale of
Series A Capital Securities and the Common Securities to acquire the Series A
Junior Subordinated Debentures and (iii) engaging in only those other activities
necessary, advisable or incidental thereto (such as registering the transfer of
the Series A Capital Securities and the Common Securities). The Series A Junior
Subordinated Debentures are the sole assets of the Trust, and, accordingly,
payments under the Series A Junior Subordinated Debentures are the sole revenues
of the Trust. All of the Common Securities are owned by the Corporation. The
Common Securities rank pari passu, and payments will be made thereon pro rata,
with the Series A Capital Securities, except that upon the occurrence and
continuance of an event of default under the Trust Agreement resulting from a
Debenture Event of Default, the rights of the Corporation as holder of the
Common Securities to payments in respect of Distributions and payments upon
liquidation, redemption or otherwise will be subordinated to the rights of the
holders of the Series A Capital Securities. See "Description of Capital
Securities--Subordination of Common Securities." The Corporation has acquired
Common Securities in a Liquidation Amount equal to 3% of the total capital of
the Trust. The Trust has a term of 31 years, but may terminate earlier as
provided in the Trust Agreement. The Trust's business and affairs are conducted
by its trustees, each appointed by the Corporation as holder of the Common
Securities. The trustees for the Trust are The Chase Manhattan Bank, as the
Property Trustee (the "Property Trustee"), Chase Manhattan Bank Delaware, as the
Delaware Trustee (the "Delaware Trustee"), and three individual trustees (the
"Administrative Trustees") who are officers of the Corporation (collectively,
the "Issuer Trustees"). The Chase Manhattan Bank, as Property Trustee, acts as
sole indenture trustee under the Trust Agreement. The Chase Manhattan Bank also
acts as indenture trustee under the Guarantee and the Indenture. See
"Description of Guarantee" and "Description of Junior Subordinated Debentures."
The holder of the Common Securities of the Trust or, if an Event of Default
under the Trust Agreement has occurred and is continuing, the holders of a
majority in Liquidation Amount of the Capital Securities will be entitled to
appoint, remove or replace the Property Trustee and/or the Delaware Trustee. In
no event will the holders of the Capital Securities have the right to vote to
appoint, remove or replace the Administrative Trustees; such voting rights will
be vested exclusively in the holder of the Common Securities. The duties and
obligations of each Issuer Trustee are governed by the Trust Agreement. The
Corporation, as issuer of the Junior Subordinated Debentures, pays all fees,
expenses, debts and obligations (other than the payment of principal, interest
and premium, if any, on the Capital Securities) related to the Trust. The
principal executive office of the Trust is c/o First Western Bancorp, Inc., 101
East Washington Street, New Castle, Pennsylvania 16101.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a subsidiary
of the Corporation and, accordingly, the accounts of the Trust will be included
in the consolidated financial statements of the Corporation. The Capital
Securities will be presented as part of a separate line item in the consolidated
statements of financial condition of the Corporation under the caption
"Company-Obligated Mandatorily Redeemable Capital Securities of Subsidiary Trust
Holding Solely Junior Subordinated Debentures of the Corporation," and
appropriate disclosures about the Capital Securities will be included in the
notes to the consolidated financial statements. For financial reporting
purposes, the Corporation will record distributions payable on the Capital
Securities as an other expense in the consolidated statements of operations.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Series A Capital Securities, the
Corporation and the Trust entered into the Registration Rights Agreement with
Sandler, O'Neill & Partners, L.P. (the "Initial Purchaser"), pursuant to which
the Corporation and the Trust agreed, among other things, to file and to use
their best reasonable efforts to cause to become effective on or before August
10, 1997 with the Commission a registration statement with respect to the
exchange of the Series B Capital Securities, with terms identical in all
material respects to the terms of the Series A Capital Securities, for the
Series A Capital Securities. A copy of the Registration Rights Agreement is
incorporated herein by reference to Exhibit 10.1 to First Western Bancorp,
Inc.'s Quarterly Report on Form 10-Q for the quarter ending March 31, 1997.
The Exchange Offer is being made to satisfy the contractual obligations of
the Corporation and the Trust under the Registration Rights Agreement. The form
and terms of the Series B Capital Securities are the same as the form and terms
of the Series A Capital Securities except that the Series B Capital Securities
have been registered under the Securities Act and therefore will not be subject
to certain restrictions on transfer applicable to the Series A Capital
Securities and will not provide for any increase in the Distribution rate
thereon. In that regard, the Series A Capital Securities provide, among other
things, that, if the Registration Statement is not declared effective by August
10, 1997, or the Exchange Offer is not completed by , 1997, the
Distribution rate borne by the Series A Capital Securities commencing on the
date after such date will increase by 0.25% per annum (not to exceed in the
aggregate 0.25%) until the Registration Statement is declared effective or the
Exchange Offer is completed, as applicable. Upon consummation of the Exchange
Offer, holders of Series A Capital Securities will not be entitled to any
increase in the Distribution rate thereon or any further registration rights
under the Registration Rights Agreement, except under limited circumstances.
(See "--Resales of Series B Capital Securities," "Risk Factors--Consequences of
a Failure to Exchange Series A Capital Securities" and "Description of Capital
Securities.")
In the event that any changes in law or the applicable interpretations of
the staff of the Commission do not permit the Trust to effect the Exchange
Offer, if it is determined that the Exchange Offer would give rise to a Special
Event, if for any other reason the Exchange Offer is not consummated on or
before , 1997, or upon the request of the Initial Purchaser (under
certain circumstances), the Corporation and the Trust will, at the Corporation's
expense, (i) as promptly as practicable, file a Shelf Registration Statement
covering resales of the Series A Capital Securities, (ii) use its best efforts
to cause the Shelf Registration Statement to be declared effective under the
Securities Act as promptly as practicable and (iii) use its best efforts to keep
effective the Shelf Registration Statement, with certain exceptions set forth in
the Registration Rights Agreement, for the applicable period under Rule 144(k)
of the Securities Act or such earlier date as all Series A Capital Securities
shall have been disposed of or on which all Series A Securities cease to be
outstanding (the "Effective Period"). In the event of the filing of a Shelf
Registration Statement, the Corporation will provide to each holder of Capital
Securities copies of the prospectus which is a part of the Shelf Registration
Statement, notify each holder when the Shelf Registration Statement has become
effective and take certain other actions as are required to permit unrestricted
resales of the Capital Securities. A holder of Capital Securities that sells
such Capital Securities pursuant to the Shelf Registration Statement will be
required to be named as a selling security holder in the related prospectus and
to deliver a prospectus to purchasers, will be subject to certain of the civil
liability provisions under the Securities Act in connection with such sales and
will be bound by the provisions of the Registration Rights Agreement, including
certain indemnification obligations.
The Exchange Offer is not being made to, nor will the Corporation or the
Trust accept tenders for exchange from, holders of Series A Capital Securities
in any jurisdiction in which the Exchange Offer or the acceptance thereof would
not be in compliance with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Series A Capital
Securities are registered on the books of the Trust, or any person
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whose Series A Capital Securities are held of record by The Depository Trust
Company who desires to deliver such Series A Capital Securities by book-entry
transfer at The Depository Trust Company.
Pursuant to the Exchange Offer, the Corporation will exchange as soon as
practicable after the date hereof, the Series A Guarantee for the Series B
Guarantee and all of the Series A Junior Subordinated Debentures, of which
$25,774,000 aggregate principal amount is outstanding, for a like aggregate
principal amount of the Series B Junior Subordinated Debentures. The Series B
Guarantee and Series B Junior Subordinated Debentures have been registered under
the Securities Act.
TERMS OF THE EXCHANGE
The Corporation and the Trust hereby offer, upon the terms and subject to
the conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal, to exchange up to $25,000,000 aggregate Liquidation Amount of
Series B Capital Securities for a like aggregate Liquidation Amount of Series A
Capital Securities properly tendered on or prior to the Expiration Date (as
defined below) and not properly withdrawn in accordance with the procedures
described below. The Trust will issue, promptly after the Expiration Date, an
aggregate Liquidation Amount of up to $25,000,000 of Series B Capital Securities
in exchange for a like principal amount of outstanding Series A Capital
Securities tendered and accepted in connection with the Exchange Offer. Holders
may tender their Series A Capital Securities in whole or in part in a
Liquidation Amount of not less than $100,000 (100 Series A Capital Securities)
or any integral multiple of $1,000 Liquidation Amount (1 Series A Capital
Security) in excess thereof.
The Exchange Offer is not conditioned upon any minimum Liquidation Amount
of Series A Capital Securities being tendered, but in no case less than $100,000
Liquidation Amount of Series A Capital Securities. As of the date of this
Prospectus $25,000,000 aggregate Liquidation Amount of the Series A Capital
Securities is outstanding.
Holders of the Series A Capital Securities do not have any appraisal or
dissenters' rights in connection with the Exchange Offer. Series A Capital
Securities which are not tendered for or are tendered but not accepted in
connection with the Exchange Offer will remain outstanding and be entitled to
the benefits of the Trust Agreement, but will not be entitled to any further
registration rights under the Registration Rights Agreement, except under
limited circumstances. See "Risk Factors--Consequences of a Failure to Exchange
Series A Capital Securities" and "Description of the Capital Securities."
If any tendered Series A Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Series A Capital
Securities will be returned, without expense, to the tendering holder thereof
promptly after the Expiration Date.
Holders who tender Series A Capital Securities in connection with the
Exchange Offer will not be required to pay brokerage commissions or fees or,
subject to the instructions in the Letter of Transmittal, transfer taxes with
respect to the exchange of the Series A Capital Securities in connection with
the Exchange Offer. The Corporation will pay all charges and expenses, other
than certain applicable taxes described below, in connection with the Exchange
Offer. (See "--Fees and Expenses.")
NEITHER THE BOARD OF DIRECTORS OF THE CORPORATION NOR THE TRUSTEES OF THE
TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF SERIES A CAPITAL SECURITIES AS TO
WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR SERIES A
CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN
AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF SERIES A CAPITAL
SECURITIES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE
EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF SERIES A CAPITAL SECURITIES
TO TENDER AFTER READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND
CONSULTING WITH THEIR ADVISERS, IF ANY, BASED ON THEIR OWN FINANCIAL POSITION
AND REQUIREMENTS.
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EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on
, 1997 unless the Exchange Offer is extended by the Corporation and
the Trust (in which case the term "Expiration Date" shall mean the latest date
and time to which the Exchange Offer is extended).
The Corporation and the Trust expressly reserve the right in their sole and
absolute discretion, subject to applicable law, at any time and from time to
time, (i) to delay the acceptance of the Series A Capital Securities for
exchange, (ii) to terminate the Exchange Offer (whether or not any of the Series
A Capital Securities have theretofore been accepted for exchange) if the
Corporation and the Trust determine, in their sole and absolute discretion, that
any of the events or conditions referred to under "--Conditions to the Exchange
Offer" have occurred or exist or have not been satisfied, (iii) to extend the
Expiration Date of the Exchange Offer and retain all of the Series A Capital
Securities tendered pursuant to the Exchange Offer, subject, however, to the
right of holders of the Series A Capital Securities to withdraw their tendered
Series A Capital Securities as described under "--Withdrawal Rights," and (iv)
to waive any condition or otherwise amend the terms of the Exchange Offer in any
respect. If the Exchange Offer is amended in a manner determined by the
Corporation and the Trust to constitute a material change, or if the Corporation
and the Trust waive a material condition of the Exchange Offer, the Corporation
or the Trust will promptly disclose such amendment by means of a prospectus
supplement that will be distributed to the registered holders of the Series A
Capital Securities, and the Corporation and the Trust will extend the Exchange
Offer to the extent required by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Corporation or the Trust may choose to make any public
announcement and subject to applicable law, neither the Corporation nor the
Trust shall have any obligation to publish, advertise or otherwise communicate
any such public announcement other than by issuing a release to an appropriate
news agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF SERIES B CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Corporation and the Trust will exchange, and will issue to the Exchange Agent,
the Series B Capital Securities for the Series A Capital Securities validly
tendered and not withdrawn (pursuant to the withdrawal rights described under
"--Withdrawal Rights") promptly after the Expiration Date.
In all cases, delivery of the Series B Capital Securities in exchange for
the Series A Capital Securities tendered and accepted for exchange pursuant to
the Exchange Offer will be made only after timely receipt by the Exchange Agent
of (i) the Series A Capital Securities or a book-entry confirmation of a
book-entry transfer of the Series A Capital Securities into the Exchange Agent's
account at The Depository Trust Company ("DTC"), including an Agent's Message if
the tendering holder has not delivered a Letter of Transmittal, (ii) the Letter
of Transmittal (or facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message in lieu of the Letter of Transmittal, and (iii) any
other documents required by the Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of the Series A Capital Securities into the Exchange Agent's
account at DTC. The term "Agent's Message" means a message, transmitted by DTC
to and received by the Exchange Agent and forming a part of a book-entry
confirmation, which states that DTC has received an express acknowledgement from
the tendering participant, which acknowledgement states that such participant
has received and agreed to be bound by the Letter of Transmittal and that the
Trust and the Corporation may enforce such Letter of Transmittal against such a
participant.
Subject to the terms and conditions of the Exchange Offer, the Corporation
and the Trust will be deemed to have accepted for exchange, and thereby
exchanged, the Series A Capital Securities validly tendered and
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not withdrawn as, if and when the Corporation or the Trust gives oral or written
notice to the Exchange Agent of the Corporation's and the Trust's acceptance of
such Series A Capital Securities for exchange pursuant to the Exchange Offer.
The Exchange Agent will act as agent for the Corporation and the Trust for the
purpose of receiving tenders of the Series A Capital Securities, Letters of
Transmittal and related documents, and as agent for tendering holders for the
purpose of receiving the Series A Capital Securities, Letters of Transmittal and
related documents and transmitting the Series B Capital Securities to validly
tendering holders. Such exchange will be made promptly after the Expiration
Date. If for any reason whatsoever, acceptance for exchange or the exchange of
any Series A Capital Securities tendered pursuant to the Exchange Offer is
delayed (whether before or after the Corporation's and the Trust's acceptance
for exchange of the Series A Capital Securities) or the Corporation or the Trust
extends the Exchange Offer or is unable to accept for exchange or exchange the
Series A Capital Securities tendered pursuant to the Exchange Offer, then,
without prejudice to the Corporation's or the Trust's rights set forth herein,
the Exchange Agent may, nevertheless, on behalf of the Corporation and the Trust
and subject to Rule 14e-1(c) under the Exchange Act, retain tendered Series A
Capital Securities and such Series A Capital Securities may not be withdrawn
except to the extent tendering holders are entitled to withdrawal rights as
described under "--Withdrawal Rights."
Pursuant to the Letter of Transmittal, or Agent's Message in lieu thereof,
a holder of the Series A Capital Securities will warrant and agree in the Letter
of Transmittal that it has full power and authority to tender, exchange, sell,
assign and transfer the Series A Capital Securities, that the Trust will acquire
good, marketable and unencumbered title to the tendered Series A Capital
Securities, free and clear of all liens, restrictions, charges and encumbrances,
and the Series A Capital Securities tendered for exchange are not subject to any
adverse claims or proxies. The holder also will warrant and agree that it will,
upon request, execute and deliver any additional documents deemed by the
Corporation, the Trust or the Exchange Agent to be necessary or desirable to
complete the exchange, sale, assignment, and transfer of the Series A Capital
Securities tendered pursuant to the Exchange Offer.
PROCEDURES FOR TENDERING SERIES A CAPITAL SECURITIES
Valid Tender. Except as set forth below, in order for the Series A Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, or, in the case of a book-entry tender, an
Agent's Message in lieu of the Letter of Transmittal, and any other required
documents, must be received by the Exchange Agent at one of its addresses set
forth under "--Exchange Agent," and either (i) tendered Series A Capital
Securities must be received by the Exchange Agent, or (ii) such Series A Capital
Securities must be tendered pursuant to the procedures for book-entry transfer
set forth below and a book-entry confirmation, including an Agent's Message of
the tendering holder which has not delivered a Letter of Transmittal, must be
received by the Exchange Agent, in each case on or prior to the Expiration Date,
or (iii) the guaranteed delivery procedures set forth below must be complied
with.
If less than all of the Series A Capital Securities are tendered, but in no
case less than $100,000 Liquidation Amount of Series A Capital Securities, a
tendering holder should fill in the amount of the Series A Capital Securities
being tendered in the appropriate box on the Letter of Transmittal. The entire
amount of the Series A Capital Securities delivered to the Exchange Agent will
be deemed to have been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book Entry Transfer. The Exchange Agent will establish an account with
respect to the Series A Capital Securities at DTC for purposes of the Exchange
Offer within two business days after the date of this
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Prospectus. Any financial institution that is a participant in DTC's book-entry
transfer facility system may make a book entry delivery of the Series A Capital
Securities by causing DTC to transfer such Series A Capital Securities into the
Exchange Agent's account at DTC in accordance with DTC's procedures for
transfers. However, although delivery of Series A Capital Securities may be
effected through book entry transfer into the Exchange Agent's account at DTC,
the Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message in lieu
of the Letter of Transmittal, and any other required documents, must in any case
be delivered to and received by the Exchange Agent at its address set forth
under "--Exchange Agent" on or prior to the Expiration Date, or the guaranteed
delivery procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Signature Guarantees. Certificates for the Series A Capital Securities need
not be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (a) a certificate for the Series A Capital Securities is
registered in a name other than that of the person surrendering the certificate
or (b) such registered holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the Letter of Transmittal.
In the case of (a) or (b) above, such certificates for Series A Capital
Securities must be duly endorsed or accompanied by a properly executed bond
power, with the endorsement or signature on the bond power and on the Letter of
Transmittal guaranteed by a firm or other entity identified in Rule 17Ad-15
under the Exchange Act as an "eligible guarantor institution," including (as
such terms are defined therein): (i) a bank; (ii) a broker, dealer, municipal
securities broker or dealer or government securities broker or dealer; (iii) a
credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that is a
participant in a Securities Transfer Association (an "Eligible Institution"),
unless surrendered on behalf of such Eligible Institution. See Instruction 1 to
the Letter of Transmittal.
Guaranteed Delivery. If a holder desires to tender Series A Capital
Securities pursuant to the Exchange Offer and the certificates for such Series A
Capital Securities are not immediately available or time will not permit all
required documents to reach the Exchange Agent on or before the Expiration Date,
or the procedures for book-entry transfer cannot be completed on a timely basis,
such Series A Capital Securities may nevertheless be tendered, provided that all
of the following guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form accompanying the Letter of Transmittal, is
received by the Exchange Agent, as provided below, on or prior to
Expiration Date; and
(iii) the certificates (or a book-entry confirmation) representing all
tendered Series A Capital Securities, in proper form for transfer,
together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof or Agent's Message in lieu
thereof), with any required signature guarantees and any other
documents required by the Letter of Transmittal, are received by the
Exchange Agent within three New York Stock Exchange trading days
after the date of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail, to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of the Series B
Capital Securities in exchange for the Series A Capital Securities tendered and
accepted for exchange pursuant to the Exchange Offer will in all cases be made
only after timely receipt by the Exchange Agent of the Series A Capital
Securities, or of a book-entry confirmation with respect to such Series A
Capital Securities, and a properly completed and duly executed Letter of
Transmittal (or facsimile thereof or Agent's Message in lieu thereof), together
with any required signature guarantees and any other documents required by the
Letter of Transmittal. Accordingly, the delivery of the Series B Capital
Securities might not be made to all tendering holders at the same time,
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and will depend upon when the Series A Capital Securities, book-entry
confirmations with respect to the Series A Capital Securities and other required
documents are received by the Exchange Agent.
The Trust's acceptance for exchange of the Series A Capital Securities
tendered pursuant to any of the procedures described above will constitute a
binding agreement between the tendering holder, the Corporation and the Trust
upon the terms and subject to the conditions of the Exchange Offer.
All questions as to the form of documents, validity, eligibility (including
time of receipt) and acceptance for exchange of any tendered Series A Capital
Securities will be determined by the Trust, in its sole discretion, whose
determination shall be final and binding on all parties. The Corporation and the
Trust reserve the absolute right, in their sole and absolute discretion, to
reject any and all tenders determined by them not to be in proper form or the
acceptance of which, or exchange for, may, in the view of counsel to the
Corporation and the Trust, be unlawful. The Corporation and the Trust also
reserve the absolute right, subject to applicable law, to waive any of the
conditions of the Exchange Offer as set forth under "--Conditions to the
Exchange Offer" or any condition or irregularity in any tender of the Series A
Capital Securities of any particular holder whether or not similar conditions or
irregularities are waived in the case of other holders.
The Corporation's and the Trust's interpretation of the terms and
conditions of the Exchange Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of the Series A
Capital Securities will be deemed to have been validly made until all
irregularities with respect to such tender have been cured or waived. Neither
the Corporation, the Trust, any affiliates or assigns of the Corporation, the
Trust, the Exchange Agent nor any other person shall be under any duty to give
any notification of any irregularities in tenders or incur any liability for
failure to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the
Corporation or the Trust, proper evidence satisfactory to the Corporation or the
Trust, in its sole discretion, of such person's authority to so act must be
submitted.
A beneficial owner of the Series A Capital Securities that are held by or
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee or custodian is urged to contact such entity promptly if such
beneficial holder wishes to participate in the Exchange Offer.
RESALES OF SERIES B CAPITAL SECURITIES
The Trust is making the Exchange Offer for the Capital Securities in
reliance upon the position of the staff of the Division of Corporation Finance
of the Commission as set forth in certain interpretive letters addressed to
third parties in other transactions. However, neither the Corporation nor the
Trust sought its own interpretive letter and there can be no assurance that the
staff of the Division of Corporation Finance of the Commission would make a
similar determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based upon these interpretations by the
staff of the Division of Corporation Finance, and subject to the two immediately
following sentences, the Corporation and the Trust believe that Series B Capital
Securities issued pursuant to this Exchange Offer in exchange for Series A
Capital Securities may be offered for resale, resold and otherwise transferred
by a holder thereof (other than a holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such Series B Capital Securities are acquired in
the ordinary course of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such Series B Capital Securities. However, any holder of Series A Capital
Securities who is an "affiliate" of the Corporation or the Trust or who intends
to participate in the Exchange Offer for the purpose of distributing Series B
Capital Securities, or any broker-dealer who purchased Series A Capital
Securities from the Trust to resell pursuant to Rule 144A or any other available
exemption under the Securities Act, (a) will not be permitted or entitled to
tender such Series A Capital Securities in the Exchange Offer and (b) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any sale or other transfer of such Series A
Capital Securities unless such sale is made pursuant to an exemption from such
requirements. In
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addition, as described below, if any broker-dealer holds Series A Capital
Securities acquired for its own account as a result of market-making or other
trading activities and exchanges such Series A Capital Securities for Series B
Capital Securities, then such broker-dealer must deliver a prospectus meeting
the requirements of the Securities Act in connection with any resales of such
Series B Capital Securities.
Each holder of Series A Capital Securities who wishes to exchange Series A
Capital Securities for Series B Capital Securities in the Exchange Offer will be
required to represent that (i) it is not an "affiliate" of the Corporation or
the Trust, (ii) any Series B Capital Securities to be received by it are being
acquired in the ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such Series B Capital Securities, and (iv) if
such holder is not a broker-dealer, such holder is not engaged in, and does not
intend to engage in, a distribution (within the meaning of the Securities Act)
of such Series B Capital Securities. In addition, the Corporation and the Trust
may require such holder, as a condition to participation in the Exchange Offer,
to furnish to the Corporation and the Trust (or an agent thereof) in writing
information as to the number of "beneficial owners" (within the meaning of Rule
13d-3 under the Exchange Act) on behalf of whom such holder holds the Series A
Capital Securities to be exchanged in the Exchange Offer. Each broker-dealer
that receives Series B Capital Securities for its own account pursuant to the
Exchange Offer must acknowledge that it acquired the Series A Capital Securities
for its own account as the result of market-making activities or other trading
activities and must agree that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such Series
B Capital Securities. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. Broker-dealers
who acquired Series A Capital Securities for their own accounts as a result of
market-making activities or other trading activities ("Participating
Broker-Dealers") may fulfill their prospectus delivery requirements with respect
to the Series B Capital Securities received upon exchange of such Series A
Capital Securities with a prospectus meeting the requirements of the Securities
Act, which may be this Prospectus, as it may be amended or supplemented from
time to time for a period ending 90 days after the Expiration Date or, if
earlier, when all such Series B Capital Securities have been disposed of by such
Participating Broker-Dealer. See "Plan of Distribution." Any Participating
Broker-Dealer who is an "affiliate" of the Corporation or the Trust and any
Participating Broker-Dealer who purchased the Series A Capital Securities from
the Trust to resell the Series A Capital Securities may not use this Prospectus
and must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction.
In that regard, each Participating Broker-Dealer who surrenders Series A
Capital Securities pursuant to the Exchange Offer will be deemed to have agreed,
by execution of the Letter of Transmittal, or delivery of an Agent's Message in
lieu thereof, that, upon receipt of notice from the Corporation or the Trust of
the occurrence of any event or the discovery of any fact which makes any
statement contained or incorporated by reference in this Prospectus untrue in
any material respect or which causes this Prospectus to omit to state a material
fact necessary in order to make the statements contained or incorporated by
reference herein, in light of the circumstances under which they were made, not
misleading or of the occurrence of certain other events specified in the
Registration Rights Agreement, such Participating Broker-Dealer will suspend the
sale of the Series B Capital Securities pursuant to this prospectus until the
Corporation or the Trust has amended or supplemented this Prospectus to correct
such misstatement or omission and has furnished copies of the amended or
supplemented Prospectus to such Participating Broker-Dealer or the Corporation
or the Trust has given notice that the sale of the Series B Capital Securities
may be resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of the Series A Capital
Securities may be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective, a written, or facsimile
transmission of such notice of withdrawal must be timely received by the
Exchange Agent at one of its addresses set forth under "--Exchange Agent" on or
prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Series A Capital Securities to be withdrawn,
the aggregate liquidation amount of the Series A
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Capital Securities to be withdrawn, and, if certificates for such Series A
Capital Securities have been tendered, the name of the registered holder of the
Series A Capital Securities as set forth on the Series A Capital Securities, if
different from that of the person who tendered such Series A Capital Securities.
If the Series A Capital Securities have been delivered or otherwise identified
to the Exchange Agent, then prior to the physical release of such Series A
Capital Securities, the tendering holder must submit the serial numbers shown on
the particular Series A Capital Securities to be withdrawn and the signature on
the notice of withdrawal must be guaranteed by an Eligible Institution, except
in the case of Series A Capital Securities tendered for the account of an
Eligible Institution. If the Series A Capital Securities have been tendered
pursuant to the procedures for book-entry transfer set forth in "--Procedures
for Tendering Series A Capital Securities," the notice of withdrawal must
specify the name and number of the account at DTC to be credited with the
withdrawal of the Series A Capital Securities, in which case a notice of
withdrawal will be effective if delivered to the Exchange Agent by written or
facsimile transmission. Withdrawals of tenders of the Series A Capital
Securities may not be rescinded. Series A Capital Securities properly withdrawn
will not be deemed validly tendered for purposes of the Exchange Offer, but may
be retendered at any subsequent time on or prior to the Expiration Date by
following any of the procedures described above under "--Procedures for
Tendering Series A Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Corporation and
the Trust, in their sole discretion, whose determination shall be final and
binding on all parties. Neither the Corporation, the Trust, any affiliates or
assigns of the Corporation, the Trust, the Exchange Agent nor any other person
shall be under any duty to give any notification of any irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification. Any Series A Capital Securities which have been tendered but which
are withdrawn will be returned to the holder thereof promptly after withdrawal.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Trust will not be required to accept for
exchange, or to exchange, any Series A Capital Securities for any Series B
Capital Securities, and, as described below, may terminate the Exchange Offer
(whether or not any Series A Capital Securities have theretofore been accepted
for exchange) or may waive any conditions to or amend the Exchange Offer, if any
of the following conditions have occurred or exists or have not been satisfied:
(a) there shall occur a change in the current interpretation by the staff of the
Commission which permits the Series B Capital Securities issued pursuant to
the Exchange Offer in exchange for Series A Capital Securities to be offered
for resale, resold and otherwise transferred by holders thereof (other than
broker-dealers and any such holder which is an "affiliate" of the
Corporation or the Trust within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act provided that such Series B Capital
Securities are acquired in the ordinary course of such holders' business and
such holders have no arrangement or understanding with any person to
participate in the distribution of such Series B Capital Securities; or
(b) any action or proceeding shall have been instituted or threatened in any
court or by or before any governmental agency or body with respect to the
Exchange Offer which, in the Corporation's and the Trust's judgment, would
reasonably be expected to impair the ability of the Corporation or the Trust
to proceed with the Exchange Offer;
(c) any law, statute, rule or regulation shall have been adopted or enacted
which, in the Corporation's and the Trust's judgment, would reasonably be
expected to impair the ability of the Corporation or the Trust to proceed
with the Exchange Offer;
(d) a banking moratorium shall have been declared by United States federal or
Pennsylvania or New York state authorities which, in the Corporation's and
the Trust's judgment, would reasonably be expected to impair the ability of
the Corporation or the Trust to proceed with the Exchange Offer; or
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(e) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement or proceedings shall have been initiated or, to the knowledge of
the Corporation or the Trust, threatened for that purpose, any governmental
approval has not been obtained, which approval the Trust shall, in its sole
discretion, deem necessary for the consummation of the Exchange Offer as
contemplated hereby; or
If the Corporation and the Trust determine in their sole and absolute
discretion that any of the foregoing events or conditions has occurred or exists
or has not been satisfied, the Corporation and the Trust may, subject to
applicable law, terminate the Exchange Offer (whether or not any Series A
Capital Securities have theretofore been accepted for exchange) or may waive any
such condition or otherwise amend the terms of the Exchange Offer in any
respect. If such waiver or amendment constitutes a material change to the
Exchange Offer, the Corporation and the Trust will promptly disclose such waiver
by means of a prospectus supplement that will be distributed to the registered
holders of the Series A Capital Securities, and the Corporation and the Trust
will extend the Exchange Offer to the extent required by Rule 14e-1 under the
Exchange Act.
EXCHANGE AGENT
The Chase Manhattan Bank has been appointed as Exchange Agent for the
Exchange Offer. Delivery of the Letters of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent as follows:
BY REGISTERED OR CERTIFIED MAIL:
------------------------------------------------------
The Chase Manhattan Bank
55 Water Street, Room 234
New York, NY 10041
Attention: Lewis Padilla
(First Western Capital Trust I,
9.875% Capital Securities)
BY OVERNIGHT DELIVERY:
------------------------------------------------------
The Chase Manhattan Bank
55 Water Street, Room 234
New York, NY 10041
Attention: Lewis Padilla
(First Western Capital Trust I,
9.875% Capital Securities)
BY HAND ONLY:
----------------
The Chase Manhattan Bank
55 Water Street, Room 234
New York, NY 10041
(First Western Capital Trust I,
9.875% Capital Securities)
TO CONFIRM BY TELEPHONE OR FOR INFORMATION:
-------------------------------------------------
(212) 638-0458
FACSIMILE TRANSMISSIONS:
---------------------------
(FOR ELIGIBLE INSTITUTIONS ONLY)
(212) 638-7375 or (212) 638-7380
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
The Corporation has agreed to pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith. The Corporation will also pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Prospectus
and related documents to the beneficial owners of Series A Capital Securities,
and in handling or tendering for their customers.
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Holders who tender their Series A Capital Securities for exchange will not
be obligated to pay any transfer taxes in connection therewith. If, however,
Series B Capital Securities are to be delivered to, or are to be issued in the
name of, any person other than the registered holder of the Series A Capital
Securities tendered, or if a transfer tax is imposed for any reason other than
the exchange of Series A Capital Securities in connection with the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other person) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
Neither the Corporation nor the Trust will make any payment to brokers,
dealers or others soliciting acceptances of the Exchange Offer.
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DESCRIPTION OF CAPITAL SECURITIES
The Capital Securities represent beneficial interests in the Trust and the
holders thereof are entitled to a preference over the Common Securities in
certain circumstances with respect to Distributions and amounts payable on
redemption of the Trust Securities or liquidation of the Trust. See
"--Subordination of Common Securities." The Trust Agreement has been qualified
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
This summary of certain provisions of the Capital Securities, the Common
Securities and the Trust Agreement does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all the provisions
of the Trust Agreement, including the definitions therein of certain terms.
GENERAL
The Capital Securities are limited to $25,000,000 aggregate Liquidation
Amount at any one time outstanding including any Series B Capital Securities
that may be issued from time to time in exchange for the Series A Capital
Securities pursuant to the Exchange Offer. See "The Exchange Offer." The Capital
Securities will rank pari passu, and payments will be made thereon pro rata,
with the Common Securities except as described under "--Subordination of Common
Securities." Legal title to the Junior Subordinated Debentures will be held by
the Property Trustee in trust for the benefit of the holders of the Trust
Securities. The Guarantee will not guarantee payment of Distributions or amounts
payable on redemption of the Capital Securities or liquidation of the Trust when
the Trust does not have funds on hand legally available for such payments. See
"Description of Guarantee."
DISTRIBUTIONS
Distributions on the Capital Securities will be cumulative, will accumulate
from February 11, 1997 and will be payable semi-annually in arrears on February
1 and August 1 of each year, commencing August 1, 1997, at the annual rate of
9.875% of the Liquidation Amount to the holders of the Capital Securities on the
relevant record dates. The record dates will be the 15th day of the month
preceding the month in which the relevant Distribution Date (as defined herein)
falls. The amount of Distributions payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. In the event that any date
on which Distributions are payable on the Capital Securities is not a Business
Day (as defined below), payment of the Distribution payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect to any such delay), except that if such next
succeeding Business Day falls in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on such date (each date on which Distributions
are payable in accordance with the foregoing, a "Distribution Date"). A
"Business Day" shall mean any day other than a Saturday or a Sunday, or a day on
which banking institutions in The City of New York or Pittsburgh, Pennsylvania
are authorized or required by law or executive order to remain closed.
So long as no Debenture Event of Default has occurred and is continuing,
the Corporation has the right under the Indenture to defer the payment of
interest on the Junior Subordinated Debentures at any time or from time to time
for a period not exceeding 10 consecutive semi-annual periods with respect to
each Extension Period, provided that no Extension Period shall end on a date
other than an Interest Payment Date or extend beyond the Stated Maturity. Upon
any such election, semi-annual Distributions on the Capital Securities will be
deferred by the Trust during any such Extension Period. Distributions to which
holders of the Capital Securities are entitled during any such Extension Period
will accumulate additional Distributions thereon at the rate per annum of 9.875%
thereof, compounded semi-annually from the relevant Distribution Date, but not
exceeding the interest rate then accruing on the Junior Subordinated Debentures.
The term "Distributions," as used herein, shall include any such additional
Distributions.
Prior to the termination of any such Extension Period, the Corporation may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods, end on
a date other than an Interest Payment Date or extend beyond the Stated Maturity.
Upon the termination of any such Extension Period and the payment of all amounts
then due on any Interest Payment Date, the Corporation may elect to begin a new
Extension Period, subject to the above
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requirements. No interest shall be due and payable during an Extension Period,
except at the end thereof. The Corporation must give the Property Trustee, the
Administrative Trustees and the Debenture Trustee notice of its election of any
such Extension Period (or an extension thereof) at least five Business Days
prior to the earlier of (i) the date the Distributions on the Capital Securities
would have been payable except for the election to begin such Extension Period
or (ii) the date the Administrative Trustees are required to give notice to any
securities exchange or to holders of such Capital Securities of the record date
or the date such Distributions are payable, but in any event not less than five
Business Days prior to such record date. There is no limitation on the number of
times that the Corporation may elect to begin an Extension Period. See
"Description of Junior Subordinated Debentures--Option to Extend Interest
Payment Date" and "Certain Federal Income Tax Consequences--Interest Income and
Original Issue Discount."
During any such Extension Period, the Corporation may not (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock
(other than (a) dividends or distributions in shares of, or options, warrants or
rights to subscribe for or purchase shares of, common stock of the Corporation,
(b) any declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
as a result of a reclassification of the Corporation's capital stock or the
exchange or conversion of one class or series of the Corporation's capital stock
for another class or series of the Corporation's capital stock, (d) the purchase
of fractional interests in shares of the Corporation's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, and (e) purchases of common stock related to the
issuance of common stock or rights under any of the Corporation's benefit plans
for its directors, officers or employees or any of the Corporation's dividend
reinvestment plans), (ii) make any payment of principal of or premium, if any,
or interest on or repay, repurchase or redeem any debt securities of the
Corporation (including Other Debentures) that rank pari passu with or junior in
right of payment to the Junior Subordinated Debentures or (iii) make any
guarantee payments (other than payments under the Guarantee) with respect to any
guarantee by the Corporation of the debt securities of any subsidiary of the
Corporation (including Other Guarantees) if such guarantee ranks pari passu with
or junior in right of payment to the Junior Subordinated Debentures. The
Corporation has no current intention to exercise its option to defer payments of
interest on the Junior Subordinated Debentures.
The revenue of the Trust available for distribution to holders of the
Capital Securities will be limited to payments under the Junior Subordinated
Debentures in which the Trust has invested the proceeds from the issuance and
sale of the Trust Securities. See "Description of Junior Subordinated
Debentures--General." If the Corporation does not make interest payments on the
Junior Subordinated Debentures, the Property Trustee will not have funds
available to pay Distributions on the Capital Securities. The payment of
Distributions (if and to the extent the Trust has funds on hand legally
available for the payment of such Distributions) will be guaranteed by the
Corporation on a limited basis as set forth herein under "Description of
Guarantee."
REDEMPTION
Upon the repayment on the Stated Maturity or prepayment prior to the Stated
Maturity of the Junior Subordinated Debentures, the proceeds from such repayment
or prepayment shall be applied by the Property Trustee to redeem a Like Amount
(as defined below) of the Capital Securities, upon not less than 30 nor more
than 60 days' notice of a date of redemption (the "Redemption Date"), at the
applicable Redemption Price, which shall be equal to (i) in the case of the
repayment of the Junior Subordinated Debentures on the Stated Maturity, the
Maturity Redemption Price (equal to the principal of, and accrued and unpaid
interest on, the Junior Subordinated Debentures), (ii) in the case of the
optional prepayment of the Junior Subordinated Debentures prior to February 1,
2007 upon the occurrence and continuation of a Special Event, the Special Event
Redemption Price (equal to the Special Event Prepayment Price in respect of the
Junior Subordinated Debentures) and (iii) in the case of the optional prepayment
of the Junior Subordinated Debentures on or after February 1, 2007, the Optional
Redemption Price (equal to the Optional Prepayment
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<PAGE> 43
Price in respect of the Junior Subordinated Debentures). See "Description of
Junior Subordinated Debentures--Optional Prepayment" and "--Special Event
Prepayment."
"Like Amount" means (i) with respect to a redemption of the Capital
Securities, Capital Securities having a Liquidation Amount equal to the
principal amount of Junior Subordinated Debentures to be paid in accordance with
their terms and (ii) with respect to a distribution of Junior Subordinated
Debentures upon the liquidation of the Trust, Junior Subordinated Debentures
having a principal amount equal to the Liquidation Amount of the Capital
Securities of the holder to whom such Junior Subordinated Debentures are
distributed.
The Corporation has the option to prepay the Junior Subordinated
Debentures, (i) in whole or in part, on or after February 1, 2007, at the
applicable Optional Prepayment Price and (ii) in whole but not in part, at any
time prior to February 1, 2007, upon the occurrence of a Special Event, at the
Special Event Prepayment Price, in each case subject to receipt of prior
approval by the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve and the receipt of any other
required regulatory approval. See "Description of Junior Subordinated
Debentures--Optional Prepayment" and "--Special Event Prepayment."
LIQUIDATION OF THE TRUST AND DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
The Corporation has the right at any time to terminate the Trust and cause
the Junior Subordinated Debentures to be distributed to the holders of the Trust
Securities in liquidation of the Trust. Such right is subject to (i) the
Corporation having received an opinion of counsel to the effect that such
distribution will not be a taxable event to holders of Capital Securities and
(ii) the prior approval of the Federal Reserve if then required under applicable
capital guidelines or policies of the Federal Reserve and the receipt of any
other required regulatory approval.
The Trust shall automatically terminate upon the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Corporation;
(ii) the distribution of a Like Amount of the Junior Subordinated Debentures to
the holders of the Capital Securities, if the Corporation, as Sponsor, has given
written direction to the Property Trustee to terminate the Trust (which
direction is optional and, except as described above, wholly within the
discretion of the Corporation, as Sponsor); (iii) redemption of all of the
Capital Securities as described under "--Redemption"; (iv) expiration of the
term of the Trust; and (v) the entry of an order for the dissolution of the
Trust by a court of competent jurisdiction.
If a termination occurs as described in clause (i), (ii), (iv), or (v)
above, the Trust shall be liquidated by the Issuer Trustees as expeditiously as
the Issuer Trustees determine to be possible by distributing, after satisfaction
of liabilities to creditors of the Trust as provided by applicable law, to the
holders of the Capital Securities a Like Amount of the Junior Subordinated
Debentures, unless such distribution is determined by the Property Trustee not
to be practicable, in which event such holders will be entitled to receive out
of the assets of the Trust legally available for distribution to holders, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, an amount equal to the aggregate of the Liquidation Amount plus accumulated
and unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid only
in part because the Trust has insufficient assets on hand legally available to
pay in full the aggregate Liquidation Distribution or if a Debenture Event of
Default has occurred and is continuing, the Capital Securities shall have a
priority over the Common Securities. See "--Subordination of Common Securities."
If the Corporation elects not to prepay the Junior Subordinated Debentures
prior to maturity in accordance with their terms and either elects not to or is
unable to liquidate the Trust and distribute the Junior Subordinated Debentures
to holders of the Capital Securities, the Capital Securities will remain
outstanding until the repayment of the Junior Subordinated Debentures on the
Stated Maturity.
After the liquidation date is fixed for any distribution of Junior
Subordinated Debentures to holders of the Capital Securities, (i) the Capital
Securities will no longer be deemed to be outstanding, (ii) DTC or its nominee
will receive, in respect of each registered global certificate, if any,
representing Capital Securities and
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held by it, a registered global certificate or certificates representing the
Junior Subordinated Debentures to be delivered upon such distribution and (iii)
any certificates representing Capital Securities not held by DTC or its nominee
will be deemed to represent Junior Subordinated Debentures having a principal
amount equal to the Liquidation Amount of such Capital Securities, and bearing
accrued and unpaid interest in an amount equal to the accumulated and unpaid
Distributions on such Capital Securities until such certificates are presented
to the Administrative Trustees or their agent for cancellation, whereupon the
Corporation will issue to such holder, and the Debenture Trustee will
authenticate, a certificate representing such Junior Subordinated Debentures.
REDEMPTION PROCEDURES
If applicable, Capital Securities shall be redeemed at the applicable
Redemption Price with the proceeds from the contemporaneous repayment or
prepayment of the Junior Subordinated Debentures. Any redemption of Capital
Securities shall be made and the applicable Redemption Price shall be payable on
the Redemption Date only to the extent that the Trust has funds legally
available for the payment of such applicable Redemption Price. See also
"--Subordination of Common Securities."
If the Trust gives a notice of redemption in respect of the Capital
Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to
the extent funds are legally available, with respect to the Capital Securities
held by DTC or its nominees, the Property Trustee will deposit irrevocably with
DTC funds sufficient to pay the applicable Redemption Price. See "--Form,
Denomination, Book-Entry Procedures and Transfer." With respect to the Capital
Securities held in certificated form, the Property Trustee, to the extent funds
are legally available, will irrevocably deposit with the paying agent for the
Capital Securities funds sufficient to pay the applicable Redemption Price and
will give such paying agent irrevocable instructions and authority to pay the
applicable Redemption Price to the holders thereof upon surrender of their
certificates evidencing the Capital Securities. See "--Payment and Paying
Agency." Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date shall be payable to the holders of such Capital Securities on
the relevant record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required, then upon the
date of such deposit, all rights of the holders of the Capital Securities will
cease, except the right of the holders of the Capital Securities to receive the
applicable Redemption Price, but without interest on such Redemption Price, and
the Capital Securities will cease to be outstanding. In the event that any
Redemption Date of Capital Securities is not a Business Day, then the applicable
Redemption Price payable on such date will be paid on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such next succeeding Business Day falls in the
next calendar year, such payment shall be made on the immediately preceding
Business Day. In the event that payment of the applicable Redemption Price is
improperly withheld or refused and not paid either by the Trust or by the
Corporation pursuant to the Guarantee as described under "Description of
Guarantee," Distributions on Capital Securities will continue to accumulate at
the then applicable rate, from the Redemption Date originally established by the
Trust to the date such applicable Redemption Price is actually paid, in which
case the actual payment date will be the Redemption Date for purposes of
calculating the applicable Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Corporation or its subsidiaries may at any time and
from time to time purchase outstanding Capital Securities by tender, in the open
market or by private agreement.
If less than all of the Capital Securities and Common Securities issued by
the Trust are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of the Capital Securities and Common Securities to be
redeemed shall be allocated pro rata to the Capital Securities and the Common
Securities based upon the relative Liquidation Amounts of such classes. The
particular Capital Securities to be redeemed shall be selected not more than 60
days prior to the Redemption Date by the Property Trustee from the outstanding
Capital Securities not previously called for redemption, by such method as the
Property Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to $1,000 or an integral multiple of
$1,000 in excess thereof) of the Liquidation Amount of the Capital Securities of
a denomination larger than $1,000. The Property Trustee shall promptly notify
the trust registrar
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in writing of the Capital Securities selected for redemption and, in the case of
the Capital Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of the Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of the
Capital Securities shall relate, in the case of the Capital Securities redeemed
or to be redeemed only in part, to the portion of the aggregate Liquidation
Amount of the Capital Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days prior to the Redemption Date to each holder of Capital Securities at its
registered address. Unless the Corporation defaults in payment of the applicable
Redemption Price on, or in the repayment of, the Junior Subordinated Debentures,
on and after the Redemption Date Distributions will cease to accrue on the
Capital Securities called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Capital
Securities and the Common Securities, as applicable, shall be made pro rata
based on the Liquidation Amount of the Capital Securities and the Common
Securities; provided, however, that if on any Distribution Date or Redemption
Date a Debenture Event of Default shall have occurred and be continuing, no
payment of any Distribution on, or applicable Redemption Price of, any of the
Common Securities, and no other payment on account of the redemption,
liquidation or other acquisition of the Common Securities, shall be made unless
payment in full in cash of all accumulated and unpaid Distributions on all of
the outstanding Capital Securities for all Distribution periods terminating on
or prior thereto, or in the case of payment of the applicable Redemption Price
the full amount of such Redemption Price, shall have been made or provided for,
and all funds available to the Property Trustee shall first be applied to the
payment in full in cash of all Distributions on, or Redemption Price of, the
Capital Securities then due and payable.
In the case of any Event of Default, the Corporation as holder of the
Common Securities will be deemed to have waived any right to act with respect to
such Event of Default until the effect of such Event of Default shall have been
cured, waived or otherwise eliminated. Until any such Event of Default has been
so cured, waived or otherwise eliminated, the Property Trustee shall act solely
on behalf of the holders of the Capital Securities and not on behalf of the
Corporation as holder of the Common Securities, and only the holders of the
Capital Securities will have the right to direct the Property Trustee to act on
their behalf.
EVENTS OF DEFAULT; NOTICE
The occurrence of a Debenture Event of Default (see "Description of Junior
Subordinated Debentures--Debenture Events of Default") constitutes an "Event of
Default" under the Trust Agreement.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of the Capital Securities, the
Administrative Trustees and the Corporation, as Sponsor, unless such Event of
Default shall have been cured or waived. The Corporation, as Sponsor, and the
Administrative Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the Capital
Securities shall have a preference over the Common Securities as described under
"--Liquidation of the Trust and Distribution of Junior Subordinated Debentures"
and "--Subordination of Common Securities."
REMOVAL OF ISSUER TRUSTEES
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in Liquidation Amount of the outstanding Capital
Securities. In no event will the holders of the Capital Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
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voting rights are vested exclusively in the Corporation as the holder of the
Common Securities. No resignation or removal of an Issuer Trustee and no
appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
Trust Agreement.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any corporation into which the Property Trustee, the Delaware Trustee or
any Administrative Trustee that is not a natural person may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Issuer Trustee shall
be a party, or any corporation succeeding to all or substantially all the
corporate trust business of such Issuer Trustee, shall be the successor of such
Issuer Trustee under the Trust Agreement, provided such corporation shall be
otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any corporation or other Person,
except as described below. The Trust may, at the request of the Corporation, as
Sponsor, with the consent of the Administrative Trustees but without the consent
of the holders of the Capital Securities, merge with or into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to a trust organized as
such under the laws of any State; provided, that (i) such successor entity
either (a) expressly assumes all of the obligations of the Trust with respect to
the Trust Securities or (b) substitutes for the Trust Securities other
securities having substantially the same terms as the Trust Securities (the
"Successor Securities") so long as the Successor Securities rank the same as the
Trust Securities rank in priority with respect to distributions and payments
upon liquidation, redemption and otherwise, (ii) the Corporation expressly
appoints a trustee of such successor entity possessing the same powers and
duties as the Property Trustee with respect to the Junior Subordinated
Debentures, (iii) the Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or other organization on which the Trust Securities are then
listed or quoted, if any, (iv) if the Capital Securities (including any
Successor Securities) are rated by any nationally recognized statistical rating
organization prior to such transaction, such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Capital Securities (including any Successor Securities) or, if the Junior
Subordinated Debentures are so rated, the Junior Subordinated Debentures, to be
downgraded by any such nationally recognized statistical rating organization,
(v) such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not adversely affect the rights, preferences and privileges of the
holders of the Trust Securities (including any Successor Securities) in any
material respect, (vi) such successor entity has a purpose identical to that of
the Trust, (vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Corporation has received an opinion from
independent counsel to the Trust experienced in such matters to the effect that
(a) such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not adversely affect the rights, preferences and privileges of the
holders of the Trust Securities (including any Successor Securities) in any
material respect, and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor such successor
entity will be required to register as an investment company under the
Investment Company Act of 1940, as amended (the "Investment Company Act"), and
(viii) the Corporation or any permitted successor or assignee owns all of the
common securities of such successor entity and guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Capital Securities Guarantee and the Common Guarantee.
Notwithstanding the foregoing, the Trust shall not, except with the consent of
holders of 100% in Liquidation Amount of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by or convey, transfer or lease
its properties and assets as an entirety or substantially as an entirety to, any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Trust or the successor entity not
to be classified as a grantor trust for United States federal income tax
purposes.
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VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "--Mergers, Consolidations,
Amalgamations or Replacements of the Trust" and "Description of
Guarantee--Amendments and Assignment" and as otherwise required by law and the
Trust Agreement, the holders of the Capital Securities will have no voting
rights.
The Trust Agreement may be amended from time to time by the Corporation,
the Property Trustee and the Administrative Trustees, without the consent of the
holders of the Trust Securities (i) to cure any ambiguity, correct or supplement
any provisions in the Trust Agreement that may be inconsistent with any other
provision, or to make any other provisions with respect to matters or questions
arising under the Trust Agreement, which shall not be inconsistent with the
other provisions of the Trust Agreement, or (ii) to modify, eliminate or add to
any provisions of the Trust Agreement to such extent as shall be necessary to
ensure that the Trust will be classified for United States federal income tax
purposes as a grantor trust at all times that any Trust Securities are
outstanding or to ensure that the Trust will not be required to register as an
"investment company" under the Investment Company Act; provided, however, that
in the case of clause (i), such action shall not adversely affect in any
material respect the interests of the holders of the Trust Securities, and any
amendments of the Trust Agreement shall become effective when notice thereof is
given to the holders of the Trust Securities. The Trust Agreement may be amended
by the Issuer Trustees and the Corporation (i) with the consent of holders
representing a majority (based upon Liquidation Amount) of the outstanding Trust
Securities, and (ii) upon receipt by the Issuer Trustees of an opinion of
counsel experienced in such matters to the effect that such amendment or the
exercise of any power granted to the Issuer Trustees in accordance with such
amendment will not affect the Trust's status as a grantor trust for United
States federal income tax purposes or the Trust's exemption from status as an
"investment company" under the Investment Company Act, provided that, without
the consent of each holder of Trust Securities, the Trust Agreement may not be
amended to (i) change the amount or timing of any Distribution on the Trust
Securities or otherwise adversely affect the amount of any Distribution required
to be made in respect of the Trust Securities as of a specified date or (ii)
restrict the right of a holder of Trust Securities to institute suit for the
enforcement of any such payment on or after such date.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Issuer Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
exercising any trust or power conferred on such Property Trustee with respect to
the Junior Subordinated Debentures, (ii) waive certain past defaults under the
Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Junior Subordinated
Debentures or (iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the holders of
a majority in Liquidation Amount of all outstanding Capital Securities;
provided, however, that where a consent under the Indenture would require the
consent of each holder of Junior Subordinated Debentures affected thereby, no
such consent shall be given by the Property Trustee without the prior approval
of each holder of the Capital Securities. The Issuer Trustees shall not revoke
any action previously authorized or approved by a vote of the holders of the
Capital Securities except by subsequent vote of such holders. The Property
Trustee shall notify each holder of Capital Securities of any notice of default
with respect to the Junior Subordinated Debentures. In addition to obtaining the
foregoing approvals of such holders of the Capital Securities, prior to taking
any of the foregoing actions, the Issuer Trustees shall obtain an opinion of
counsel experienced in such matters to the effect that the Trust will not be
classified as an association taxable as a corporation for United States federal
income tax purposes on account of such action.
Any required approval of holders of Capital Securities may be given at a
meeting of such holders convened for such purpose or pursuant to written
consent. The Property Trustee will cause a notice of any meeting at which
holders of Capital Securities are entitled to vote, or of any matter upon which
action by written consent of such holders is to be taken, to be given to each
holder of record of Capital Securities in the manner set forth in the Trust
Agreement.
No vote or consent of the holders of Capital Securities will be required
for the Trust to redeem and cancel the Capital Securities in accordance with the
Trust Agreement.
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Notwithstanding that holders of the Capital Securities are entitled to vote
or consent under any of the circumstances described above, any of the Capital
Securities that are owned by the Corporation, the Issuer Trustees or any
affiliate of the Corporation or any Issuer Trustees, shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
FORM, DENOMINATION, BOOK-ENTRY PROCEDURES AND TRANSFER
In the event that Capital Securities are issued in certificated form, such
Capital Securities will be in blocks having a Liquidation Amount of not less
than $100,000 (100 Capital Securities) and may be transferred or exchanged in
such blocks in the manner and at the offices described below.
The Series B Capital Securities initially will be represented by one or
more Capital Securities in registered, global form (collectively, the "Global
Capital Securities"). The Global Capital Securities will be deposited upon
issuance with the Property Trustee as custodian for DTC, in New York, New York,
and registered in the name of DTC or its nominee, in each case for credit to an
account of a direct or indirect participant in DTC as described below.
Except as set forth below, the Global Capital Securities may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee. Beneficial interests in the Global Capital
Securities may not be exchange for Capital Securities in certificated form
except in the limited circumstances described below. See "--Exchange of
Book-Entry Capital Securities for Certificated Capital Securities."
DEPOSITARY PROCEDURES
DTC has advised the Trust and the Corporation that DTC is a limited-purpose
trust company created to hold securities for its participating organizations
(collectively, the "Participants") and to facilitate the clearance and
settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of its Participants. The Participants
include securities brokers and dealers (including the Initial Purchaser), banks,
trust companies, clearing corporations and certain other organizations. Access
to DTC's system is also available to other entities such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interest and transfer of ownership interest
of each actual purchaser of each security held by or on behalf of DTC are
recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Trust and the Corporation that, pursuant to
procedures established by it, (i) upon deposit of the Global Capital Securities,
DTC will credit the accounts of Participants designated by the Initial Purchaser
with portions of the Liquidation Amount of the Global Capital Securities and
(ii) ownership of such interests in the Global Capital Securities will be shown
on, and the transfer of ownership thereof will be effected only through, records
maintained by DTC (with respect to the Participants) or by the Participants and
the Indirect Participants (with respect to other owners of beneficial interests
in the Global Capital Securities).
Investors in the Global Capital Securities may hold their interests therein
directly through DTC if they are Participants, or indirectly through
organizations that are Participants. All interests in a Global Capital Security
may be subject to the procedures and requirements of DTC. The laws of some
states require that certain persons take physical delivery in certificated form
of securities that they own. Consequently, the ability to transfer beneficial
interests in a Global Capital Security to such persons will be limited to that
extent. Because DTC can act only on behalf of Participants, which in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having beneficial interests in a Global Capital Security to pledge such
interests to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interests, may be affected by the lack
of a physical certificate evidencing such interests. For certain other
restrictions on the transferability of the Capital Securities, see "--Exchange
of Book-Entry Capital Securities for Certificated Capital Securities" and
"--Exchange of Certificated Capital Securities for Book-Entry Capital
Securities."
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Except as described below, owners of interests in the Global Capital
Securities will not have Capital Securities registered in their name, will not
receive physical delivery of Capital Securities in certificated form and will
not be considered the registered owners or holders thereof under the Trust
Agreement for any purpose.
Payments in respect of the Global Capital Security registered in the name
of DTC or its nominee will be payable by the Property Trustee to DTC in its
capacity as the registered holder under the Trust Agreement. Under the terms of
the Trust Agreement, the Property Trustee will treat the persons in whose names
the Capital Securities, including the Global Capital Securities, are registered
as the owners thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. Consequently, neither the Property Trustee nor
any agent thereof has or will have any responsibility or liability for (i) any
aspect of DTC's records or any Participant's or Indirect Participant's records
relating to or payments made on account of beneficial ownership interests in the
Global Capital Securities, or for maintaining, supervising or reviewing any of
DTC's records or any Participant's or Indirect Participant's records relating to
the beneficial ownership interests in the Global Capital Securities or (ii) any
other matter relating to the actions and practices of DTC or any of its
Participants or Indirect Participants. DTC has advised the Trust and the
Corporation that its current practice, upon receipt of any payment in respect of
securities such as the Capital Securities, is to credit the accounts of the
relevant Participants with the payment on the payment date, in amounts
proportionate to their respective holdings in Liquidation Amount of beneficial
interests in the relevant security as shown on the records of DTC unless DTC has
reason to believe it will not receive payment on such payment date. Payments by
the Participants and the Indirect Participants to the beneficial owners of
Capital Securities will be governed by standing instructions and customary
practices and will be the responsibility of the Participants or the Indirect
Participants and will not be the responsibility of DTC, the Property Trustee,
the Trust or the Corporation. Neither the Trust or the Corporation nor the
Property Trustee will be liable for any delay by DTC or any of its Participants
in identifying the beneficial owners of the Capital Securities, and the Trust or
the Corporation and the Property Trustee may conclusively rely on and will be
protected in relying on instructions from DTC or its nominee for all purposes.
Secondary market trading activity in interests in the Global Capital
Securities will settle in immediately available funds, subject in all cases to
the rules and procedures of DTC and its participants. Transfers between
Participants in DTC will be effected in accordance with DTC's procedures, and
will settle in same-day funds.
DTC has advised the Trust and the Corporation that it will take any action
permitted to be taken by a holder of Capital Securities only at the direction of
one or more Participants to whose account with DTC interests in the Global
Capital Securities are credited and only in respect of such portion of the
Liquidation Amount of the Capital Securities as to which such Participant or
Participants has or have given such direction. However, if there is an Event of
Default under the Trust Agreement, DTC reserves the right to exchange the Global
Capital Securities for legended Capital Securities in certificated form and to
distribute such Capital Securities to its Participants.
The information in this section concerning DTC and its book-entry system
has been obtained from sources that the Trust and the Corporation believe to be
reliable, but neither the Trust nor the Corporation takes responsibility for the
accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the Global Capital Securities among Participants in DTC, it is
under no obligation to perform or to continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Trust or the
Corporation nor the Property Trustee will have any responsibility for the
performance by DTC or its Participants or Indirect Participants of its
obligations under the rules and procedures governing its operations.
EXCHANGE OF BOOK-ENTRY CAPITAL SECURITIES FOR CERTIFICATED CAPITAL SECURITIES
A Global Capital Security is exchangeable for Capital Securities in
registered certificated form if (i) DTC (x) notifies the Trust that it is
unwilling or unable to continue as Depositary for the Global Capital Security
and the Trust thereupon fails to appoint a successor Depositary within 90 days
or (y) has ceased to be a clearing agency registered under the Exchange Act,
(ii) the Corporation in its sole discretion elects to cause
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the issuance of the Capital Securities in certificated form or (iii) there shall
have occurred and be continuing an Event of Default or any event which after
notice or lapse of time or both would be an Event of Default under the Trust
Agreement. In addition, beneficial interests in a Global Capital Security may be
exchanged for certificated Capital Securities upon request but only upon at
least 20 days prior written notice given to the Property Trustee by or on behalf
of DTC in accordance with customary procedures. In all cases, certificated
Capital Securities delivered in exchange for any Global Capital Security or
beneficial interests therein will be registered in the names, and issued in any
approved denominations, requested by or on behalf of the Depositary (in
accordance with its customary procedures) and will bear the legend required, if
any, by the Trust Agreement unless the Property Trustee determines otherwise in
compliance with applicable law.
EXCHANGE OF CERTIFICATED CAPITAL SECURITIES FOR BOOK-ENTRY CAPITAL SECURITIES
Capital Securities which are issued in certificated form may not be
exchanged for beneficial interests in any Global Capital Security unless such
exchange occurs in connection with a transfer of such Certificated Capital
Securities and the transferor first delivers to the Property Trustee a written
certificate (in the form provided in the Trust Agreement) to the effect that
such transfer will comply with the appropriate transfer restrictions applicable
to such Capital Securities, if any, and written instructions directing the
Property Trustee to make, or to direct the Clearing Agency to make, an
adjustment on its books and records with respect to the appropriate Global
Capital Security to reflect an increase in the number of Capital Securities
represented by such Global Capital Security.
PAYMENT AND PAYING AGENCY
Payments in respect of the Capital Securities held in global form shall be
made to the Depositary, which shall credit the relevant accounts at the
Depositary on the applicable Distribution Dates or in respect of the Capital
Securities that are not held by the Depositary, such payments shall be made by
check mailed to the address of the holder entitled thereto as such address shall
appear on the register. The paying agent (the "Paying Agent") shall initially be
the Property Trustee and any co-paying agent chosen by the Property Trustee and
acceptable to the Administrative Trustees and the Corporation. The Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee and the Corporation. In the event that the Property Trustee
shall no longer be the Paying Agent, the Administrative Trustees shall appoint a
successor (which shall be a bank or trust company acceptable to the
Administrative Trustees and the Corporation) to act as Paying Agent.
RESTRICTIONS ON TRANSFER
The Capital Securities will be issued, and may be transferred, only in
blocks having a Liquidation Amount of not less than $100,000 (100 Capital
Securities). Any such transfer of Capital Securities in a block having a
Liquidation Amount of less than $100,000 shall be deemed to be void and of no
legal effect whatsoever. Any such transferee shall be deemed not to be the
holder of such Capital Securities for any purpose, including but not limited to
the receipt of Distributions on such Capital Securities, and such transferee
shall be deemed to have no interest whatsoever in such Capital Securities.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the
Capital Securities.
Registration of transfers of the Capital Securities will be effected
without charge by or on behalf of the Trust, but upon payment of any tax or
other governmental charges that may be imposed in connection with any transfer
or exchange. The Trust will not be required to register or cause to be
registered the transfer of the Capital Securities after they have been called
for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of
an Event of Default, undertakes to perform only such duties as are specifically
set forth in the Trust Agreement and, after such
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Event of Default, must exercise the same degree of care and skill as a prudent
person would exercise or use in the conduct of his or her own affairs. Subject
to this provision, the Property Trustee is under no obligation to exercise any
of the powers vested in it by the Trust Agreement at the request of any holder
of Trust Securities unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby. If no Event of Default
has occurred and is continuing and the Property Trustee is required to decide
between alternative causes of action, construe ambiguous provisions in the Trust
Agreement or is unsure of the application of any provision of the Trust
Agreement, and the matter is not one on which holders of the Capital Securities
or the Common Securities are entitled under the Trust Agreement to vote, then
the Property Trustee shall take such action as is directed by the Corporation
and if not so directed, shall take such action as it deems advisable and in the
best interests of the holders of the Trust Securities and will have no liability
except for its own bad faith, negligence or willful misconduct.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that the Trust will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a corporation
for United States federal income tax purposes and so that the Junior
Subordinated Debentures will be treated as indebtedness of the Corporation for
United States federal income tax purposes. In this connection, the Corporation
and the Administrative Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of the Trust or the
Trust Agreement, that the Corporation and the Administrative Trustees determine
in their discretion to be necessary or desirable for such purposes, as long as
such action does not materially adversely affect the interests of the holders of
the Trust Securities.
Holders of the Trust Securities have no preemptive or similar rights.
The Trust may not borrow money, issue debt, execute mortgages or pledge any
of its assets.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Series A Junior Subordinated Debentures were issued and the Series B
Junior Subordinated Debentures will be issued as a separate series under the
Indenture, as supplemented from time to time (as so supplemented, the
"Indenture"), between the Corporation and The Chase Manhattan Bank, as trustee
(the "Debenture Trustee"). The Indenture has been qualified under the Trust
Indenture Act. This summary of certain terms and provisions of the Junior
Subordinated Debentures and the Indenture does not purport to be complete, and
where reference is made to particular provisions of the Indenture, such
provisions, including the definitions of certain terms, some of which are not
otherwise defined herein, are qualified in their entirety by reference to all of
the provisions of the Indenture and those terms made a part of the Indenture by
the Trust Indenture Act.
GENERAL
Concurrently with the issuance of the Capital Securities, the Trust
invested the proceeds thereof, together with the consideration paid by the
Corporation for the Common Securities, in Series A Junior Subordinated
Debentures issued by the Corporation which, pursuant to the Exchange Offer, will
be exchanged for Series B Junior Subordinated Debentures. The Junior
Subordinated Debentures will bear interest from February 11, 1997 at the annual
rate of 9.875% of the principal amount thereof, payable semi-annually in arrears
on February 1 and August 1 of each year (each, an "Interest Payment Date"),
commencing August 1, 1997, to the person in whose name each Junior Subordinated
Debenture is registered, subject to certain exceptions, at the close of business
on the 15th day of the month preceding the month in which the relevant payment
date falls. It is anticipated that, until the liquidation, if any, of the Trust,
each Junior Subordinated Debenture will be held in the name of the Property
Trustee in trust for the benefit of the holders of the Trust Securities. The
amount of interest payable for any period will be computed on the basis of a
360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Junior Subordinated Debentures is not a Business Day,
then payment of the interest payable on such date will be made on the next
succeeding day that
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is a Business Day (and without any interest or other payment in respect of any
such delay), except that if such next succeeding Business Day falls in the next
succeeding calendar year, then such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. Accrued interest that is not paid on the applicable Interest
Payment Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate per annum of 9.875% thereof, compounded semi-
annually. The term "interest," as used herein, shall include semi-annual
interest payments, interest on semi-annual interest payments not paid on the
applicable Interest Payment Date and Additional Sums (as defined below), as
applicable.
The Series A Junior Subordinated Debentures were, and the Series B Junior
Subordinated Debentures will be, issued in denominations of $1,000 and integral
multiples thereof. The Junior Subordinated Debentures will mature on February 1,
2027 (the "Stated Maturity").
The Junior Subordinated Debentures will rank pari passu with all Other
Debentures and will be unsecured and subordinate and junior in right of payment
to all Senior Indebtedness to the extent and in the manner set forth in the
Indenture. See "--Subordination."
The Corporation is a holding company and almost all of the operating assets
of the Corporation are owned by the Corporation's Subsidiaries. The Corporation
is a legal entity separate and distinct from its Subsidiaries. Holders of Junior
Subordinated Debentures should look only to the Corporation for payments on the
Junior Subordinated Debentures. The principal sources of the Corporation's
income are dividends, interest and fees from its Subsidiaries. The Corporation
relies primarily on service fees and dividends from such Subsidiaries to meet
its obligations for payment of principal and interest on its outstanding debt
obligations and corporate expenses. The Banks are subject to certain
restrictions imposed by federal law on any extensions of credit to, and certain
other transactions with, the Corporation and certain other affiliates, and on
investments in stock or other securities thereof. Such restrictions prevent the
Corporation and such other affiliates from borrowing from the Banks unless the
loans are secured by various types of collateral. Further, such secured loans,
other transactions and investments by any of the Banks are generally limited in
amount as to the Corporation and as to each of such other affiliates to 10% of
such Bank's capital and surplus and as to the Corporation and all of such other
affiliates to an aggregate of 20% of such Bank's capital and surplus. In
addition, there are regulatory limitations on the payment of dividends directly
or indirectly to the Corporation from the Banks. As of March 31, 1997, under OCC
regulations, the total capital available for payment of dividends by First
Western Bank, N.A. to the Corporation was approximately $14.9 million, and under
OTS regulations, the total capital available for payment of dividends by First
Western Bank, F.S.B. to the Corporation was approximately $6.6 million, for a
total of approximately $21.5 million. However, the OCC and OTS have the power to
prohibit any act, including the payment of dividends, if such act would reduce
bank capital to a point that, in their opinion, would render the bank
undercapitalized and thus constitute an unsafe or unsound banking practice.
Because the Corporation is a holding company, the right of the Corporation
to participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability of
holders of the Capital Securities to benefit indirectly from such distribution),
is subject to the prior claims of creditors of that subsidiary (including
depositors, in the case of the Banks), except to the extent the Corporation may
itself be recognized as a creditor of that subsidiary. At March 31, 1997, the
Subsidiaries of the Corporation had total liabilities (excluding liabilities
owed to the Corporation) of $1.565 billion. Accordingly, the Junior Subordinated
Debentures will be effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries (including the Subsidiaries'
deposit liabilities) and all liabilities of any future subsidiaries of the
Corporation. The Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of the Corporation or any subsidiary, including Senior
Indebtedness. See "--Subordination."
DISTRIBUTION OF THE JUNIOR SUBORDINATED DEBENTURES
As described under "Description of the Capital Securities--Liquidation of
the Trust and Distribution of the Junior Subordinated Debentures to Holders,"
under certain circumstances involving the termination of the
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Trust, Junior Subordinated Debentures may be distributed to the holders of the
Capital Securities in exchange therefor upon liquidation of the Trust, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law. If distributed to holders of the Capital Securities in liquidation, the
Junior Subordinated Debentures will initially be issued in the form of one or
more global securities and DTC, or any successor depositary for the Capital
Securities, will act as depositary for the Junior Subordinated Debentures. It is
anticipated that the depositary arrangements for the Junior Subordinated
Debentures would be substantially identical to those in effect for the Capital
Securities. If the Junior Subordinated Debentures are distributed to the holders
of the Capital Securities upon the liquidation of the Trust, the Corporation
will use its best efforts to register or list the Junior Subordinated Debentures
with DTC or such other trading facilities, if any, on which the Capital
Securities are then listed. There can be no assurance as to the market price of
any Junior Subordinated Debentures that may be distributed to the holders of the
Capital Securities.
PAYMENT AND PAYING AGENTS
Payment of principal of (and premium, if any) and interest on Junior
Subordinated Debentures will be made at the office of the Debenture Trustee in
The City of New York or at the office of such Paying Agent or Paying Agents as
the Corporation may designate from time to time, except that at the option of
the Corporation payment of any interest may be made, except in the case of
Junior Subordinated Debentures in global form, (i) by check mailed to the
address of the Person entitled thereto as such address shall appear in the
register for Junior Subordinated Debentures or (ii) by transfer to an account
maintained by the Person entitled thereto as specified in such register,
provided that proper transfer instructions have been received by the relevant
Record Date. Payment of any interest on any Junior Subordinated Debenture will
be made to the Person in whose name such Junior Subordinated Debenture is
registered at the close of business on the Record Date for such interest, except
in the case of defaulted interest. The Corporation may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent; however
the Corporation will at all times be required to maintain a Paying Agent in each
place of payment for the Junior Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any Paying Agent, or
then held by the Corporation in trust, for the payment of the principal of (and
premium, if any) or interest on any Junior Subordinated Debenture and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall, at the request of the Corporation, be repaid
to the Corporation and the holder of such Junior Subordinated Debenture shall
thereafter look, as a general unsecured creditor, only to the Corporation for
payment thereof.
OPTION TO EXTEND INTEREST PAYMENT DATE
So long as no Debenture Event of Default has occurred and is continuing,
the Corporation has the right under the Indenture at any time and from time to
time during the term of the Junior Subordinated Debentures to defer the payment
of interest for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period shall end on
a date other than an Interest Payment Date or extend beyond the Stated Maturity.
At the end of such Extension Period, the Corporation must pay all interest then
accrued and unpaid (together with interest thereon at the annual rate of 9.875%,
compounded semi-annually, to the extent permitted by applicable law ("Compounded
Interest")). During an Extension Period, interest will continue to accrue and
holders of Junior Subordinated Debentures (and holders of the Trust Securities
while Trust Securities are outstanding) will be required to accrue such deferred
interest income for United States federal income tax purposes prior to the
receipt of cash attributable to such income. See "Certain Federal Income Tax
Consequences--Interest Income and Original Issue Discount."
During any such Extension Period, the Corporation may not (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock or
(ii) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Corporation (including any Other
Debentures) that rank pari passu with or junior in right of payment to the
Junior Subordinated Debentures or (iii) make any guarantee payments with respect
to any guarantee by the Corporation of the debt securities of any subsidiary of
the
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Corporation (including any Other Guarantees) if such guarantee ranks pari passu
with or junior in right of payment to the Junior Subordinated Debentures (other
than (a) dividends or distributions in shares of, or options, warrants or rights
to subscribe for or purchase shares of, common stock of the Corporation, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Guarantee, (d) as a result of a reclassification of the
Corporation's capital stock or the exchange or conversion of one class or series
of the Corporation's capital stock for another class or series of the
Corporation's capital stock, (e) the purchase of fractional interests in shares
of the Corporation's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
and (f) purchases of common stock related to the issuance of common stock or
rights under any of the Corporation's benefit plans for its directors, officers
or employees or any of the Corporation's dividend reinvestment plans).
Prior to the termination of any such Extension Period, the Corporation may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods, end on
a date other than an Interest Payment Date or extend beyond the Stated Maturity.
Upon the termination of any such Extension Period and the payment of all amounts
then due on any Interest Payment Date, the Corporation may elect to begin a new
Extension Period, subject to the above requirements. No interest shall be due
and payable during an Extension Period, except at the end thereof. The
Corporation must give the Property Trustee, the Administrative Trustees and the
Debenture Trustee notice of its election of any Extension Period (or an
extension thereof) at least five Business Days prior to the earlier of (i) the
date the Distributions on the Capital Securities would have been payable except
for the election to begin or extend such Extension Period or (ii) the date the
Administrative Trustees are required to give notice to any securities exchange
or to holders of Capital Securities of the record date or the date such
Distributions are payable, but in any event not less than five Business Days
prior to such record date. The Debenture Trustee shall give notice of the
Corporation's election to begin or extend a new Extension Period to the holders
of the Capital Securities. Except as described above, there is no limitation on
the number of times that the Corporation may elect to begin an Extension Period.
OPTIONAL PREPAYMENT
The Junior Subordinated Debentures will be prepayable, in whole or in part,
at the option of the Corporation on or after February 1, 2007 (the "Initial
Optional Prepayment Date"), subject to the Corporation having received prior
approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve and having received any other
required regulatory approval, at a prepayment price (the "Optional Prepayment
Price") equal to the percentage of the outstanding principal amount of the
Junior Subordinated Debentures specified below, plus, in each case, accrued and
unpaid interest thereon to the date of prepayment if redeemed during the
12-month period beginning February 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2007.......................................................... 104.938%
2008.......................................................... 104.444%
2009.......................................................... 103.950%
2010.......................................................... 103.456%
2011.......................................................... 102.963%
2012.......................................................... 102.469%
2013.......................................................... 101.975%
2014.......................................................... 101.482%
2015.......................................................... 100.988%
2016.......................................................... 100.494%
2017 and thereafter........................................... 100.000%
</TABLE>
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SPECIAL EVENT PREPAYMENT
Prior to February 1, 2007, if a Special Event shall occur and be
continuing, the Corporation may, at its option and subject to receipt of prior
approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve and receipt of any other required
regulatory approval, prepay the Junior Subordinated Debentures in whole (but not
in part) at any time within 90 days of the occurrence of such Special Event, at
a prepayment price (the "Special Event Prepayment Price") equal to, for each
Capital Security, the Make-Whole Amount (as defined below) for a corresponding
$1,000 principal amount of Junior Subordinated Debentures together with accrued
Distributions to, but excluding, the date fixed for redemption. The "Make-Whole
Amount" shall be equal to the greater of (x) 100% of the principal amount
thereof or (y) the sum, as determined by a Quotation Agent (as defined herein),
of the present values of the remaining scheduled payments of principal and
interest on the Junior Subordinated Debentures discounted to the prepayment date
on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Adjusted Treasury Rate, plus, in the case of each of clauses (x)
and (y), accrued and unpaid interest thereon to the date of prepayment.
A "Special Event" means a Tax Event or a Regulatory Capital Event (as
defined below), as the case may be.
A "Tax Event" means the receipt by the Corporation and the Trust of an
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to, or change (including any announced prospective change) in,
the laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the Issue Date, there is
more than an insubstantial risk that (i) the Trust is, or will be within 90 days
of the date of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Junior Subordinated Debentures,
(ii) interest payable by the Corporation on the Junior Subordinated Debentures
is not, or within 90 days of the date of such opinion will not be, deductible by
the Corporation, in whole or in part, for United States federal income tax
purposes, or (iii) the Trust is, or will be within 90 days of the date of such
opinion, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
A "Regulatory Capital Event" means that the Corporation shall have received
an opinion of independent bank regulatory counsel experienced in such matters to
the effect that, as a result of (a) any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any rules, guidelines or policies of the Federal Reserve or
(b) any official administrative pronouncement or judicial decision interpreting
or applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the Issue Date, the
Capital Securities do not constitute, or within 90 days of the date thereof,
will not constitute, Tier 1 Capital (or its then equivalent); provided, however,
that the distribution of the Junior Subordinated Debentures in connection with
the liquidation of the Trust by the Corporation shall not in and of itself
constitute a Regulatory Capital Event unless such liquidation shall have
occurred in connection with a Tax Event.
"Adjusted Treasury Rate" means, with respect to any prepayment date, the
rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such prepayment date plus (i) 3.075% if such prepayment date
occurs prior to February 1, 1998 and (ii) 2.525% in all other cases.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the remaining
term of the Junior Subordinated Debentures to be prepaid that would be utilized,
at the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Junior Subordinated Debentures.
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"Quotation Agent" means the Reference Treasury Dealer appointed by the
Corporation. "Reference Treasury Dealer" means a nationally recognized U.S.
Government securities dealer in New York City selected by the Corporation.
"Comparable Treasury Price" means, with respect to any prepayment date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such prepayment date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the average
of the Reference Treasury Dealer Quotations for such prepayment date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Debenture Trustee obtains fewer than three such Reference Treasury
Dealer Quotations, the average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any prepayment date, the average, as determined by
the Debenture Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the Debenture Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such prepayment date.
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by the Trust on the
outstanding Capital Securities and Common Securities shall not be reduced as a
result of any additional taxes, duties and other governmental charges to which
the Trust has become subject as a result of a Tax Event.
Notice of any prepayment will be mailed at least 30 days but not more than
60 days before the prepayment date to each holder of Junior Subordinated
Debentures to be prepaid at its registered address. Unless the Corporation
defaults in payment of the prepayment price, on and after the prepayment date
interest ceases to accrue on such Junior Subordinated Debentures called for
prepayment.
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Corporation will pay as
additional amounts on the Junior Subordinated Debentures the Additional Sums.
RESTRICTIONS ON CERTAIN PAYMENTS
The Corporation has covenanted that it will not, (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock
(other than (a) dividends or distributions in shares of, or options, warrants or
rights to subscribe for or purchase shares of, common stock of the Corporation,
(b) any declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
as a result of a reclassification of the Corporation's capital stock or the
exchange or conversion of one class or series of the Corporation's capital stock
for another class or series of the Corporation's capital stock, (d) the purchase
of fractional interests in shares of the Corporation's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, and (e) purchases of common stock related to the
issuance of common stock or rights under any of the Corporation's benefit plans
for its directors, officers or employees or any of the Corporation's dividend
reinvestment plans), (ii) make any payment of principal, interest or premium, if
any, on or repay or repurchase or redeem any debt securities of the Corporation
(including Other Debentures) that rank pari passu with or junior in right of
payment to the Junior Subordinated Debentures or (iii) make any guarantee
payments (other than payments under the Guarantee) with respect to any guarantee
by the Corporation of the debt securities of any subsidiary of the Corporation
(including under Other Guarantees) if such guarantee ranks pari passu or junior
in right of payment to the Junior Subordinated Debentures if at such time (1)
there shall have occurred any event of which the Corporation has actual
knowledge that (a) is, or with the giving of notice or the lapse of time, or
both, would be, a Debenture Event of Default and (b) in respect of which the
Corporation shall not have taken reasonable
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steps to cure, (2) if such Junior Subordinated Debentures are held by the Trust,
the Corporation shall be in default with respect to its payment of any
obligations under the Guarantee or (3) the Corporation shall have given notice
of its election of an Extension Period as provided in the Indenture and shall
not have rescinded such notice, and such Extension Period, or any extension
thereof, shall have commenced and be continuing.
MODIFICATION OF INDENTURE
From time to time the Corporation and the Debenture Trustee may, without
the consent of the holders of Junior Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies (provided that any such action
does not materially adversely affect the interest of the holders of Junior
Subordinated Debentures) and qualifying, or maintaining the qualification of,
the Indenture under the Trust Indenture Act. The Indenture contains provisions
permitting the Corporation and the Debenture Trustee, with the consent of the
holders of a majority in principal amount of Junior Subordinated Debentures, to
modify the Indenture in a manner affecting the rights of the holders of Junior
Subordinated Debentures; provided, that no such modification may, without the
consent of the holders of each outstanding Junior Subordinated Debenture so
affected, (i) change the Stated Maturity, or reduce the principal amount of the
Junior Subordinated Debentures or reduce the amount payable on redemption
thereof or reduce the rate or extend the time of payment of interest thereon
except pursuant to the Corporation's right under the Indenture to defer the
payment of interest as provided therein (see "--Option to Extend Interest
Payment Date") or make the principal of, or interest or premium on, the Junior
Subordinated Debentures payable in any coin or currency other than that provided
in the Junior Subordinated Debentures, or impair or affect the right of any
holder of Junior Subordinated Debentures to institute suit for the payment
thereof, or (ii) reduce the percentage of principal amount of Junior
Subordinated Debentures, the holders of which are required to consent to any
such modification of the Indenture.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures constitutes a
"Debenture Event of Default" (whatever the reason for such Debenture Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i)failure for 30 days to pay any interest (including Compounded Interest and
Additional Sums, if any) on the Junior Subordinated Debentures or any Other
Debentures, when due (subject to the deferral of any due date in the case of an
Extension Period); or (ii)failure to pay any principal or premium, if any, on
the Junior Subordinated Debentures or any Other Debentures when due whether at
maturity, upon redemption, by declaration of acceleration of maturity or
otherwise; or (iii)failure to observe or perform in any material respect certain
other covenants contained in the Indenture for 90 days after written notice to
the Corporation from the Debenture Trustee or the holders of at least 25% in
aggregate outstanding principal amount of Junior Subordinated Debentures; or
(iv)certain events in bankruptcy, insolvency or reorganization of the
Corporation.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures have, subject to certain exceptions, the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Debenture Trustee. The Debenture Trustee or the holders of not
less than 25% in aggregate outstanding principal amount of the Junior
Subordinated Debentures may declare the principal due and payable immediately
upon a Debenture Event of Default. The holders of a majority in aggregate
outstanding principal amount of the Junior Subordinated Debentures may annul
such declaration and waive the default if the default (other than the
non-payment of the principal of the Junior Subordinated Debentures which has
become due solely by such acceleration) has been cured and a sum sufficient to
pay all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures affected thereby may, on behalf of the holders of
all the Junior Subordinated Debentures, waive
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any past default, except a default in the payment of principal (or premium, if
any) on or interest (unless such default has been cured and a sum sufficient to
pay all matured installments of interest (and premium, if any) and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee) or
a default in respect of a covenant or provision which under the Indenture cannot
be modified or amended without the consent of the holder of each outstanding
Junior Subordinated Debenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a Debenture Event of Default shall have occurred and be continuing and
shall be attributable to the failure of the Corporation to pay the principal of
(or premium, if any), or interest (including Compounded Interest and Additional
Sums, if any) on the Junior Subordinated Debentures on the due date, a holder of
Capital Securities may institute a Direct Action. The Corporation may not amend
the Indenture to remove the foregoing right to bring a Direct Action without the
prior written consent of the holders of all of the Capital Securities.
Notwithstanding any payments made to a holder of Capital Securities by the
Corporation in connection with a Direct Action, the Corporation shall remain
obligated to pay the principal of (or premium, if any) or interest (including
Compounded Interest and Additional Sums, if any) on the Junior Subordinated
Debentures, and the Corporation shall be subrogated to the rights of the holder
of such Capital Securities with respect to payments on the Capital Securities to
the extent of any payments made by the Corporation to such holder in any Direct
Action.
The holders of the Capital Securities will not be able to exercise directly
any remedies, other than those set forth in the preceding paragraph, available
to the holders of the Junior Subordinated Debentures unless there shall have
been an Event of Default under the Trust Agreement. See "Description of Capital
Securities--Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Corporation shall not consolidate with or
merge into any other Person or convey, transfer or lease its properties as an
entirety or substantially as an entirety to any Person, and no Person shall
consolidate with or merge into the Corporation or convey, transfer or lease its
properties as an entirety or substantially as an entirety to the Corporation,
unless: (i) in case the Corporation consolidates with or merges into another
Person or conveys or transfers its properties substantially as an entirety to
any Person, the successor Person is organized under the laws of the United
States or any State or the District of Columbia, and such successor Person
expressly assumes the Corporation's obligations on the Junior Subordinated
Debentures; (ii) immediately after giving effect thereto, no Debenture Event of
Default, and no event which, after notice or lapse of time or both, would become
a Debenture Event of Default, shall have occurred and be continuing; and (iii)
certain other conditions as prescribed in the Indenture are met.
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Corporation that may adversely affect holders of the
Junior Subordinated Debentures.
For so long as the Trust Securities remain outstanding, the Corporation has
covenanted (i) to directly or indirectly maintain 100% direct or indirect
ownership of the Common Securities of the Trust; provided, however, that any
permitted successor of the Corporation under the Indenture may succeed to the
Corporation's ownership of such Common Securities, (ii) not to cause, as Sponsor
of the Trust, or to permit, as holder of the Common Securities, the dissolution,
winding-up or termination of the Trust, except in connection with a distribution
of the Junior Subordinated Debentures as provided in the Trust Agreement and in
connection with certain mergers, consolidations or amalgamations and (iii) to
use its reasonable efforts to cause the Trust (a) to remain a business trust,
except in connection with the distribution of Junior Subordinated Debentures to
the holders of Capital Securities in liquidation of the Trust, the redemption of
all of the Capital Securities of the Trust, or certain mergers, consolidations
or amalgamations, each as permitted by the Trust Agreement, and (b) to otherwise
continue to be classified as a grantor trust for United States federal income
tax purposes.
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SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at maturity or called for redemption within one year, and the Corporation
deposits or causes to be deposited with the Debenture Trustee funds, in trust,
for the purpose and in an amount sufficient to pay and discharge the entire
indebtedness on the Junior Subordinated Debentures not previously delivered to
the Debenture Trustee for cancellation, for the principal (and premium, if any)
and interest to the date of the deposit or to the Stated Maturity, as the case
may be, then the Indenture will cease to be of further effect (except as to the
Corporation's obligations to pay all other sums due pursuant to the Indenture
and to provide the officers' certificates and opinions of counsel described
therein), and the Corporation will be deemed to have satisfied and discharged
the Indenture.
SUBORDINATION
In the Indenture, the Corporation has covenanted and agreed that any Junior
Subordinated Debentures issued thereunder will be subordinate and junior in
right of payment to all Senior Indebtedness to the extent provided in the
Indenture. Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Corporation, all Senior Indebtedness must be paid
in full before the holders of Junior Subordinated Debentures will be entitled to
receive or retain any payment in respect thereof.
In the event of the acceleration of the maturity of Junior Subordinated
Debentures, the holders of all Senior Indebtedness outstanding at the time of
such acceleration will first be entitled to receive payment in full of such
Senior Indebtedness before the holders of Junior Subordinated Debentures will be
entitled to receive or retain any payment in respect of the Junior Subordinated
Debentures.
No payments on account of principal (or premium, if any) or interest, if
any, in respect of the Junior Subordinated Debentures may be made if there shall
have occurred and be continuing a default in any payment with respect to Senior
Indebtedness, or an event of default with respect to any Senior Indebtedness
resulting in the acceleration of the maturity thereof, or if any judicial
proceeding shall be pending with respect to any such default.
"Senior Indebtedness" shall mean all Indebtedness for Money Borrowed,
whether outstanding on the date of execution of the Indenture or thereafter
created, assumed or incurred, except Indebtedness Ranking on a Parity with the
Junior Subordinated Debentures or Indebtedness Ranking Junior to the Junior
Subordinated Debentures, and any deferrals, renewals or extensions of such
Senior Indebtedness.
"Indebtedness for Money Borrowed" shall mean any obligation of, or any
obligation guaranteed by, the Corporation for the repayment of borrowed money,
whether or not evidenced by bonds, debentures, notes or other written
instruments; provided, however, that Indebtedness for Money Borrowed shall not
include trade accounts payable or accrued liabilities in the ordinary course of
business.
"Indebtedness Ranking on a Parity with the Junior Subordinated Debentures"
shall mean (i) Indebtedness for Money Borrowed, whether outstanding on the date
of execution of the Indenture or thereafter created, assumed or incurred, to the
extent such indebtedness specifically by its terms ranks equally with and not
prior to the Junior Subordinated Debentures in the right of payment upon the
happening of the dissolution or winding-up or liquidation or reorganization of
the Corporation and (ii) all other debt securities, and guarantees in respect of
those debt securities, issued to any other trust, or a trustee of such trust,
partnership or other entity affiliated with the Corporation that is a financing
vehicle of the Corporation (a "financing entity") in connection with the
issuance by such financing entity of equity securities or other securities
guaranteed by the Corporation pursuant to an instrument that ranks pari passu
with or junior in right of payment to the Guarantee.
"Indebtedness Ranking Junior to the Junior Subordinated Debentures" shall
mean any Indebtedness for Money Borrowed, whether outstanding on the date of
execution of the Indenture or thereafter created,
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assumed or incurred, to the extent such indebtedness specifically by its terms
ranks junior to and not equally with or prior to the Junior Subordinated
Debentures (and any other Indebtedness Ranking on a Parity with the Junior
Subordinated Debentures) in right of payment upon the happening of the
dissolution or winding-up or liquidation or reorganization of the Corporation.
The securing of any Indebtedness for Money Borrowed, otherwise constituting
Indebtedness Ranking on a Parity with the Junior Subordinated Debentures or
Indebtedness Ranking Junior to the Junior Subordinated Debentures, as the case
may be, shall not be deemed to prevent such Indebtedness for Money Borrowed from
constituting Indebtedness Ranking on a Parity with the Junior Subordinated
Debentures or Indebtedness Ranking Junior to the Junior Subordinated Debentures,
as the case may be.
The Corporation is a holding company and almost all of the operating assets
of the Corporation are owned by the Corporation's Subsidiaries. The Corporation
relies primarily on service fees and dividends from such Subsidiaries to meet
its obligations for payment of principal and interest on its outstanding debt
obligations and corporate expenses. The Corporation is a legal entity separate
and distinct from its Subsidiaries. Holders of Junior Subordinated Debentures
should look only to the Corporation for payments on the Junior Subordinated
Debentures. The principal sources of the Corporation's income are dividends,
interest and fees from its Subsidiaries. The Banks are subject to certain
restrictions imposed by federal law on any extensions of credit to, and certain
other transactions with, the Corporation and certain other affiliates, and on
investments in stock or other securities thereof. Such restrictions prevent the
Corporation and such other affiliates from borrowing from the Banks unless the
loans are secured by various types of collateral. Further, such secured loans,
other transactions and investments by any of the Banks are generally limited in
amount as to the Corporation and as to each of such other affiliates to 10% of
such Bank's capital and surplus and as to the Corporation and all of such other
affiliates to an aggregate of 20% of such Bank's capital and surplus. In
addition, there are regulatory limitations on the payment of dividends directly
or indirectly to the Corporation from the Banks. See "--General." Accordingly,
the Junior Subordinated Debentures will be effectively subordinated to all
existing and future liabilities of the Corporation's subsidiaries.
Because the Corporation is a holding company, the right of the Corporation
to participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability of
holders of the Capital Securities to benefit indirectly from such distribution),
is subject to the prior claims of creditors of that subsidiary (including
depositors, in the case of the Banks), except to the extent the Corporation may
itself be recognized as a creditor of that subsidiary. At March 31, 1997, the
Subsidiaries of the Corporation had total liabilities (excluding liabilities
owed to the Corporation) of $1.565 billion. Accordingly, the Junior Subordinated
Debentures will be effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries (including the Subsidiaries'
deposit liabilities) and all liabilities of any future subsidiaries of the
Corporation. The Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of the Corporation or any subsidiary, including Senior
Indebtedness. See "--Subordination."
RESTRICTIONS ON TRANSFER
The Junior Subordinated Debentures will be issued, and may be transferred,
only in blocks having an aggregate principal amount of not less than $100,000
(100 Junior Subordinated Debentures). Any such transfer of Junior Subordinated
Debentures in a block having an aggregate principal amount of less than $100,000
shall be deemed to be void and of no legal effect whatsoever. Any such
transferee shall be deemed not to be the holder of such Junior Subordinated
Debentures for any purpose, including but not limited to the receipt of payments
on such Junior Subordinated Debentures, and such transferee shall be deemed to
have no interest whatsoever in such Junior Subordinated Debentures.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by
and construed in accordance with the laws of the State of New York.
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INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Debenture Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Debenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
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DESCRIPTION OF GUARANTEE
The Series A Capital Securities Guarantee was executed and delivered by the
Corporation concurrently with the issuance by the Trust of the Series A Capital
Securities for the benefit of the holders from time to time of the Series A
Capital Securities. As soon as practicable after the consummation of the
Exchange Offer, the Series A Capital Securities Guarantee will be exchanged by
the Corporation for the Series B Capital Securities Guarantee. The Guarantee has
been qualified under the Trust Indenture Act. The Chase Manhattan Bank will act
as Guarantee Trustee under the Guarantee. This summary of certain provisions of
the Guarantee does not purport to be complete and is subject to, and qualified
in its entirety by reference to, all of the provisions of the Guarantee,
including the definitions therein of certain terms, and the Trust Indenture Act.
The Guarantee Trustee will hold the Guarantee for the benefit of the holders of
the Capital Securities.
GENERAL
The Corporation will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth herein, the Guarantee Payments (as defined below)
to the holders of the Capital Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that the Trust may have or assert
other than the defense of payment. The following payments with respect to the
Capital Securities, to the extent not paid by or on behalf of the Trust (the
"Guarantee Payments"), will be subject to the Guarantee: (i) any accumulated and
unpaid Distributions required to be paid on the Capital Securities, to the
extent that the Trust has funds on hand legally available therefor at such time,
(ii) the applicable Redemption Price with respect to the Capital Securities
called for redemption, to the extent that the Trust has funds on hand legally
available therefor at such time, and (iii) upon a voluntary or involuntary
termination and liquidation of the Trust, the lesser of (a) the Liquidation
Distribution and (b) the amount of assets of the Trust remaining available for
distribution to holders of Capital Securities. The Corporation's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Corporation to the holders of the Capital Securities or by
causing the Trust to pay such amounts to such holders.
The Guarantee will rank subordinate and junior in right of payment to all
Senior Indebtedness to the extent provided therein. See "--Status of the
Guarantee." Because the Corporation is a holding company, the right of the
Corporation to participate in any distribution of assets of any subsidiary upon
such subsidiary's liquidation or reorganization or otherwise, is subject to the
prior claims of creditors of that subsidiary, except to the extent the
Corporation may itself be recognized as a creditor of that subsidiary.
Accordingly, the Corporation's obligations under the Guarantee will be
effectively subordinated to all existing and future liabilities of the
Corporation's Subsidiaries (including the deposit liabilities of the
Corporation's Subsidiaries), and all liabilities of any future subsidiaries of
the Corporation. Claimants should look only to the Corporation for payments
under the Guarantee. See "Description of the Junior Subordinated
Debentures--General." The Guarantee does not limit the incurrence or issuance of
other secured or unsecured debt of the Corporation, including Senior
Indebtedness, whether under the Indenture, any other indenture that the
Corporation may enter into in the future or otherwise.
The Corporation will, through the Guarantee, the Trust Agreement, the
Junior Subordinated Debentures and the Indenture, taken together, fully,
irrevocably and unconditionally guarantee all of the Trust's obligations under
the Capital Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Trust's obligations under the Capital Securities. See "Relationship Among the
Capital Securities, the Junior Subordinated Debentures and the Guarantee."
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Corporation
and will rank subordinate and junior in right of payment to all Senior
Indebtedness in the same manner as Junior Subordinated Debentures.
The Guarantee will rank pari passu with all Other Guarantees issued by the
Corporation. The Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal
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proceeding directly against the Corporation to enforce its rights under the
Guarantee without first instituting a legal proceeding against any other person
or entity). The Guarantee will be held for the benefit of the holders of the
Capital Securities. The Guarantee will not be discharged except by payment of
the Guarantee Payments in full to the extent not paid by the Trust or upon
distribution to the holders of the Capital Securities of the Junior Subordinated
Debentures. The Guarantee does not place a limitation on the amount of
additional Senior Indebtedness that may be incurred by the Corporation.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of the Capital Securities (in which case no vote will be
required), the Guarantee may not be amended without the prior approval of the
holders of a majority of the Liquidation Amount of such outstanding Capital
Securities. The manner of obtaining any such approval will be as set forth under
"Description of Capital Securities--Voting Rights; Amendment of the Trust
Agreement." All guarantees and agreements contained in the Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
the Corporation and shall inure to the benefit of the holders of the Capital
Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Corporation to perform any of its payment or other obligations thereunder. The
holders of a majority in Liquidation Amount of the Capital Securities will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Guarantee Trustee in respect of the Guarantee or to
direct the exercise of any trust or power conferred upon the Guarantee Trustee
under the Guarantee.
Any holder of the Capital Securities may institute a legal proceeding
directly against the Corporation to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Trust, the Guarantee
Trustee or any other person or entity (a "Direct Action").
The Corporation, as guarantor, will be required to file annually with the
Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Corporation in performance of the Guarantee, will undertake to
perform only such duties as are specifically set forth in the Guarantee and, in
case a default with respect to the Guarantee has occurred, must exercise the
same degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the Guarantee
Trustee will be under no obligation to exercise any of the powers vested in it
by the Guarantee at the request of any holder of the Capital Securities unless
it is offered reasonable indemnity against the costs, expenses and liabilities
that might be incurred thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon
full payment of the applicable Redemption Price of the Capital Securities, upon
full payment of the Liquidation Amount payable upon liquidation of the Trust or
upon distribution of Junior Subordinated Debentures to the holders of the
Capital Securities. The Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of the Capital
Securities must restore payment of any sums paid under the Capital Securities or
the Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
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DESCRIPTION OF THE SERIES A SECURITIES
The terms of the Series A Securities are identical in all material respects
to the Series B Securities, except that (i) the Series A Securities have not
been registered under the Securities Act, are subject to certain restrictions on
transfer and are entitled to certain rights under the applicable Registration
Rights Agreement (which rights will terminate upon consummation of the Exchange
Offer, except under limited circumstances); (ii) the Series B Capital Securities
will not provide for any increase in the Distribution rate thereon; and (iii)
the Series B Junior Subordinated Debentures will not provide for any increase in
the interest rate thereon. The Series A Securities provide that, in the event
that the Exchange Offer Registration Statement is not declared effective on or
prior to August 10, 1997, or, in certain limited circumstances, in the event the
Exchange Offer is not consummated on the 45th day after the Registration
Statement is declared effective or a shelf registration statement (the "Shelf
Registration Statement") with respect to the resale of the Series A Capital
Securities is not declared effective on or prior to the 30th day after such
registration statement was required to be filed (a "Registration Default"), then
interest will accrue (in addition to the stated interest rate on the Junior
Subordinated Debentures) at the rate per annum equal to an additional
one-quarter of one percent (0.25%) per Registration Default (not to exceed in
the aggregate 0.25%) of the principal amount, or the Liquidation Amount, as
applicable. The Series B Securities are not, and upon consummation of the
Exchange Offer the Series A Securities will not be, entitled to any such
additional interest or Distributions. Accordingly, holders of Series A Capital
Securities should review the information set forth under "Risk Factors--Certain
Consequences of a Failure to Exchange Series A Capital Securities" and
"Description of the Capital Securities."
RELATIONSHIP AMONG THE CAPITAL SECURITIES, THE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Capital Securities
(to the extent the Trust has funds on hand legally available for the payment of
such Distributions) will be irrevocably guaranteed by the Corporation as and to
the extent set forth under "Description of Guarantee." Taken together, the
Corporation's obligations under the Junior Subordinated Debentures, the
Indenture, the Trust Agreement and the Guarantee will provide, in the aggregate,
a full, irrevocable and unconditional guarantee of payments of Distributions and
other amounts due on the Capital Securities. No single document standing alone
or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these documents
that has the effect of providing a full, irrevocable and unconditional guarantee
of the Trust's obligations under the Capital Securities. If and to the extent
that the Corporation does not make the required payments on the Junior
Subordinated Debentures, the Trust will not have sufficient funds to make the
related payments, including Distributions, on the Capital Securities. The
Guarantee will not cover any such payment when the Trust does not have
sufficient funds on hand legally available therefor. In such event, the remedy
of a holder of Capital Securities is to institute a Direct Action. The
obligations of the Corporation under the Guarantee will be subordinate and
junior in right of payment to all Senior Indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Capital Securities, primarily
because: (i) the aggregate principal amount or Prepayment Price of the Junior
Subordinated Debentures will be equal to the sum of the Liquidation Amount or
Redemption Price, as applicable, of the Capital Securities; (ii) the interest
rate and interest and other payment dates on the Junior Subordinated Debentures
will match the Distribution rate and Distribution and other payment dates for
the Capital Securities; (iii) the Corporation, as Sponsor, shall pay for all and
any costs, expenses and liabilities of the Trust except the Trust's obligations
to holders of Capital Securities under such Capital Securities; and
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(iv) the Trust Agreement will provide that the Trust is not authorized to engage
in any activity that is not consistent with the limited purposes thereof.
ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES
A holder of any Capital Security may institute a legal proceeding directly
against the Corporation to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Trust or any
other person or entity.
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Trust Agreement. However, in
the event of payment defaults under, or acceleration of, Senior Indebtedness,
the subordination provisions of the Indenture will provide that no payments may
be made in respect of the Junior Subordinated Debentures until such Senior
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. Failure to make required payments on Junior Subordinated
Debentures would constitute an Event of Default under the Trust Agreement.
LIMITED PURPOSE OF THE TRUST
The Capital Securities will represent beneficial interests in the Trust,
and the Trust exists for the sole purpose of issuing and selling the Trust
Securities, using the proceeds from the sale of the Trust Securities to acquire
the Junior Subordinated Debentures and engaging in only those other activities
necessary, advisable or incidental thereto. A principal difference between the
rights of a holder of a Capital Security and a holder of a Junior Subordinated
Debenture is that a holder of a Junior Subordinated Debenture will be entitled
to receive from the Corporation the principal amount of (and premium, if any)
and interest on Junior Subordinated Debentures held, while a holder of Capital
Securities is entitled to receive Distributions from the Trust (or, in certain
circumstances, from the Corporation under the Guarantee) if and to the extent
the Trust has funds on hand legally available for the payment of such
Distributions.
RIGHTS UPON TERMINATION
Unless the Junior Subordinated Debentures are distributed to holders of the
Capital Securities, upon any voluntary or involuntary termination and
liquidation of the Trust, the holders of the Capital Securities will be entitled
to receive, out of assets held by the Trust, the Liquidation Distribution in
cash. See "Description of Capital Securities--Liquidation of the Trust and
Distribution of Junior Subordinated Debentures." Upon any voluntary or
involuntary liquidation or bankruptcy of the Corporation, the Property Trustee,
as holder of the Junior Subordinated Debentures, would be a subordinated
creditor of the Corporation, subordinated in right of payment to all Senior
Indebtedness as set forth in the Indenture, but entitled to receive payment in
full of principal (and premium, if any) and interest, before any stockholders of
the Corporation receive payments or distributions. Since the Corporation is the
guarantor under the Guarantee and has agreed to pay for all costs, expenses and
liabilities of the Trust (other than the Trust's obligations to the holders of
its Trust Securities), the positions of a holder of Capital Securities and a
holder of Junior Subordinated Debentures relative to other creditors and to
stockholders of the Corporation in the event of liquidation or bankruptcy of the
Corporation are expected to be substantially the same.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a summary of certain of the material United States federal
income tax consequences of the purchase, ownership and disposition of Capital
Securities held as capital assets by a holder who purchases such Capital
Securities upon initial issuance. It does not deal with special classes of
holders such as banks, thrifts, real estate investment trusts, regulated
investment companies, insurance companies, dealers in securities or currencies,
tax-exempt investors, United States Alien Holders (as defined below) engaged in
a U.S. trade or business or persons that will hold the Capital Securities as a
position in a "straddle," as part of a "synthetic security" or "hedge," as part
of a "conversion transaction" or other integrated investment, or as other than a
capital asset. This summary also does not address the tax consequences to
persons that have a functional currency other than the U.S. dollar or the tax
consequences to shareholders, partners or beneficiaries of a holder of Capital
Securities. Further, it does not include any description of any alternative
minimum tax consequences or the tax laws of any state or local government or of
any foreign government that may be applicable to the Capital Securities. This
summary is based on the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury regulations thereunder and the administrative and judicial
interpretations thereof, as of the date hereof, all of which are subject to
change, possibly on a retroactive basis.
EXCHANGE OF CAPITAL SECURITIES
The exchange of Series A Capital Securities for Series B Capital Securities
will not be a taxable event to beneficial owners of Capital Securities
("Securityholders") for federal income tax purposes. The exchange of Series A
Securities for Series B Securities pursuant to the Exchange Offer will not be
treated as an "exchange" for federal income tax purposes because the Series B
Securities will not differ materially in kind or extent from the Series A
Securities and because the exchange will occur by operation of the terms of the
Series A Securities. Accordingly, the Series B Junior Subordinated Debentures
will have the same issue date and issue price as the Series A Junior
Subordinated Debentures, and a Securityholder will have the same adjusted tax
basis and holding period in the Series B Capital Securities as the
Securityholder had in the Series A Capital Securities immediately before the
exchange.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
The Corporation has taken the position that the Junior Subordinated
Debentures will be classified for United States federal income tax purposes as
indebtedness of the Corporation under current law. No assurance can be given
that the Internal Revenue Service (the "IRS") will not challenge such position
or, if challenged, that such a challenge would not be successful. The remainder
of this discussion assumes that the Junior Subordinated Debentures will be
treated as indebtedness of the Corporation for United Stated federal income tax
purposes.
CLASSIFICATION OF THE TRUST
Kirkpatrick & Lockhart LLP ("Tax Counsel") has rendered its opinion
generally to the effect that, under current law and assuming full compliance
with the terms of the Trust Agreement and the Indenture (and certain other
documents), and based on certain facts and assumptions contained in such
opinion, the Trust will be classified for United States federal income tax
purposes as a grantor trust and not as an association taxable as a corporation.
Accordingly, for United States federal income tax purposes, each holder of
Capital Securities generally will be considered the owner of an undivided
interest in the Junior Subordinated Debentures, and each holder will be required
to include in its gross income any interest (or OID accrued) with respect to its
allocable share of those Junior Subordinated Debentures.
An opinion of Tax Counsel, however, is not binding on the IRS or the
courts. Prospective investors should note that no rulings have been or are
expected to be sought from the IRS with respect to any of these issues and no
assurance can be given that the IRS will not take contrary positions. Moreover,
no assurance can be given that the opinion expressed herein will not be
challenged by the IRS or, if challenged, that such a challenge would not be
successful.
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INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations (the "Regulations") applicable
to debt instruments issued on or after August 13, 1996, a "remote" contingency
that stated interest will not be timely paid will be ignored in determining
whether a debt instrument is issued with OID. The Corporation believes that the
likelihood of its exercising its option to defer payments of interest is
"remote" since exercising that option would, among other things, prevent the
Corporation from declaring dividends on any class of its equity securities.
Accordingly, the Corporation has taken the position based on the advice of Tax
Counsel that the Junior Subordinated Debentures will not be considered to be
issued with OID and, accordingly, stated interest on the Junior Subordinated
Debentures generally will be taxable to a holder as ordinary income at the time
it is paid or accrued in accordance with such holder's method of accounting.
Under the Regulations, if the Corporation were to exercise its option to
defer payments of interest, the Junior Subordinated Debentures would at that
time be treated as issued with OID, and all stated interest on the Junior
Subordinated Debentures would thereafter be treated as OID as long as the Junior
Subordinated Debentures remain outstanding. In such event, all of a holder's
taxable interest income with respect to the Junior Subordinated Debentures would
thereafter be accounted for on an economic accrual basis regardless of such
holder's method of tax accounting, and actual distributions of stated interest
would not be reported as taxable income. Consequently, a holder of Capital
Securities would be required to include in gross income OID even though the
Corporation would not make actual cash payments during an Extension Period.
Moreover, under the Regulations, if the option to defer the payment of interest
was determined not to be "remote," the Junior Subordinated Debentures would be
treated as having been originally issued with OID. In such event, all of a
holder's taxable interest income with respect to the Junior Subordinated
Debentures would be accounted for on an economic accrual basis regardless of
such holder's method of tax accounting, and actual distributions of stated
interest would not be reported as taxable income.
The Regulations have not yet been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to the interpretation described herein.
Because income on the Capital Securities will constitute either interest or
OID, corporate holders of the Capital Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Capital Securities.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
The Corporation has the right at any time to liquidate the Trust and cause
the Junior Subordinated Debentures to be distributed to the holders of the Trust
Securities. Under current law, such a distribution, for United States federal
income tax purposes, would be treated as a nontaxable event to each holder, and
each holder would receive an aggregate tax basis in the Junior Subordinated
Debentures equal to such holder's aggregate tax basis in its Capital Securities.
A holder's holding period in the Junior Subordinated Debentures so received in
liquidation of the Trust would include the period during which the Capital
Securities were held by such holder. If, however, the Trust is characterized for
United States federal income tax purposes as an association taxable as a
corporation at the time of its dissolution, the distribution of the Junior
Subordinated Debentures would constitute a taxable event to holders of Capital
Securities and a holder's holding period in Junior Subordinated Debentures would
begin on the date such Junior Subordinated Debentures were received.
Under certain circumstances described herein (see "Description of Capital
Securities"), the Junior Subordinated Debentures may be redeemed for cash and
the proceeds of such redemption distributed to holders in redemption of their
Capital Securities. Under current law, such a redemption would, for United
States federal income tax purposes, constitute a taxable disposition of the
redeemed Capital Securities, and a holder could recognize gain or loss as if it
sold such redeemed Capital Securities for cash. See "--Sales of Capital
Securities."
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<PAGE> 68
SALES OF CAPITAL SECURITIES
A holder that sells Capital Securities (including a redemption of the
Capital Securities either on the Stated Maturity Date or upon an optional
redemption of the Junior Subordinated Debentures by the Corporation) will
recognize gain or loss equal to the difference between its adjusted tax basis in
the Capital Securities and the amount realized on the sale of such Capital
Securities (other than with respect to accrued and unpaid interest which has not
yet been included in income, which will be treated as ordinary income). A
holder's adjusted tax basis in the Capital Securities generally will be its
initial purchase price increased by OID (if any) previously includable in such
holder's gross income to the date of disposition and decreased by payments (if
any) received on the Capital Securities in respect of OID. Such gain or loss
generally will be a capital gain or loss and generally will be a long-term
capital gain or loss if the Capital Securities have been held for more than one
year.
The Capital Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Junior Subordinated Debentures. A holder who uses the accrual method of
accounting for tax purposes (and a cash method holder, if the Junior
Subordinated Debenture are deemed to have been issued with OID) and who disposes
of his Capital Securities between record dates for payments of distributions
thereon will be required to include accrued but unpaid interest on the Junior
Subordinated Debentures through the date of disposition in income as ordinary
income (i.e., interest or, if applicable, OID), and to add such amount to his
adjusted tax basis in his pro rata share of the underlying Junior Subordinated
Debentures deemed disposed of. To the extent the selling price is less than the
holder's adjusted tax basis (which will include all accrued but unpaid interest)
a holder will recognize a capital loss. Subject to certain limited exceptions,
capital losses cannot be applied to offset ordinary income for United States
federal income tax purposes.
POSSIBLE TAX LAW CHANGES
On February 6, 1997, as part of President Clinton's Fiscal 1998 Budget
Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") that, among other things, would treat as equity for federal income
tax purposes a corporate debt instrument with a term of more than 15 years
issued to a related party (other than a corporation), where the instrument is
not shown on the issuer's balance sheet because the holder is consolidated with
the issuer on such balance sheet and the holder or some other related party
issues a related instrument not shown as indebtedness on such balance sheet (the
"Debt/Equity Provision"). The Proposed Legislation is proposed to be effective
for instruments issued on or after the date on which the first congressional
committee action is taken. On June 9, 1997, the Chairman of the House Committee
on Ways and Means, Representative Archer, introduced the 1997 Tax Bill. The 1997
Tax Bill as amended by the House Committee on Ways and Means does not contain
provisions similar to the Debt/Equity Provision.
It is expected that, if the Proposed Legislation were enacted, such
legislation will not apply to the Series A Junior Subordinated Debentures since
they were issued prior to the date of any committee action. Moreover, even if
the Exchange Offer is consummated after the actual effective date of the
Proposed Legislation, the exchange of the Series A Securities for the Series B
Securities will not cause the Series B Junior Subordinated Debentures to be
subject to the Proposed Legislation.
There can be no assurance, however, that current or future legislative
proposals, if enacted, or final legislation will not affect the ability of the
Corporation to deduct interest on the Junior Subordinated Debentures. Such a
change could give rise to a Tax Event, which would permit the Corporation to
cause a redemption of the Capital Securities, as described more fully under
"Description of Capital Securities--Redemption."
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is not a U.S. Holder
for United States federal income tax purposes.
67
<PAGE> 69
A "U.S. Holder" is a holder of Capital Securities who or which is a citizen
or individual resident (or is treated as a citizen or individual resident) of
the United States for federal income tax purposes, a corporation or partnership
created or organized in or under the laws of the United States, any state or any
political subdivision thereof, a person otherwise subject to United States
federal taxation or on a net income basis in respect of income or gain from the
Capital Securities, or a trust or estate the income of which is includible in
its gross income for federal income tax purposes without regard to its source.
For taxable years beginning after December 31, 1996 (or for the immediately
preceding taxable year, if the trustee of a trust so elects), a trust is a U.S.
Holder for federal income tax purposes if, and only if, (i) a court within the
United States is able to exercise primary supervision over the administration of
the trust and (ii) one or more United States trustees have the authority to
control all substantial decisions of the trust.
Under present United States federal income tax laws: (i) payments by the
Trust or any of its paying agents to any holder of a Capital Security who or
which is a United States Alien Holder will not be subject to United States
federal withholding tax; provided that, (a) the beneficial owner of the Capital
Security does not actually or constructively own 10 percent or more of the total
combined voting power of all classes of stock of the Corporation entitled to
vote, (b) the beneficial owner of the Capital Security is not a controlled
foreign corporation that is related to the Corporation through stock ownership,
and (c) either (A) the beneficial owner of the Capital Security certifies to the
Trust or its agent, under penalties of perjury, that it is not a United States
holder and provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution"), and holds the Capital Security in such capacity, certifies to the
Trust or its agent, under penalties of perjury, that such statement has been
received from the beneficial owner by it or by a Financial Institution between
it and the beneficial owner and furnishes the Trust or its agent with a copy
thereof; and (ii) a United States Alien Holder of a Capital Security will not be
subject to United States federal withholding tax on any gain realized upon the
sale or other disposition of a Capital Security.
INFORMATION REPORTING TO HOLDERS
Generally, income on the Capital Securities will be reported to holders on
Forms 1099, which forms should be mailed to holders of Capital Securities by
January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Capital Securities may
be subject to a "backup" withholding tax of 31 percent unless the holder
complies with certain identification requirements. Any withheld amounts will be
allowed as a credit against the holder's United States federal income tax,
provided the required information is provided to the IRS.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS.
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<PAGE> 70
ERISA CONSIDERATIONS
The Corporation (the obligor with respect to the Junior Subordinated
Debentures held by the Trust), and its affiliates and the Property Trustee may
each be considered a "party in interest" (within the meaning of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) or a "disqualified
person" (within the meaning of Section 4975 of the Code) with respect to many
employee benefit plans ("Plans") that are subject to ERISA and certain employee
benefit-related provisions of the Code. Any purchaser proposing to acquire
Capital Securities with assets of any Plan should consult with its counsel. The
purchase and/or holding of Capital Securities by a Plan that is subject to the
fiduciary responsibility provisions of ERISA or the prohibited transaction
provisions of Section 4975 of the Code (including individual retirement
arrangements and other plans described in Section 4975(e)(1) of the Code) and
with respect to which the Corporation, the Property Trustee or any affiliate is
a service provider (or otherwise is a party in interest or a disqualified
person) may constitute or result in a prohibited transaction under ERISA or
Section 4975 of the Code, unless such Capital Securities are acquired pursuant
to and in accordance with an applicable exemption, such as Prohibited
Transaction Class Exemption ("PTCE") 84-14 (an exemption for certain
transactions determined by an independent qualified professional asset manager),
PTCE 91-38 (an exemption for certain transactions involving bank collective
investment funds), PTCE 90-1 (an exemption for certain transactions involving
insurance company pooled separate accounts), PTCE 95-60 (an exemption for
transactions involving certain insurance company general accounts) or PTCE 96-23
(an exemption for certain transactions determined by an in-house asset manager).
In addition, a Plan fiduciary considering the purchase of Capital Securities
should be aware that the assets of the Trust may be considered "plan assets" for
ERISA purposes. Therefore, to avoid certain prohibited transactions under ERISA
and the Code that could thereby result, each investing Plan, by purchasing the
Capital Securities, will be deemed to have directed the Trust to invest in the
Junior Subordinated Debentures and to have consented to the appointment of the
Property Trustee.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Series B Capital Securities for its own
account in connection with the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Series B Capital
Securities. This Prospectus, as it may be amended or supplemented from time to
time, may be used by Participating Broker-Dealers during the period referred to
below in connection with resales of Series B Capital Securities received in
exchange for Series A Capital Securities if such Series A Capital Securities
were acquired by such Participating Broker-Dealers for their own accounts as a
result of market-making activities or other trading activities. The Corporation
has agreed that this Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer in connection with resales
of such Series B Capital Securities for a period ending 90 days after the
Expiration Date (subject to extension under certain limited circumstances
described herein) or, if earlier, when all such Series B Capital Securities have
been disposed of by such Participating Broker-Dealer. See "The Exchange Offer--
Resales of Series B Capital Securities." Neither the Corporation nor the Trust
will receive any cash proceeds from the issuance of the Series B Capital
Securities offered hereby. Series B Capital Securities received by
broker-dealers for their own accounts in connection with the Exchange Offer may
be sold from time to time in one or more transactions in the over-the-counter
market, in negotiated transactions, through the writing of options on the Series
B Capital Securities or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such prevailing
market prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such Series B Capital Securities. Any broker-dealer that
resells Series B Capital Securities that were received by it for its own account
in connection with the Exchange Offer and any broker or dealer that participates
in a distribution of such Series B Capital Securities may be deemed to be an
"underwriter" within the meaning of the Securities Act, and any profit on any
such resale of Series B Capital Securities and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that by acknowledging that
it will deliver and by
69
<PAGE> 71
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
Each person who tenders Series A Capital Securities for exchange for Series
B Capital Securities pursuant to the Exchange Offer shall be deemed to have
acknowledged, represented to and agreed with the Trust, the Corporation and the
Initial Purchaser that (i) it is not an affiliate of the Trust or the
Corporation, (ii) the Series B Capital Securities to be received by it are being
acquired in the ordinary course of its business and (iii) at the time of the
Exchange Offer, it has no arrangement with any person to participate in the
distribution (within the meaning of the Securities Act) of the Series B Capital
Securities.
LEGAL MATTERS
Certain legal matters will be passed upon for the Corporation by
Kirkpatrick & Lockhart LLP, Pittsburgh, Pennsylvania.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements of First Western Bancorp, Inc. and
subsidiaries incorporated in this Prospectus by reference from the Corporation's
Annual Report on Form 10-K for the year ended December 31, 1996 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report included therein, which is incorporated herein by reference, and have
been so incorporated in reliance upon the report of such firm, given on their
authority as experts in accounting and auditing.
With respect to the unaudited interim financial information for the periods
ended March 31, 1997 and 1996, which is incorporated herein by reference,
Deloitte & Touche LLP have applied limited procedures in accordance with
professional standards for a review of such information. However, as stated in
their report included in the Corporation's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997 and incorporated by reference herein, they did not
audit and they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their report on such information should
be restricted in light of the limited nature of the review procedures applied.
Deloitte & Touche LLP are not subject to the liability provisions of Section 11
of the Securities Act of 1933 for their report on the unaudited interim
financial information because such report is not a "report" or a "part" of the
registration statement prepared or certified by an accountant within the meaning
of Sections 7 and 11 of the Act.
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<PAGE> 72
======================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION, THE TRUST
OR ANY OF THEIR AFFILIATES. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION OR THE TRUST
SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................... 7
Incorporation of Certain Documents by
Reference............................. 7
Summary................................. 9
Risk Factors............................ 15
Use of Proceeds......................... 21
Ratios of Earnings to Combined Fixed
Charges............................... 21
Capitalization.......................... 22
Selected Consolidated Financial Data.... 23
First Western........................... 25
First Western Capital Trust I........... 29
Accounting Treatment.................... 29
The Exchange Offer...................... 30
Description of Capital Securities....... 40
Description of Junior Subordinated
Debentures............................ 50
Description of Guarantee................ 61
Description of the Series A
Securities............................ 63
Relationship Among the Capital
Securities, the Junior Subordinated
Debentures and the Guarantee.......... 63
Certain Federal Income Tax
Consequences.......................... 65
ERISA Considerations.................... 69
Plan of Distribution.................... 69
Legal Matters........................... 70
Independent Public Accountants.......... 70
</TABLE>
======================================================
======================================================
FIRST WESTERN CAPITAL TRUST I
OFFER TO EXCHANGE ITS
SERIES B 9.875% CAPITAL SECURITIES, WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, FOR ANY AND ALL OF ITS OUTSTANDING SERIES A 9.875%
CAPITAL SECURITIES FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
FIRST WESTERN BANCORP, INC.
---------------------------------------------
PROSPECTUS
---------------------------------------------
, 1997
======================================================
<PAGE> 73
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 21. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES.
(a) Exhibits. The following exhibits are filed as part of this Registration
Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION SEQUENTIAL PAGE NUMBER
- ------ ----------------------------------------- -----------------------------------------
<S> <C> <C>
3.1 Restated Articles of Incorporation Incorporated herein by reference to
Exhibit 3.1 to First Western Bancorp,
Inc.'s Quarterly Report on Form 10-Q for
the Quarter ended March 31, 1993
3.2 Bylaws Incorporated herein by reference to
Exhibit 3.2 to First Western Bancorp,
Inc.'s Quarterly Report on Form 10-Q for
the Quarter ended June 30, 1995
5.1 Opinion of Kirkpatrick & Lockhart LLP Previously Filed
10.1 Loan Agreement between First Western Incorporated herein by reference to
Bancorp, Inc. and Pittsburgh National Exhibit 10.8 to First Western Bancorp,
Bank dated November 29, 1990 Inc.'s 1990 Form 10-K
10.2 Amendment to Loan Agreement between First Incorporated herein by reference to
Western Bancorp, Inc. and Pittsburgh Exhibit 10.12 to First Western Bancorp,
National Bank dated September 30, 1992 Inc.'s 1993 Form 10-K
10.3 Second Amendment to Loan Agreement Incorporated herein by reference to
between First Western Bancorp, Inc. and Exhibit 10.1 to First Western Bancorp,
PNC Bank, National Association dated June Inc.'s Quarterly Report on Form 10-Q for
24, 1994 the Quarter ended June 30, 1994
10.4 Incentive Stock Option Plan for Key Incorporated herein by reference to
Officers* as amended effective February Exhibit 10.5 to First Western Bancorp,
21, 1995 Inc.'s 1994 Form 10-K
10.5 First Western Bancorp, Inc. Annual Incorporated herein by reference to
Incentive Plan* Exhibit 10.11 to First Western Bancorp,
Inc.'s 1992 Form 10-K
10.6 First Western Bancorp, Inc. Deferred Incorporated herein by reference to
Compensation Plan for Directors* Exhibit 10.1 to First Western Bancorp,
Inc.'s Quarterly Report on Form 10-Q for
the Quarter ended March 31, 1995
10.7 First Western Bancorp, Inc. 1993 Incorporated herein by reference to
Supplemental Benefit Program* Exhibit 10.11 to First Western Bancorp,
Inc.'s 1993 Form 10-K
10.8 Supplemental Executive Retirement Plan* Incorporated herein by reference to
Exhibit 10.9 to First Western Bancorp,
Inc.'s 1995 Form 10-K
10.9 Change in Control Agreement between Incorporated herein by reference to
Thomas J. O'Shane and First Western Exhibit 10.10 to First Western Bancorp,
Bancorp, Inc.* Inc.'s 1995 Form 10-K
10.10 Change in Control Agreement between Incorporated herein by reference to
Robert H. Young and First Western Exhibit 10.11 to First Western Bancorp,
Bancorp, Inc. Inc.'s 1995 Form 10-K
</TABLE>
II-1
<PAGE> 74
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION SEQUENTIAL PAGE NUMBER
- ------ ----------------------------------------- -----------------------------------------
<S> <C> <C>
10.11 Change in Control Agreement between Incorporated herein by reference to
Stephen R. Sant and First Western Exhibit 10.12 to First Western Bancorp,
Bancorp, Inc. Inc.'s 1995 Form 10-K Inc.
10.12 Change in Control Agreement between Incorporated herein by reference to
Richard L. Stover and First Western Exhibit 10.12 to First Western Bancorp,
Bancorp, Inc.* Inc.'s 1996 Form 10-K
10.13 Registration Rights Agreement among First Incorporated herein by reference to
Western Bancorp, Inc., First Western Exhibit 10.03 to First Western Bancorp,
Capital Trust I, and Sandler O'Neill & Inc.'s Quarterly Report on Form 10-Q for
Partners, L.P. the Quarter Ended March 31, 1997
10.14 Amended and Restated Declaration of Trust Incorporated herein by reference to
of First Western Capital Trust I Exhibit 10.01 to First Western Bancorp,
Inc.'s Quarterly Report on Form 10-Q for
the Quarter Ended March 31, 1997
10.15 Indenture between First Western Bancorp, Incorporated herein by reference to
Inc. and The Chase Manhattan Bank Exhibit 10.02 to First Western Bancorp,
Inc.'s Quarterly Report on Form 10-Q for
the Quarter Ended March 31, 1997
15.1 Letter re: Unaudited Interim Financial Previously Filed
Information
21.1 Subsidiaries of the Registrant Incorporated herein by reference to
Exhibit 21.1 to First Western Bancorp,
Inc.'s 1996 Form 10-K
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Kirkpatrick & Lockhart LLP Previously Filed
(included in Exhibit 5.1)
25.1 Statement re: Eligibility of Trustee for Previously Filed
Series B 9.875% Junior Subordinated
Deferrable Interest Debentures of First
Western Bancorp, Inc.
25.2 Statement re: Eligibility of Trustee for Previously Filed
Series B 9.875% Capital Securities of
First Western Capital Trust I
25.3 Statement re: Eligibility of Trustee for Previously Filed
First Western Bancorp, Inc. Guarantee
with respect to Series B 9.875% Capital
Securities
99.1 Letter of Transmittal Previously Filed
99.2 Notice of Guaranteed Delivery Previously Filed
</TABLE>
- ---------
* Indicates exhibit is a management contract or compensation plan or
arrangement.
II-2
<PAGE> 75
SIGNATURES
Pursuant to the requirement of the Securities Act of 1933, the Registrants
have duly caused this Registration Statement to be signed on their behalf by the
undersigned, thereunto duly authorized, in the City of New Castle, Commonwealth
of Pennsylvania, on July 22, 1997.
FIRST WESTERN BANCORP, INC.
FIRST WESTERN CAPITAL TRUST I
By: /s/ THOMAS J. O'SHANE
------------------------------------
Thomas J. O'Shane
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dated indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ------------------------------------- -----------------
<S> <C> <C>
/s/ THOMAS J. O'SHANE President, Chief Executive Officer July 22, 1997
- ------------------------------------- and Director (Principal Executive
Thomas J. O'Shane Officer)
/s/ ROBERT H. YOUNG Executive Vice President, July 22, 1997
- ------------------------------------- Chief Financial Officer,
Robert H. Young Secretary and Treasurer
(Principal Financial Officer)
/s/ KENNETH J. ROMIG Vice President and Controller July 22, 1997
- ------------------------------------- (Principal Accounting Officer)
Kenneth J. Romig
* Director July 22, 1997
- -------------------------------------
Wendell H. Boyd
* Director July 22, 1997
- -------------------------------------
James M. Campbell
* Director July 22, 1997
- -------------------------------------
Robert C. Duvall
* Director July 22, 1997
- -------------------------------------
Louis J. Kasing, Jr.
* Director July 22, 1997
- -------------------------------------
John W. Lehman, M.D.
* Senior Vice President, Legal Counsel, July 22, 1997
- ------------------------------------- Assistant Secretary and Director
Thomas S. Mansell
</TABLE>
II-3
<PAGE> 76
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ------------------------------------- -----------------
<S> <C> <C>
* Director July 22, 1997
- -------------------------------------
Floyd H. McElwain
* Director July 22, 1997
- -------------------------------------
Richard C. McGill
* Director July 22, 1997
- -------------------------------------
Harold F. Reed, Jr.
* Director July 22, 1997
- -------------------------------------
John W. Sant
*By: /s/ ROBERT H. YOUNG
- -------------------------------------
Robert H. Young
Attorney-in-fact, pursuant
to power of attorney
previously filed as part of this
Registration Statement
</TABLE>
II-4
<PAGE> 77
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION SEQUENTIAL PAGE NUMBER
- ------ ----------------------------------------- -----------------------------------------
<S> <C> <C>
3.1 Restated Articles of Incorporation Incorporated herein by reference to
Exhibit 3.1 to First Western Bancorp,
Inc.'s Quarterly Report on Form 10-Q for
the Quarter ended March 31, 1993
3.2 Bylaws Incorporated herein by reference to
Exhibit 3.2 to First Western Bancorp,
Inc.'s Quarterly Report on Form 10-Q for
the Quarter ended June 30, 1995
5.1 Opinion of Kirkpatrick & Lockhart LLP Previously Filed
10.1 Loan Agreement between First Western Incorporated herein by reference to
Bancorp, Inc. and Pittsburgh National Exhibit 10.8 to First Western Bancorp,
Bank dated November 29, 1990 Inc.'s 1990 Form 10-K
10.2 Amendment to Loan Agreement between First Incorporated herein by reference to
Western Bancorp, Inc. and Pittsburgh Exhibit 10.12 to First Western Bancorp,
National Bank dated September 30, 1992 Inc.'s 1993 Form 10-K
10.3 Second Amendment to Loan Agreement Incorporated herein by reference to
between First Western Bancorp, Inc. and Exhibit 10.1 to First Western Bancorp,
PNC Bank, National Association dated June Inc.'s Quarterly Report on Form 10-Q for
24, 1994 the Quarter ended June 30, 1994
10.4 Incentive Stock Option Plan for Key Incorporated herein by reference to
Officers* as amended effective February Exhibit 10.5 to First Western Bancorp,
21, 1995 Inc.'s 1994 Form 10-K
10.5 First Western Bancorp, Inc. Annual Incorporated herein by reference to
Incentive Plan* Exhibit 10.11 to First Western Bancorp,
Inc.'s 1992 Form 10-K
10.6 First Western Bancorp, Inc. Deferred Incorporated herein by reference to
Compensation Plan for Directors* Exhibit 10.1 to First Western Bancorp,
Inc.'s Quarterly Report on Form 10-Q for
the Quarter ended March 31, 1995
10.7 First Western Bancorp, Inc. 1993 Incorporated herein by reference to
Supplemental Benefit Program* Exhibit 10.11 to First Western Bancorp,
Inc.'s 1993 Form 10-K
10.8 Supplemental Executive Retirement Plan* Incorporated herein by reference to
Exhibit 10.9 to First Western Bancorp,
Inc.'s 1995 Form 10-K
10.9 Change in Control Agreement between Incorporated herein by reference to
Thomas J. O'Shane and First Western Exhibit 10.10 to First Western Bancorp,
Bancorp, Inc.* Inc.'s 1995 Form 10-K
10.10 Change in Control Agreement between Incorporated herein by reference to
Robert H. Young and First Western Exhibit 10.11 to First Western Bancorp,
Bancorp, Inc. Inc.'s 1995 Form 10-K
10.11 Change in Control Agreement between Incorporated herein by reference to
Stephen R. Sant and First Western Exhibit 10.12 to First Western Bancorp,
Bancorp, Inc. Inc.'s 1995 Form 10-K Inc.
</TABLE>
<PAGE> 78
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION SEQUENTIAL PAGE NUMBER
- ------ ----------------------------------------- -----------------------------------------
<S> <C> <C>
10.12 Change in Control Agreement between Incorporated herein by reference to
Richard L. Stover and First Western Exhibit 10.12 to First Western Bancorp,
Bancorp, Inc.* Inc.'s 1996 Form 10-K
10.13 Registration Rights Agreement among First Incorporated herein by reference to
Western Bancorp, Inc., First Western Exhibit 10.03 to First Western Bancorp,
Capital Trust I, and Sandler O'Neill & Inc.'s Quarterly Report on Form 10-Q for
Partners, L.P. the Quarter Ended March 31, 1997
10.14 Amended and Restated Declaration of Trust Incorporated herein by reference to
of First Western Capital Trust I Exhibit 10.01 to First Western Bancorp,
Inc.'s Quarterly Report on Form 10-Q for
the Quarter Ended March 31, 1997
10.15 Indenture between First Western Bancorp, Incorporated herein by reference to
Inc. and The Chase Manhattan Bank Exhibit 10.02 to First Western Bancorp,
Inc.'s Quarterly Report on Form 10-Q for
the Quarter Ended March 31, 1997
15.1 Letter re: Unaudited Interim Financial Previously Filed
Information
21.1 Subsidiaries of the Registrant Incorporated herein by reference to
Exhibit 21.1 to First Western Bancorp,
Inc.'s 1996 Form 10-K
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Kirkpatrick & Lockhart LLP Previously Filed
(included in Exhibit 5.1)
25.1 Statement re: Eligibility of Trustee for Previously Filed
Series B 9.875% Junior Subordinated
Deferrable Interest Debentures of First
Western Bancorp, Inc.
25.2 Statement re: Eligibility of Trustee for Previously Filed
Series B 9.875% Capital Securities of
First Western Capital Trust I
25.3 Statement re: Eligibility of Trustee for Previously Filed
First Western Bancorp, Inc. Guarantee
with respect to Series B 9.875% Capital
Securities
99.1 Letter of Transmittal Previously Filed
99.2 Notice of Guaranteed Delivery Previously Filed
</TABLE>
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* Indicates exhibit is a management contract or compensation plan or
arrangement.
<PAGE> 1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-29387 of First Western Bancorp, Inc. on Form S-4
of our report dated January 24, 1997 (February 13, 1997 as to Note 21),
appearing in and incorporated by reference in the Annual Report on Form 10-K of
First Western Bancorp, Inc. for the year ended December 31, 1996 and to the
reference to us under the heading "Independent Public Accountants" in the
Prospectus, which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
- -------------------------
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
July 22, 1997
