<PAGE>
As filed with the Securities and Exchange Commission on August 26, 1999
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________________
WESTBANK CORPORATION
(Exact name of registrant as specified in its charter)
_________________________
Delaware 04-2830731
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
225 Park Avenue
West Springfield, Massachusetts 01089-3326
(413) 747-1400
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
_________________________
WESTBANK CAPITAL TRUST I
(Exact name of registrant as specified in its charter)
_________________________
Delaware Pending
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
c/o Westbank Corporation
225 Park Avenue
West Springfield, Massachusetts 01089-3326
(413) 747-1400
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
_________________________
Donald R. Chase
President and Chief Executive Officer
Westbank Corporation
225 Park Avenue
West Springfield, Massachusetts 01089-3326
(413) 747-1400
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
_________________________
Copies of communications to:
Richard A. Schaberg, Esq. Stephen J. Coukos, Esq.
Thacher Proffitt & Wood Sullivan & Worcester LLP
1700 Pennsylvania Avenue, N.W. One Post Office Square
Suite 800 Boston, MA 02109
Washington, DC 20006 (617) 338-2800
(202) 347-8400
_________________________
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.
_________________________
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. [ ]
<PAGE>
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legal facsimile thereof, pursuant to Item 11(a)(1) of
this Form, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]______________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]________________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]___________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
_________________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================================================
Amount Proposed Maximum Proposed Maximum Amount of
Title of Shares to be Offering Price Aggregate Offering Registration
to be Registered Registered Per Unit(1) Price (1) Fee
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Junior Subordinated Deferrable Interest 1,700,000 $10.00 $17,000,000 $4,726
Debentures of Westbank Corporation(2)
- -----------------------------------------------------------------------------------------------------------------------
Capital Securities of Westbank Capital Trust I 1,700,000 $10.00 $17,000,000 N/A
- -----------------------------------------------------------------------------------------------------------------------
The Westbank Corporation Guarantee with
respect to Capital Securities(3)(4) N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------
Total 100% $17,000,000(5) $4,726
=======================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee.
(2) The Junior Subordinated Deferrable Interest Debentures will be purchased by
Westbank Capital Trust I with the proceeds of the sale of the Capital
Securities.
(3) No separate consideration will be received for the Westbank Corporation
Guarantee.
(4) This Registration Statement is deemed to cover the Junior Subordinated
Deferrable Interest Debentures of Westbank Corporation, the rights of
holders of Junior Subordinated Deferrable Interest Debentures of Westbank
Corporation under the Indenture, the rights of holders of Capital
Securities of Westbank Capital Trust I under the Trust Agreement, the
rights of holders of the Capital Securities under the Guarantee, which,
taken together, fully, irrevocably and unconditionally guarantee all of the
respective obligations of Westbank Capital Trust I under the Capital
Securities.
(5) Such amount represents the principal amount of Junior Subordinated
Deferrable Interest Debentures issued at their principal amount and the
issue price rather than the principal amount of Junior Subordinated
Deferrable Interest Debentures issued at an original issue discount. Such
amount also represents the initial public offering price of the Capital
Securities of Westbank Capital Trust I.
_________________________
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
PRELIMINARY PROSPECTUS
Subject to Completion, dated , 1999
1,700,000 Capital Securities
[LOGO] WESTBANK CAPITAL TRUST I
% Capital Securities fully guaranteed by
Westbank Corporation
- --------------------------------------------------------------------------------
Westbank Corporation: We are a bank holding company that offers, through
our subsidiaries Park West Bank and Trust Company and Cargill Bank, a full range
of community banking and related financial services to our customers in
Massachusetts and Connecticut.
Westbank Capital Trust I: Westbank Capital Trust I is a subsidiary of
Westbank Corporation and a statutory business trust created under Delaware law.
The Offering: In connection with this offering, the Trust will:
. sell capital securities to the public and common securities to us;
. use the proceeds from these sales to buy an equivalent principal amount
of % subordinated debentures due , 2029 issued by us; and
. distribute the future cash payments it receives on the subordinated
debentures to the holders of the capital and common securities.
The capital securities represent preferred ownership interests in the
assets of the Trust.
Each capital security pays a cumulative quarterly distribution at the
annual rate of % of the $10.00 liquidation amount of each capital security,
beginning , 1999.
Application has been made to have the capital securities listed on the
Nasdaq National Market under the symbol "WBKCP." If approved for listing, we
expect trading to commence within 30 days after the capital securities are first
issued.
The capital securities will be ready for delivery in book-entry form only
through The Depository Trust Company on or about , 1999.
We will sell our subordinated debentures to the Trust, which will be its
sole asset. We may defer interest payments on the subordinated debentures from
time to time for up to 20 consecutive quarterly periods. We may redeem the
subordinated debentures on or after 2004, and before , 2004 upon the
occurrence of a tax, investment company or bank regulatory event described in
this prospectus.
Investing in the capital securities involves certain risks which are
described in the "Risk Factors" section beginning on page of this
prospectus. You should read this prospectus carefully before you invest in the
capital securities.
Neither the SEC nor any state securities commission has approved or
disapproved of the capital securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
The capital securities are not deposits or other obligations of a bank or
savings association and are not insured by the Federal Deposit Insurance
Corporation or any other governmental agency.
Per capital security Total
------------------------ ------------
Public Offering Price............... $ 10.00 $17,000,000
Proceeds to the Trust............... $ 10.00 $17,000,000
The Trust will use all proceeds to purchase the subordinated debentures. We
will pay all underwriting discounts and commissions, equal to $.035 per capital
security or a total of $595,000.
Tucker Anthony Cleary Gull
The date of this prospectus is ___________ ___, 1999.
<PAGE>
[MAP OF LOCATIONS INCLUDING NLT BRANCHES TO BE ACQUIRED]
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Forward-looking Statements Relating to Future Performance or Expectations.....................
Summary Information...........................................................................
Summary Selected Consolidated Financial Data..................................................
Risk Factors..................................................................................
Westbank Corporation..........................................................................
Management....................................................................................
Westbank Capital Trust I......................................................................
Use of Proceeds...............................................................................
Capitalization................................................................................
Accounting Treatment..........................................................................
Description of Capital Securities.............................................................
Description of Subordinated Debentures........................................................
Description of Guarantee......................................................................
Relationship Among the Capital Securities, the Subordinated Debentures and the Guarantee......
Certain Federal Income Tax Consequences.......................................................
ERISA Considerations..........................................................................
Underwriting..................................................................................
Legal Matters.................................................................................
Experts.......................................................................................
Where You Can Find More Information...........................................................
Additional Information We Have Incorporated in the Prospectus.................................
Annual Report on Form 10-K/A for the Year Ended December 31, 1998............................. A-1
Quarterly Report on Form 10-Q for the Three and Six Months Ended June 30, 1999................ B-1
</TABLE>
3
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Certain persons participating in this offering may engage in transactions that
stabilize, maintain, or otherwise affect the price of the capital securities
being offered, including over-alloting shares of the capital securities and
bidding for and purchasing such securities at a level above that which otherwise
might prevail in the open market. For a description of these activities, see
"Underwriting." Such stabilizing transactions, if commenced, may be discontinued
at any time. In connection with this offering, certain underwriters (and selling
group members) may engage in passive market making transactions in the capital
securities on the Nasdaq National Market in accordance with Rule 103 of
Regulation M. See "Underwriting."
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations not contained in this prospectus in
connection with the offering of the capital securities. If given or made, such
information or representations must not be relied upon as having been authorized
by us or the underwriters. This prospectus does not constitute an offer to sell,
or a solicitation of an offer to buy, the capital securities in any jurisdiction
where, or to any person to whom, it is unlawful to make such offer or
solicitation. Neither the delivery of this prospectus nor any sale made
hereunder shall, under any circumstances, imply that there has not been any
change in the facts in this prospectus or our affairs since the date of this
prospectus.
4
<PAGE>
Summary Information
The following information is a summary of the major terms of the offering
of capital securities. You should carefully read the more detailed discussion
and financial information appearing elsewhere or incorporated in this prospectus
before you decide to invest in the capital securities. In this prospectus,
references to "we," "us," "our" and "Westbank" are to Westbank Corporation
Westbank Corporation
Overview
We are a Massachusetts chartered bank holding company headquartered in West
Springfield, Massachusetts. As a registered bank holding company, we are subject
to regulation by the Board of Governors of the Federal Reserve System (which we
refer to in this prospectus as the "Federal Reserve Board" or the "FRB").
Through our wholly-owned subsidiaries, Park West Bank and Trust Company ("Park
West") and Cargill Bank ("Cargill"), we provide community banking services to
our principal market areas of western Massachusetts and northeast Connecticut.
We have grown to $434.4 million in assets and $370.1 million in deposits at
June 30, 1999. Our deposits are insured by the Federal Deposit Insurance
Corporation (the "FDIC") up to FDIC limits (generally $100,000 per depositor).
Our principal executive office is located at 225 Park Avenue, West
Springfield, Massachusetts 01089 and our telephone number is (413) 747-1400.
Park West Bank & Trust
Park West is chartered as a state bank and trust company by The
Commonwealth of Massachusetts. Its deposits are insured by the Bank Insurance
Fund ("BIF") of the FDIC, and it is subject to regulation by the Massachusetts
Commissioner of Banks and the FDIC. Park West offers a full range of retail
banking services to individuals, businesses, and nonprofit organizations through
thirteen banking offices located in Hampden County, Massachusetts. Such services
include a wide range of retail checking and savings accounts, loans, safe
deposit facilities, and automated teller machines at selected branch locations.
As of June 30, 1999, Park West had total assets of $385.0 million.
Park West also provides lending, depository and related financial services
to commercial, industrial, financial, and governmental customers. These services
include short and long term loans and revolving credit arrangements, letters of
credit, inventory and accounts receivable financing, real estate construction
lending, and mortgage loans.
Park West also operates a Trust Department which provides services normally
associated with holding property in a fiduciary or agency capacity. The Trust
Department had $114.0 million under management as of June 30, 1999.
5
<PAGE>
Cargill Bank
On January 29, 1999, we acquired Cargill Bancorp, Inc., the holding company
for Cargill Bank, which now retains its name and charter as a separate
subsidiary of Westbank. Cargill is a Connecticut chartered savings and loan
association which provides a variety of deposit, loan and investment products
and services to small businesses and consumers. Cargill's deposits are insured
by the Savings Association Insurance Fund of the FDIC, and is regulated by the
Office of Thrift Supervision (the "OTS") and the Commissioner of Banking of the
State of Connecticut. The business of Cargill is to attract deposits from the
general public and to make loans secured by mortgages on residential and other
real estate, enabling borrowers to purchase, refinance, construct or improve
property. In addition, Cargill makes consumer loans and holds investment
securities. Cargill's market area is northeastern Connecticut and is made up
primarily of the towns of Putnam, Woodstock, Pomfret, Thompson, Killingly and
Eastford. Cargill operates three offices, the main office in Putnam and branch
offices in Quinebaug, which is part of Thompson, and Woodstock. The region in
which Cargill operates is 30 miles south of Worcester, Massachusetts and
centrally located between Boston, Massachusetts, Providence Rhode Island and
Hartford, Connecticut. As of June 30, 1999 Cargill had total assets of $49.0
million.
Business Strategy
We seek growth by developing our core banking operations, deepening our
market penetration by providing additional banking services to our present
customers, expanding our geographic market area and customer base through
selective acquisitions of other banks and by opening new offices in selected
areas. The major components of our growth-oriented community banking strategy
are set forth below:
. Growth of Our Community Banking Franchise
. Becoming a Full-Service Financial Provider
. Selective Acquisitions and Branch Expansion
. Efficient Capital Management and Consistent Shareholder Returns
Pending Acquisition of Two New London Trust, FSB Branches
On April 12, 1999, we announced the signing of a definitive agreement to
purchase two branches located in Danielson and Putnam, Connecticut from New
London Trust, FSB. The transaction, which is subject to regulatory approval, is
currently expected to close in the fourth quarter of 1999. Cargill has filed the
regulatory applications necessary to obtain the required regulatory approvals.
Under the agreement, Cargill will acquire all of the deposits and certain
loans associated with these two branches. At June 30, 1999, the branches had
approximately $109.3 million in deposits and approximately $86.5 million in
loans.
6
<PAGE>
Westbank Capital Trust I
We organized the Trust as a statutory Delaware business trust on [ ],
1999.The Trust will sell its capital securities to the public and its common
securities to us. The Trust will use all of the proceeds from the sale of the
capital securities and the common securities to buy our % subordinated
debentures due , 2029. The subordinated debentures have the same financial
terms as the capital securities. We are obligated to make interest payments
under the subordinated debentures to the Trust, which the Trust will use to make
distributions on the capital securities to you. Our obligations under the
subordinated debentures are unsecured and rank junior to all of our other
borrowings, except borrowings that by their terms rank equal or junior to the
capital securities. We will, on a subordinated basis, fully, irrevocably and
unconditionally guarantee the payment by the Trust of the amounts that are
required to be paid on the capital securities, to the extent that the Trust has
funds available for such payment.
The Trust intends to maintain its status as an entity that is not taxable
as a corporation for federal income tax purposes. The Trust has no separate
financial statements. The statements would not be meaningful to you, because the
Trust has no independent operations. The Trust has a term of approximately 30
years, but may be dissolved earlier.
The Offering
Securities Offered....................... The underwriter is offering
1,700,000 % capital securities, each
with a liquidation amount of $10.00.
Each capital security represents an
undivided preferred beneficial
interest in the assets of the Trust.
Each capital security that you own
will entitle you to receive
quarterly distributions as described
in this prospectus.
The Offering Price....................... The Trust is offering capital
securities at a price of $10.00 for
each capital security.
Distributions............................ If you purchase any capital
securities, you will be entitled to
receive quarterly cash distributions
at an annual rate of % of the
liquidation amount of $10.00 for
each capital security. You will be
entitled to be paid distributions on
March 31, June 30, September 30 and
December 31 of each year, beginning
, 1999. The amount of each
distribution will include amounts
accrued up to the date the
distribution is due. The
distribution payable on September
30, 1999 will equal the amount
accrued from , 1999 through
, 1999. These payments are
identical to the payments that we
are required to make under the
subordinated debentures.
Subordinated Debentures.................. The Trust will invest the proceeds
from the issuance of the capital
securities and the common securities
in an equivalent amount of our %
subordinated debentures.
7
<PAGE>
Maturity................................. The subordinated debentures are
scheduled to mature on , 2029
unless we shorten the maturity date.
We will not shorten the maturity
date unless we have first received
any required regulatory approvals.
The Trust must redeem the capital
securities when the subordinated
debentures are paid on the maturity
date, or following any earlier
redemption of the subordinated
debentures.
We Have the Ability to
Defer Payment of Your
Distributions......................... We can, on one or more occasions,
defer interest payments on the
subordinated debentures for up to 20
consecutive quarters, unless an
event of default exists under the
subordinated debentures. We cannot
defer interest payments beyond ,
2029, the stated maturity date of
the subordinated debentures.
If we defer interest payments on the
subordinated debentures, the Trust
will also defer distributions on the
capital securities. During this
deferral period, the capital
securities will still accumulate
distributions at an annual rate of
% of the liquidation amount
of $10.00 for each capital security.
Additionally, any unpaid
distributions on the capital
securities will accumulate
additional distributions at the same
rate, compounded quarterly, to the
extent permitted by law. If the
Trust defers your distributions, you
will still be required to accrue
interest income and include it in
your gross income for United States
federal income tax purposes, even if
you are a cash basis taxpayer.
Our Guarantee of
the Capital Securities................ We will fully, irrevocably and
unconditionally guarantee, on a
subordinated basis, to the extent
that the Trust has funds legally
available to make the following
payment obligations:
. payment of distributions on the
capital securities,
. payments on liquidation of the
Trust, and
. payments on maturity or earlier
redemption of the capital
securities.
If we do not make a payment on the
subordinated debentures, the Trust
will not have sufficient funds to
make payments on the capital
securities. Our guarantee does not
cover the payment of distributions
when the Trust does not have
sufficient funds to pay the
distributions. Our obligations under
the guarantee and under the
subordinated debentures are
unsecured and rank junior to all of
our other
8
<PAGE>
borrowings, except borrowings that
by their terms rank equal or junior
to the subordinated debentures.
Redemption............................... The Trust will redeem the capital
securities when we pay the
subordinated debentures at maturity
on , 2029. In addition, if we
redeem some or all of the
subordinated debentures before
maturity, the Trust will use the
cash it receives from the redemption
of the subordinated debentures to
redeem proportionately an amount of
capital securities and common
securities having an aggregate
liquidation amount (which is the
number of securities times $10.00)
equal to the aggregate principal
amount of the subordinated
debentures that we redeem.
We can redeem some or all but not
less than all of the subordinated
debentures before , 2004 at
their principal amount plus any
accrued and unpaid interest to the
date of redemption at any time on or
after , 2004.
We can redeem all of the
subordinated debentures before ,
2029 at their principal amount plus
any accrued and unpaid interest to
the date of redemption at any time
if changes in bank regulatory,
investment company or tax laws occur
that would adversely affect the
status of the Trust, the capital
securities or the subordinated
debentures.
We may have to obtain regulatory
approvals, including the approval of
the Federal Reserve Board, before we
redeem any subordinated debentures
prior to maturity.
Distribution of
Subordinated Debentures............... We have the right at any time to
dissolve the Trust and cause the
subordinated debentures to be
distributed to holders of capital
securities in liquidation of the
Trust, subject to receiving prior
approval of the FRB to do so if we
are then required under applicable
capital guidelines or policies of
the FRB. See "Description of Capital
Securities--Liquidation of the Trust
and Distribution of Subordinated
Debentures."
Trustees of Westbank
Capital Trust I....................... There are five trustees of the
Trust. Wilmington Trust Company will
be the property trustee, Wilmington
Trust Company will be the Delaware
trustee and three individuals who
are employees of Westbank will be
the administrative trustees of the
Trust.
As the sole holder of the common
securities, we can replace or remove
any of the trustees. However, if an
event of default exists under the
trust agreement governing the Trust,
9
<PAGE>
only the holders of a majority in
aggregate liquidation amount of the
capital securities would be able to
remove and replace the property
trustee and the Delaware trustee. As
owner of all of the common
securities, only we can remove or
replace the administrative trustees.
The duties and obligations of each
trustee are governed by the trust
agreement.
Form of the Capital Securities
When They Are Issued.................. The capital securities will be
represented by one or more global
securities that will be deposited
with and registered in the name of
The Depository Trust Company, New
York, New York ("DTC") or its
nominee. This means that you will
not receive a physical certificate
for the capital securities. We
expect that the capital securities
will be ready for delivery through
DTC on or about , 1999.
Purchases of the Capital
Securities for an Employee
Benefit Plan.......................... If you are purchasing the capital
securities for an employee benefit
plan, you should read "ERISA
Considerations" for a discussion of
prohibited transactions and your
fiduciary duties.
Limited Voting Rights.................... If you purchase the capital
securities, you will have no voting
rights, except in limited
circumstances. See "Description of
Capital Securities--Voting Rights;
Amendment of Trust Agreement."
Use of proceeds.......................... All the proceeds to the Trust from
the sale of the capital securities
and the common securities will be
invested by the Trust in the
subordinated debentures. Of the
$17.0 million in proceeds, we will
contribute approximately $16.0
million in net proceeds to Cargill
as equity capital to support the
pending acquisition of two
Connecticut branches of New London
Trust, FSB. The offering of the
capital securities is not contingent
upon consummation of the pending
branch acquisition. If the branch
acquisition is not consummated, we
intend to use the proceeds for
expansion of our lending and
investment activities and for
general corporate purposes.
Listing of the Capital
Securities............................ Application has been made to have
the capital securities listed on the
Nasdaq National Market under the
symbol "WBKCP." If approved for
listing, we expect trading to
commence within 30 days after the
capital securities are first issued.
10
<PAGE>
Summary Selected Consolidated Financial Data (Unaudited)
We have selected highlights from our consolidated financial data as of, and
for the quarters ended June 30, 1999 and 1998 and as of, and for the five years
ended December 31, 1998. You should read our consolidated financial statements
and related notes included in our annual report on Form 10-K/A, for the year
ended December 31, 1998 and the quarterly reports on Form 10-Q for the three and
six months ended June 30, 1999, which we have attached to this prospectus as
Appendix A and Appendix B, respectively.
The unaudited selected consolidated financial information set forth below
gives effect to the merger with Cargill Bancorp, Inc. on January 29, 1999 under
the pooling-of-interests accounting method. The selected statement of income
data treats the merger as if the respective companies had been combined for all
periods presented. Westbank's fiscal year ends December 31 and Cargill's fiscal
year ends September 30.
11
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<TABLE>
<CAPTION>
At or For the Six
Months Ended
June 30, At of For the Years Ended December 31,
--------------------- -------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
--------- --------- -------- --------- --------- --------- ---------
(Dollars in thousands, excluding per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED BALANCE SHEET
DATA:
Total assets.......................... $434,423 $397,898 $402,623 $355,567 $331,803 $299,590 $284,814
Cash and cash equivalents............. 14,682 29,381 14,240 16,526 25,176 14,953 14,349
Loans, net............................ 338,164 287,389 293,113 268,254 254,948 233,527 225,193
Securities............................ 70,195 69,244 84,328 60,312 40,584 36,651 33,580
Deposits.............................. 370,084 347,636 342,267 314,679 298,014 269,478 256,668
Borrowed funds........................ 32,057 18,796 27,807 11,884 9,269 7,677 8,625
Stockholders' equity.................. 30,966 29,359 30,490 26,918 22,717 20,786 17,355
SELECTED STATEMENT OF
INCOME DATA:
Total interest and dividend income.... $ 14,996 $ 13,878 $ 28,631 $ 26,724 $ 24,059 $ 23,475 $ 19,647
Total interest expense................ 6,806 6,381 13,292 12,091 10,524 10,145 7,481
-------- -------- -------- -------- -------- -------- --------
Net interest income................... 8,190 7,497 15,339 14,633 13,535 13,330 12,166
Provision for loan losses............. 77 40 41 306 944 2,907 1,528
-------- -------- -------- -------- -------- -------- --------
Net interest income after provision
for loan losses..................... 8,113 7,457 15,298 14,327 12,591 10,423 10,638
Non-interest income................... 1,110 1,257 2,427 2,529 2,340 3,104 2,641
Non-interest expenses................. 5,854 5,693 12,200 11,066 11,278 9,969 11,234
-------- -------- -------- -------- -------- -------- --------
Income before income taxes............ 3,369 3,021 5,525 5,790 3,653 3,558 2,045
Income taxes (benefit)................ 1,277 1,182 2,148 2,406 1,516 1,132 (307)
-------- -------- -------- -------- -------- -------- --------
Net income before cumulative effect
of accounting change................ 2,092 1,839 3,337 3,384 2,137 2,426 2,352
Cumulative effect of accounting
change for income taxes............. - - - - - - (22)
-------- -------- -------- -------- -------- -------- --------
Net income............................ $ 2,092 $ 1,839 $ 3,377 $ 3,384 $ 2,137 $ 2,426 $ 2,330
======== ======== ======== ======== ======== ======== ========
PER SHARE DATA:
Basic earnings per share.............. $ 0.50 $ 0.45 $ 0.82 $ 0.88 $ 0.59 $ 0.69 $ 0.67
Diluted earnings per share............ 0.48 0.43 0.79 0.85 0.57 0.67 0.65
Book value per share.................. 7.32 7.08 7.26 6.84 6.19 5.89 5.25
Dividends per share................... 0.20 0.20 0.40 0.30 0.24 0.20 0.00
</TABLE>
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<TABLE>
<CAPTION>
At or For the Six
Months Ended
June 30, At or For the Years Ended December 31,
---------------------- -------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- ---------- ------------ ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
PERFORMANCE RATIOS(1):
Return on average total assets......... 1.01% 1.00% 0.88% 0.97% 0.68% 0.81% 0.86%
Return on average stockholders' equity. 13.50 12.96 11.55 13.73 9.81 12.29 13.20
Interest rate spread(2)................ 3.49 3.57 3.49 3.74 3.92 4.10 4.30
Interest rate margin(2)................ 4.15 4.31 4.22 4.45 4.62 4.78 4.79
Average earnings assets to average
interest-bearing liabilities........ 119.10 121.09 122.32 119.27 119.37 118.63 116.49
Efficiency ratio(2) (3)................ 62.95 65.03 68.67 64.48 71.04 60.66 75.87
EARNINGS TO FIXED CHARGES
RATIOS(4):
Including interest on deposits......... 1.50x 1.49x 1.42x 1.48x 1.35x 1.35x 1.27x
Excluding interest on deposits......... 7.79 12.85 9.77 20.90 15.00 13.99 11.23
ASSET QUALITY RATIOS:
Nonperforming loans to total loans..... 0.25% 0.35% 0.37% 0.68% 1.23% 2.89% 2.57%
Allowance for loan losses to total
loans............................... 0.80 0.95 0.90 1.13 1.05 1.65 1.49
Allowance for loan losses to non-
performing loans.................... 316.67 273.98 259.24 166.87 85.41 55.42 51.70
Net charge-offs to average loans(1).... 0.01 0.13 0.15 (0.02) 0.88 1.03 0.76
CAPITAL RATIOS:
Stockholders' equity to total assets... 7.12% 7.39% 7.53% 7.44% 7.00% 6.86% 6.44%
Tier 1 risk-based capital ratio........ 11.44 11.89 11.94 11.57 10.58 10.29 9.10
Total risk-based capital ratio......... 12.41 13.00 13.00 12.77 11.76 11.45 10.38
Core capital (to tangible assets)...... 7.12 7.39 7.53 7.44 7.00 6.86 6.44
Tangible capital (to
tangible assets)......................... 7.12 7.39 7.53 7.44 7.00 6.86 6.44
</TABLE>
_________________________
(1) Ratios are annualized for the six months ended June 30, 1999 and 1998.
(2) Ratios are calculated using fully tax equivalent (FTE) interest income.
(3) Equals non-interest expenses divided by net interest income (FTE) plus non-
interest income (excluding net gains or losses on securities transactions).
(4) For purposes of computing the ratios of earnings to fixed charges, earnings
represent income before income taxes plus fixed charges. Fixed charges
represent total interest expense, including and excluding interest on
deposits.
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Risk Factors
An investment in the capital securities involves a number of risks. Some
of these risks relate to the capital securities and others relate to us. We
urge you to carefully consider this information, together with the other
information in this prospectus and in the documents that we have incorporated by
reference in this prospectus.
Risks related to your investment in the capital securities
We will depend primarily on any dividends we may receive from our subsidiaries
in making payments under the subordinated debentures, which could affect the
payments made to you under the capital securities
Because we are a bank holding company, substantially all of our operating
assets are owned by Park West and Cargill. We rely primarily on dividends from
Park West and Cargill to pay principal and interest on our outstanding debt
obligations and corporate expenses. The boards of directors of Park West and
Cargill have the sole discretion to declare and pay any dividends to us. In
addition, the FRB limits all capital distributions by Park West and Cargill
directly or indirectly to us, including dividend payments. Without prior
approval, neither Park West nor Cargill may declare a dividend if the total
amount of all dividends declared by either bank in any calendar year exceeds the
total of their respective retained net income for the current year and retained
net income for the preceding two years. Under federal law, neither Park West
nor Cargill can pay any dividend if, after paying the dividend, it will be
"undercapitalized." The FRB may declare a dividend payment to be unsafe and
unsound even though Park West or Cargill would continue to meet its capital
requirements (imposed by the FDIC and the Massachusetts Commissioner of Banks in
the case of Park West, and the OTS and the Commissioner of Banking of the State
of Connecticut in the case of Cargill) after the dividend. If either Park West
or Cargill do not pay dividends to us and we are unable to make payments on the
subordinated debenture, the Trust will not be able to pay distributions and
other payments on the capital securities and the guarantee will not apply.
We cannot make payments under the guarantee or the subordinated debentures if we
default on our other obligations that are more senior
Our obligations under the guarantee issued for your benefit are unsecured
and rank
. junior to all of our other borrowings, except those borrowings that by
their terms are equal or junior to the guarantee;
. senior to our common stock.
This means that we cannot pay under the guarantee if we default on payments
of any of our other borrowings, unless, by their terms, those borrowings are
equal or junior to the guarantee. If we liquidate, go bankrupt or dissolve, we
would be able to pay under the guarantee only after we have paid all our other
liabilities that are senior to the guarantee.
Our obligations under the subordinated debentures are unsecured and rank
junior in priority to all of our senior indebtedness, which includes our
borrowings that are not by their
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terms equal or junior to the subordinated debentures. If we default on a payment
on our senior indebtedness, we cannot pay principal or interest on the
subordinated debentures. If we liquidate, go bankrupt or dissolve, we would be
able to pay the Trust under the subordinated debentures only after we have made
all payments on our senior indebtedness. As of June 30, 1999, we had senior
indebtedness of $19.1million.
If we default on our obligations to pay principal or interest on the
subordinated debentures, the Trust will not have sufficient funds to make
distribution payments or liquidation payments on the capital securities. As a
result, you will not be able to rely upon our guarantee for payment of these
amounts. Instead, you or the property trustee may enforce the rights of the
Trust under the subordinated debentures against us. For more information,
please refer to "Description of Subordinated Debentures--Enforcement of Certain
Rights by Holders."
The capital securities, the guarantee, the subordinated debentures and the
indenture do not limit our ability or the ability of any subsidiary to incur
additional debt, including debt that is senior in priority of payment.
For more information on payments under the guarantee and the subordinated
debentures, you should refer to "Description of Guarantee--Status of the
Guarantee" and "Description of Subordinated Debentures--Subordination."
We may defer interest payments on the subordinated debentures which could have
adverse consequences to you
We have the right, at one or more times, unless an event of default exists
under the subordinated debentures, to defer interest payments on the
subordinated debentures for up to 20 consecutive quarters, but not beyond
, 2029. If we defer interest payments, the Trust will defer paying
distributions to you on your capital securities during the deferral period.
However, during this period, the capital securities would still accumulate
distributions at the rate of % per year, compounded quarterly, to the
extent permitted by law. During any deferral period, we will be prohibited from
declaring or paying cash dividends on our capital stock or from paying on or
repaying, repurchasing or redeeming any debt which ranks equal or junior to the
subordinated debentures. For more information, please refer to "Description of
Capital Securities--Distributions."
When any deferral period ends and we pay all interest then accrued and
unpaid on the subordinated debentures, we may elect to begin a new deferral
period. There is no limitation on the number of times that we may elect to
begin a deferral period. See "Description of Capital Securities--Distributions"
and "Description of Subordinated Debentures--Option to Extend Interest Payment
Date."
If we exercise our right to defer payments of interest on the subordinated
debentures, you will be required to accrue income as original issue discount
(OID) in respect of the deferred stated interest allocable to your capital
securities for United States federal income tax purposes, which will be
allocated but not distributed to you. As a result, you will be required to
recognize income for United States federal income tax purposes before you
receive any cash and will not receive the cash related to this interest income
from the Trust if you dispose of your capital securities prior to the record
date for the distribution payment. For more information, you should read
"Certain
15
<PAGE>
Federal Income Tax Consequences--Interest Income and Original Issue Discount"
and "--Sales or Redemption of Capital Securities."
We do not currently intend to exercise our right to defer interest payments
on the subordinated debentures. However, if we exercise this right in the
future, the market price of the capital securities will probably be affected.
The capital securities may trade at a price that does not fully reflect the
value of accrued but unpaid interest on the subordinated debentures. If you
sell your capital securities during a deferral period, you may not receive the
same return on your investment as someone else who continues to hold the capital
securities.
The guarantee covers payments only if the Trust has cash available
If we default on our obligations to pay principal or interest on the
subordinated debentures, the Trust will not have sufficient funds to make
distribution payments or liquidation payments on the capital securities.
Because our guarantee does not cover payments when the Trust does not have
sufficient funds, you will not be able to rely upon the guarantee for payment of
these amounts. Instead, you or the property trustee may enforce the rights of
the Trust under the subordinated debentures against us. For more information,
please refer to "Description of Subordinated Debenture--Enforcement of Certain
Rights by Holders."
The Trust may redeem the capital securities before , 2004 if a
special event occurs; you may be taxed on the redemption proceeds and you may
not be able to reinvest the redemption proceeds at the same or a higher rate of
return
If there are changes in bank regulatory, investment company or tax laws
that would adversely affect the status of the Trust, the capital securities or
the subordinated debentures, we have the right to redeem the subordinated
debentures, in whole but not in part. Our redemption of the subordinated
debentures will cause the Trust to redeem the capital securities and the common
securities at a price equal to $10.00 per security plus any accrued and unpaid
distributions. Under current United States federal income tax law, the
redemption of the capital securities would be a taxable event to you. In
addition, depending upon capital market conditions at the time of such
redemptions, you may not be able to reinvest the money you receive in the
redemption at a rate that is equal to or higher than the rate of return you
received on the capital securities. We may have to obtain regulatory approval,
including the approval of the FRB, before we redeem any subordinated debentures.
For more information, you should refer to "Description of Capital Securities--
Redemption."
If we distribute the subordinated debentures, there may be an adverse effect on
the trading market and trading price of your investment, and there may be
adverse tax effects
We may dissolve the Trust at any time and, after satisfying the liabilities
owed to the Trust's creditors under applicable law, the Trust will distribute
the subordinated debenture to you, as a holder of capital securities, and us, as
the holder of common securities.
If the trustees distribute the subordinated debentures to you, we will use
our best efforts to list the subordinated debentures on the Nasdaq National
Market. We cannot be sure that the subordinated debentures will be approved for
listing on Nasdaq or that a trading market will exist for the subordinated
debentures. Accordingly, the capital securities or the subordinated debentures
16
<PAGE>
may trade at a discount from the price that an investor paid to purchase the
capital securities. Because holders of capital securities may receive
subordinated debentures in liquidation of the Trust and because distributions
are otherwise limited to payments on the subordinated debentures, prospective
purchasers of capital securities are also making an investment decision with
regard to the subordinated debentures and should carefully review all the
information regarding the subordinated debentures contained in this prospectus.
Under current United States federal income tax law, a distribution of the
subordinated debentures following the dissolution of the Trust would not be a
taxable event to you unless the distribution occurs at a time when the Trust is
treated as an association taxable as a corporation. However, any distributions
of cash for the subordinated debentures would be a taxable event to you. You
should refer to "Certain Federal Income Tax Considerations--Receipt of
Subordinated Debentures or Cash Upon Liquidation of the Trust" for more
information.
You will have limited voting rights
As a holder of capital securities, you will have limited voting rights. You
can vote only to modify the capital securities and to exercise the Trust's
rights as a holder of the subordinated debentures. In general, only we can
replace or remove any of the trustees. However, if an event of default exists
under the trust agreement, the holders of the capital securities may replace the
property trustee and the Delaware trustee.
We, along with the property trustee and the administrative trustees, may
amend the trust agreement without your consent even if these actions adversely
affect your interests, to ensure that the Trust:
(a) will not be classified as an association taxable as a corporation for
United States federal income tax purposes and
(b) will not be required to register as an "investment company" under the
Investment Company Act of 1940.
You will have no voting rights with respect to any matters submitted to a
vote of our stockholders. For more information on your voting rights, please
refer to "Description of Capital Securities--Voting Rights; Amendment of the
Trust Agreement" and "--Removal of Trustees."
The holders of the capital securities and the subordinated debentures are not
protected by covenants in the indenture and the trust agreement
Neither the indenture, which sets forth the terms of the subordinated
debentures, nor the trust agreement, which sets forth the terms of the capital
securities and the common securities, protects holders of the subordinated
debentures or the capital securities, respectively, in the event we experience
significant adverse changes in our financial condition or results of operations.
In addition, neither the indenture nor the trust agreement limits our ability or
the ability of any subsidiary to incur additional indebtedness. Therefore, the
provisions of these governing instruments should not be considered a significant
factor in evaluating whether we will be able to comply with our obligations
under the subordinated debentures or the guarantee.
17
<PAGE>
Trading price may not reflect the full value of the capital securities
We cannot predict the market prices for the capital securities or the
subordinated debentures that may be distributed if we dissolve the Trust. The
capital securities or the subordinated debentures may trade at a discount from
the price that you paid for the capital securities and may trade at prices that
do not fully reflect the value of any accrued and unpaid interest on the
underlying subordinated debentures.
A holder who uses the accrual method of accounting for tax purposes (and a
cash method holder, if the subordinated debentures are deemed to have been
issued with OID) and who disposes of its capital securities between record dates
for payments of distributions will be required to include accrued but unpaid
interest on the subordinated debentures through the date of disposition in
income as ordinary income (i.e., interest or, possibly, OID), and to add such
amount to its adjusted tax basis in its share of the underlying subordinated
debenture 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. See "Certain Federal Income Tax
Considerations--Interest Income and Original Issue Discount" and "--Sales or
Redemptions of Capital Securities."
We have applied for the capital securities to be listed on the Nasdaq
National Market. Although the underwriter of the offering has indicated that it
intends to make a market in the capital securities, it is not obligated to do so
and may stop any market-making activities at any time without notice. We cannot
be sure that there will be a liquid trading market for the capital securities.
Risks related to Westbank
We may experience difficulties in managing our growth
As part of our general strategy we may continue to acquire banks and businesses
that we believe provide a strategic fit with our business. To the extent that we
do grow, we cannot assure you that we will be able to adequately and profitably
manage our growth. Acquiring other banks and businesses, including but not
limited to our recent acquisition of Cargill, will involve risks commonly
associated with acquisitions, including:
. potential exposure to liabilities of banks and businesses we
acquire;
. difficulty and expense of integrating the operations and personnel
of banks and businesses we acquire;
. potential disruption to our business;
. potential diversion of our management's time and attention;
. impairment of relationships with and the possible loss of key
employees and customers of the banks and businesses we acquire; and
18
<PAGE>
. incurrence of amortization expense if we account for an acquisition
as a purchase.
The success of our internal growth strategy will depend primarily on our
ability to generate an increasing level of loans and deposits at acceptable risk
levels and on acceptable terms without significant increases in non-interest
expenses relative to revenues generated. There is no assurance that we will be
successful in implementing our internal growth strategy. Our financial
performance also depends, in part, on our ability to manage various portfolios
and our ability to successfully introduce additional financial products and
services. There can be no assurance that additional financial products and
services will be introduced or, if introduced, that such financial products and
services will be successful. Furthermore, the success of our growth strategy
will depend on our ability to maintain sufficient regulatory capital levels and
general economic conditions that are beyond our control.
If we are unable to successfully compete for customers in our market area, our
financial condition and results of operations could be adversely affected
We face intense and increasing competition in making loans, attracting
deposits and providing other financial products and services. The market area
in which we operate, has numerous financial institutions that we compete with
for customers. Our competition for loans comes principally from:
. commercial banks . mortgage banking companies
. savings banks . finance companies
. savings and loan associations . credit unions
Our competition for deposits comes principally from:
. commercial banks . brokerage firms
. savings banks . insurance companies
. savings and loan associations . money market mutual funds
. credit unions . mutual funds (such as corporate
and government securities funds)
Many of these competitors have greater financial resources and name
recognition, more locations, more advanced technology and more financial
products to offer than we have. Our profitability depends on our continued
ability to attract new customers and compete in western Massachusetts and
northeastern Connecticut. If we are unable to successfully compete, our
financial condition and results of operations will be adversely affected.
19
<PAGE>
Because we primarily serve Western Massachusetts and Northeast Connecticut, a
decline in the local economy could lower our profitability
We serve the Hampden County area of western Massachusetts with our main
office and twelve Park West branches and the Putnam County area of northeast
Connecticut with our three Cargill locations. The level of our profits depend
on providing products and services to customers in this local region. An
increase in unemployment, a decrease in real estate values or an increase in
interest rates are among the factors that could weaken the local economy. With
a weaker local economy:
. customers may not want or need our products and services,
. borrowers may be unable to repay their loans,
. the value of the collateral securing our loans to borrowers may
decline, and
. the overall quality of our loan portfolio may decline.
Making mortgage loans is a significant source of our profits. If customers
in the local area do not want these loans, our profits may decrease. Although
we could make other investments, we may earn less revenue on these investments
than on loans. Also, our losses on loans may increase if borrowers are unable
to make payments on their loans.
Our future profits will be affected by our ability to successfully integrate the
new branches to be acquired from New London Trust, FSB
Cargill has agreed, subject to regulatory approval, to purchase two
branches located in Danielson and Putnam, Connecticut. Under the agreement,
Cargill will acquire all of the deposits and certain of the loans associated
with these branches (approximately $109.3 million and $86.5 million,
respectively, as of June 30, 1999). Our future profits will be affected by
Cargill's ability to retain the acquired deposits, to generate revenues from the
new locations, to manage the costs associated with the acquisition and to
otherwise successfully integrate the new branches into its operations.
Interest rate changes may reduce our profitability
To be profitable, we have to earn more money in interest income and fee
income than we pay as interest on deposits and other interest-bearing
liabilities and as other expenses. If interest rates fall, the amount of
interest we earn on loans, and investment securities may decrease more quickly
than the amount of interest we pay on deposits and other interest-bearing
liabilities. This would result in a decrease in our profitability.
Changes in the level or structure of interest rates also affect
. our ability to originate loans,
. the value of our loan and securities portfolios,
. our ability to realize gains from the sale of loans and securities,
20
<PAGE>
. the average life of our deposits and
. our ability to obtain deposits.
Fluctuations in interest rates will ultimately affect both the level of income
and expense we record on a large portion of our assets and liabilities, and the
market value of all interest-earning assets, other than interest-earning assets
that mature in the short term. Our interest rate management strategy is designed
to stabilize net interest income and preserve capital over a broad range of
interest rate movements by matching the interest rate sensitivity of assets and
liabilities. Although we believe that our current mix of loans, mortgage-backed
securities, investment securities and deposits is reasonable, significant
fluctuations in interest rates may have a negative effect on our profitability.
In addition, Cargill is assuming $109.3 million of deposit liabilities from
New London Trust, FSB and creating $17.0 million in interest-bearing liabilities
in connection with this offering. The assumption of these interest-bearing
liabilities could affect our interest rate risk.
We cannot predict how changes in technology will affect our business
The financial services market, including banking services, is increasingly
affected by advances in technology, including developments in:
. telecommunications,
. data processing,
. automation,
. Internet-based banking,
. telebanking, and
. debit cards and so-called "smart cards."
Our ability to compete successfully in the future will depend on whether we
can anticipate and respond to technological changes. To develop these and other
new technologies we will likely have to make additional capital investments.
Although we continually invest in new technology, we cannot assure you that we
will have sufficient resources or access to the necessary proprietary technology
to remain competitive in the future.
The year 2000 problem could hurt our operations and profits
We rely upon computers to conduct our daily business. If our computer
systems fail to recognize a date using "00" as the year 2000, we may be unable
to do our routine business and provide service to our customers. The failure of
the computer systems of parties we do business with or utilities, including the
electric and telephone companies, to recognize the year 2000 may also disrupt
our operations. For example, we may not be able to process withdrawals or
deposits, prepare account statements or engage in any of the transactions that
constitute our normal operations. Any one or more of these events could hurt
our profits.
21
<PAGE>
We primarily use a third party vendor to process our electronic data. Our
vendor has modified or replaced many of its computer applications and systems
necessary to correct the year 2000 date issue. We have substantially completed
testing these modified applications and systems. We also use a combination of
purchased and contract-based software as well as other third party vendors for
many of our data processing needs. Our assessment of potential computer issues
for the year 2000 has been substantially completed. Where potential computer
issues have been identified, the vendors have committed to definitive dates to
resolve such issues. We have established contingency plans for systems for
which year 2000 issues will not be corrected. If our vendors do not achieve
year 2000 compliance, our operations could be adversely affected.
The FDIC and the OTS, our primary federal bank regulators, along with the
other federal and state bank regulators, have identified the year 2000 issue as
a substantive area of examination for both regularly scheduled and special bank
examinations. In accordance with regulatory guidelines issued by the banking
regulators, we have substantially completed our testing of both internally and
externally supplied systems and all renovations as of June 30, 1999. Because of
this oversight by the bank regulatory agencies, if we do not become year 2000
compliant, we could become subject to administrative remedies similar to those
imposed on financial institutions otherwise found not to be operating in a safe
and sound manner, including remedies available under prompt corrective action
regulations.
There has been limited litigation filed against corporations regarding the
year 2000 problem and a corporation's compliance efforts. However, the law in
this area will probably continue to develop well into the new millennium. If we
experience a year 2000 failure, our exposure could be significant and material,
unless there is legislative action to limit year 2000 liability. Legislation
has been introduced in several jurisdictions regarding the year 2000 problem.
However, we cannot be sure that legislation will be enacted in jurisdictions
where we do business that will limit any potential liability. Through June 30,
1999, we had incurred approximately $218,000 in costs associated with achieving
year 2000 compliance. We expect to incur approximately $100,000 in additional
costs to achieve year 2000 compliance during 1999.
We may be adversely affected by changes in laws and regulations affecting the
financial services industry
Park West and Cargill (the "Banks") are subject to extensive regulation and
supervision as a state-chartered bank and trust company and state-chartered
savings and loan association, respectively. The regulatory authorities have
extensive discretion in connection with their supervision and enforcement
activities and their examination policies, including the imposition of
restrictions on the operation of a bank, the classification of assets by an
institution and requiring an increase in a national bank's allowance for loan
losses. Any change in the regulatory structure or the applicable statutes or
regulations, whether by the regulators or Congress, could have a material effect
on us, the Banks, and the operations of each.
Forward-looking Statements Relating to Future Performance or Expectations
We have used and incorporated by reference "forward-looking statements" in
this prospectus. Words such as "believes," "expects," "may," "will," "should,"
"projected," "contemplates" or "anticipates" may constitute forward-looking
statements. These statements are within the meaning of the Private Securities
Litigation Reform Act of 1995 and are subject to risks and uncertainties that
could cause our actual results to differ materially. We have used these
statements to describe our expectations and estimates in various areas,
including:
22
<PAGE>
. our overall business conditions particularly in the markets in which
we operate,
. fiscal and monetary policy,
. the market for mortgage originations and purchases,
. year 2000 compliance issues,
. competitive products and pricing,
. credit risk management and
. changes in regulations affecting financial institutions.
Our actual results could vary materially from the future results covered in our
forward-looking statements. The statements in the "Risk Factors" section are
cautionary statements identifying important factors, including certain risks and
uncertainties, that could cause our results to vary materially from the future
results covered in such forward-looking statements. Other factors, such as the
general state of the United States economy, could also cause actual results to
vary materially from the future results covered in such forward-looking
statements. We disclaim any obligation to announce publicly future events or
developments that affect the forward-looking statements in this prospectus.
23
<PAGE>
Westbank Corporation
Overview
We are a Massachusetts-chartered bank holding company headquartered in West
Springfield, Massachusetts. Through our wholly-owned subsidiaries, Park West
and Cargill, we provide community banking services to our principal market area
of western Massachusetts and northeast Connecticut.
We have grown to $434.4 million in assets and $370.1 million in deposits at
June 30, 1999. Our deposits are insured by the FDIC up to FDIC limits (generally
$100,000 per depositor).
Our principal executive office is located at 225 Park Avenue, West
Springfield, Massachusetts 01089 and our telephone number is (413) 747-1400.
Park West Bank & Trust
Park West is chartered as a state bank and trust company by The
Commonwealth of Massachusetts, is a member of the FDIC, and is subject to
regulation by the Massachusetts Commissioner of Banks and the FDIC. Park West
offers a full range of retail banking services to individuals, businesses, and
nonprofit organizations through thirteen banking offices located in Hampden
County, Massachusetts. Such services include a wide range of checking and
savings accounts, loans, safe deposit facilities, and automated teller machines
at selected branch locations. As of June 30, 1999, Park West had total assets of
$385.0 million.
Park West also provides lending, depository and related financial services
to commercial, industrial, financial, and governmental customers. These services
include short and long term loans and revolving credit arrangements, letters of
credit, inventory and accounts receivable financing, real estate construction
lending, and mortgage loans.
Park West also operates a Trust Department which provides services normally
associated with holding property in a fiduciary or agency capacity. The Trust
Department had $114.0 million under management as of June 30, 1999.
Cargill Bank
On January 29, 1999, we acquired Cargill Bancorp, Inc., the holding company
for Cargill Bank, which now retains its name and charter as a separate
subsidiary of Westbank. Cargill is a Connecticut chartered savings and loan
association which provides a variety of deposit, loan and investment products
and services to small businesses and consumers. Cargill is regulated by the OTS
and the Commissioner of Banking of the State of Connecticut. The business of
Cargill is to attract deposits from the general public and to make loans secured
by mortgages on residential and other real estate, enabling borrowers to
purchase, refinance, construct or improve property. In addition, Cargill makes
consumer loans and holds investment securities. Cargill's market area is
northeastern Connecticut and is made up primarily of the towns of Putnam,
Woodstock, Pomfret, Thompson, Killingly and Eastford. Cargill operates three
offices, the main office in Putnam and branch offices in Quinebaug, which is
part of Thompson, and Woodstock. The region in which Cargill operates is 30
miles south of Worcester, Massachusetts and centrally located between Boston,
Massachusetts, Providence, Rhode Island and Hartford, Connecticut. As of June
30, 1999 Cargill had total assets of $49.0 million.
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<PAGE>
Business Strategy
We seek growth by developing our core banking operations, deepening our
market penetration by providing additional banking services to our present
customers, by expanding our geographic market area and customer base through
selective acquisitions of other banks and by opening new offices in selected
areas. The major components of our growth-oriented community banking strategy
are set forth below.
. Growth of Our Community Banking Franchise
We strive to serve as a community-oriented bank focused on developing long-
term customer relationships by providing personalized service, convenient
locations, and the flexibility to meet the needs of individuals and
businesses in our market area. In this regard, we currently offer an
array of community banking products and services through both Park West and
Cargill from Park West's main office and twelve branch locations in
Massachusetts and Cargill's three locations in Connecticut. Cargill will
also add two additional locations in Connecticut upon completion of the
New London Trust, FSB branch acquisition. Large bank mergers have
negatively affected small-to medium-sized businesses, which creates
opportunities for a community bank that offers both a broad range of
products to businesses and exceptional service to consumers. Because
customer needs seldom fall into neat categories and usually cross from one
type of banking product to another, we believe that organizing around our
customers and their needs, not around products, provides us with a
competitive advantage. Our local decision-making process in our banking
offices allows our employees to listen to our customers and understand
their needs and empowers them to deliver customer solutions.
. Becoming a Full-Service Financial Provider
We offer a full-range of deposit, loan, trust, securities brokerage,
insurance and other financial products and services to our customers. We
view these products and services as a natural extension of our community
banking franchise. We are an active business lender and seek to achieve a
greater diversification of assets on our balance sheet. We offer small- to
medium-sized businesses in our market area traditional loan products and
commercial services including short and long term loans and revolving
credit arrangements, letters of credit, inventory and accounts receivable
financing, real estate construction lending, and mortgage loans. Our
commercial and commercial real estate loan portfolios have grown to $114.0
million at June 30, 1999 from $81.7 million at December 31, 1996. Our
Trust Department has a well-diversified line of services that is able to
meet the changing needs of our customers throughout each phase of their
life cycle. The mission of our Trust Department is to build long-term
relationships with customers through all market conditions. That means
consistently providing the capabilities and capacity to serve customers as
their needs and situations change. The Trust Department has built high
quality customer relationships based on the trust their customers place in
them. At June 30, 1999, fiduciary accounts totaled in excess of $114.0
million. We plan to begin offering trust services to our new customers in
Connecticut by January 1, 2000. By becoming a full-service provider of
financial services, we have enhanced our ability to attract and retain both
retail and commercial customers in our market area.
25
<PAGE>
. Selective Acquisitions and Branch Expansion
We are presently positioned and have sufficient resources and
infrastructure to expand through acquisition and branch expansion.
Consistent with our corporate strategies of expanding our geographic market
area and customer base, Park West has recently established branches in
Ludlow and Southwick, Massachusetts. These new full-service banking offices
have generated a combined total of $18.0 million in new deposits through
June 30, 1999. Park West also added an additional satellite mortgage
correspondent bank, which has an excellent reputation in the Franklin
County area of Western Massachusetts. In addition, our acquisition of
Cargill will allow Cargill to offer a wider range of products and services,
while at the same time achieving our corporate objective of expanding our
market area and customer base into Connecticut. In this regard, on April
12, 1999, Cargill agreed to acquire two retail banking offices from New
London Trust, FSB located in Putnam and Danielson, Connecticut. We will
acquire all of the loans and all of the deposit liabilities associated with
these offices (approximately $86.5 million and $109.3 million,
respectively, at June 30, 1999). We will continue to pursue opportunities
for growth in our defined market area as well as in markets that are
contiguous to our present market area, which include Connecticut, Rhode
Island and Central Massachusetts. We constantly evaluate our technology,
operations and product offerings to assess growth opportunities in those
areas.
. Efficient Capital Management and Consistent Shareholder Returns
Our policy has always been to maintain our financial strength through risk
management, conservative loan underwriting standards, investment in high
grade assets and consistent earnings. We have provided a more attractive
return on equity over the past few years primarily as a result of the
growth of our loan portfolio and deposit liabilities, increases in non-
interest income and controlled growth of non-interest expenses, while
maintaining our commitment to capital strength and asset quality. We have
paid a cash dividend in each of the last 18 quarters and, in recent years,
we have a history of increasing quarterly cash dividends to enhance returns
for our shareholders. Additionally, we will consider repurchasing shares
of our common stock from time to time at prevailing market prices in order
to enhance our return on equity.
26
<PAGE>
Pending Acquisition of Two New London Trust, FSB Branches
On April 12, 1999, we announced the signing of a definitive agreement to
purchase two branches located in Danielson and Putnam, Connecticut from New
London Trust, FSB. The transaction, which is subject to regulatory approval, is
currently expected to close in the fourth quarter of 1999. Cargill has filed
the regulatory applications necessary to obtain the required regulatory
approvals.
Under the agreement, Cargill will acquire all of the deposits and certain
of the loans related to the two branches. At June 30, 1999, the total amount of
deposits to be acquired were approximately $109.3 million, classified as
follows:
<TABLE>
<CAPTION>
Weighted Average
Amount Interest Rate
--------------- -----------------
(Unaudited)
(In thousands)
<S> <C> <C>
Deposits:
Demand............. $ 3,348 -%
NOW................ 7,497 0.94
Money market....... 7,869 3.20
Savings............ 18,172 2.51
Time............... 72,445 5.12
-------- ----
Total deposits. $109,331 4.23%
======== ====
</TABLE>
At June 30, 1999, the total amount of loans to be acquired were approximately
$86.5 million, categorized as follows:
<TABLE>
<CAPTION>
Weighted Average
Amount Interest Rate
--------------- ------------------
(Unaudited)
(In thousands)
<S> <C> <C>
Loans:
Real estate:
Residential....... $62,335 7.55%
Commercial........ 16,860 8.81
Construction...... 1,230 6.98
Consumer.............. 2,194 7.79
Commercial............ 3,834 8.60
------- ----
Total loans $86,453 7.91%
======= ====
</TABLE>
27
<PAGE>
Management
Set forth below is certain biographical information with respect to our
Directors and Executive Officers, each of whom has been engaged in the principal
occupation or employment specified for the past five years unless otherwise
noted.
Directors
Roland O. Archambault, age 67, a resident of Chicopee, MA, has served on
the Board of Directors of Westbank since 1989 and on the Board of Directors of
Park West since 1991. Mr. Archambault is the former President/owner of Park
Supply Company, a new and used brick/masonry supply business, where he retired
after 38 years of service in 1998. Mr. Archambault is currently the
President/owner of Pinnacle Raceway.
Mark A. Beauregard, age 47, a resident of South Hadley, MA, has served on
the Board of Directors of Park West since 1986 and has served on the Board of
Directors of Westbank since 1991. Mr. Beauregard joined the law firm of Resnic,
Beauregard, Waite & Driscoll, P.C. in 1977 and became a partner in the firm in
1979.
David R. Chamberland, age 60, a resident of West Springfield, MA, has
served on the Board of Directors of both Westbank and Park West for ten years.
Since 1979, Mr. Chamberland has been the President/owner of Chiocopee Building
Supply, specializing in cedar and mahogany building materials.
Donald R. Chase, age 52, has been employed by Park West since 1972, holding
a variety of positions of increasing responsibility throughout the years. Mr.
Chase was appointed to serve on the Board of Directors of Park West in 1987. In
December 1988, he was named President and Chief Executive Officer of Park West.
In September 1990, he was appointed to the Board of Directors of Westbank and
named President and Chief Executive Officer. In April 1999, Mr. Chase was also
appointed Vice Chairman of the Company. Mr. Chase was elected to serve on the
Board of Directors of Cargill in February 1999. Mr. Chase is active in the
community serving on several boards and committees, including Eastern States
Exposition, Westover Metropolitan Development Corporation, Holyoke Community
College Foundation, and the United Way.
Leroy F. Jarrett, age 71, a resident of Chatham, MA, has served on the
Board of Directors of both Westbank and Park West since 1961. Mr. Jarrett is
the former President and Treasurer of New England Church Interiors where he
retired in early 1995. Mr. Jarrett has served as past Vice Chairman of
Westbank.
Ernest N. Laflamme, Jr., age 68, a resident of Chicopee, MA, has served on
the Board of Directors of Westbank since 1987 and the Board of Park West since
1991. Mr. Laflamme began his career as an Assessor for the City of Chicopee in
1964 and has held the position of Treasurer for the past 29 years. Mr. Laflamme
is currently the Chairman of Westbank.
G. Wayne McCary, age 57, a resident of Longmeadow, MA, has served on the
Board of Directors of both Westbank and Park West since February 1999. Mr.
McCary has been employed by Eastern States Exposition (State Fairgrounds) for
approximately 25 years and was named President in 1991.
28
<PAGE>
Robert J. Perlak, age 63, a resident of Chicopee, MA, has served on the
Board of Directors of Westbank since 1987 and has served on the Board of Park
West since 1991. Mr. Perlak is a former Assistant Chief Probation Officer for
Hampden County. In 1993, Mr. Perlak, retired from that position after 27 years.
Mr. Perlak is currently the Clerk of the Corporation of Westbank.
George R. Sullivan, age 45, a resident of Longmeadow, MA, was appointed to
the Board of Directors of both Westbank and Park West in May 1997. Mr. Sullivan
is the Chief Executive Officer of Sullivan Paper Company where he has been
employed since 1971. Mr. Sullivan is Assistant Clerk of the Corporation and
Westbank.
James E. Tremble, age 60, a resident of Longmeadow, MA, has served on the
Board of Directors for Park West since 1986 and was appointed to the Board of
Directors of Westbank in 1991. Mr. Tremble is the President of Valley
Communication Systems, Inc., a family-owned communications business, where he
has been employed since January 1976.
Executive Officers who are not Directors
John M. Lilly, age 51, has been employed by Park West for 26 years in a
variety of positions in the finance and audit areas. In December 1988, Mr.
Lilly was appointed Executive Vice President and Treasurer of Park West, and, in
December 1991, he was named Treasurer and Chief Financial Officer of Westbank.
Gary L. Briggs, age 48, has held a variety of positions in the lending area
of Park West since 1979. In December 1998, Mr. Briggs was elected Executive
Vice President of Lending at Park West. Prior to coming to Park West, he was
employed at Household Finance Corporation from 1973 - 1979. Mr. Briggs was
named Executive Vice President of Cargill Bank in April 1999.
Robert A. Gibowicz, age 56, has been employed by the Bank for 16 years. In
December 1983, he was hired as Trust Officer, and in October 1986, he was named
Senior Trust Officer. Prior to coming to Park West, Mr. Gibowicz held a variety
of trust positions beginning in 1964 and continuing through December 1983 at
Franklin County Trust Company and Shawmut Bank of Hampshire County,
respectively.
29
<PAGE>
Westbank Capital Trust I
We organized the Trust as a statutory business trust under Delaware law
pursuant to the trust agreement that we, as sponsor, and the trustees executed.
We, together with the trustees, filed a certificate of trust with the Delaware
Secretary of State on [ ], 1999.
The Trust exists solely to:
. issue and sell the capital securities to the public and the common
securities to us;
. use the proceeds from the sale of the capital securities and common
securities to purchase our subordinated debentures, which will be the
only assets of the Trust;
. maintain its status as a grantor trust for federal income tax
purposes; and
. engage in other activities that are necessary or incidental to these
purposes.
We will purchase all of the common securities of the Trust. The common
securities will represent an aggregate liquidation amount equal to 3% of the
Trust's total capitalization. The capital securities will represent the
remaining 97% of the Trust's total capitalization. The common securities will
have terms substantially identical to the capital securities. However, if we
default on our payments under the subordinated debentures, the Trust will only
pay cash distributions and liquidation, redemption and other amounts payable to
us with respect to the common securities after it pays you these amounts on the
capital securities.
The Trust has a term of approximately 30 years, but we may dissolve it
earlier as provided in the trust agreement. The trustees conduct the Trust's
business and affairs. We appoint each trustee. The trustees are:
. Wilmington Trust Company, as property trustee;
. Wilmington Trust Company, as Delaware trustee; and
. Three individuals who are our employees, as administrative trustees.
As the sole holder of the common securities, we can replace or remove any
of the trustees. However, if an event of default exists under the trust
agreement, the holders of the capital securities with at least a majority of
aggregate liquidation amount of the capital securities will be able to remove
and replace the property trustee and the Delaware trustee. Only we, as owner of
all of the common securities, can remove or replace the administrative trustees.
The duties and obligations of each trustee are governed by the trust agreement.
We will pay all fees and expenses related to the Trust and the offering of
the capital securities, as well as all of the ongoing costs and expenses of the
Trust. We will not be responsible for the Trust's obligations under the capital
securities, except as provided by our guarantee of the capital securities.
The Trust has no separate financial statements. The statements would not
be meaningful to you because the Trust has no independent operations.
30
<PAGE>
The principal executive office of the Trust is c/o Westbank Corporation,
225 Park Avenue, West Springfield, MA 01089-3326 and its telephone number is
(413) 747-1400.
Use of Proceeds
All the proceeds to the Trust from the sale of the capital securities and
the common securities will be invested by the Trust in the subordinated
debentures of the $17.0 million in proceeds, we will contribute approximately
$16.0 million to Cargill as equity capital to support the pending acquisition of
two branches from New London Trust, FSB. The offering of the capital securities
is not contingent upon consummation of the pending branch acquisition. If the
branch acquisition is not consummated, we will use the proceeds for the
expansion of our lending and investment activities and for general corporate
purposes.
31
<PAGE>
Capitalization
The following table presents our pro forma consolidated capitalization at
June 30, 1999 and as adjusted to show the effect of the completion of the
offering of the capital securities and the issuance of the subordinated
debentures to the Trust. You should read this table together with the
consolidated financial statements and notes incorporated by reference to our
Annual Report on Form 10-K/A, for the fiscal year ended December 31, 1998 and
our Quarterly Report on Form 10-Q for the three and six months ended June 30,
1999 and the "Use of Proceeds" section in this prospectus.
<TABLE>
<CAPTION>
June 30, 1999
-------------------------------------------------------
as Adjusted
---------------------------------------
Securities Sale and
Actual Securities Sale Branch Acquisition
-------------- ---------------- --------------------
(Unaudited)
(Dollars in thousands)
<S> <C> <C> <C>
Guaranteed preferred beneficial interest in our
subordinated debentures(1)....................................... $ - $17,000 $17,000
Stockholders' equity:
Common stock, $2.00 par value, 9,000,000 shares authorized
4,229,931 issued and outstanding............................... 8,460 8,460 8,460
Additional paid-in capital....................................... 11,337 11,337 11,337
Retained earnings................................................ 12,094 12,094 12,094
Accumulated other comprehensive loss............................. (925) (925) (925)
------- ------- -------
Total stockholders' equity..................................... $30,966 $30,966 $30,966
------- ------- -------
Total guaranteed preferred beneficial interest in our
subordinate debentures and stockholder equity................ $30,966 $47,966 $47,966
======= ======= =======
Consolidated capital ratios (2):
Tier 1 risk-based capital ratio.................................. 11.44% 15.65% 10.04%
Total risk-based capital ratio................................... 12.41% 19.00% 12.98%
Leverage ratio................................................... 7.34% 9.27% 5.84%
</TABLE>
____________________
(1) The sole assets of the Trust, which we will treat as one of our
subsidiaries, will be $17.5 million aggregate principal amount of our
subordinated debentures, which will mature on , 2029. Westbank
will own all of the common securities issued by the Trust.
(2) The capital ratios, as adjusted, are computed including the total net
estimated proceeds from the sale of the capital securities and the exclusion
of goodwill related to the acquisition of branches from New London Trust,
FSB, in a manner consistent with FRB guidelines.
The following table sets forth the unaudited pro forma condensed
consolidated balance sheet and statements of income as of and for the six months
ended June 30, 1999 and the year ended December 31, 1998, for the historical,
pro forma branch acquisition and as adjusted capital securities issuance for
Westbank Corporation based on the assumptions described in the notes to pro
forma condensed consolidated balance sheet and statements of income.
The data set forth below should be read in conjunction with, and is
qualified in its entirety by the historical consolidated financial statements of
Westbank Corporation, including the related notes. The data set forth below is
not necessarily indicative of the results of the future operations of Westbank
Corporation upon consummation of the acquisition and securities sale or the
actual
32
<PAGE>
results that would have been achieved had the acquisition and securities sale
been consummated prior to the periods presented.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 1999
(Dollars in thousands)
<TABLE>
<CAPTION>
Pro Forma
After
Capital Capital Acquisition Pro Forma
Westbank Securities Securities of NLT Westbank
June 30, 1999 Issuance(1) Issuance Branches(2) June 30, 1999
------------- ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Assets
Cash and due from banks...................... $ 13,816 $ - $ 13,816 $ 449 $ 14,265
Federal funds sold........................... 866 16,405 17,271 8,213 25,484
-------- ------- -------- -------- --------
Cash and cash equivalents.................. 14,682 16,405 31,087 8,662 39,749
Securities available for sale, at fair value. 60,229 - 60,229 3,691 63,920
Investment securities held to maturity,
at amortized cost.......................... 9,966 - 9,966 - 9,966
Net loans.................................... 338,164 - 338,164 85,240 423,404
Accrued interest receivable.................. 2,601 - 2,601 540 3,141
Bank premises and equipment.................. 6,910 - 6,910 1,590 8,100
Other real estate owned...................... 85 - 85 167 652
Intangible assets............................ - 595 595 9,635 10,230
Other assets................................. 1,786 - 1,786 - 1,786
-------- ------- -------- -------- --------
Total assets............................... $434,423 $17,000 $451,423 $109,525 $560,948
======== ======= ======== ======== ========
Liabilities, Guaranteed Preferred Beneficial
Interests in our Subordinated Debentures
and Stockholders' Equity
Deposits..................................... $370,084 $ - $370,084 $109,331 $479,415
Borrowed funds............................... 32,057 - 32,057 - 32,057
Accrued interest payable..................... 470 - 470 194 664
Other liabilities............................ 846 - 846 - 846
-------- ------- -------- -------- --------
Total liabilities.......................... 403,457 - 403,457 109,525 512,982
-------- ------- -------- -------- --------
Guaranteed Preferred Beneficial Interests in
our Subordinated Debentures.............. - 17,000 17,000 - 17,000
-------- ------- -------- -------- --------
Stockholders' equity:
Common stock............................... 8,460 - 8,460 - 8,460
Additional paid-in capital................. 11,337 - 11,337 - 11,337
Retained earnings.......................... 12,094 - 12,094 - 12,094
Accumulated other comprehensive loss....... (925) - (925) - (925)
-------- ------- -------- -------- --------
Total stockholders' equity................ 30,966 - 30,966 - 30,966
-------- ------- -------- -------- --------
Total liabilities, guaranteed
beneficial interests in our
subordinated debentures and
stockholders' equity.................... $434,423 $17,000 $451,423 $109,525 $560,948
======== ======= ======== ======== ========
</TABLE>
__________________
(1) Represents the issuance of the capital securities, with the net proceeds
reflected as federal funds sold. The estimated offering costs of $595,000
will be included in other assets and amortized over the 30 year term of the
subordinated debentures. Does not reflect additional offering expenses
estimated to be approximately $330,000.
(2) Represents, as of June 30, 1999, the unaudited assets acquired and
liabilities assumed in the proposed acquisition of the two branches from New
London Trust, FSB. Loans to be acquired approximates the assets' fair
value. The deposits assumed are all considered to be at market rates and,
accordingly, approximate fair value. Intangible assets represents the tax
deductible deposit premium of 8.8% of the deposits assumed, including
accrued interest payable, which will be amortized over 15 years on a
straight-line basis plus $441,000 or more in transaction costs. The net
cash received in the settlement of the transaction has been shown as federal
funds sold.
33
<PAGE>
WESTBANK CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
(Dollars in Thousands)
Pro Forma
Capital Westbank
Securities Acquisition of December 31,
Westbank Issuance NLT Branches 1998
---------- ---------- -------------- -------------
<S> <C> <C> <C> <C>
Income:
Interest and fees on loans......................... $ 23,645 $ - $7,093 $ 30,738
Interest and dividend income on securities......... 4,614 1,208 196 6,018
Interest on temporary investments.................. 372 - 725 1,097
---------- ------ ------ ----------
Total interest and dividend income.................. 28,631 1,208 8,014 37,853
Interest expense.................................... 13,292 1,572 5,097 19,961
---------- ------ ------ ----------
Net interest income................................. 15,339 (364) 2,917 17,892
Provision for loan losses........................... 41 - 187 228
---------- ------ ------ ----------
Net interest income after provision
for loan losses.................................... 15,298 (364) 2,730 17,664
---------- ------ ------ ----------
Non-interest income:
Investment security gains (losses)................. 141 - - 141
Other non-interest income.......................... 2,286 - 822 3,108
---------- ------ ------ ----------
Total non-interest income........................... 2,427 - 822 3,249
---------- ------ ------ ----------
Non-interest expenses:
Salaries and benefits.............................. 5,797 - 1,378 7,175
Other non-interest expense......................... 5,601 - 1,075 6,676
Occupancy - net.................................... 802 - 272 1,074
Goodwill........................................... - - 682 682
---------- ------ ------ ----------
Total non-interest expense.......................... 12,200 - 3,407 15,607
---------- ------ ------ ----------
Income before income taxes.......................... 5,525 (364) 145 5,306
Income taxes....................................... 2,148 (138) 55 2,065
---------- ------ ------ ----------
Net Income.......................................... $ 3,377 $ (226) $ 90 $ 3,241
========== ====== ====== ==========
Net income per share:
Basic.............................................. $ 0.82 $ 0.78
Diluted............................................ $ 0.79 $ 0.76
Weighted average shares outstanding:
Basic.............................................. 4,143,009 4,143,009
Diluted............................................ 4,272,682 4,272,682
</TABLE>
- ---------------
(1) Does not include costs savings expected and revenue enhancements to be
achieved in connection with the acquisition of the NLT branches and
combination with Cargill.
34
<PAGE>
WESTBANK CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
(Dollars in Thousands)
Capital Pro Forma
Securities Acquisition of Westbank
Westbank Issuance NLT Branches June 30, 1999
---------- ---------- -------------- -------------
<S> <C> <C> <C> <C>
Income:
Interest and fees on loans........................ $ 12,533 $ - $3,407 $ 15,940
Interest and dividend income on securities........ 2,390 604 134 3,128
Interest on temporary investments................. 73 - 197 270
---------- ----- ------ ----------
Total interest and dividend income................. 14,996 604 3,738 19,338
Interest expense................................... 6,806 796 2,326 9,918
---------- ----- ------ ----------
Net interest income................................ 8,190 (182) 1,412 9,420
Provision for loan losses.......................... 77 - 90 167
---------- ----- ------ ----------
Net interest income after provision
for loan losses................................... 8,113 (182) 1,322 9,253
---------- ----- ------ ----------
Non-interest income:
Investment security gains (losses)................ 92 - - 92
Other non-interest income......................... 1,018 - 345 1,363
---------- ----- ------ ----------
Total non-interest income.......................... 1,110 - 345 1,455
---------- ----- ------ ----------
Non-interest expenses:
Salaries and benefits............................. 2,967 - 734 3,701
Other non-interest expense........................ 2,273 - 424 2,697
Occupancy - net................................... 614 - 118 732
Goodwill.......................................... - - 341 341
---------- ----- ------ ----------
Total non-interest expense......................... 5,854 - 1,617 7,471
---------- ----- ------ ----------
Income before income taxes......................... 3,369 (182) 50 3,237
Income taxes...................................... 1,277 (69) 19 1,227
---------- ----- ------ ----------
Net Income......................................... $ 2,092 $(113) $ 31 $ 2,010
========== ===== ====== ==========
Net income per share:
Basic............................................. $ 0.50 $ 0.48
Diluted........................................... $ 0.48 $ 0.46
Weighted average shares outstanding:
Basic............................................. 4,218,407 4,218,407
Diluted........................................... 4,336,579 4,336,579
</TABLE>
- ---------------
(1) Does not include costs savings expected and revenue enhancements to be
achieved in connection with the acquisition of the NLT branches and
combination with Cargill.
35
<PAGE>
Accounting Treatment
For financial reporting purposes, we will treat the Trust as our
subsidiary. We will include the Trust's accounts in our consolidated financial
statements. The capital securities will be presented as a separate line item in
our consolidated balance sheet as mandatory redeemable preferred stock and will
not be included in stockholders' equity and appropriate disclosures about the
capital securities, the guarantee and the subordinated debentures will be
included in the notes to our consolidated financial statements. For financial
reporting purposes, we will record distributions payable on the capital
securities as an expense in our consolidated statements of income.
Description of Capital Securities
This summary describes the material provisions of the capital securities.
It is not a complete description and you should refer to the trust agreement,
including the definitions used in the trust agreement, and the Trust Indenture
Act for more information. We have filed the form of the trust agreement as an
exhibit to the registration statement of which this prospectus is a part.
General
The capital securities of the Trust will rank equal to, and payments made
on the capital securities will be made on a pro rata basis with, the common
securities of the Trust, except as described under "--Subordination of Common
Securities." The property trustee will have legal title to the subordinated
debentures and will hold them in trust for the benefit of you and the other
holders of the capital securities. Our guarantee for the benefit of the holders
of the capital securities will be a guarantee on a subordinated basis with
respect to the capital securities, but will not guarantee payment of
distributions or amounts payable on redemption or liquidation of the capital
securities when the Trust does not have funds legally available to pay
distributions or other amounts to the holders of the capital securities. You
should read "Description of Guarantee" for more information about our guarantee.
Distributions
The capital securities represent beneficial ownership interests in the
Trust. Distributions on the capital securities will be cumulative, and will
accumulate from the date that the capital securities are first issued.
Distributions will be made at the annual rate of % of the stated
liquidation amount of $10.00, payable quarterly in arrears on the distribution
dates, which are March 31, June 30, September 30 and December 31 of each year,
to holders of the capital securities on the relevant record dates. If the
capital securities are in book-entry form, the record dates will be one business
day prior to the relevant distribution date. If the capital securities are not
in book-entry form, record dates will be the 15/th/ day of the month in which
the distribution is to be paid.
The first distribution date for the capital securities will be September
30, 1999. The period beginning on and including the date the capital securities
are first issued and ending on but excluding September 30, 1999, and each period
thereafter beginning on and including a distribution date and ending on but
excluding the next distribution date is a distribution period.
36
<PAGE>
The amount of distributions payable for any distribution period will be based on
a 360-day year of twelve 30-day months.
If any distribution date would otherwise fall on a day that is not a
business day, the distribution date will be postponed to the next day that is a
business day without any additional payments for the delay, unless the
distribution would fall in the next calendar year, in which case the
distribution date will be the last business day of the calendar year. A
business day means any day other than a Saturday or a Sunday, or a day on which
banks in New York, New York or Wilmington, Delaware are authorized or required
by law or executive order to remain closed or a day on which the principal
corporate trust office of the property trustee is closed for business.
The Trust's revenue available for distribution to holders of the capital
securities will be limited to our payments to the Trust under our subordinated
debentures. For more information, please refer to "Description of Subordinated
Debentures -- General." If we do not make interest payments on the subordinated
debentures, the property trustee will not have funds available to pay
distributions on the capital securities and on the common securities. We will
guarantee the payment of distributions if and to the extent that the Trust has
funds legally available to pay the distributions. You should read "Description
of Guarantee" for more information about the extent of our guarantee.
Option to Defer Interest Payments
As long as no event of default exists, we have the right under the
indenture to elect to defer the payment of interest on the subordinated
debentures, at any time or from time to time, for no more than 20 consecutive
quarters with respect to each deferral period, provided that no deferral period
will end on a date other than an interest payment date on the subordinated
debentures, or extend beyond , 2029, the maturity date of the debentures.
If we defer payments, the Trust will defer quarterly distributions on the
capital securities during a deferral period. During any deferral period
distributions will continue to accrue on the capital securities and on any
accrued and unpaid distributions, compounded quarterly from the relevant
distribution date at the applicable distribution rate, which will be equal to
the applicable interest rate on the subordinated debentures. The term
distributions includes any accumulated additional distributions.
Before the end of any deferral period, we may extend the deferral period,
as long as the extension does not cause the deferral period to exceed 20
consecutive quarters, or, to end on a date other than an interest payment date
or extend beyond , 2029. At the end of any deferral period and
upon the payment of all amounts then due on any interest payment date, we may
elect to begin a new deferral period, subject to the above requirements. No
interest shall be due and payable during a deferral period until the deferral
period ends. We must give the property trustee, the administrative trustees and
the debenture trustee notice of our election to defer interest payments or to
extend a deferral period at least five business days before the earlier of:
. the date the distributions on the capital securities would have been
payable except for the election to begin a deferral period; and
. the date the administrative trustees are required to give notice to
any securities exchange or automated quotation system or to holders of
the 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.
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There is no limitation on the number of times that we may elect to begin a
deferral period. Please refer to "Description of Subordinated Debentures--Option
to Extend Interest Payment Date" and "Certain Federal Income Tax Consequences--
Interest Income and Original Issue Discount."
During any deferral period, we may not:
. declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to,
any of our capital stock;
. make any payment of principal of, or interest, if any, on or
repay, repurchase or redeem any debt securities that rank equal
or junior to the subordinated debentures; or
. make any guarantee payments with respect to any guarantee of the
debt securities of any subsidiary (including our guarantee of the
capital securities issued by the Trust and other similar
guarantees) if such guarantee ranks equal or junior to the
subordinated debentures.
Notwithstanding the foregoing, during a deferral period we may make the
following payments:
(a) dividends or distributions in shares of, or options, warrants or
rights to subscribe for or purchase shares of, our common stock,
(b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of
rights, stock or other property 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 our capital stock or the
exchange or conversion of one class or series of our capital
stock or indebtedness for another class or series of our capital
stock,
(e) the purchase of fractional interests in shares of our 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 our benefit plans for our directors,
officers or employees or any of our dividend reinvestment plans.
We do not currently intend to exercise our right to defer payments of
interest on the subordinated debentures. Our obligations under the guarantee to
make payments of distributions is limited to the extent that the Trust has funds
legally available to pay distributions. You should read "Description of
Guarantee" for more information about the extent of our guarantee.
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Redemption
Upon repayment on , 2029 or prepayment, in whole or in part prior
to , 2029, of the subordinated debentures (other than following the
distribution of the subordinated debentures to you as a holder of the capital
securities and us, as the holder of the common securities), the property trustee
will apply the proceeds from the repayment or prepayment of the subordinated
debentures (as long as the property trustee has received written notice no later
than 45 days before the repayment) to redeem an amount of capital securities
having an aggregate liquidation amount equal to the principal amount of the
subordinated debentures paid to the Trust. We will give notice of any redemption
between 30 and 60 days prior to the redemption date.
If we prepay less than all of the subordinated debentures on a redemption
date, then the property trustee will allocate the proceeds of the prepayment on
a pro rata basis among the capital securities and the common securities. If a
court of competent jurisdiction enters an order to dissolve the Trust, the
subordinated debentures will be subject to optional prepayment in whole, but not
in part, on or after , 2004.
We will have the right to prepay the subordinated debentures:
(1) in whole or in part, on or after , 2004; and
(2) in whole but not in part, at any time prior to , 2004, if
there are changes in the bank regulatory, investment company or tax laws that
would adversely affect the status of the Trust, the capital securities or the
subordinated debentures.
We may have to obtain regulatory approval, including the approval of the
FRB, before we redeem any subordinated debentures.
Please refer to "Description of Subordinated Debentures--Optional
Prepayment" and "--Special Event Prepayment" for information on prepayment of
the subordinated debentures.
Liquidation of the Trust and Distribution of Subordinated Debentures
We, as holder of the outstanding common securities, will have the right at
any time to dissolve the Trust and, after satisfying the liabilities owed to the
Trust's creditors as required by applicable law, we will have the right to
distribute the subordinated debentures to the holders of the capital securities
and to us as holder of the common securities. Our right to dissolve the Trust
is subject to our receiving:
. an opinion of counsel to the effect that if we distribute the
subordinated debentures, the holders of the capital securities will
not experience a taxable event; and
. any required regulatory approval.
The Trust will automatically dissolve if:
(1) certain bankruptcy events occur, or we dissolve or liquidate;
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(2) we distribute subordinated debentures having a principal amount equal
to the liquidation amount of the capital securities to holders of the capital
securities and we, as holder of the common securities, have given written
directions to the property trustee to dissolve the Trust (which direction is at
our option and, except as described above, wholly within our discretion, as
holder of the common securities);
(3) the Trust redeems all of the capital securities as described
under "-- Redemption;"
(4) the Trust's term expires; or
(5) a court of competent jurisdiction enters an order for the dissolution
of the Trust.
If the Trust is dissolved as described in clause (1), (2), (4), or (5)
above, the Trust will be liquidated by the trustees as quickly as the trustees
determine to be possible by distributing to holders of the capital securities,
after satisfying the liabilities owed to the Trust's creditors as provided by
applicable law, subordinated debentures having a principal amount equal to the
liquidation amount of the capital securities, unless the property trustee
determines that this distribution is not practicable. If the property trustee
determines that this distribution is not practicable, the holders of the capital
securities will be entitled to receive an amount equal to the aggregate in
liquidation amount plus accumulated and unpaid distributions on the capital
securities to the date of payment (such amount being the "liquidation
distribution") out of the assets of the Trust legally available for distribution
to holders, after satisfying the liabilities owed to the Trust's creditors as
provided by applicable law. If the liquidation distribution can be paid only in
part because the Trust has insufficient assets legally available to pay the full
amount of the liquidation distribution, or if a debenture event of default
exists, the capital securities will have a payment priority over the common
securities. For more information, please refer to "--Subordination of Common
Securities."
After the liquidation date is fixed for any distribution of subordinated
debentures to holders of the capital securities:
(1) the capital securities and the common securities will no longer be
deemed to be outstanding;
(2) DTC or its nominee will receive in respect of each registered global
certificate representing capital securities and the common securities a
registered global certificate representing the subordinated debentures to be
delivered upon this distribution; and
(3) any certificates representing capital securities and the common
securities not held by DTC or its nominee will be deemed to represent
subordinated debentures having a principal amount equal to the liquidation
amount of those capital securities, and bearing accrued and unpaid interest in
an amount equal to the accumulated and unpaid distributions on those capital
securities until such certificates are presented to the administrative trustees
or their agent for cancellation, in which case we will issue to those holders,
and the Delaware trustee will authenticate, a certificate representing the
subordinated debentures.
We cannot assure you of the market prices for the capital securities or the
subordinated debentures that may be distributed to you in exchange for the
capital securities if a dissolution and liquidation of the Trust were to occur.
Accordingly, the capital securities that you purchase, or the
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subordinated debentures that you may receive upon a dissolution and liquidation
of the Trust, may trade at a discount to the price that you paid to purchase the
capital securities offered by this prospectus.
If we elect not to prepay the subordinated debentures prior to maturity and
either elect not to or we are unable to liquidate the Trust and distribute the
subordinated debentures to holders of the capital securities, the capital
securities will remain outstanding until the repayment of the subordinated
debentures on , 2029.
Redemption Procedures
If we redeem the subordinated debentures, the Trust will redeem capital
securities and the common securities at the applicable redemption price with the
proceeds that it receives from our redemption of the subordinated debentures.
Any redemption of the capital securities and the common securities will be made
and the applicable redemption price will be payable on the redemption date only
to the extent that the Trust has funds legally available to pay the applicable
redemption price. For more information, you should refer to "--Subordination of
Common Securities."
If the Trust gives a notice of redemption for the capital securities, then,
by 12:00 noon, New York City time, on the redemption date, to the extent funds
legally are available, with respect to:
. the capital securities held by DTC or its nominees, the property
trustee will deposit, or cause the paying agent to deposit,
irrevocably with DTC funds sufficient to pay the applicable redemption
price and will give DTC irrevocable instructions and authority to pay
the redemption price to the holders of the capital securities. For
more information, you should refer to "--Form, Denomination, Book-
Entry Procedures and Transfer."
. the capital securities held in certificated form, the property trustee
will irrevocably deposit with the paying agent funds sufficient to pay
the applicable redemption price and will give the paying agent
irrevocable instructions and authority to pay the applicable
redemption price to the holders upon surrender of their certificates
evidencing the capital securities. For more information, you should
refer to "--Payment and Paying Agency."
The paying agent will initially be the property trustee and any co-paying
agent chosen by the property trustee and acceptable to the administrative
trustees and us.
Notwithstanding the foregoing, distributions payable on or before the
redemption date will be payable to the holders of the capital securities on the
relevant record dates for the related distribution dates. If the Trust gives a
notice of redemption and funds are deposited as required, then upon the date of
the deposit, all rights of the holders of the capital securities called for
redemption will cease, except the right of the holders of the capital securities
to receive the applicable redemption price, without interest, and the capital
securities called to be redeemed will cease to be outstanding.
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If any redemption date for the capital securities is not a business day,
then the applicable redemption price, without interest or any other payment in
respect of the delay, will be paid on the next business day, except that, if the
next business day falls in the next calendar year, the payment shall be made on
the last business day of the calendar year. If payment of the applicable
redemption price is improperly withheld or refused and not paid either by the
Trust or by us pursuant to the guarantee:
(1) distributions on the capital securities will continue to accumulate at
%, from the redemption date originally established by the Trust to the
date such applicable redemption price is actually paid; and
(2) the actual payment date will be the redemption date for purposes of
calculating the applicable redemption price.
Notice of any redemption will be mailed between 30 and 60 days before the
redemption date to each holder of capital securities at its registered address.
Unless we default in payment of the applicable redemption price on, or in the
repayment of, the subordinated debentures, on and after the redemption date,
distributions will cease to accrue on the capital securities called for
redemption.
Subject to applicable law (including, without limitation, U.S. federal
securities laws), we or our subsidiaries may at any time, and from time to time,
purchase outstanding capital securities in the open market or by private
agreement.
Subordination of Common Securities
Payment of distributions on, and the redemption price of, the capital
securities and the common securities, as applicable, will generally be made on a
pro rata basis. However, if a debenture event of default exists on any
distribution or redemption date, 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, will 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 before the
distribution or redemption date, or payment of the applicable redemption price
is made in full. All funds available to the property trustee will 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, we, as holder of all of the common
securities, will be deemed to have waived any right to act with respect to the
event of default until the effect of the event of default has been cured, waived
or otherwise eliminated. Until any event of default has been cured, waived or
otherwise eliminated, the property trustee will act solely on behalf of the
holders of the capital securities and not on our behalf, 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
An event of default under the indenture constitutes an event of default
under the trust agreement. See "Description of Subordinated Debentures--
Debenture Events of Default."
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The trust agreement provides that within five (5) business days after any
event of default actually known to the property trustee occurs, the property
trustee will give notice of the event of default to the holders of the capital
securities, the administrative trustees and to us, as sponsor, unless the event
of default has been cured or waived. We, as sponsor, and the administrative
trustees are required to file annually with the property trustee a certificate
as to whether we and the administrative trustees have complied with the
applicable conditions and covenants of the trust agreement.
If a debenture event of default exists, the capital securities will have a
payment preference over the common securities as described under "--Liquidation
of the Trust and Distribution of Subordinated Debentures" and "--Subordination
of Common Securities." An event of default does not entitle the holders of
capital securities to accelerate the maturity date of the capital securities.
Removal of Trustees
Unless a debenture event of default exists, we may remove the property
trustee and the Delaware trustee at any time. If a debenture event of default
exists, the property trustee and the Delaware trustee may be removed only 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, because
these voting rights are vested exclusively in us as the holder of all of the
common securities. No resignation or removal of the property trustee or the
Delaware trustee and no appointment of a successor trustee shall be effective
until the acceptance of appointment by the successor trustee in accordance with
the trust agreement.
Merger or Consolidation of Issuer Trustees
If the property trustee, the Delaware trustee or any administrative trustee
that is not a natural person is merged, converted or consolidated into another
entity, or the property trustee is a party to a merger, conversion or
consolidation which results in a new entity, or an entity succeeds to all or
substantially all of the corporate trust business of the property trustee, the
new entity shall be the successor of the respective trustee under the trust
agreement, provided that the entity is 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 substantially all of its properties
and assets to any corporation or other entity, except as described below or as
otherwise described under "--Liquidation of the Trust and Distribution of
Subordinated Debentures." The Trust may, at our request, as sponsor, and 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 substantially all of its
properties and assets to a trust organized as such under the laws of any state;
provided, that:
(1) the successor either:
(a) expressly assumes all of the obligations of the Trust with
respect to the capital securities and the common securities or
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(b) substitutes securities for the capital securities and the common
securities that have substantially the same terms as the capital securities
and the common securities so long as the substitute securities rank equal
to the capital securities and the common securities in priority with
respect to distributions and payments upon liquidation, redemption and
otherwise;
(2) we appoint a trustee of the successor possessing the same powers and
duties as the property trustee with respect to the subordinated debentures;
(3) the substitute securities are listed, or any substitute securities
will be listed upon notification of issuance, on any national securities
exchange or other organization on which the capital securities and the common
securities are then listed or quoted, if any;
(4) if the capital securities, substitute securities or subordinated
debentures are rated by any nationally recognized statistical rating
organization prior to such transaction, the transaction does not cause any of
those securities to be downgraded by the rating organization;
(5) the transaction does not adversely affect the rights, preferences and
privileges of the holders of the capital securities (including any successor
securities) in any material respect;
(6) the successor has a purpose substantially identical to that of the
Trust;
(7) prior to the transaction, we received an opinion from independent
counsel to the Trust experienced in such matters to the effect that
(a) the transaction does not adversely affect the rights, preferences
and privileges of the holders of the capital securities (including any
successor securities) in any material respect (other than any dilution of
such holders' interests in the new entity), and
(b) following the transaction, neither the Trust nor the successor
will be required to register as an investment company under the Investment
Company Act; and
(8) we, or any permitted successor or assignee owns all of the common
securities of the successor and guarantees the obligations of the successor
under the substituted securities at least to the extent provided by the
guarantee and the common securities guarantee.
Notwithstanding the foregoing, the Trust shall not, except with the consent
of holders of 100% in liquidation amount of the capital 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 the transaction would cause the Trust or the successor
to be classified as an association taxable as a corporation for United States
federal income tax purposes.
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.
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We, as holder of the common securities, together with the property trustee
and the administrative trustees, may amend the trust agreement from time to
time, without the consent of the holders of the capital securities:
(1) 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 are not inconsistent with the other provisions of the
trust agreement; or
(2) to modify, eliminate or add to any provisions of the trust agreement
as is necessary to ensure that at all times that any capital securities are
outstanding, the Trust will not be classified as an association taxable as a
corporation or to enable the Trust to qualify as a grantor trust, in each case
for United States federal income tax purposes, 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 (1) the amendment would not
adversely affect in any material respect the interests of the holders of the
capital securities. Any amendments of the trust agreement pursuant to the
foregoing shall become effective when notice of the amendment is given to the
holders of the capital securities.
We, as holder of the common securities, together with the trustees, may
amend the trust agreement:
(1) with the consent of holders representing a majority (based upon
liquidation amount) of the outstanding capital securities; and
(2) upon receipt by the trustees of an opinion of counsel experienced in
such matters to the effect that the amendment or the exercise of any power
granted to the trustees in accordance with the amendment will not affect the
Trust's classification as an entity that is not taxable as a corporation or as
being 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 capital securities, no
amendment may change the amount or timing of any distribution on the capital
securities and the common securities or otherwise adversely affect the amount of
any distribution required to be made in respect of the capital securities and
the common securities as of a specified date; or restrict the right of a holder
of capital securities and the common securities to sue for the enforcement of
any payment on or after the specified date.
So long as any subordinated debentures are held by the property trustee,
the trustees may not:
. direct the time, method and place of conducting any proceeding for any
remedy available to the debenture trustee, or execute any trust or
power conferred on the debenture trustee with respect to the
subordinated debentures;
. waive certain past defaults under the indenture;
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. exercise any right to rescind or annul a declaration accelerating the
maturity of the principal of the subordinated debentures; or
. consent to any amendment, modification or termination of the indenture
or the subordinated debentures, where such consent shall be required,
without, in each case, obtaining the prior consent 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 subordinated debentures affected by the amendment, modification or
termination, the property trustee will not give consent without the prior
approval of each holder of the capital securities.
The 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 subordinated debentures.
In addition to obtaining the approvals of the holders of the capital securities,
prior to taking any of the foregoing actions, the 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 the holders convened for the purpose of approving the matter 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 has been taken, to
be given to each holder of record of capital securities in accordance with 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.
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 us, the trustees or any of our or any trustee's
affiliates, shall, for purposes of such vote or consent, be treated as if they
were not outstanding.
Depositary Procedures
DTC has advised the Trust and us that it is a limited-purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC was created to hold securities for its
participating organizations (collectively, "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, to eliminate the need for physical movement of certificates.
Participants include securities brokers and dealers (including the
underwriters), banks, trust companies, clearing corporations and certain other
organizations. Indirect access to DTC's system is also available to banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly (collectively,
"indirect participants"). Persons who are not participants may beneficially own
securities held by
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or on behalf of DTC only through participants or 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 participants and indirect participants.
DTC also has advised the Trust and us that, pursuant to procedures
established by it, (1) upon deposit of the global capital securities, DTC will
credit the accounts of participants designated by the underwriters with portions
of the liquidation amount of the global capital securities and (2) ownership of
interests in the global capital securities will be shown on, and the transfer of
ownership of the global capital securities, will be effected only through
records maintained by DTC (with respect to participants) or by participants and
indirect participants (with respect to other owners of beneficial interests in
the global capital securities).
Registration of Capital Securities
The capital securities will be represented by one or more global
certificates registered in the name of DTC or its nominee. Beneficial interests
in the capital securities will be shown on, and transfers of the global capital
securities will be effected only through, records maintained by participants.
Except as described below, capital securities in certificated form will not be
issued in exchange for the global certificates. See "Exchange of Book-Entry
Capital Securities for Certificated Capital Securities."
You may hold your interests in the global capital security directly through
DTC if you are a participant, or indirectly through organizations that are
participants. All interests in a global capital security will 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 those 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 its interests to
persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of its interests, may be affected by the lack of a physical
certificate evidencing its interests. For certain other restrictions on the
transferability of the capital securities, see "--Exchange of Book-Entry Capital
Securities for Certificated Capital Securities."
Payments on 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. Neither the property trustee nor any agent
thereof has or will have any responsibility or liability for:
. 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
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. 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 us that its current practice, upon receipt of
any payment on 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 the capital securities as
shown on the records of DTC unless DTC has reason to believe it will not receive
payment on the payment date. Payments by participants and indirect participants
to the beneficial owners of capital securities will be governed by standing
instructions and customary practices and will be the responsibility of
participants or indirect participants and will not be the responsibility of DTC,
the property trustee, the Trust or us. None of the Trust, Westbank nor the
property trustee will be liable for any delay by DTC or any of its participants
or indirect participants in identifying the beneficial owners of the capital
securities, and the Trust, Westbank and the property trustee may conclusively
rely on, and will be protected in relying on, instructions from DTC or its
nominee for all purposes.
Any 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 us that it will take any action permitted to
be taken by a holder of capital securities (including, without limitation,
presenting the capital securities for exchange as described below) only at the
direction of one or more participants who have an interest in DTC's global
capital securities in respect of the portion of the liquidation amount of the
capital securities as to which the participant or participants has or have given
direction. However, if an event of default exists under the trust agreement,
DTC reserves the right to exchange the global capital securities for legended
capital securities in certificated form and to distribute the certificated
capital securities to its participants.
We believe that the information in this section concerning DTC and its
book-entry system has been obtained from reliable sources, but we do not take
responsibility for the accuracy of this information.
Although DTC has agreed to the procedures described in this section to
facilitate transfers of interests in the global capital securities among
participants in DTC, DTC is not obligated to perform or to continue to perform
these procedures, and these procedures may be discontinued at any time. None of
the Trust, Westbank nor the property trustee will have any responsibility or
liability for any aspect of the performance by DTC or its participants or
indirect participants of any of their respective obligations under the rules and
procedures governing their operations or for maintaining, supervising or
reviewing any records relating to the global capital securities that are
maintained by DTC or any of its participants or indirect participants.
Exchange of Book-Entry Capital Securities for Certificated Capital Securities
A global capital security can be exchanged for capital securities in
registered certificated form if:
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(1) DTC notifies the Trust that it is unwilling or unable to continue as
depositary for the global capital security and the Trust fails to appoint a
successor depositary within 90 days of receipt of DTC's notice, or has ceased to
be a clearing agency registered under the Exchange Act and the Trust fails to
appoint a successor depositary within 90 days of becoming aware of this
condition;
(2) the Trust, in its sole discretion, elects to cause the capital
securities to be issued in certificated form; or
(3) an event of default, or any event which after notice or lapse of time
or both would be an event of default, exists under the trust agreement.
In addition, beneficial interests in a global capital security may be
exchanged by or on behalf of DTC for certificated capital securities upon
request by DTC, but only upon at least 20 days' prior written notice given to
the property trustee in accordance with DTC's customary procedures. In all
cases, certificated capital securities delivered in exchange for any global
capital security will be registered in the names, and issued in any approved
denominations, requested by or on behalf of DTC (in accordance with its
customary procedures).
Payment and Paying Agency
The Trust will make payments on the capital securities that are held in
global form to DTC, which will credit the relevant accounts at DTC on the
applicable distribution dates. The Trust will make payments on the capital
securities that are not held by DTC by mailing a check to the address of the
holder entitled to the payment as the holder's address appears on the register.
The paying agent will initially be the property trustee and any co-paying agent
chosen by the property trustee and acceptable to the administrative trustees and
us. The paying agent will be permitted to resign as paying agent upon 30 days'
notice to the property trustee, the administrative trustees and us. In the
event that the property trustee is no longer the paying agent, the
administrative trustees will appoint a successor (which must be a bank or trust
company acceptable to the administrative trustees and us) to act as paying
agent.
Registrar and Transfer Agent
The property trustee will act as registrar and transfer agent for the
capital securities.
The Trust will register transfers of the capital securities without charge,
except for any tax or other governmental charges that may be imposed in
connection with any transfer or exchange. The Trust will not be required to have
the transfer of the capital securities registered after they have been called
for redemption.
Information Concerning the Property Trustee
Except if an event of default exists, the property trustee will undertake
to perform only the duties specifically set forth in the trust agreement. After
an event of default, the property trustee 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 not obligated
to exercise any of the powers vested in it by the trust agreement at the request
of any holder of capital securities, unless it is offered reasonable indemnity
against the costs, expenses and liabilities that it
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might incur. If no event of default exists 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 directed by us and, if
not directed, shall take such action as it deems advisable and in the best
interests of the holders of the capital 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:
(1) The Trust will not be deemed to be an investment company required to
be registered under the Investment Company Act;
(2) The Trust will be classified as a grantor trust for United States
federal income tax purposes; and
(3) the subordinated debentures will be treated as our indebtedness for
United States federal income tax purposes.
We, together with 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 we and the administrative trustees determine
in our discretion is necessary or desirable, as long as it does not materially
adversely affect the interests of the holders of the capital securities.
The trust agreement provides that holders of the capital securities have no
preemptive or similar rights to subscribe for any additional capital securities
and the issuance of capital securities is not subject to preemptive rights.
The Trust may not borrow money, issue debt, execute mortgages or pledge any
of its assets.
Description of Subordinated Debentures
This summary describes the material provisions of the subordinated
debentures. This description is not complete and you should refer to the
indenture and the Trust Indenture Act for more information. We have filed the
indenture as an exhibit to the registration statement of which this prospectus
is a part. Wilmington Trust Company will act as debenture trustee under the
indenture. The indenture is qualified under the Trust Indenture Act.
General
The Trust will invest the proceeds from the sale of the capital securities
and the common securities in the subordinated debentures issued by us. The
subordinated debentures will bear interest at the annual rate of % of
the principal amount of the subordinated debentures, payable quarterly in
arrears on interest payment dates of March 31, June 30, September 30 and
December 31 of each year and at maturity to the person in whose name each
subordinated
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debenture is registered at the close of business on the relevant record date.
The first interest payment date for the subordinated debentures will be
September 30, 1999. The period beginning on and including the date the
subordinated debentures are first issued and ending on but excluding September
30, 1999, and each period beginning on and including an interest payment date,
and ending on but excluding the next interest payment date is an interest
period.
We anticipate that, until the liquidation, if any, of the Trust, each
subordinated debenture will be held by the property trustee in trust for the
benefit of the holders of the capital securities. The amount of interest payable
for any interest period will be computed on the basis of a 360-day year of
twelve 30-day months. In the event that any interest payment date would
otherwise fall on a day that is not a business day, the interest payment date
will be postponed to the next business day (without any interest or other
payment due to the delay) unless it would fall in the next calendar year, in
which case the interest payment date shall be the last business day of the
calendar year.
Accrued interest that is not paid on the applicable interest payment date
will bear additional interest (to the extent permitted by law) at the rate of
% per annum, compounded quarterly from the relevant interest payment
date. The term "interest" as used in this prospectus includes quarterly interest
payments and interest on quarterly interest payments not paid on the applicable
interest payment date.
Notwithstanding anything to the contrary set forth above, if the maturity
date falls on a day that is not a business day, the payment of principal and
interest will be paid on the next business day, with the same force and effect
as if made on the maturity date, and no interest on such payments will accrue
from and after the maturity date.
The subordinated debentures will be issued as a series of subordinated
debentures under the indenture.
The subordinated debentures will mature on , 2029.
The subordinated debentures will rank equal to all of our other
subordinated debentures which have been or may be issued to other trusts
established by us, in each case similar to the Trust, and will be unsecured and
rank subordinate and junior to all indebtedness for money that we borrow to the
extent and in the manner set forth in the indenture. See "--Subordination."
We are a bank holding company regulated by the FRB, and substantially all
of our operating assets are owned by Park West and Cargill. We are a legal
entity separate and distinct from our subsidiaries. Holders of subordinated
debentures should look only to us for payments on the subordinated debentures.
The principal sources of our income are dividends, interest and fees from Park
West and Cargill. We rely primarily on dividends from Park West and Cargill to
meet our obligations for payment of principal and interest on our outstanding
debt obligations and corporate expenses. Dividend payments from Park West and
Cargill are subject to regulatory limitations, generally based on current and
retained earnings, imposed by the various regulatory agencies with authority
over Park West and Cargill. In addition to regulatory restrictions on the
payment of dividends, Park West and Cargill are subject to restrictions imposed
by federal law on any extensions of credit to us and other affiliates of Park
West and Cargill and on investments in stock or other securities of affiliates.
Also, as a bank holding company, our right to receive distributions from Park
West and Cargill may be limited if such entity is liquidated or reorganized.
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For more information about these regulatory limits , you should read "Risk
Factors -- Risks related to your investment in the capital securities -- We will
depend primarily on any dividends we may receive from our subsidiaries in making
payments under the subordinated debentures, which could affect the payments made
to you under the capital securities."
The subordinated debentures will be effectively subordinated to all
existing and future liabilities of Park West and Cargill (including their
deposit liabilities) and all liabilities of any of our future subsidiaries. The
indenture does not limit us, Park West or Cargill from incurring or issuing
other secured or unsecured debt, including senior indebtedness. See "--
Subordination."
Form, Registration and Transfer
If the subordinated debentures are distributed to the holders of the
capital securities, the subordinated debentures may be represented by one or
more global certificates registered in the name of Cede & Co., as the nominee of
DTC. The depositary arrangements for such subordinated debentures are expected
to be substantially similar to those in effect for the capital securities. For
a description of DTC and the terms of the depositary arrangements relating to
payments, transfers, voting rights, redemptions and other notices and other
matters, you should read "Description of Capital Securities--Form, Denomination,
Book-Entry Procedures and Transfer."
Payment and Paying Agents
Payment of principal of and interest on the subordinated debentures will be
made at the office of the debenture trustee in New York, New York or at the
office of such paying agent or paying agents as we may designate from time to
time, except that, at our option, payment of any interest may be made, except in
the case of subordinated debentures in global form:
. by check mailed to the address of the person or entity entitled to the
interest payment as such address shall appear in the register for the
subordinated debentures; or
. by transfer to an account maintained by the person or entity entitled
to the interest payment as specified in the register, provided that
proper transfer instructions have been received by the relevant record
date.
Payment of any interest on any subordinated debenture will be made to the
person or entity in whose name the subordinated debenture is registered at the
close of business on the record date for the interest payment date, except in
the case of defaulted interest. We may at any time designate additional paying
agents or rescind the designation of any paying agent; however we will always be
required to maintain a paying agent in each place of payment for the
subordinated debentures.
Any moneys deposited with the debenture trustee or any paying agent, or
then held by us, in trust for the payment of the principal of or interest on any
subordinated debenture and remaining unclaimed for two years after such
principal or interest has become due and payable shall, at our request, be
repaid to us and the holder of the subordinated debenture shall thereafter look,
as a general unsecured creditor, only to us for payment.
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Option to Extend Interest Payment Date
So long as no debenture event of default exists, we will have the right
under the indenture to defer the payment of interest on the subordinated
debentures, at any time and from time to time, for no more than 20 consecutive
quarters for each deferral period, provided that no deferral period shall end on
a date other than an interest payment date or extend beyond ,
2029. At the end of a deferral period, we must pay all interest then accrued
and unpaid (together with interest thereon at the rate of % per year,
compounded quarterly from the relevant interest payment date, to the extent
permitted by applicable law). During a deferral period, interest will continue
to accrue, and holders of the capital securities or, if the subordinated
debentures have been distributed to holders of the capital securities, holders
of subordinated debentures, will be required to include that deferred interest
in gross income for United States federal income tax purposes on an accrual
method of accounting prescribed by the Internal Revenue Code of 1986 (the
"Code") and Treasury regulation provisions on original issue discount prior to
the receipt of cash attributable to that income. See "Certain Federal Income
Tax Consequences--Original Issue Discount."
During any such deferral period, we may not:
(1) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of our capital
stock;
(2) make any payment of principal of, or interest or premium, if any, on
or repay, repurchase or redeem any of our debt securities that rank equal to or
junior to the subordinated debentures; or
(3) make any guarantee payments with respect to any guarantee by us of the
debt securities of any of our subsidiaries (including our guarantee of the
capital securities of the Trust and any other guarantees) if such guarantee
ranks equal or junior to the subordinated debentures other than
(a) dividends or distributions in shares of, or options, warrants or
rights to subscribe for or purchase shares of, our common stock,
(b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of
rights, stock or other property under any such plan in the future, or
the redemption or repurchase of any rights pursuant thereto,
(c) payments under the guarantee,
(d) as a result of a reclassification of our capital stock or the
exchange or conversion of one class or series of our capital stock or
indebtedness for another class or series of our capital stock,
(e) the purchase of fractional interests in shares of our capital
stock pursuant to the conversion or exchange provisions of such
capital stock or the security being converted or exchanged and
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(f) purchases of our common stock related to the issuance of common
stock or rights under any of our benefit plans for our directors,
officers or employees or any of our dividend reinvestment plans.
We do not currently intend to exercise our option to defer payments of
interest on the subordinated debentures.
Before the end of any deferral period, we may extend the deferral period,
as long as no event of default exists and the extension does not cause the
deferral period to exceed 20 consecutive quarterly periods, to end on a date
other than an interest payment date or to extend beyond
, 2029. At the end of any deferral period and upon the payment of all then
accrued and unpaid interest (together with interest thereon at the rate of
% per year, compounded quarterly, to the extent permitted by applicable law), we
may elect to begin a new deferral period, subject to the requirements set forth
herein. No interest shall be due and payable during a deferral period until the
deferral period ends. We must give the property trustee, the administrative
trustees and the debenture trustee notice of our election at least five business
days before the earlier of:
. the date the distributions on the capital securities and the common
securities would have been payable except for the election to begin or
extend such deferral period;
. the date the administrative trustees are required to give notice to
any securities exchange or automated quotation system on which the
capital securities are listed or quoted or to holders of capital
securities of the record date for such distributions; or
. the date such distributions are payable, but at least five business
days prior to the record date.
The debenture trustee will notify holders of the capital securities of our
election to begin or extend a new deferral period.
There is no limit on the number of times that we may elect to begin a
deferral period.
Optional Prepayment
We may prepay the subordinated debentures, in whole or in part, at our
option on or after , 2004, subject to our receipt of any
required regulatory approval, at an optional prepayment price equal to 100% of
the principal amount of the subordinated debentures.
Special Event Prepayment
If there are changes in the bank regulatory, investment company or tax laws
that adversely affect the status of the Trust, the capital securities or the
subordinated debentures, we may, at our option, and subject to our receipt of
any required regulatory approval, prepay the subordinated debentures, in whole
but not in part, at any time within 90 days of the change in the law. If we
exercise our option to prepay the subordinated debentures under these
circumstances, then the proceeds of that prepayment must be applied to redeem
the capital securities at a prepayment price equal to 100% of the principal
amount of the subordinated debentures so prepaid, plus, in each
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case, accrued and unpaid interest on the subordinated debentures, if any, to the
date of prepayment. See "Description of Capital Securities--Redemption."
A change in the bank regulatory law means our receipt of an opinion of
independent bank regulatory counsel experienced in such matters to the effect
that, as a result of
. any amendment to, or change (including any announced prospective
change) in, any laws or regulations of the United States or any rules,
guidelines or policies of an applicable regulatory agency or authority
or
. any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations,
which amendment or change is effective or which pronouncement or decision is
announced on or after the date the capital securities and the common securities
are first issued, the capital securities do not constitute, or within 90 days of
the opinion will not constitute, Tier 1 Capital (or its then equivalent if we
were subject to such capital requirement).
A change in the investment company law means the receipt by us and the
Trust of an opinion of independent securities counsel experienced in such
matters to the effect that, as a result of:
. any amendment to, or change (including any announced prospective
change) in, any laws or regulations of the United States or any rules,
guidelines or policies of any applicable regulatory agency or
authority, or
. any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations,
which amendment or change is effective or which pronouncement or decision is
announced on or after the date the capital securities are first issued, the
Trust is, or within 90 days of the date of the opinion will be, considered an
investment company that is required to be registered under the Investment
Company Act.
A change in tax law means the receipt by us and the Trust of an opinion of
independent tax counsel experienced in such matters to the effect that, as a
result of:
. any amendment to, or change (including any announced prospective
change) in, any laws or regulations of the United States or any
political subdivision or taxing authority thereof or therein, or
. any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations,
which amendment or change is effective or which pronouncement or decision is
announced on or after the date the capital securities are first issued, there is
more than an insubstantial risk that:
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. 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 any income
received or accrued on the subordinated debentures;
. interest payable by us on the subordinated debentures is not, or
within 90 days of the date of such opinion will not be, deductible by
us, in whole or in part, for United States federal income tax
purposes; or
. 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.
We will mail any notice of prepayment between 30 and 60 days before the
prepayment date to each holder of subordinated debentures to be prepaid at its
registered address. Unless we default in payment of the prepayment price, on
the prepayment date interest shall cease to accrue on the 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 change in the tax law, we will pay as
additional amounts on the subordinated debentures any amounts as may be
necessary in order that the amount of distributions then due and payable by the
Trust on the outstanding capital securities shall not be reduced as a result of
any additional sums, including taxes, duties or other governmental charges to
which the Trust has become subject as a result of a change in the tax law.
Certain Covenants by Us
We will also covenant that we will not:
(1) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of our capital stock;
(2) make any payment of principal of, or interest or premium, if any, on
or repay, repurchase or redeem any of our debt securities that rank equal or
junior to the subordinated debentures; or
(3) make any guarantee payments with respect to any of our guarantees of
the debt securities of any of our subsidiaries if such guarantee ranks equal or
junior to the subordinated debentures, other than
(a) dividends or distributions in shares of, or options, warrants or
rights to subscribe for or purchase shares of, our common stock,
(b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of
rights, stock or other property under any such plan in the future, or
the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the guarantee,
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(d) as a result of a reclassification of our capital stock or
indebtedness or the exchange or conversion of one class or series of
our capital stock for another class or series of our capital stock,
(e) the purchase of fractional interests in shares of our capital
stock pursuant to the conversion or exchange provisions of such
capital stock or the security being converted or exchanged, and
(f) purchases of our common stock related to the issuance of common
stock or rights under any of our benefit plans for its directors,
officers or employees or any of our dividend reinvestment plans,
if at such time:
. we have actual knowledge that there is any event that is, or with the
giving of notice or the lapse of time, or both, would be, a debenture
event of default and that we have not taken reasonable steps to cure;
. we are in default with respect to our payment of any obligations under
the guarantee; or
. we have given notice of our election to exercise our right to defer
interest payments on the subordinated debentures as provided in the
indenture and the deferral period, or any extension of the deferral
period, is continuing.
So long as the capital securities and common securities remain outstanding,
we also will covenant:
. to maintain 100% direct or indirect ownership of the common
securities; provided, however, that any of our permitted successors
under the indenture may succeed to our ownership of the common
securities;
. to use commercially reasonable efforts to cause the Trust to remain a
business trust, except in connection with the distribution of
subordinated debentures to the holders of capital securities in
liquidation of the Trust, the redemption of all of the capital
securities, or certain mergers, consolidations or amalgamations, each
as permitted by the trust agreement;
. to use commercially reasonable efforts to cause the Trust to otherwise
continue not to be classified as an association taxable as a
corporation and to be classified as a grantor trust for United States
federal income tax purposes;
. to use commercially reasonable efforts to cause each holder of capital
securities to be treated as owning an undivided beneficial interest in
the subordinated debentures; and
. to not cause, as sponsor of the Trust, or permit, as holder of the
common securities, the dissolution, winding-up or liquidation of the
Trust, except as provided in the trust agreement.
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Modification of Indenture
From time to time, we, together with the debenture trustee, may, without
the consent of the holders of subordinated debentures, amend the indenture for
specified purposes, including, among other things, curing ambiguities, defects
or inconsistencies, provided that any amendment in the indenture does not
materially adversely affect the interest of the holders of subordinated
debentures, and qualifying, or maintaining the qualification of, the indenture
under the Trust Indenture Act.
The indenture permits us and the debenture trustee, with the consent of the
holders of a majority in aggregate principal amount of subordinated debentures,
to modify the indenture in a manner affecting the rights of the holders of the
subordinated debentures; provided that no modification may, without the consent
of the holders of each outstanding subordinated debenture affected:
. change the stated maturity date, or reduce the principal amount, of
the subordinated debentures,
. reduce the amount payable on prepayment or reduce the rate or extend
the time of payment of interest except pursuant to our right under the
indenture to defer the payment of interest (see "--Option to Extend
Interest Payment Date"),
. make the principal of, or interest on, the subordinated debentures
payable in any coin or currency other than that provided in the
subordinated debentures,
. impair or affect the right of any holder of subordinated debentures to
institute suit for the payment thereof, or
. reduce the percentage of the principal amount of the subordinated
debentures, the holders of which are required to consent to any such
modification.
Debenture Events of Default
A "debenture event of default" is:
. our failure for 30 days to pay any interest (including compounded
interest and additional sums, if any) on the subordinated debentures
or any other debentures when due (subject to the deferral of any
interest due date in the case of a deferral period with respect to the
subordinated debentures or other debentures as the case may be),
. our failure to pay any principal on the subordinated debentures or any
other debentures when due whether at maturity, upon prepayment, by
accelerating the maturity or otherwise,
. our failure to observe or perform, in any material respect, any other
covenant contained in the indenture for 90 days after written notice
to us from the debenture trustee or to us and the debenture trustee
from the holders of at least 25% in aggregate outstanding principal
amount of subordinated debentures, or
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. certain events related to our bankruptcy, insolvency or
reorganization.
The holders of a majority in aggregate outstanding principal amount of the
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 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 subordinated debentures may annul this declaration and waive the default if
the default (other than the non-payment of the principal of the 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
subordinated debentures affected may, on behalf of the holders of all the
subordinated debentures, waive any past default, except a default in the payment
of principal or interest (unless such default 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) 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
subordinated debenture.
The indenture requires that we file with the debenture trustee a
certificate annually as to the absence of defaults specified under the
indenture.
The indenture provides that the debenture trustee may withhold notice of a
debenture event of default from the holders of the subordinated debentures if
the debenture trustee considers it in the interest of the holders to do so.
Enforcement of Certain Rights by Holders of Capital Securities
If a debenture event of default exists that is attributable to our failure
to pay the principal of or interest (including compounded interest and
additional sums, if any) on the subordinated debentures on the due date, a
holder of capital securities may institute a direct action. We may not amend
the indenture to remove this right to bring a direct action without the prior
written consent of the holders of all of the capital securities.
Notwithstanding any payments that we make to a holder of capital securities in
connection with a direct action, we shall remain obligated to pay the principal
of or interest (including compounded interest and additional sums, if any) on
the subordinated debentures, and we shall be subrogated to the rights of the
holder of the capital securities with respect to payments on the capital
securities to the extent that we make any payments to a holder in any direct
action.
The holders of the capital securities will not be able to exercise directly
any remedies, other than those described in the above paragraph, available to
the holders of the subordinated debentures, unless an event of default exists
under the trust agreement. See "Description of Capital Securities--Events of
Default; Notice."
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Consolidation, Merger, Sale of Assets and Other Transactions
The indenture provides that we will not consolidate with or merge into any
other person or convey, transfer or lease all or substantially all of our
properties to any person, and no person shall consolidate with or merge into us
or convey, transfer or lease all or substantially all of its properties to us,
unless:
. in case we consolidate with or merge into another person or convey or
transfer all or substantially all of our properties to any person, the
successor is organized under the laws of the United States or any
state or the District of Columbia, and the successor expressly assumes
our obligations under the indenture with respect to the subordinated
debentures;
. immediately after giving effect to the transaction, no debenture event
of default, and no event which, after notice or lapse of time or both,
would become a debenture event of default, exists; and
. certain other conditions as prescribed in the indenture are met.
The general provisions of the indenture do not afford holders of the
subordinated debentures protection in the event of a highly leveraged or other
transaction that we may become involved in that may adversely affect holders of
the subordinated debentures.
Satisfaction and Discharge
The indenture provides that when, among other things,
. all subordinated debentures not previously delivered to the debenture
trustee for cancellation have become due and payable or will become due and
payable at maturity or called for prepayment within one year, and
. we deposit or cause 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 subordinated debentures not previously
delivered to the debenture trustee for cancellation, for the principal and
interest (including compounded interest and additional sums, if any) to the
date of the prepayment or to , 2029, as the case may be,
then the indenture will cease to be of further effect (except as to our
obligations to pay all other sums due pursuant to the indenture and to provide
the officers' certificates and opinions of counsel), and we will be deemed to
have satisfied and discharged the indenture.
Subordination
We have promised that any subordinated debentures issued under the
indenture will be ranked junior to all senior indebtedness to the extent
provided in the indenture. Upon any payment or distribution of our assets to
creditors upon our liquidation, dissolution, winding up, reorganization,
assignment for the benefit of our creditors, marshaling of our assets or any
bankruptcy, insolvency, debt restructuring or similar proceedings in connection
with any
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insolvency or bankruptcy proceeding of us, the senior indebtedness must be paid
in full before the holders of the subordinated debentures will be entitled to
receive or retain any payment in respect thereof.
If the maturity of subordinated debentures is accelerated, the holders of
all senior indebtedness outstanding at such time will first be entitled to
receive payment in full of such senior indebtedness before the holders of
subordinated debentures will be entitled to receive or retain any payment in
respect of the principal of or interest, if any, on the subordinated debentures.
No payments on account of principal or interest, if any, in respect of the
subordinated debentures may be made if there is a default in any payment with
respect to senior indebtedness, or an event of default exists with respect to
any senior indebtedness that accelerates the maturity of the senior
indebtedness, or if any judicial proceeding shall be pending with respect to the
default.
Indebtedness for money borrowed means any obligation of or any obligation
guaranteed by us, to repay borrowed money, whether or not evidenced by bonds,
debentures, notes or other written instruments; except that indebtedness for
money borrowed does not include trade accounts payable or accrued liabilities
arising in the ordinary course of business.
Indebtedness ranking on a parity with the subordinated debentures means:
. indebtedness for money borrowed, whether outstanding on the date the
indenture is executed or created, assumed or incurred after the date
that the indenture is executed, to the extent the indebtedness for
money borrowed by its terms ranks equal to and not prior to the
subordinated debentures in the right of payment upon the happening of
our dissolution, winding-up, liquidation or reorganization, and
. all other debt securities, and guarantees in respect of those debt
securities, issued to any trust other than the Trust, or a trustee of
the trust, partnership or other entity affiliated with us, that is our
financing vehicle (a "financing entity"), in connection with the
issuance by the financing entity of equity securities or other
securities guaranteed by us pursuant to an instrument that ranks equal
to, with or junior to the guarantee, including the guarantee issued
with respect to the capital securities of the Trust. The securing of
any indebtedness otherwise constituting indebtedness ranking on a
parity with the subordinated debentures shall not be deemed to prevent
such indebtedness from constituting indebtedness ranking on a parity
with the subordinated debentures.
Indebtedness ranking junior to the subordinated debentures means any
indebtedness for money borrowed, whether outstanding on the date the indenture
is executed or created, assumed or incurred after the date the indenture is
executed, to the extent the indebtedness for money borrowed by its terms ranks
junior to and not equal to or prior to the subordinated debentures (and any
other indebtedness ranking on a parity with the subordinated debentures) in
right of payment upon the happening of our dissolution or winding-up or
liquidation or reorganization. The securing of any indebtedness for money
borrowed otherwise constituting indebtedness ranking junior to the subordinated
debentures shall not be deemed to prevent the indebtedness for money borrowed
from constituting indebtedness ranking junior to the subordinated debentures.
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Senior indebtedness means all indebtedness for money borrowed, whether
outstanding on the date the indenture is executed or created, assumed or
incurred after the date the indenture is executed, except indebtedness ranking
on a parity with the subordinated debentures or indebtedness ranking junior to
the subordinated debentures, and any deferrals, renewals or extensions of the
senior indebtedness.
For more information regarding the regulatory limitations applicable to
dividends and other payments by the Bank, you should read "Risk Factors -- Risks
related to your investments in the capital securities -- We will depend
primarily on any dividends we may receive from our subsidiaries in making
payments under the subordinated debentures, which could affect the payments made
to you under the capital securities."
Governing Law
The indenture and the subordinated debentures will be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to conflict of law principles.
Information Concerning the Debenture Trustee
The debenture trustee will have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to these provisions, the debenture trustee is not
obligated to exercise any of the powers vested in it by the indenture at the
request of any holder of subordinated debentures, unless offered reasonable
indemnity by the 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 under the indenture if the debenture trustee reasonably believes
that repayment or adequate indemnity is not reasonably assured to it.
Description of Guarantee
The guarantee will be executed and delivered by us at the same time as the
capital securities. Wilmington Trust Company will act as guarantee trustee under
the guarantee to comply with the Trust Indenture Act. The guarantee will be
qualified as an indenture under the Trust Indenture Act. This summary of the
material provisions of the guarantee is not a complete description and you
should refer to the guarantee and the Trust Indenture Act for more information.
The form of the guarantee has been filed as an exhibit to the registration
statement of which this prospectus is part. The guarantee trustee will hold the
guarantee for the benefit of the holders of the capital securities.
General
We will irrevocably agree to pay in full on a subordinated basis, to the
extent set forth herein, the payments with respect to the capital securities to
the extent not paid by the Trust. The payments that will be subject to the
guarantee are:
. any accumulated and unpaid distributions required to be paid on the
capital securities, to the extent that the Trust has funds legally
available at that time;
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. the applicable redemption price with respect to the capital securities
called for redemption, to the extent that the Trust has funds legally
available at that time; and
. upon a voluntary or involuntary dissolution, winding-up or liquidation
of the Trust (other than in connection with the distribution of the
subordinated debentures to holders of the capital securities or the
redemption of all capital securities), the lesser of (a) the
liquidation distribution, to the extent the Trust has funds legally
available at that time, and (b) the amount of assets of the Trust
remaining available for distribution to holders of capital securities
after satisfying the liabilities owed to the Trust's creditors as
required by applicable law.
The guarantee will rank subordinate and junior to all senior indebtedness
to the extent provided in the guarantee. See "--Status of the Guarantee." Our
obligation to make a guarantee payment may be satisfied by our direct payment of
the required amounts to the holders of the capital securities or by causing the
Trust to pay these amounts to the holders of the capital securities.
The guarantee will be an irrevocable guarantee on a subordinated basis of
the Trust's obligations under the capital securities, but will apply only to the
extent that the Trust has funds sufficient to make these payments. If we do not
make interest payments on the subordinated debentures held by, the Trust will
not be able to pay you distributions on the capital securities and will not have
funds legally available. Please refer to the "Relationship Among the Capital
Securities, the Subordinated Debentures and the Guarantee" section of this
prospectus. The guarantee does not limit us from incurring or issuing other
secured or unsecured debt, including senior indebtedness, whether under the
indenture, any other indenture that we may enter into in the future or
otherwise.
The holders of at least a majority in aggregate liquidation amount of the
capital securities 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 our guarantee or to direct the exercise of any trust power conferred
upon the guarantee trustee under our guarantee. Any holder of the capital
securities may institute a legal proceeding directly against us to enforce their
rights under the guarantee without first instituting a legal proceeding against
the Trust, the guarantee trustee or any other person or entity.
If we default on our obligation to pay amounts payable under the
subordinated debentures, the Trust will lack funds for the payment of
distributions or amounts payable on redemption of the capital securities or
otherwise, and the holders of the capital securities will not be able to rely
upon the guarantee for payment of such amounts. Instead, if a debenture event
of default exists that is attributable to our failure to pay principal of or
interest on the subordinated debentures on a payment date, then any holder of
capital securities may institute a direct action against us pursuant to the
terms of the indenture for enforcement of payment to that holder of the
principal of or interest on such subordinated debentures having a principal
amount equal to the aggregate liquidation amount of the capital securities of
that holder. In connection with a direct action, we will not be liable to the
extent that we made any payment to the holder of capital securities in the
direct action. Except as described herein, holders of capital securities will
not be able to exercise directly any other remedy available to the holders of
the subordinated debentures or assert directly any other rights in respect of
the subordinated debentures. The trust agreement provides that each
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holder of capital securities by accepting the capital securities agrees to the
provisions of the guarantee and the indenture.
We will, through our guarantee, the trust agreement, the 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 that guarantee. Only the
combined operation of these documents provides a full, irrevocable and
unconditional guarantee of the Trust's obligations under the capital securities.
You should refer to "Relationship Among the Capital Securities, the Subordinated
Debentures and the Guarantee" for more information about our guarantee.
Status of the Guarantee
Our guarantee will constitute an unsecured obligation and will rank
subordinate and junior to all senior indebtedness in the same manner as the
subordinated debentures. See "Description of Subordinated Debentures--
Subordination." In addition, because we are a bank holding company, our right
to participate in any distribution of Park West's or Cargill's assets upon the
liquidation or reorganization of either is subject to the prior claims of their
respective creditors (including its depositors), except to the extent we may be
recognized as a creditor of Park West or Cargill. Accordingly, our obligations
under the guarantee effectively will be subordinated to all existing and future
liabilities of our present and future subsidiaries (including depositors of Park
West and Cargill). As a result, claimants should look only to our assets for
payments under the guarantee. See "Description of Subordinated Debentures--
General."
Our guarantee will rank equal to all of our other guarantees with respect
to preferred beneficial interests issued by other trusts. Our guarantee of the
Trust's capital securities does not limit the amount of secured or unsecured
debt, including senior indebtedness, that we or any of our subsidiaries may
incur. We expect from time to time that we will incur additional indebtedness
and that our subsidiaries will also incur additional liabilities. Our guarantee
will constitute a guarantee of payment and not of collection, enabling the
guaranteed party to institute a legal proceeding directly against us to enforce
their rights under the guarantee without first instituting a legal proceeding
against any other person or entity. Our guarantee will be held for the benefit
of the holders of the capital securities. Our guarantee will not be discharged,
except by payment of the guarantee payments in full to the extent that the Trust
has not paid, or upon distribution of the subordinated debentures to, the
holders of the capital securities.
Events of Default
There will be an event of default under the guarantee if we fail to perform
any of our payment or other obligations under the guarantee; except that with
respect to a default in payment of any guarantee payment, we shall have received
notice of default and shall not have cured the default within 60 days after
receipt of the notice. The holders of at least 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 our guarantee or to direct the exercise of any trust or
power conferred upon the guarantee trustee under our guarantee.
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Any holder of the capital securities may institute a legal proceeding
directly against us to enforce the rights of the holders of the capital
securities under the guarantee without first instituting a legal proceeding
against the Trust, the guarantee trustee or any other person or entity.
We, as guarantor, will be required to file annually with the guarantee
trustee a certificate regarding our compliance with the applicable conditions
and covenants under our guarantee.
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. You should read "Description of Capital Securities--Voting Rights;
Amendment of the Trust Agreement" for more information about the manner of
obtaining the holders' approval. All guarantees and agreements contained in the
guarantee agreement shall bind our successors, assigns, receivers, trustees and
representatives and shall inure to the benefit of the holders of the capital
securities then outstanding.
Termination of the Guarantee
Our guarantee will terminate and be of no further force and effect upon:
. full payment of the applicable redemption price of all outstanding
capital securities,
. full payment of the liquidation amount payable upon liquidation of
the Trust, or
. distribution of subordinated debentures to the holders of the
capital securities.
Our 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.
Information Concerning the Guarantee Trustee
The Delaware trustee shall act as the guarantee, except if we default under
the guarantee, and 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 not be obligated 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 it might incur.
Governing Law
The guarantee will be governed by and construed in accordance with the laws
of the State of New York, without regard to conflict of law principles.
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Relationship among the Capital Securities, the
Subordinated Debentures and the Guarantee
Full and Unconditional Guarantee to the extent that the Trust has Funds Legally
Available to Pay Distributions
We will irrevocably guarantee payments of distributions and other amounts
due on the capital securities to the extent the Trust has funds legally
available to pay distributions as and to the extent set forth under "Description
of Guarantee." Taken together, our obligations under the subordinated
debentures, the indenture, the trust agreement and the guarantee will provide, a
full, irrevocable and unconditional guarantee of the Trust's 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 this guarantee. Only the combined operation of
these documents effectively provides a full, irrevocable and unconditional
guarantee of the Trust's obligations under the capital securities.
If and to the extent that we do not make the required payments on the
subordinated debentures, the Trust will not have sufficient funds to make its
related payments, including distributions on the capital securities. Our
guarantee will not cover any payments when the Trust does not have sufficient
funds legally available to make those payments. Your remedy, as a holder of
capital securities, is to institute a direct action. Our obligations under the
guarantee will be subordinate and junior to all senior indebtedness.
Sufficiency of Payments
As long as we pay the interest and other payments when due on the
subordinated debentures, the Trust will have sufficient funds to cover
distributions and other payments due on the capital securities, primarily
because:
. the aggregate principal amount or prepayment price of the subordinated
debentures will equal the sum of the liquidation amount or redemption
price, as applicable, of the securities;
. the interest rate and interest payment dates and other payment dates
on the subordinated debentures will match the distribution rate and
distribution payment dates and other payment dates for the capital
securities;
. as sponsor, we will pay for all and any costs, expenses and
liabilities of the Trust, except for the Trust's obligations to
holders of capital securities; and
. the trust agreement also provides that the Trust is not authorized to
engage in any activity that is not consistent with its limited
purposes.
Enforcement Rights of Holders of Capital Securities
You, as holder of capital securities, may institute a legal proceeding
directly against us to enforce your rights under our guarantee without first
instituting a legal proceeding against the guarantee trustee, the Trust or any
other person or entity.
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A default or event of default under any senior indebtedness would not
constitute a default or event of default under the trust agreement. However, if
there are payment defaults under, or accelerations of, senior indebtedness, the
subordination provisions of the indenture provide that we cannot make payments
in respect of the subordinated debentures until we have paid the senior
indebtedness in full or we have cured any payment default or a payment default
has been waived. Our failure to make required payments on 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 capital
securities, using the proceeds from the sale of the capital securities to
acquire our 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 subordinated
debenture is that a holder of a subordinated debenture will be entitled to
receive from us the principal amount of and interest on subordinated debentures
held, while a holder of capital securities is entitled to receive distributions
from the Trust (or, in certain circumstances, from us under our guarantee) if
and to the extent the Trust has funds legally available to pay the
distributions.
Rights Upon Dissolution
Unless the subordinated debentures are distributed to holders of
securities, if the Trust is voluntarily or involuntarily dissolved, wound-up or
liquidated, after satisfying the liabilities owed to the Trust's creditors as
required by applicable law, 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 Subordinated Debentures."
If we are voluntarily or involuntarily liquidated or bankrupted, the
property trustee, as holder of the subordinated debentures, would be one of our
subordinated creditors, subordinated in right of payment to all senior
indebtedness, but entitled to receive payment in full of principal and interest,
before any of our stockholders receive payments or distributions. Since we will
be the guarantor under the guarantee and will agree to pay all costs, expenses
and liabilities of the Trust (other than the Trust's obligations to the holders
of its capital securities), the positions of a holder of capital securities and
a holder of subordinated debentures relative to other creditors and to our
stockholders in the event of our liquidation or bankruptcy are expected to be
substantially the same.
Certain Federal Income Tax Consequences
General
In the opinion of Thacher Proffitt & Wood, special federal income tax
counsel to us and the Trust, the following describes the material United States
federal income tax consequences of the purchase, ownership and disposition of a
capital security.
This summary addresses only the tax consequences to a person that acquires
a capital security on its original issuance at its original issue price and that
holds the security as a capital asset. This summary does not address all tax
consequences that may be applicable to a beneficial
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owner of a capital security and does not address the tax consequences to holders
subject to special tax regimes (like banks, thrifts, real estate investment
trusts, regulated investment companies, insurance companies, dealers in
securities or currencies, tax-exempt investors or persons that will hold a
capital security as a position in a "straddle," as part of a "synthetic
security" or "hedge" or as part of a "conversion transaction" or other
integrated investment). This summary 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 apply to a capital security.
Except as noted below in the discussion of Non-U.S. Holders, this discussion is
addressed to a U.S. Holder, which is defined as a beneficial owner of a capital
security that, for U.S. federal income tax purposes, is (or is treated as)
(1) a citizen or individual resident of the United States,
(2) a corporation or partnership (or entity treated for federal income tax
purposes as a corporation or partnership) created or organized in or
under the laws of the United States or any political subdivision
thereof,
(3) an estate the income of which is includible in gross income for U.S.
federal income tax purposes without regard to its source, or
(4) a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more U.S.
persons have the ability to control all substantial decisions of the
trust.
This summary does not address the tax consequences to any shareholder,
partner or beneficiary of a holder of a capital security. This summary is based
on 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. An opinion of Thacher Proffitt & Wood
is not binding on the Internal Revenue Service (the "IRS") or the courts. No
rulings have been or are expected to be sought from the IRS with respect to any
of the matters described herein. We can give no assurance that the opinions
expressed herein will not be challenged by the IRS or, if challenged, that the
challenge will not be successful.
Classification of the Subordinated Debentures
We intend to take the position that the subordinated debentures will be
classified for U.S. federal income tax purposes as our indebtedness. Thacher
Proffitt & Wood will render its opinion that, under then current law, based on
the representations, facts and assumptions set forth in this prospectus and
certain assumptions and qualifications referenced in the opinion, and assuming
full compliance with the terms of the indenture (and other relevant documents),
the subordinated debentures will be characterized for U.S. federal income tax
purposes as our indebtedness. We, together with the Trust and the holders of
the capital securities (by acceptance of a beneficial interest in a capital
security) will agree to treat the subordinated debentures as our indebtedness
for all U.S. federal income tax purposes. We cannot be sure that this position
will not be challenged by the IRS or, if challenged, that the challenge will not
be successful. The remainder of this discussion assumes that the subordinated
debentures will be classified as our indebtedness for U.S. federal income tax
purposes.
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Classification of the Trust
In connection with the issuance of the capital securities, Thacher Proffitt
& Wood will render its opinion that, under then 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 that
opinion, the Trust will not be classified for U.S. federal income tax purposes
as an association taxable as a corporation. Accordingly, for U.S. federal
income tax purposes, the Trust will not be subject to U.S. federal income tax,
and each holder of a capital security will be required to include in its gross
income any interest (or accrued original issue discount) with respect to its
allocable share of the subordinated debentures.
Interest Income and Original Issue Discount
Under the indenture, we have the right to defer the payment of interest on
the subordinated debentures at any time or from time to time for one or more
deferral periods not exceeding 20 consecutive quarterly periods each, provided
that no deferral period shall end on a date other than an interest payment date
or extend beyond , 2029. By reason of that right, the Treasury
regulations will subject the subordinated debentures to the rules in the Code
and Treasury regulations on debt instruments issued with original issue discount
(the "OID Rules"), unless the indenture or subordinated debentures contain terms
or conditions that make the likelihood of exercise of the deferral option
remote. Under the Treasury regulations, a "remote" contingency that stated
interest will not be timely paid will be ignored in determining whether a debt
instrument is issued with original issue discount. Although there is no
authority directly on point, we believe that the likelihood that we would
exercise our option to defer payments of interest is "remote" since exercising
that option would, among other things, prevent us from declaring dividends on
any class of our equity securities. Accordingly, we intend to take the position
that the subordinated debentures will not be considered to be issued with
original issue discount and, accordingly, stated interest on the 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 Treasury regulations, if we were to exercise our option to defer
payments of interest, the subordinated debentures would at that time be treated
as issued with original issue discount, and all stated interest on the
subordinated debentures would thereafter be treated as original issue discount
as long as the subordinated debentures remain outstanding. If this occurred, all
of a holder's interest income with respect to the 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 a capital
security would be required to include in gross income original issue discount
even though we would not make actual cash payments during a deferral period. The
amount of such includible original issue discount could be significant. Also,
under the Treasury regulations, if the option to defer the payment of interest
were determined not to be "remote," the subordinated debentures would be treated
as having been originally issued with original issue discount. In such event, a
holder would be required to include in gross income an amount of original issue
discount each taxable year that approximates the amount of interest that accrues
on the subordinated debentures at the stated interest rate, regardless of such
holder's method of tax accounting, and actual cash payments of interest on the
subordinated debentures would not be separately includible in gross income.
These Treasury 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.
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Because income on the capital securities will constitute interest or
original issue discount, 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 Subordinated Debentures or Cash Upon Liquidation of the Trust
We will have the right at any time to liquidate the Trust and cause the
subordinated debentures to be distributed to the holders of the capital
securities. Under current law, the liquidation of the Trust and the
distribution of the subordinated debentures to trust security holders, for U.S.
federal income tax purposes, would be treated as a nontaxable event to each
holder, and the aggregate tax basis of each holder in the subordinated
debentures received by such holder would be equal to the holder's aggregate tax
basis in those capital securities surrendered. A holder's holding period in the
subordinated debentures received in liquidation of the Trust would be no shorter
than the period during which the capital securities were held by that holder.
The subordinated debentures may be prepaid in cash, and the proceeds of
that prepayment would be distributed to holders in redemption of their capital
securities. Under current law, that redemption would constitute, for U.S.
federal income tax purposes, a taxable disposition of the redeemed capital
securities, the tax consequences of which are described below under "--Sales or
Redemptions of Capital Securities."
Sales or Redemptions of Capital Securities
On a sale or redemption of a capital security for cash, a holder will
recognize gain or loss equal to the difference between its adjusted tax basis in
the capital security and the amount realized on the sale or redemption of that
capital security. If the rules regarding original issue discount do not apply,
a holder's adjusted basis in a capital security generally will be its initial
purchase price, and if the holder uses an accrual method of accounting, the
holder will have a basis in any accrued but unpaid interest. If the rules
regarding original issue discount apply, a holder's adjusted basis in a capital
security generally will be its initial purchase price increased by any original
issue discount previously included in the holder's gross income to the date of
disposition and decreased by any payments received on the capital security.
Gain or loss recognized on a sale or redemption of a capital security will be
capital gain or loss. Capital gain recognized by an individual in respect of a
capital security held for more than one year as of the date of sale or
redemption is subject to a maximum U.S. federal income tax rate of 20 percent.
The capital securities may trade at a price that discounts any accrued but
unpaid interest on the subordinated debentures. Therefore, the amount realized
by a holder who disposes of a capital security between distribution payment
dates and whose adjusted basis in the capital security has been increased by the
amount of any accrued but unpaid original issue discount (or interest) may be
less than the holder's adjusted basis in the capital security. A holder's basis
in a capital security could be increased either under the rules regarding
original issue discount or, if those rules do not apply, in the case of a holder
that uses an accrual method of accounting, under the accrual accounting rules.
In that case, the holder will recognize a capital loss. Subject to a limited
exception in the case of individual taxpayers, capital losses cannot be applied
to offset ordinary income for U.S. federal income tax purposes.
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Non-U.S. Holders
For purposes of this discussion, a "Non-U.S. Holder" generally is any
corporation, individual, partnership, estate or trust that is not a U.S. Holder
for U.S. federal income tax purposes.
Under current U.S. federal income tax laws, subject to the discussion below
of backup withholding, payments by the Trust or any of its paying agents to a
Non-U.S. Holder will not be subject to U.S. federal withholding tax, provided
that (a) the Non-U.S. Holder does not own, actually or constructively, ten
percent or more of the total combined voting power of all classes of our stock
entitled to vote, (b) the Non-U.S. Holder is not a controlled foreign
corporation that is related to us through stock ownership, (c) the Non-U.S.
Holder is not a bank whose receipt of interest on the subordinated debentures is
described in Section 881(c)(3)(A) of the Code, and (d) either (A) the Non-U.S.
Holder certifies to the Trust or its agent, under penalties of perjury, that it
is not a U.S. 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 business (a "Financial Institution") and
holds the capital security in that capacity certifies to the Trust or its agent,
under penalties of perjury, that the statement has been received from the Non-
U.S. Holder by it or by a Financial Institution between it and the Non-U.S.
Holder and furnishes the Trust or its agent with a copy thereof. New Treasury
regulations provide alternative methods for satisfying the certification
requirements described in clause (1)(d), effective for certain payments made
after December 31, 2000.
If a Non-U.S. Holder is engaged in a trade or business in the United States
and interest on the capital securities (or the subordinated debentures) is
effectively connected with the conduct of that trade or business, the Non-U.S.
Holder, although exempt from the withholding tax discussed above, will be
subject to U.S. federal income tax on that interest on a net income basis in
generally the same manner as if it were a U.S. Holder. In addition, if such
Non-U.S. Holder is a foreign corporation, it may be subject to a branch profits
tax equal to 30% of its effectively connected earnings and profits that are
repatriated or treated as repatriated. For this purpose, the interest income
would be included in the foreign corporation's earnings and profits. In the
case of a Non-U.S. Holder entitled to the benefits of a tax treaty with the
United States, the foregoing discussion generally applies only if the Non-U.S.
Holder is engaged in business in the United States through a U.S. permanent
establishment and the income on the subordinated debentures is attributable to
that permanent establishment within the meaning of the treaty, and the rate of
the branch profits tax may be limited to a rate prescribed by the treaty for the
withholding of tax on dividends. New final Treasury regulations generally
prescribe new methods for certifying that a Non-U.S. Holder is exempt from the
withholding of U.S. federal income tax by reason of being engaged in trade or
business in the United States.
Any gain recognized upon a sale or other disposition of capital securities
(or subordinated debentures) generally will not be subject to U.S. federal
income tax unless (1) the gain is, or is treated as, effectively connected with
a U.S. trade or business of the Non-U.S. Holder or (2) in the case of a Non-U.S.
Holder who is an individual, that individual is present in the United States for
183 days or more in the taxable year of the sale or other disposition, and
certain other conditions are met.
71
<PAGE>
Backup Withholding Tax and Information Reporting
The amount of interest, including original issue discount, accrued on
capital securities held of record by U.S. persons (other than corporations and
other exempt holders) will be reported to the IRS. "Backup" withholding at a
rate of 31% will apply to payments of interest to non-exempt U.S. persons unless
the holder furnishes its taxpayer identification number in the manner prescribed
in applicable Treasury regulations, certifies that the number is correct,
certifies as to no loss of exemption from backup withholding and meets certain
other conditions.
Payment of the proceeds from the disposition of capital securities to or
through the United States office of a broker is subject to information reporting
and backup withholding unless the holder or beneficial owner establishes an
exemption from information reporting and backup withholding.
Non-U.S. Holders are generally exempt from the information reporting and
backup withholding rules but may be required to comply with certain
certification and identification requirements to prove their exemption.
Any amount withheld from a holder under the backup withholding rules will
be allowed as a refund or a credit against such holder's U.S. federal income tax
liability, provided the required information is furnished to the IRS.
It is anticipated that income on capital securities will be reported to
holders on Form 1099 (or any successor form) and mailed to holders of capital
securities by January 31 following each calendar year.
THE U.S. 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. YOU SHOULD CONSULT YOUR TAX ADVISER WITH RESPECT TO THE
TAX CONSEQUENCES TO YOU OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF A CAPITAL
SECURITY, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN U.S. FEDERAL OR OTHER TAX LAWS.
ERISA Considerations
The primary purpose of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") is to protect the interests of participants in employee
benefit plans by mandating standards of conduct, obligations and
responsibilities for the people who serve as the fiduciaries of these plans. A
person will be considered to be a fiduciary with respect to an employee benefit
plan under ERISA to the extent that he or she exercises discretionary authority
over the management or the investment of the plan's assets. Accordingly, before
investing the assets of an employee benefit plan in capital securities, a
fiduciary will be required to determine whether the investment satisfies the
prudence and diversification requirements of ERISA and whether the investment,
itself, is permitted under the plan's governing documents.
Section 406 of ERISA and Section 4975 of the Code prohibit plans, as well
as individual retirement accounts and Keogh plans subject to Section 4975 of the
Code, from engaging in certain transactions involving "plan assets" with persons
who are "parties-in-interest" under ERISA or
72
<PAGE>
"disqualified persons" under the Code with respect to the plan. Violation of the
"prohibited transaction" rules will result in the imposition of an excise tax or
other liabilities on the "parties-in-interest" or the "disqualified persons," as
applicable, unless exemptive relief is available under a statutory or
administrative exemption. Employee benefit plans that are governmental plans (as
defined in Section 3(32) of ERISA), certain church plans (as defined in Section
3(33) of ERISA) and foreign plans (as described in Section 4(b)(4) of ERISA) are
not subject to the requirements of ERISA or Section 4975 of the Code; however,
governmental plans may be subject to similar provisions under applicable state
laws.
The U.S. Department of Labor has issued special regulations governing
certain investments by employee benefits plans covered by ERISA. These
regulations are known as the "Plan Asset Regulations." Under these Regulations,
the assets of the Trust will be deemed to be the assets of the employee benefit
plan for purposes of ERISA and Section 4975 of the Code if the plan's assets are
used to acquire an equity interest in the Trust and no exception under the Plan
Asset Regulations applies to the transaction. An "equity interest" is defined
in the Plan Asset Regulations to specifically include a beneficial interest in a
trust such as the Trust.
The Plan Asset Regulations do, however, contain certain exceptions to this
general rule. Under one exception, the assets of the Trust will not be deemed to
be the "plan assets" of the investing plans if, at all times, less than 25% of
the value of each class of equity interest in the Trust is held by all employee
benefit plans, including, for this purpose, employee benefit plans not subject
to ERISA or Section 4975 of the Code, such as governmental, church and foreign
plans, and any other plans whose assets qualify as "plan assets" under the Plan
Asset Regulations (collectively, the "Benefit Plan Investors"). Alternatively,
the assets of the Trust will not be deemed to be "plan assets" of the investing
plans if the capital securities constitute "publicly-offered securities" within
the meaning of the Plan Asset Regulations. Potential employee benefit plan
investors should be aware that although these exceptions exist, we cannot give
plan investors any assurance that the capital securities held by Benefit Plan
Investors will be less than 25% of the total value of the capital securities
either at the completion of this offering or at any subsequent time. In
addition, no assurance can be given that the capital securities offered in this
Prospectus constitute "publicly-offered securities" within the meaning of the
Plan Asset Regulations. We will purchase and initially hold all of the common
securities of the Trust.
By operation of the Plan Asset Regulations, certain transactions involving
the Trust and an employee benefit plan may be deemed to constitute direct or
indirect prohibited transactions under ERISA and Section 4975 of the Code. A
direct or indirect prohibited transaction may occur if the assets of the Trust
are deemed to be the "plan assets" of the plan investing in the Trust. For
example, if we were a party- in-interest with respect to a plan (either directly
or by reason of its ownership of the Bank or other subsidiaries), an extension
of credit between us and the Trust (as represented by the subordinated
debentures and the guarantee) would occur which is likely to be prohibited by
Section 406(a)(1)(B) of ERISA and Section 4975(c)(1)(B) of the Code, unless
exemptive relief is available. In addition, if we qualify as a fiduciary with
respect to the Trust as a result of certain powers it holds under the Trust
Indenture (such as the powers to remove and replace the property trustee and the
administrative trustees), it is possible that the optional redemption or
acceleration of the subordinated debentures would be considered to be prohibited
transactions under Section 406(b) of ERISA and Section 4975(c)(1)(E) of the
Code. In order to avoid engaging in these prohibited transactions, each
investing plan, by purchasing capital securities, will be deemed to have
directed the Trust to invest in the subordinated debentures and to have
appointed the property trustee.
73
<PAGE>
The DOL has issued five separate prohibited transaction class exemptions
("PTCEs") that may provide exemptive relief to an employee benefit plan for
direct or indirect prohibited transactions that may arise from the purchase or
holding of the capital securities. The available PTCE's include:
. PTCE 96-23 which may be applicable for certain transactions involving
in-house asset managers;
. PTCE 95-60 which may be applicable for certain transactions
involving insurance company general accounts;
. PTCE 91-38 which may be applicable for certain transactions
involving bank collective investment funds;
. PTCE 90-1 which may be applicable for certain transactions involving
insurance company separate accounts; and
. PTCE 84-14 which may be applicable for certain transactions
involving independent qualified asset managers.
Because the capital securities may be deemed to be equity interests in
Westbank for us of applying ERISA and Section 4975 of the Code, these capital
securities may not be purchased or held by any employee benefit plan ("Plan"),
any entity whose underlying assets include "plan assets" by reason of any plan's
investment in the entity (a "Plan Asset Entity") or any person investing the
"plan assets" of any plan, unless the purchaser or holder is exempt from all of
ERISA's prohibited transaction rules because of the relief provided under one of
the PTCE's identified above or another applicable exemption. Any purchaser or
holder of capital securities (or any interest in such securities) will be deemed
to have represented, through the fact of the purchase and holding of the capital
securities, that the purchaser either (a) is not a Plan or a Plan Asset Entity
and is not purchasing the capital securities on behalf of, or with the "plan
assets" of, any Plan or (b) is exempt from ERISA's prohibited transaction rules
because of the relief provided under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or
another applicable exemption. If a Plan or Plan Asset Entity purchases or holds
capital securities and elects to rely on an exemption other than PTCE 96-23, 95-
60, 91-38, 90-1 or 84-14, we, together with the Trust, may require an opinion of
legal counsel or other satisfactory evidence that such exemption is available.
Due to the complexity of these rules and the penalties that may be imposed
on persons involved in non-exempt prohibited transactions, it is critical that
Plan fiduciaries consult with legal counsel regarding the consequences that may
result if the assets of the Trust are deemed to be the "plan assets" of the Plan
by operation of the Plan Asset Regulations and the exemptive relief, described
above, is not available.
74
<PAGE>
Underwriting
Subject to the terms and conditions set forth in the underwriting
agreement, dated , 1999, we, together with the Trust, have
agreed that the Trust will sell to the underwriters listed below (the
"Underwriters") represented by Tucker Anthony Cleary Gull ("Tucker Cleary"), and
the Underwriters have agreed to purchase from the Trust, the respective number
of capital securities set forth opposite their respective names below:
<TABLE>
<CAPTION>
Number of
Capital Securities
------------------
<S> <C>
Tucker Anthony Cleary Gull
[additional underwriters to be provided]
Total...................................... 1,700,000
==================
</TABLE>
Under the terms and conditions of the underwriting agreement, the
Underwriters are committed to take and pay for all of the capital securities if
any are taken.
We will pay the Underwriters compensation of $0.35 for each capital
security sold in the offering. The Underwriters will then offer the capital
securities in part directly to the public at the initial public offering price
set forth on the cover page of this prospectus and in part to several securities
dealers at the initial public offering price less a concession of no more than
$ for each capital security. The Underwriters and such dealers may allow and
reallow, a concession of no more than $ for each capital security to other
brokers and dealers. After the capital securities are released for sale to the
public, the initial public offering price and other selling terms may from time
to time be varied by Tucker Cleary. The Underwriters will not execute any
transaction in a discretionary account without prior approval of the customer.
In addition, we have agreed to pay Tucker Cleary a fee of $50,000 for its
services in managing the offering.
Prior to the offering, there has been no public market for the capital
securities. Although certain Underwriters have indicated to us and to the Trust
that they intend to make a market in the capital securities, they are not
obligated to do so and may discontinue any such market-making activities at any
time without notice. No assurance can be given as to the liquidity of the
trading markets for the capital securities.
We, together with the Trust, have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act.
Until the distribution of the capital securities is completed, rules of the
SEC may limit the ability of the Underwriters to bid for and purchase the
capital securities. As an exception to these rules, the Underwriters are
permitted to engage in certain transactions that stabilize the price of the
capital securities. Such transactions consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of the capital securities.
75
<PAGE>
If the Underwriters create a short position in the capital securities in
connection with the offering, i.e., if it sells a greater aggregate number of
capital securities than is set forth on the cover page of this prospectus, the
Underwriters may reduce the short position by purchasing capital securities in
the open market.
The Underwriters may also impose a penalty bid on certain selling group
members. This means that if the Underwriters purchase capital securities in the
open market to reduce their short position or to stabilize the price of the
capital securities, they may reclaim the amount of the selling concession from
the selling group members who sold those capital securities as part of the
offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
Neither we nor the Underwriters make any representations or prediction as
to the direction or magnitude of any effect that the transactions described
above may have on the price of the capital securities. In addition, neither we
nor the Underwriters make any representation that Tucker Cleary will engage in
such transactions or that such transactions, once commenced, will not be
discontinued without notice.
During a period of 180 days from the date of this Prospectus, neither the
Trust nor Westbank will, subject to certain exceptions, without the prior
written consent of Tucker Cleary, directly or indirectly, sell, offer to sell,
grant any option for sale of, or otherwise dispose of, any capital securities,
any security convertible into or exchangeable into or exercisable for capital
securities or the subordinated debentures or any debt securities substantially
similar to the subordinated debentures or equity securities substantially
similar to the capital securities (except for the subordinated debentures and
the capital securities offered hereby).
Because the National Association of Securities Dealers, Inc. (the "NASD")
is expected to view the capital securities as interests in a direct
participation program, the offering of the capital securities is being made in
compliance with the applicable provisions of Rule 2810 of the NASD's Conduct
Rules.
It is expected that delivery of the capital securities will be made in
book-entry form only through the facilities of DTC in New York, New York against
payment therefor on or about , 1999, as agreed upon by us, the Trust and
Tucker Cleary in accordance with Rule 15c6-1 under the Exchange Act.
Tucker Cleary or its affiliates have provided from time to time, and expect
to provide in the future, investment services to us and our affiliates, for
which Tucker Cleary or its affiliates have received or will receive customary
fees and commissions.
Legal Matters
Certain legal matters will be passed upon for us by Thacher Proffitt & Wood
and for Tucker Cleary by Sullivan & Worcester LLP. Certain matters relating to
United States federal income tax considerations described in this prospectus
will be passed upon for us by Thacher Proffitt & Wood.
76
<PAGE>
Experts
The consolidated financial statements of Westbank Corporation as of
December 31, 1998 and 1997, and for each of the three years in the period ended
December 31, 1998, included and incorporated by reference in this Prospectus
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is included and incorporated herein by reference. Insofar
as the report of Deloitte & Touche LLP relates to the amounts included for
Cargill Bancorp, Inc. at September 30, 1998 and 1997 and for each of the three
years in the period ended September 30, 1998, it is based solely on the report
of Snyder & Haller P.C., independent auditors; such report being included and
incorporated herein by reference, and has been so included and incorporated in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
Where You Can Find More Information
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document in our public files
at the SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C.
20549 and at the SEC's regional offices at 7 World Trade Center, 13/th/ Floor,
Suite 1300, New York, New York 10048 and Citicorp Center, 500 West Madison
Avenue, Suite 1400, Chicago, Illinois 60661. Please call the SEC at 1-800-SEC-
0330 for further information on the public reference rooms. Our SEC filings are
also available to the public from the SEC's web site at http://www.sec.gov
through the SEC's electronic data gathering, analysis and retrieval system,
EDGAR. Our common stock is listed on the Nasdaq National Market under the symbol
"Westbank." Information about us also is available from the NASD, 1735 K Street,
N.W., Washington, D.C. 20006.
This prospectus is part of a registration statement that we and the Trust
filed with the SEC. Because the SEC allows us to omit parts of the registration
statement from this prospectus, we did not include all the information in the
registration statement in this prospectus. You should review the registration
statement, including the exhibits, for additional information regarding the
Trust, the capital securities and us. The registration statement and its
exhibits may be inspected at the SEC's offices described in the previous
paragraph.
Additional Information We Have Incorporated in the Prospectus
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents that are considered part of this prospectus.
Information that we file with the SEC after the date of the registration
statement will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 by us (1) after the date of the filing of our registration statement
and prior to its effectiveness and (2) until our offering of securities has been
completed.
. Annual Report on Form 10-K/A for the year ended December 31, 1998 and
all amendments thereto.
. Quarterly Report on Form 10-Q for the three months ended March 31,
1999.
. Quarterly Report on Form 10-Q for the three and six months ended June
30, 1999.
77
<PAGE>
. Current Report on Form 8-K dated January 29, 1999.
. Definitive Proxy Statement on Schedule 14A dated March 16, 1999.
. Current Report on Form 8-K dated March 31, 1999.
. Current Report on Form 8-K dated April 12, 1999.
For your convenience, we have attached a copy of our Annual Report on Form
10-K/A, as amended, for the year ended December 31, 1998 (without exhibits), and
the Quarterly Report on Form 10-Q for the three and six months ended June 30,
1999 to this prospectus as Appendix A and B. You may obtain a copy of our
filings with the SEC at no cost, by writing or telephoning us at the following
address:
Westbank Corporation
225 Park Avenue
West Springfield, MA 01089-3326
(413) 747-1400
Attention: Robert J. Perlak, Clerk
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. This prospectus is an offer to
sell only the capital securities referred to in this prospectus, and only under
circumstances and in jurisdictions where it is lawful to do so. The information
contained in this prospectus is current only as of the date of the prospectus.
78
<PAGE>
Appendix A
A-1
<PAGE>
Appendix B
A-2
<PAGE>
[LOGO]
Tucker Anthony Cleary Gull
A-3
<PAGE>
Appendix A
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
[mark one] [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-12784
WESTBANK CORPORATION
Massachusetts 04-2830731
(State of Incorporation) (I.R.S. Employer Identification Number)
225 Park Avenue, West Springfield, Massachusetts 01090-0149
(Address of principal executive office) (Zip Code)
(413) 747-1400
(Telephone Number)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- -------------------
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
Common stock, $2.00 Par Value
Preferred stock, $5.00 Par Value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days.
Yes X No
Based on the closing sales price on March 1, 1999 the aggregate market value of
the voting stock held by nonaffiliates of the registrant was $47,936,445.
The number of shares outstanding of the registrants common stock, $2.00 par
value was 4,214,193 on March 1, 1999.
Portions of the Annual Report to Stockholders for the year ended December 31,
1998 are incorporated by reference into Parts I and II.
Portions of the Proxy Statement issued by the Corporation in connection with the
Annual Meeting to be held on April 21, 1999 are incorporated by reference into
Part III.
<PAGE>
WESTBANK CORPORATION
WESTBANK CORPORATION IS SUBMITTING THIS FORM 10-K/A
AS A RESULT OF THE ACQUISITION OF CARGILL
BANCORP, INC., ON JANUARY 29, 1999.
ALL FINANCIAL INFORMATION HAS BEEN RESTATED AS
REQUIRED, ACCOUNTING FOR THE ACQUISITION OF
CARGILL BANCORP, INC., AS A POOLING OF
INTERESTS.
INDEX TO FORM 10-K
PART I
Item 1 Business I - 1
Item 2 Properties I - 2
Item 3 Legal Proceedings I - 3
Item 4 Submission of Matters to a vote of Security Holders I - 3
PART II
Item 5 Market for the Corporation's Common Stock
and Related Stockholder Matters II - 1
Item 6 Selected Financial Data II - 1
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations II - 1
PART III
Item 8 Financial Statements and Supplementary Data III - 1
Item 9 Changes in and Disagreements with Accountant
on Accounting and Financial Disclosure III - 1
Item 10 Directors and Executive Officers of the Registrant III - 1
Item 11 Executive Compensation III - 1
Item 12 Security Ownership of Certain Beneficial
Owners and Management III - 1
Item 13 Certain Relationships and Related Transactions III - 1
PART IV
Item 14 Exhibits, Financial Statement
Schedules and Reports on Form 8-K IV - 1
Signatures IV - 2
Exhibit Index IV - 3
<PAGE>
WESTBANK CORPORATION, WEST SPRINGFIELD, MASSACHUSETTS
PART I
ITEM 1 BUSINESS
Reference is made to Page 4 of the Corporation's Annual Report to Stockholders
for the year ended December 31, 1998, wherein this subject is covered.
Statistical Disclosure by Bank Holding Companies
The following statistical tables and accompanying text provide required
financial data about the Corporation and should be read in conjunction with the
Consolidated financial statements and related notes, appearing in the 1998
Annual Report to Stockholders and is incorporated herein by reference thereto:
Page of
Annual Report
I. Distribution of Assets, Liabilities and
Stockholders' Equity:
Interest Rates and Interest Differential 10
Rate/Volume Analysis of Interest
Margin on Earning Assets 11
II. Investment Portfolio 12, 27, 28, 30, 31 and 38
III. Loan Portfolio 13, 28, 29, 31, 32 and 38
a. Types of Loans 13
b. Maturities and Sensitivities
to Changes in Interest Rates 7, 8, 9 and 13
c. Risk Elements 7, 8, 14, 15, 16, 28, 31 and 32
IV. Summary of Loan Loss Experience 14 and 15
V. Deposits 16, 33 and 42
VI. Return on Equity and Assets 17
VII. Short Term Borrowing 17, 34 and 43
I - 1
<PAGE>
ITEM 2 PROPERTIES
The Corporation's principal banking subsidiary, Park West Bank and Trust Company
("Park West") operates thirteen banking offices throughout Western
Massachusetts, located as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
LOCATION OWNED LEASED TOTAL
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Agawam (Feeding Hills) 1 1
- -----------------------------------------------------------------------
Chicopee 1 1
- -----------------------------------------------------------------------
Chicopee - Supermarket 1 1
- -----------------------------------------------------------------------
East Longmeadow 1 1
- -----------------------------------------------------------------------
East Longmeadow -
Supermarket 1 1
- -----------------------------------------------------------------------
Holyoke 1 1
- -----------------------------------------------------------------------
Ludlow 1 1
- -----------------------------------------------------------------------
Southwick 1 1
- -----------------------------------------------------------------------
West Springfield 2 1 3
- -----------------------------------------------------------------------
Westfield 1 1
- -----------------------------------------------------------------------
Westfield Supermarket 1 1
- -----------------------------------------------------------------------
TOTAL 6 7 13
- -----------------------------------------------------------------------
</TABLE>
As a result of the acquisition of Cargill Bancorp, Inc., the Corporation's other
banking subsidiary, Cargill Bank, operates three Northern Connecticut branches,
located as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
LOCATION OWNED LEASED TOTAL
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Putnam 1 1
- -----------------------------------------------------------------------
Quinebaug 1 1
- -----------------------------------------------------------------------
Woodstock 1 1
- -----------------------------------------------------------------------
TOTAL 2 1 3
- -----------------------------------------------------------------------
</TABLE>
All general banking offices except the Park West Holyoke office have drive-in
facilities and twenty-four hour automated teller machines
Title to the properties described as owned in the foregoing table is held by the
subsidiary banks with warranty deed with no material encumbrances. Park West
owns, with no material encumbrances, land adjacent to the main office which is
available for parking and, through a subsidiary, also owns one other property
adjacent to the main office consisting of land also used as a parking lot. The
Corporation also owns the property on which its former Operations Center was
located and is presently leased. In addition, the Bank holds other real estate
as a result of foreclosure proceedings.
All of the property described as leased in the foregoing table is leased
directly from independent parties. Management considers the terms and conditions
of each of the existing leases to be in the aggregate favorable to the Bank.
I-2
<PAGE>
ITEM 3 LEGAL PROCEEDINGS
Certain litigation is pending against the Corporation and the Bank. Management,
after consultation with legal counsel, does not anticipate that any liability
arising out of such litigation will have a material effect on the Corporation's
Financial Statements.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
I-3
<PAGE>
PART II
ITEM 5 MARKET FOR CORPORATION'S COMMON STOCK
AND RELATED STOCKHOLDER MATTERS
Reference is made to Page 49 of the Corporation's Annual Report to Stockholders
for the year ended December 31, 1998, wherein this subject is covered.
ITEM 6 SELECTED FINANCIAL DATA
Reference is made to Page 5 of the Corporation's Annual Report to Stockholders
for the year ended December 31, 1998, wherein this subject is covered.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to Pages 6 through 19 of the Corporation's Annual Report to
Stockholders for the year ended December 31, 1998, wherein this subject is
covered.
Information Concerning Forward-Looking Statements.
Westbank has made and may make in the future forward-looking statements
concerning future performance, including, but not limited to, future earnings,
and events or conditions which may affect such future performance. These
forward-looking statements are based upon management's expectations and belief
concerning possible future developments and the potential effect of such future
developments on Westbank. There is no assurance that such future developments
will be in accordance with management's expectations and belief or that the
effect of any future developments on Westbank will be those anticipated by
Westbank management.
All assumptions that form the basis of any forward-looking statements regarding
future performance, as well as events or conditions which may affect such future
performance, are based on factors that are beyond Westbank's ability to control
or predict with precision, including future market conditions and the behavior
of other market participants. Among the factors that could cause actual results
to differ materially from such forward-looking statements are the following:
1. The status of the economy in general, as well as in Westbank's
primary market area, Western Massachusetts;
2. The real estate market in Western Massachusetts;
3. Competition in Westbank's primary market area from other banks,
especially in light of continued consolidation in the New England
banking industry.
4. Any changes in federal and state bank regulatory requirements;
5. Changes in interest rates; and
6. The cost and other effects of unanticipated legal and
administrative cases and proceedings, settlements and
investigations.
The assumptions listed above, as they relate to Cargill Bank, are the same with
the exception of the market area, which is Northeast Connecticut.
While Westbank periodically reassesses material trends and uncertainties
affecting the Corporation's performance in connection with is preparation of
management's discussion and analysis of results of operations and financial
condition contained in its quarterly and annual reports, Westbank does not
intend to review or revise any particular forward-looking statement in light of
future events.
II-1
<PAGE>
PART III
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to pages 21 through 41 of the Corporation's Annual Report to
Stockholders for the year ended December 31, 1998, wherein this subject is
covered.
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
NONE
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Reference is made to pages 4 through 7 of the Corporation's Proxy Statement to
Stockholders for the 1999 Annual Meeting scheduled for April 21, 1999, wherein
this subject is covered.
ITEM 11 EXECUTIVE COMPENSATION
References is made to pages 8 through 12, of the Corporation's Proxy Statement
to Stockholders for the 1999 Annual Meeting scheduled for April 21, 1999,
wherein this subject is covered.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Reference is made to pages 6 and 7, of the Corporation's Proxy Statement to
Stockholders for the 1999 Annual Meeting scheduled for April 21, 1999, wherein
this subject is covered.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Reference is made to pages 6 through 15, of the Corporation's Proxy Statement to
Stockholders for the 1999 Annual Meeting scheduled for April 21, 1999, wherein
this subject is covered under the caption "Beneficial Ownership of Stock and
Executive Compensation - Miscellaneous".
III - 1
<PAGE>
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
The following documents are filed as a part of this report:
1. Financial Statements
The following financial statements are incorporated in this Annual
Report on Form 10-K by reference to the Corporation's Annual Report to
Stockholders for the year ended December 31, 1998:
WESTBANK CORPORATION
Page of
Annual
Report
------
Independent Auditors' Reports 42
Consolidated Balance Sheets at
December 31, 1998 and 1999 20
Consolidated Statements of Income
for the years ended December
31, 1998, 1997 and 1996 21
Consolidated Statement of Stockholders'
Equity from January 1, 1996, to
December 31, 1998 22
Consolidated Statements of Comprehensive
Income for the years ended December 31, 1998,
1997 and 1996 22
Consolidated Statements of Cash Flows for the years
ended December 31, 1998, 1997 and 1996 23
Notes to Consolidated Financial Statements 24 - 41
Current reports on Form 8-K Reporting other Events were filed by
the Registrant on:
NONE
2. Financial Statement Schedules
Financial Statement Schedules are omitted because they are
inapplicable or not required.
3 Exhibits
See accompanying Exhibit Index.
IV - 1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WESTBANK CORPORATION
By: /s/ Donald R. Chase
Donald R. Chase
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Donald R. Chase President and Chief Executive Officer and Director August 18, 1999
- -------------------------
Donald R. Chase
/s/ Ernest N. Laflamme, Jr. Chairman of the Board and Director August 18, 1999
- -------------------------
Ernest N. Laflamme, Jr.
/s/ John M. Lilly Treasurer and Chief Financial Officer August 18, 1999
- -------------------------
John M. Lilly
/s/ Roland O. Archambault Director August 18, 1999
- -------------------------
Roland O. Archambault
/s/ Mark A. Beauregard Director August 18, 1999
- -------------------------
Mark A. Beauregard
/s/ David R. Chamberland Director August 18, 1999
- -------------------------
David R. Chamberland
/s/ Leroy F. Jarrett Director August 18, 1999
- -------------------------
Leroy F. Jarrett
/s/ G. Wayne McCary Director August 18, 1999
- -------------------------
G. Wayne McCary
/s/ Robert J. Perlak Corporate Clerk and Director August 18, 1999
- -------------------------
Robert J. Perlak
/s/ George R. Sullivan Director August 18, 1999
- -------------------------
George R. Sullivan
/s/ James E. Tremble Director August 18, 1999
- -------------------------
James E. Tremble
</TABLE>
IV-2
<PAGE>
EXHIBIT INDEX
Page No.
--------
3. Articles of Organization, as amended **
(a) Articles of Organization, as amended *
(b) By-Laws, as amended *
10.1 Employment Contract dated October 1, 1986, between
William A. Franks, Jr. and Westbank Corporation ***
10.12 Termination Agreement dated February 20, 1987, between
Donald R. Chase and Park West Bank and Trust Company ***
10.14 Termination Agreement dated February 20, 1987,
between Stanley F. Osowski and CCB, Inc. ***
10.15 1985 Incentive Stock Option Plan for Key Employees *
10.16 1995 Directors Stock Option Plan ****
10.17 1996 Stock Incentive Plan *****
13. 1995 Annual Report to Stockholders ARS (IFC 1-36 IBC)
21. Subsidiaries of Registrant TO BE INCLUDED
27. Financial Data Schedule TO BE INCLUDED
* Incorporated by reference to identically numbered exhibits contained in
Registrant's Annual Report on Form 10-K for the year ended December 31,
1988
** Incorporated by reference to identically numbered exhibits contained in
Registrant's Annual Report on Form 10-K for the year ended December 31,
1987
*** Incorporated by reference to identically numbered exhibits contained in
Registrant's Annual Report on Form 10-K for the year ended December 31,
1986
**** Incorporated by reference to identically numbered exhibits contained in
Registrant's Annual Report on Form 10-K for the year ended December 31,
1995
***** Incorporated by reference to identically numbered exhibits contained
in Registrant's 1996 Proxy Statement
IV-3
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Financial Highlights...................................... 1
Letter to Stockholders.................................... 2-3
Business - Westbank Corporation and Subsidiaries ........ 4
Selected Consolidated Financial Data.................... . 5
Management's Discussion and Analysis - Financial Results.. 6-20
Consolidated Balance Sheets............................... 21
Consolidated Statements of Income......................... 23
Consolidated Statements of Comprehensive Income........... 24
Consolidated Statements of Stockholders' Equity........... 25
Consolidated Statements of Cash Flows..................... 25
Notes to Consolidated Financial Statements................26-45
Independent Auditors' Report..............................46-47
Corporate Directory....................................... 48
Corporate Information..................................... 49
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
Westbank Corporation and Subsidiaries
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31
(Dollars in Thousands) 1998 1997 1996
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Net income $ 3,377 $ 3,384 $ 2,137
Net interest income 15,339 14,633 13,535
Non-interest income 2,427 2,529 2,340
Non-interest expense 12,200 11,066 11,278
Provision for loan losses 41 306 944
</TABLE>
<TABLE>
<CAPTION>
YEAR END DECEMBER 31
(Dollars in Thousands)
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Investment and
mortgage-backed securities $ 84,328 $ 60,213 $ 39,764
Loans, net 293,113 268,254 254,948
Allowance for loan losses 2,665 3,057 2,699
Total assets 402,623 355,567 331,803
Total deposits 342,266 314,679 298,014
Total stockholders' equity 30,490 26,918 22,717
COMMON SHARE INFORMATION
Basic weighted average
shares outstanding 4,143,009 3,845,698 3,643,270
Basic net earnings per share $ .82 $ .88 $ .59
</TABLE>
<PAGE>
CHAIRMAN'S AND PRESIDENT'S LETTER
Westbank Corporation and Subsidiaries
Dear Shareholder:
The past year was especially rewarding because we have achieved our topmost
objectives, record earnings and measured growth. Our growth strategy is based on
the premise: Succeeding today and investing for tomorrow. We seek to grow at a
measured, orderly pace by nurturing our core banking operations, deepening our
market penetration by providing more banking services to our present customers,
by acquisitions of other banks and opening new offices in selected areas.
We are proud to report that net income for the year ended December 31, 1998
totaled $3.3 million or $0.84 per diluted share, compared to $3.2 million or
$0.89 per diluted share for the same period a year ago. Included in the results
of operations during the fourth quarter of 1998 were $400 thousand of merger
costs associated with the acquisition of Cargill Bancorp, Inc., of Putnam,
Connecticut, which was consummated on January 29, 1999.
We look forward to the opportunity to work with the Cargill shareholders, staff
and customers. The affiliation will allow Cargill to offer a wider range of
products and services, while at the same time Westbank will achieve its
corporate objective of expanding its market into Connecticut.
Westbank is presently positioned and has sufficient resources and infrastructure
to expand through acquisition. We will pursue opportunities for growth in our
defined market area as well as in markets that are contiguous to our present
market area, which include Connecticut, Rhode Island and Central Massachusetts.
Consistent with our corporate strategies of building market share, we have
expanded our geographical reach into Ludlow and Southwick, Massachusetts. These
new full-service banking offices have exceeded all expectations by generating a
combined total of $11 million in new deposits last year.
At year-end assets totaled $355 million, an increase of $46.7 million or 15%
compared to the same period in 1997. Deposits increased by $27.5 million or 10%
and totaled $299.1 million.
The Corporation's capital was $27.3 million at year end, representing a capital
ratio of 7.69% while the Corporation's book value totaled $7.19 versus $6.63 for
the same period in the prior year.
Particularly gratifying was the fact that we were able to expand our loan
portfolio last year while continuing to maintain our disciplined loan criteria,
ample evidence that loans can be increased substantially while maintaining high
credit standards. During 1998 loans increased by $26.9 million or 12% and
totaled $259.3 million.
At Westbank, profitability is achieved through hard work and a clear focus on
what we do well. We reinvest in growth businesses and emphasize our core
competencies, which include credit and service quality, both of which are
absolutely essential to compete effectively. Banks cannot consistently generate
exceptional profits without being top-flight credit underwriters. Westbank is
recognized industry-wide for our relentless focus on maintaining superior credit
quality. Customer's needs seldom fall into neat categories, and usually cross
from one type of banking product to another. A clear competitive advantage for
Westbank is the fact that we organize around our customers and their needs, not
around products. To be focused on the customer, we have to know what the
customer wants, therefore, we listen to them and hear what they really need.
Through our local decision-making process in our banking offices our employees
are empowered to deliver customer solutions.
We've helped many businesses grow from the spare bedroom to the oak boardroom.
Technology helps us offer services in a more timely manner. However, sometimes
customers want the personal touch. Westbank offers both. This is the essence of
Westbank and the basis of the Westbank Advantage: Our products; our people; our
entire company is focused on meeting the needs of the customer.
Large bank mergers have negatively impacted small and medium sized businesses,
which indicates that there is and will be a growing need for a community bank
that offers not only a broad range of products both to businesses and consumers
but also provides exceptional service. The Residential Mortgage Department
continued its strong record of growth and significantly exceeded 1998 goals.
Westbank assisted six hundred families in terms of purchasing a home, building
their dream home or lowering their existing payments by closing on $61,000,000
in residential loans. Park West Bank and Trust Company also added an additional
satellite mortgage correspondent bank, which has an excellent reputation in the
Franklin County area of Western Massachusetts.
We converted a portion of our mortgages into mortgage-backed securities for sale
on Wall Street, providing the Bank with excellent investment grade securities
and immediate liquidity. This enables Westbank to realize additional income
without relinquishing its relationship with the borrower. With activity
remaining strong at the end of 1998, we anticipate another strong year in 1999.
Westbank's relatively new Indirect Lending Program has had a very positive
impact on loan originations. Through this program Westbank receives consumer
loan applications from Bank-approved automobile and recreational vehicle
dealerships whose customers wish to finance their purchases. These applications
are then processed according to the Bank's normal consumer loan underwriting
criteria. In 1998, indirect consumer loans accounted for approximately 28.5% of
the Bank's total consumer loan originations excluding mortgages.
<PAGE>
As wealth grows, so do the opportunities for those of us who manage and invest
that wealth. Customer needs change as they marry, purchase homes, have children
or retire. These lifestyle changes, coupled with changing market conditions,
make understanding all the more difficult. Our Trust Department has a
well-diversified line of services that is able to meet the changing needs of our
customers throughout each phase of their life cycle. Their "job" is building
long-term relationships with customers through all market conditions. That means
consistently providing the capabilities and capacity to serve customers as their
needs and situations change. During 1998, the Trust Department made significant
strides. They have built high quality customer relationships based on the trust
their customers place in them. At year-end, fiduciary accounts totaled in excess
of $119 million.
There is, of course, a lot of work that goes on behind the scenes that improves
our ability to compete effectively. For example, we are testing and changing
systems to be certain that we will cross the threshold into the next millennium.
Work on Year 2000 compliance is well advanced. Credit for this accomplishment
can be placed squarely on the shoulders of our Y2K Committee that is comprised
of executive officers in charge of each functional area of the bank. The
Committee is responsible for implementing our Year 2000 plan, and reporting its
progress monthly to the board of directors.
Our success is attributable to an exceptional team of employees, many of whom
are shareholders. They work hard every day to meet and exceed the expectations
of their customers and are determined that Westbank be recognized as a leader in
the financial services industry. The critical link between customer satisfaction
and shareholder value has always been the quality of our employees.
Westbank is focused on a growth momentum. However, size is not a strategy. It is
a statistic; i.e. growth only for the sake of getting bigger cannot be an
objective. Westbank will grow but only in ways that lead to a stronger and more
profitable company.
CORPORATE VISION IS NOTHING WITHOUT FOCUS. Our focus will be on three strategic
initiatives: Revenue Growth, Cost Control and Asset Management. Westbank will
continue to emphasize the growth of its core business this year. We expect to
build lending and deposit relationships with local customers in a very
competitive market. Westbank has the advantage of being a reliable community
bank that has a well-earned reputation for knowledgeable service by its
experienced staff.
Nineteen Hundred and Ninety-Nine will be a challenging year for us as we strive
to enhance the environment necessary to support and expand a diversified and
profitable financial services company. We will remain intently focused not only
on growth, but also on operational integrity and the effectiveness required to
achieve a predictable, sustainable financial performance. We are confident in
the strategic direction we have chosen and where we expect it to take us
throughout 1999 and beyond.
Westbank Corporation and its shareholders have been fortunate over the years to
be well served by a strong management team and Board of Directors. After
thirty-eight years of dedicated service to the Company, Alfred C. Whitaker and
Paul J. McKenna, DMD, will retire from the Board of Directors in April of 1999.
Their dedication to Westbank and its shareholders is as strong today as it was
when they, along with a small group of other businessmen, founded the Bank in
1961. We would like to take this opportunity to thank them for their leadership
and loyalty. We wish them well in their retirement. We welcome to the Board of
Directors G. Wayne McCary, President and Chief Executive Officer of Eastern
States Exposition, the sixth largest fair in North America located in West
Springfield, Massachusetts.
We appreciate your loyalty, confidence and support of Westbank Corporation. Your
investment in our Company is foremost in our minds as we plan for the future. We
look forward to the ever-present challenges and the accompanying opportunities
of the twenty-first century. We are optimistic that with your continued support
we will continue to focus on growth and earnings.
Sincerely,
Alfred C. Whitaker Donald R. Chase
Chairman of the Board President and
Chief Executive Officer
<PAGE>
BUSINESS
Westbank Corporation and Subsidiaries
CORPORATE ORGANIZATION
Westbank Corporation (hereinafter sometimes referred to as "Westbank" or the
"Corporation") is a registered Bank Holding Company organized to facilitate the
expansion and diversification of the business of Park West Bank and Trust
Company (hereinafter sometimes referred to as "Park West" or the "Bank") into
additional financial services related to banking.
PARK WEST BANK AND TRUST COMPANY
As of December 31, 1998, substantially all operating income and net income of
the Corporation are presently accounted for by Park West. Park West is chartered
as a state bank and trust company by the Commonwealth of Massachusetts, is a
member of the Federal Deposit Insurance Corporation ("FDIC"), and is subject to
regulation by the Massachusetts Commissioner of Banks and the FDIC. A full range
of retail banking services is furnished to individuals, businesses, and
nonprofit organizations through thirteen banking offices located in Hampden
County. Such services include a wide range of checking and savings accounts,
loans, safe deposit facilities, and automated teller machines at selected branch
locations.
Park West also provides lending, depository and related financial services to
commercial, industrial, financial and governmental customers. In the lending
area, these include short- and long-term loans and revolving credit
arrangements, letters of credit, inventory and accounts receivable financing,
real estate construction lending, and mortgage loans.
Park West also operates a Trust Department providing services normally
associated with holding property in a fiduciary or agency capacity. The value of
the property held by the Trust Department at December 31, 1998 amounted to
$119,797,000 and is not included in the accompanying financial statements since
such items are not assets of the Bank.
EMPLOYEES
As of December 31, 1998, the Corporation and its subsidiaries had the equivalent
of 125 full-time officers and staff.
COMPETITION
Westbank's banking, real estate activity and trust services are competitive with
other Massachusetts financial institutions. Its service area is in Western
Massachusetts, primarily Hampden County. Westbank's competitors include other
commercial banks, mutual savings banks, savings and loan associations, credit
unions, consumer finance companies, loan offices, money market funds, and other
financing organizations.
Competition for trust services by major commercial banks is high, with
continuing efforts by those banks to solicit new business. The Trust Department
prides itself as one of the few remaining corporate fiduciaries providing
personal services locally. Insurance companies, mutual savings banks, investment
counseling firms, and other business firms and individuals also offer active
competition for such business.
ACQUISITION OF CARGILL BANCORP, INC.
On July 15, 1998, the Corporation entered into an agreement to acquire Cargill
Bancorp, Inc., which is a Delaware corporation and the holding company for
Cargill Bank, a $47.0 million asset Connecticut chartered stock savings and loan
association headquartered in Putnam, Connecticut.
Under the terms of the agreement, Cargill Bancorp will be merged into Westbank
Corporation. Cargill Bank will retain its local identity and remain a separate
subsidiary of Westbank Corporation. Each share of Cargill Bancorp common stock
will be exchanged for 1.3655 shares of Westbank common stock.
On November 3, 1998, the Corporation filed a registration statement to register
approximately 565,096 shares of common stock in order to facilitate this merger.
Cargill shareholders approved the merger at a shareholders meeting held on
December 16, 1998, and final regulatory approval was received on January 14,
1999.
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
Westbank Corporation and Subsidiaries
<TABLE>
<CAPTION>
Year ended December 31,
(Dollars in Thousands Except Share Amounts) 1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest and dividend income $ 28,631 $ 26,724 $ 24,059 $ 23,475 $ 19,647
Interest expense 13,292 12,091 10,524 10,145 7,481
- -------------------------------------------------------------------------------------------------------------------------------
Net interest income 15,339 14,633 13,535 13,330 12,166
Provision for loan losses 41 306 944 2,907 1,528
Non-interest income 2,427 2,529 2,340 3,104 2,641
Non-interest expense 12,200 11,066 11,278 9,969 11,234
- -------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 5,525 5,790 3,653 3,558 2,045
Income taxes (benefit) 2,148 2,406 1,516 1,132 (307)
- -------------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect
of changes in accounting principle 3,377 3,384 2,137 2,426 2,352
Cumulative effect of changes in
accounting principle for income taxes (22)
- -------------------------------------------------------------------------------------------------------------------------------
Net income $ 3,377 $ 3,384 $ 2,137 $ 2,426 $ 2,330
===============================================================================================================================
Common share data:
Earnings per share:
Basic $ .82 $ .88 $ .59 $ .69 $ .67
Diluted $ .79 $ .85 $ .57 $ .67 $ .65
Cash dividends declared $ .40 $ .30 $ .24 $ .20
Ending book value $ 7.26 $ 6.84 $ 6.19 $ 5.80 $ 5.25
AT DECEMBER 31:
Total loans -- net $ 293,113 $ 268,254 $ 254,948 $ 233,527 $ 225,193
Total assets 402,623 355,567 331,803 299,590 284,814
Total non-performing assets 1,494 2,025 3,791 8,655 8,313
Total deposits 342,266 314,679 298,014 269,478 256,668
Total borrowings 27,807 11,884 9,269 7,677 8,625
Total stockholders' equity 30,490 26,918 22,717 20,786 17,355
AVERAGE FOR YEAR:
Loans 284,629 270,066 246,366 232,422 214,846
Assets 382,924 348,561 313,063 297,676 273,214
Deposits 335,110 312,725 280,855 269,105 246,845
Stockholders' equity 29,229 24,638 21,777 19,741 17,655
Weighted shares outstanding - basic 4,143,009 3,845,698 3,643,270 3,539,919 3,491,111
- diluted 4,272,682 4,003,015 3,762,419 3,630,052 3,562,162
SELECTED RATIOS:
Rate of return on average total assets .88% .97% .68% .81% .86%
Rate of return on average stockholders' equity 11.55% 13.73% 9.81% 12.29% 13.20%
Stockholders' equity to total assets at year end 7.57% 7.57% 6.85% 6.93% 6.09%
Average total stockholders' equity
to average total assets 7.63% 7.07% 6.96% 6.63% 6.46%
Allowance for loan losses to total loans at year end .90% 1.13% 1.05% 1.65% 1.49%
Non-performing loans as a percentage
of total loans at year end .37% .68% 1.23% 2.89% 2.57%
Net charge-offs as a percentage
of average loans .15% .02% .88% 1.03% .76%
Other real estate owned as a percentage of total assets .12% .10% .19% .53% .61%
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS - FINANCIAL RESULTS
Westbank Corporation and Subsidiaries
Management's discussion of operations and financial position is based on the
selected consolidated financial data and should be read in conjunction with the
consolidated financial statements and notes thereto. Effective January 29, 1999,
Cargill Bancorp, Inc., and its subsidiary ("Cargill") were merged with and into
Westbank Corporation ("Westbank"), pursuant to a plan of merger dated July 15,
1998. Each share of Cargill common stock was converted into 1.3655 shares of the
Corporation's common stock. Approximately 400,164 of Westbank common shares were
issued for the outstanding common stock of Cargill.
The transaction was accounted for using the pooling-of-interests method and,
accordingly, all historical financial data has been restated to include both
entities for all periods presented. Westbank's fiscal year ends December 31 and
Cargill's fiscal year ends September 30.
For 1998, the Corporation reported net income of $3,377,000, or $.82 per share
basic and $.79 diluted, after providing $41,000 for loan losses. This compares
to net income for 1997 of $3,384,000, or $.88 per share basic and $.85 diluted.
The Corporation's 1997 earnings reflected a provision for loan losses of
$306,000. Net interest income increased $706,000 from 1997 to 1998.
Non-interest expense amounted to $12,200,000 in 1998 compared to $11,066,000 in
1997, an increase of $1,134,000, or 10%. The increase in operating expenses for
1998 is a direct result of reflecting $595,000 for merger costs related to the
acquisition of Cargill Bancorp, Inc., and the remaining increase is a result of
the overall growth of the Corporation. Non-interest income declined by $102,000
compared to 1997. During 1998, Trust Department earnings increased by $33,000
over 1997. Gains on sale of investments and other real estate declined by
$142,000, gains on sale of mortgages totaled $120,000, while service charges on
deposit accounts and other non-interest income declined by $108,000 compared to
1997. Income taxes in 1998 totaled $2,148,000, a decrease of $258,000 versus
1997.
At December 31, 1998, the Corporation's total assets were $402,623,000, an
increase of $47,056,000 or 13%, from $355,567,000 at year-end 1997. The higher
level of assets resulted primarily from an increase in net loans and investments
totaling $48,875,000 funded by the growth in deposits.
Non-performing assets amounted to $1,494,000 or .37% of total assets at December
31, 1998, compared with $2,025,000 or .68% at the end of 1997.
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
imposes significant regulatory restrictions and requirements on banking
institutions insured by the FDIC and their holding companies. FDICIA established
capital categories into which financial institutions are placed based on capital
level. Each capital category establishes different degrees of regulatory
restrictions which can apply to a financial institution. As of December 31,
1998, Park West's and Cargill's capital was at a level that placed each Bank in
the "well capitalized" category as defined by FDICIA.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS - FINANCIAL RESULTS (CONTINUED)
Westbank Corporation and Subsidiaries
FDICIA imposes a variety of other restrictions and requirements on insured
banks. These include significant regulatory reporting requirements such as
insuring that a system of risk-based deposit insurance premiums and civil money
penalties for inaccurate deposit reporting exists. In addition, FDICIA imposes a
system of regulatory standards for bank and bank holding company operations,
detailed truth in savings disclosure requirements, and restrictions on
activities authorized by state law but not authorized for national banks.
COMPONENTS OF CAPITAL
The following table presents the Corporation's components of capital as of
December 31. The table also presents the ratio of capital to total assets.
<TABLE>
<CAPTION>
(Dollars in Thousands) 1998 1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Stockholders' Equity
Common stock $ 8,397 $ 7,865 $ 7,343
Additional paid-in-capital 11,076 9,711 8,386
Retained earnings 10,803 9,282 7,087
Accumulated other
comprehensive income (loss) 214 60 (99)
- -------------------------------------------------------------------------------
Total Capital $30,490 $26,918 $22,717
===============================================================================
Ratio of capital
to average total assets 7.53% 7.44% 7.00%
</TABLE>
Regulatory risk-based capital requirements take into account the different risk
categories of banking organizations by assigning risk weights to assets and the
credit equivalent amounts of off-balance sheet exposures. In addition, capital
is divided into two tiers. In this Corporation, Tier 1 includes the common
stockholders' equity; total risk-based, or supplementary, capital includes not
only the equity but also a portion of the allowance for loan losses.
The following are the Corporation's risk-based capital ratios at December 31:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Tier 1 risk-based capital (minimum required 4%) 11.94% 11.57% 10.58%
Total risk-based capital (minimum required 8%) 13.00% 12.77% 11.76%
==============================================================================
</TABLE>
DISCUSSION OF MARKET RISK
Market risk is the risk of loss due to adverse changes in market prices and
rates. The management of this risk, coupled with directives to build shareholder
value and profitability, is an integral part of the Corporation's overall
operating strategy. The Corporation's approach to risk management, primarily
interest rate risk management, is quite basic and concentrates on fundamental
strategies to restructure the balance sheet and composition of assets and
liabilities. Since the Corporation does not utilize interest rate futures, swaps
or options transactions, its asset/liability profile is not complex. It reflects
a simple approach to managing risk through the use of fixed and adjustable rate
loans and investments, rate-insensitive checking accounts as well as a
combination of fixed and variable rate deposit products and borrowed funds. Bank
policy includes required limits on the sensitivity of net interest income under
various interest rate scenarios.
The Bank seeks to control its interest rate risk exposure in a manner that will
allow for adequate levels of earnings and capital over a range of possible
interest rate environments. The Bank has adopted formal policies and practices
to monitor and manage interest rate risk exposure. As part of this effort, the
Bank actively manages interest rate risk through the use of a simulation model
that measures the sensitivity of future net interest income to changes in
interest rates. In addition, the Bank regularly monitors interest rate
sensitivity through gap analysis, which measures the terms to maturity or next
repricing date of interest-earning assets and interest-bearing liabilities.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS - FINANCIAL RESULTS (CONTINUED)
Westbank Corporation and Subsidiaries
On a quarterly basis, an interest rate risk exposure compliance report is
prepared and presented to the Bank's Board of Directors. This report presents an
analysis of the change in net interest income resulting from an increase or
decrease in the level of interest rates. All changes are measured as percentage
changes from the projected net interest income in the flat rate scenario. The
calculated estimates of change in net interest income are compared to current
limits established by management and approved by the Board of Directors. The
following is a summary of the interest rate exposure report as of December 31,
1998 and 1997:
<TABLE>
<CAPTION>
Percentage Change in
Change in Interest Rates Net Interest Income
(In Basis Points) 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
+200 (5.21)% (1.41)%
Level 0% 0%
-200 (0.71)% 1.40%
</TABLE>
The change in net interest income between 1998 and 1997 when rates decline 200
basis points is primarily the result of the current low interest rate
environment. In the current year, many deposit rates were not able to be
decreased by the full 200 basis points. The inability to reduce deposit rates
would cause net interest income to decline during a falling interest rate
environment despite the Corporation being liability-sensitive.
The model utilized to create the results presented above makes various estimates
at each level of interest rate change regarding cash flows from principal
repayments on loans and mortgage-backed securities and/or call activity on
investment securities. Actual results could differ significantly from these
estimates which would result in significant differences in the calculated
projected change.
In order to reduce the exposure to interest rate fluctuations, the Corporation
has developed strategies to manage its liquidity, shorten the effective
maturities of certain interest-earning assets and increase the effective
maturities of certain interest-bearing liabilities. The Bank has focused its
residential lending on a combination of fixed and adjustable rate mortgages.
Commercial loans, commercial mortgages and consumer lending focus on adjustable
and short term loans. The Bank also attempts to maintain and/or increase its
savings and transaction accounts, which are considered relatively insensitive to
changes in interest rates.
The Corporation also measures sensitivity to changes in interest rates using
interest rate sensitivity gap analysis which is the difference between the cash
flow amounts of interest-sensitive assets and liabilities that will be
refinanced (or repriced) during a given period. For example, if the asset amount
to be repriced exceeds the corresponding liability amount for a certain day,
month, year, or longer period, the institution is in an asset-sensitive gap
position. In this situation, net interest income would increase if market
interest rates rose or decrease if market interest rates fell. If,
alternatively, more liabilities than assets will reprice, the institution is in
a liability-sensitive position. Accordingly, net interest income would decline
when rates rise and increase when rates fall. Also, these examples assume that
interest-rate changes for assets and liabilities are of the same magnitude,
whereas actual interest-rate changes generally differ in magnitude for assets
and liabilities.
The following table sets forth the distribution of the repricing of the
Corporation's earning assets and interest-bearing liabilities as of December 31,
1998, the interest rate sensitivity gap, (i.e., interest rate sensitive assets
less interest rate sensitive liabilities), the cumulative interest rate
sensitivity gap, the interest rate sensitivity gap ratio and the cumulative
interest rate sensitivity gap ratio. The table also sets forth the time periods
in which earning assets and interest-bearing liabilities will mature or may
reprice in accordance with their contractual terms. However, the table does not
necessarily indicate the impact of general interest rate movements on the net
interest margin since the repricing of various categories of assets and
liabilities is subject to competitive pressures and the needs of the Bank's
customers. In addition, various assets and liabilities indicated as repricing
within the same period may, in fact, reprice at different times within such
period and at different rates.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS - FINANCIAL RESULTS (CONTINUED)
Westbank Corporation and Subsidiaries
<TABLE>
<CAPTION>
Three Over Three Over One Over
Months Months to Year to Five
(Dollars in Thousands) or Less A Year Five Years Years Total
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EARNING ASSETS
Securities including
mortgage-backed securities $ 3,174 $ 1,549 $ 6,380 $ 73,225 $ 84,328
Interest bearing cash 391 595 894 1,880
Loans 50,916 45,162 97,771 101,929 295,778
Federal funds sold 1,069 1,069
- --------------------------------------------------------------------------------------------------------
55,550 47,306 105,045 175,154 383,055
INTEREST BEARING LIABILITIES
Savings deposits 5,369 48,320 53,689
NOW Accounts 2,600 23,393 25,993
Money market accounts 29,659 29,659
Negotiated rate certificates 13,299 8,439 3,373 25,111
Other time deposits 39,198 78,436 38,786 156,420
Borrowed funds 20,309 510 6,988 27,807
- --------------------------------------------------------------------------------------------------------
$102,465 $ 95,354 $ 120,860 $318,679
========================================================================================================
Interest Rate
Sensitivity Gap $(46,915) $(48,048) $ (15,815) $175,154 $ 64,376
Cumulative Interest Rate
Sensitivity Gap $(46,915) $(94,963) $(110,778) $ 64,376
Interest Rate
Sensitivity Gap Ratio (12.24%) (12.54%) (4.15%) 45.68% 16.75%
Cumulative Interest Rate
Sensitivity Gap Ratio (12.24%) (24.79%) (28.93%) 16.75%
</TABLE>
The presentation of a run off and repricing of savings accounts and NOW accounts
is based on the Corporation's historical experience with $5,369,000 and
$2,600,000, respectively, included in the three-month to one-year category and
the remainder placed in the one to five year category of the interest-bearing
liabilities.
Westbank seeks to manage the mix of asset and liability maturities to control
the effect of changes in the general level of interest rates on net interest
income. In periods of rising interest rates, Westbank's negative interest rate
sensitivity gap as to earning assets and interest-bearing liabilities maturing
in less than one year may cause a diminution of Westbank's income;
correspondingly, in periods of declining interest rates, a negative interest
rate sensitivity gap may provide additional income. Except for its effect on the
general level of interest rates, inflation does not have a material impact on
Westbank's earnings due to the rate of variability and short-term maturities of
its earning assets.
DISTRIBUTION OF ASSETS, LIABILITIES AND
STOCKHOLDERS' EQUITY - INTEREST RATES AND INTEREST DIFFERENTIAL
The following table presents the condensed average balance sheets for 1998, 1997
and 1996. The total dollar amount of interest income from earning assets and the
resultant yields are calculated on a taxable equivalent basis. The interest paid
on interest-bearing liabilities, expressed both in dollars and rates, is shown
in the table:
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS - FINANCIAL RESULTS (CONTINUED)
Westbank Corporation and Subsidiaries
<TABLE>
<CAPTION>
1998 1997 1996
Average Average Average
Interest Yield/ Interest Yield/ Interest Yield/
Average Income/ Rate Average Income/ Rate Average Income/ Rate
(Dollars in Thousands) Balance Expense Paid Balance Expense Paid Balance Expense Paid
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Securities:
U.S. Treasury $ 3,663 $ 221 6.03% $ 6,978 $ 430 6.16% $ 9,150 $ 591 6.46%
Federal agencies 61,856 3,994 6.46 42,072 2,833 6.73 26,044 1,768 6.79
Other securities 4,969 304 6.12 3,835 240 6.26 4,158 279 6.71
- -----------------------------------------------------------------------------------------------------------------------------------
Total securities 70,488 4,519 6.41 52,885 3,503 6.62 39,352 2,638 6.70
- -----------------------------------------------------------------------------------------------------------------------------------
Interest-bearing cash and
temporary investments 792 29 3.66 1,340 73 5.45 2,592 163 6.29
- -----------------------------------------------------------------------------------------------------------------------------------
Loans: (a)
Commercial 41,129 3,810 9.26 38,058 3,640 9.56 35,558 3,351 9.42
Real estate 213,377 17,400 8.15 205,984 17,153 8.33 190,235 15,871 8.34
Consumer 30,123 2,435 8.08 26,024 2,100 8.07 20,573 1,789 8.70
- -----------------------------------------------------------------------------------------------------------------------------------
Total loans 284,629 23,645 8.31 270,066 22,893 8.48 246,366 21,011 8.53
Federal funds sold 7,761 438 5.64 4,800 255 5.31 4,845 247 5.10
- -----------------------------------------------------------------------------------------------------------------------------------
Total earning assets 363,670 $ 28,631 7.87% 329,091 $ 26,724 8.12% 293,155 $ 24,059 8.21%
- -----------------------------------------------------------------------------------------------------------------------------------
Allowance for loan losses (2,920) (2,840) (3,383)
Cash and due from banks 11,120 10,888 10,704
Other assets 11,054 11,422 12,587
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $382,924 $348,561 $313,063
===================================================================================================================================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest-bearing deposits:
Savings $ 50,588 $ 1,382 2.73% $ 47,020 $ 1,160 2.47% $ 43,932 $ 978 2.23%
Money market 31,663 1,195 3.77 17,132 572 3.34 14,172 373 2.63
Negotiated rate certificates 22,977 1,118 4.87 18,528 922 4.98 16,621 829 4.99
Other time deposits 181,085 8,967 4.95 184,165 9,146 4.97 162,154 8,083 4.98
- -----------------------------------------------------------------------------------------------------------------------------------
Total time deposits 286,313 12,662 4.42 266,845 11,800 4.42 236,879 10,263 4.33
Borrowed funds 16,906 630 3.73 9,065 291 3.21 8,714 261 3.00
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 303,219 13,292 4.38 275,910 12,091 4.38 245,593 10,524 4.29
Demand deposits 48,797 45,880 43,976
Other liabilities 1,679 2,133 1,717
Stockholders' equity 29,229 24,638 21,777
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $382,924 $348,561 $ 313,063
===================================================================================================================================
Net interest income $ 15,339 $ 14,633 $ 13,535
Yield spread 3.49% 3.74% 3.92%
Net Yield on earning assets 4.22% 4.45% 4.62%
===================================================================================================================================
</TABLE>
(a) Average loan balances above include non-accrual loans. When a loan is
placed in non-accrual status, interest income is recorded to the extent
actually received in cash or is applied to reduce principal.
During 1998, the yield spread declined to 3.49% from 3.74% in 1997, down 25
basis points. The Corporation's net interest margin decreased during 1998 to
4.22% from 4.45% in 1997, a decrease of 23 basis points
During 1997, the yield spread declined to 3.74% from 3.92% in 1996, down 18
basis points. The Corporation's net interest margin decreased during 1997 to
4.45% from 4.62% in 1996, a decrease of 17 basis points. The section titled
Rate/Volume Analysis further describes the change in yields.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS - FINANCIAL RESULTS (CONTINUED)
Westbank Corporation and Subsidiaries
RATE/VOLUME ANALYSIS OF INTEREST MARGIN ON EARNING ASSETS
The following table sets forth, for each major category of interest-earning
assets and interest-bearing liabilities, the dollar amounts of interest income
(calculated on a taxable equivalent basis) and interest expense and changes
therein for 1998 as compared with 1997 and 1997 compared with 1996.
<TABLE>
<CAPTION>
1998 Compared With 1997 1997 Compared With 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Increase Due to* Increase Due to*
(Dollars in Thousands) 1998 1997 (Decrease) Volume Rate 1997 1996 (Decrease) Volume Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest earned:
Securities:
U.S. Treasury $ 221 $ 430 $(209) $ (200) $ (9) $ 430 $ 591 $ (161) $ (140) $ (21)
Federal agencies 3,994 2,833 1,161 1,281 (120) 2,833 1,768 1,065 1,058 7
Other securities 304 240 64 69 (5) 240 279 (39) (18) (21)
Interest-bearing cash 29 73 (44) (24) (20) 73 163 (90) (86) (4)
Loans:
Commercial 3,810 3,640 170 286 (116) 3,640 3,351 289 239 50
Real estate 17,400 17,153 247 600 (353) 17,153 15,871 1,282 1,314 (32)
Consumer 2,435 2,100 335 332 3 2,100 1,789 311 446 (135)
Federal funds sold 438 255 183 166 17 255 247 8 (2) 10
- -----------------------------------------------------------------------------------------------------------------------------------
28,631 26,724 1,907 2,510 (603) 26,724 24,059 2,665 2,811 (146)
- -----------------------------------------------------------------------------------------------------------------------------------
Interest expense:
Savings 1,382 1,160 222 93 129 1,160 978 182 73 109
Money market 1,195 572 623 540 83 572 373 199 87 112
Negotiated rate certificates 1,118 922 196 218 (22) 922 829 93 96 (3)
` Other time deposits 8,967 9,146 (179) (142) (37) 9,146 8,083 1,063 1,109 (46)
Borrowed funds 630 291 339 285 54 291 261 30 11 19
- -----------------------------------------------------------------------------------------------------------------------------------
13,292 12,091 1,201 994 207 12,091 10,524 1,567 1,376 191
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income $15,339 $14,633 $ 706 $1,516 $(810) $14,633 $13,535 $1,098 $1,435 $(337)
===================================================================================================================================
</TABLE>
* The dollar amount of changes in interest income and interest expense
attributable to changes in rate and volume has been allocated between rate
and volume based on changes in rates times the prior year's volume and the
changes in volume times the prior year's rate.
Net interest income for 1998 increased to $15,339,000, up 5% from $14,633,000 in
1997. An 11% increase in average earning assets and a 25 basis point decline in
average rate of return resulted in an increase in volume of $2,510,000 and a
decrease in rate of $603,000. An increase of 10% in average interest-bearing
liabilities and a 1 basis point increase in average rate of interest paid
contributed to an increase in volume of $994,000 and an increase in rate of
$207,000.
Net interest income for 1997 increased to $14,633,000, up 8% from $13,535,000 in
1996. A 16% increase in average earning assets and a 9 basis point decline in
average rate of return resulted in an increase in volume of $2,811,000 and a
decrease in rate of $146,000. An increase of 12% in average interest-bearing
liabilities and a 9 basis point increase in average rate of interest paid
contributed to an increase in volume of $1,376,000 and an increase in rate of
$191,000.
LIQUIDITY
Liquidity management requires close scrutiny of the mix and maturity of deposits
and borrowings and short-term investments. Cash and due from banks, federal
funds sold, investment securities and mortgage-backed securities, as compared to
deposits, are used by Westbank to compute its liquidity on a daily basis as
adjusted for regulatory purposes. In addition, Westbank is subject to Regulation
D of the Federal Reserve Bank (FRB), which requires depository institutions to
maintain reserve balances on deposit with the FRB based on certain average
depositor balances. Westbank is in compliance with Regulation D. Management of
Westbank believes that its current liquidity is sufficient to meet current and
anticipated funding needs. Refer to Note 7 in the Notes To Consolidated
Financial Statements for a discussion of the Corporation's external sources of
liquidity.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS - FINANCIAL RESULTS (CONTINUED)
Westbank Corporation and Subsidiaries
INVESTMENT PORTFOLIO
Refer to Note 2 in the Notes to Consolidated Financial Statements of this report
which covers the maturity distribution and market values at December 31, 1998 of
the securities portfolio. The following table shows the amortized cost (in
thousands) of the Corporation's securities held to maturity at December 31:
<TABLE>
<CAPTION>
1998 1997 1996
- ----------------------------------------------------------------------
<S> <C> <C> <C>
U. S. Government obligations $ 998 $ 4,246 $ 7,296
Federal agency obligations 26,890 32,927 13,827
Mortgage-backed securities 2,728 2,330 1,814
Other debt securities 99 2,440
- ----------------------------------------------------------------------
Amortized cost $30,616 $39,602 $25,377
======================================================================
</TABLE>
The following table shows the fair value (in thousands) of the Corporation's
securities available for sale at December 31:
<TABLE>
<CAPTION>
1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
U. S. Government obligations $ 928 $ 2,058 $ 1,990
Federal agency obligations 26,667 3,486 2,465
Mortgage-backed securities 24,372 13,502 8,807
Equity securities 1,745 1,664 1,125
- --------------------------------------------------------------------------------
53,712 20,710 14,387
Gross unrealized (gain) loss on
securities available for sale (352) (104) 170
- --------------------------------------------------------------------------------
Amortized cost $ 53,360 $ 20,606 $ 14,557
================================================================================
</TABLE>
The following table shows weighted average yields and maturity distribution of
debt securities at December 31, 1998:
<TABLE>
<CAPTION>
Within 1 Year 1 to 5 Years 5 to 10 Years After 10 Years Total
Average Amortized Average Amortized Average Amortized Average Amortized Average Amortized
Yield Cost Yield Cost Yield Cost Yield Cost Yield Cost
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U. S. Government
obligations 5.61% $ 1,428 6.25% $ 498 5.78% $ 1,926
Federal agency
obligations 5.19 1,499 6.43 4,442 6.21% $44,477 6.49% $ 3,400 6.22% 53,818
Mortgage-backed
securities 5.50 56 6.26 1,440 6.48 1,004 6.58 23,987 6.56 26,487
- ------------------------------------------------------------------------------------------------------------------------------
Total debt
Securities 5.40% $ 2,983 6.37% $ 6,380 6.22% $45,481 6.57% $27,387 6.32% $82,231
==============================================================================================================================
</TABLE>
The weighted average yield has been computed by dividing annualized interest
income, including the accretion of discount and the amortization of premiums, by
the book value of securities outstanding.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS - FINANCIAL RESULTS (CONTINUED)
Westbank Corporation and Subsidiaries
LOAN PORTFOLIO
The following table sets forth the classification (in thousands) of the
Corporation's loans by major category at December 31:
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial $ 41,760 $ 41,661 $ 36,153 $ 36,080 $ 35,156
- -------------------------------------------------------------------------------------------
Real Estate:
Construction 5,998 5,302 6,662 8,526 8,900
Residential (1-4 family) 168,744 152,896 153,781 132,530 113,327
Commercial properties 60,348 55,127 45,506 51,059 61,311
- -------------------------------------------------------------------------------------------
Total Real Estate 235,090 213,325 205,949 192,115 183,538
- -------------------------------------------------------------------------------------------
Consumer 19,277 16,648 15,943 9,701 10,240
- -------------------------------------------------------------------------------------------
Gross loans 296,127 271,634 258,045 237,896 228,934
Deferred loan origination
fees-net of costs (349) (323) (398) (445) (339)
- -------------------------------------------------------------------------------------------
Total Loans 295,778 271,311 257,647 237,451 228,595
Allowance for loan
losses (2,665) (3,057) (2,699) (3,924)
(3,402)
- -------------------------------------------------------------------------------------------
Net loans $ 293,113 $ 268,254 $ 254,948 $ 233,527 $ 225,193
===========================================================================================
</TABLE>
The Corporation's loan portfolio is not concentrated within a single industry or
a group of related industries; however, underlying collateral values are
dependent upon market fluctuations in the Western Massachusetts and Northeastern
Connecticut areas. The aggregate amount of loans to executive officers,
directors and organizations with which they are associated amounted to
$3,041,000 or 7.8% of stockholders' equity as of December 31, 1998, compared to
$2,386,000 or 8.9% as of December 31, 1997.
The following table provides the maturity distribution and sensitivity to
changes in interest rates of commercial loans and commercial real estate
construction loans at December 31, 1998:
<TABLE>
<CAPTION>
12 Months 1 - 5 After
(Dollars in Thousands) or Less Years 5 Years Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial $32,576 $ 7,457 $ 1,727 $41,760
Commercial real estate-construction 5,998 5,998
- -------------------------------------------------------------------------------
Totals $38,574 $ 7,457 $ 1,727 $47,758
===============================================================================
</TABLE>
Of the commercial loans which mature beyond one year, approximately $4,291,000
have fixed rates and the remaining $4,893,000 are floating rate loans.
In the normal course of business, various commitments and contingent liabilities
are outstanding, such as guarantees, standby letters of credit, commitments to
extend credit and various financial instruments with off-balance-sheet risk that
are not reflected in the financial statements. The most significant of these are
commitments to grant loans and commitments to advance funds under existing loan
agreements which were $9,281,000 and $31,457,000, respectively, at December 31,
1998 and $10,257,000 and $29,533,000, respectively, in 1997. See further
discussion in Note 13 to the Consolidated Financial Statements.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS - FINANCIAL RESULTS (CONTINUED)
Westbank Corporation and Subsidiaries
LOAN LOSS EXPERIENCE
The provision for loan losses is an amount added to the allowance against which
loan losses are charged. The provision for losses is dependent on actual net
write-offs and an evaluation of the collectibility of the loan portfolio, taking
into consideration such factors as the financial condition of individual
borrowers, historical loss experience with respect to various portfolio
segments, current and near-term economic conditions, and the size of the
portfolio. Based on these reviews, the allowance for loan losses at December 31,
1998, is deemed to be adequate by management. In the determination of the
allowance for loan losses, management obtains independent appraisals for a
significant number of properties. Management has also retained an independent
loan review consultant to provide advice on the adequacy of the loan loss
allowance.
The following table sets forth the historical relationship among the average
amount of loans outstanding, the allowance for loan losses, provision for loan
losses charged to operating expenses, losses charged off, recoveries and
selected ratios:
<TABLE>
<CAPTION>
Year Ended December 31,
(Dollars in Thousands) 1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at beginning of year $ 3,057 $ 2,699 $ 3,924 $ 3,402 $ 3,511
Provision charged to expense 41 306 944 2,907 1,528
- --------------------------------------------------------------------------------------------------------------------------
3,098 3,005 4,868 6,309 5,039
- --------------------------------------------------------------------------------------------------------------------------
Charge-offs:
Loans secured by real estate 318 394 1,745 2,180 1,305
Construction/land development 190 12
Commercial and
industrial loans 153 250 510 246 487
Consumer loans 47 116 94 122 96
- --------------------------------------------------------------------------------------------------------------------------
518 760 2,539 2,560 1,888
- --------------------------------------------------------------------------------------------------------------------------
Recoveries:
Loans secured by real estate 42 354 324 24 25
Construction/land developing 14 75
Commercial and
industrial loans 30 445 12 51 210
Consumer loans 13 13 20 25 16
- --------------------------------------------------------------------------------------------------------------------------
85 812 370 175 251
- --------------------------------------------------------------------------------------------------------------------------
Net charge-offs (recoveries) 433 (52) 2,169 2,385 1,637
- --------------------------------------------------------------------------------------------------------------------------
Balance at end of year $ 2,665 $ 3,057 $ 2,699 $ 3,924 $ 3,402
Average loans outstanding $ 284,629 $ 270,066 $ 246,366 $ 232,423 $ 214,846
==========================================================================================================================
Net charge-offs (recoveries) as a percentage
of average loans 0.15% (0.02)% 0.88% 1.03% 0.76%
Net charge-offs (recoveries) as a percentage of
the allowance at January 1 14.16 (1.93) 55.28 70.11 46.62
Allowance as a percentage of total
loans at December 31 0.90 1.13 1.05 1.65 1.49
Allowance as a percentage of
non-performing loans
at December 31 259.24 166.87 85.41 55.42 51.70
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS - FINANCIAL RESULTS (CONTINUED)
Westbank Corporation and Subsidiaries
Allocation of the balance as of December 31 of the allowance for loan losses
applicable to:
<TABLE>
<CAPTION>
(Dollars in Thousands) 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
% of % of % of % of % of
Total Total Total Total Total
Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans secured by
real estate $1,764 77.38% $2,083 76.55% $1,763 77.23% $2,898 77.17% $2,626 76.28%
Construction/land
development 70 2.03 83 1.97 94 2.58 156 3.58 127 3.89
Commercial and industrial
loans 628 14.10 697 15.35 685 14.01 776 15.17 522 15.36
Consumer loans 203 6.49 194 6.13 157 6.18 94 4.08 127 4.47
- -----------------------------------------------------------------------------------------------------------------------------------
$2,665 100% $3,057 100% $2,699 100% $3,924 100% $3,402 100%
===================================================================================================================================
</TABLE>
The approach the Corporation uses in determining the adequacy of the allowance
for loan losses is the combination of a target reserve and general reserve
allocation. Quarterly, based on an internal review of the loan portfolio, the
Corporation identifies required reserve allocations targeted to recognized
problem loans that, in the opinion of management, have potential loss exposure
or questions relative to the adequacy of the collateral on these same loans. In
addition, the Corporation allocates a general reserve against the remainder of
the loan portfolio. The decline in the allowance for loan losses from 1997 to
1998 is a result of the improved credit quality of the loan portfolio, in
combination with the continued improvement in the local economy.
NON-PERFORMING ASSETS
LOANS
Loans on which interest and principal payments are 90 days or more past due are
placed on a non-accrual basis (earlier, if deemed appropriate) and interest is
reversed unless management determines that the collectibility of principal and
interest is not reasonably considered in doubt. The following table sets forth
information with regard to non-performing loans as of the end of each year
indicated:
<TABLE>
<CAPTION>
(Dollars in Thousands) 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Loans on a non-accrual basis $ 797 $ 1,648 $ 2,878 $ 6,578 $ 5,378
- ------------------------------------------------------------------------------------------------------
Non-accrual loans as a percentage
of total net loans outstanding 0.27% 0.61% 1.13% 2.82% 2.39%
Non-accrual loans as a percentage
of total assets 0.20% 0.46% 0.87% 2.20% 1.89%
Loans contractually past due 90
days or more and still accruing $ 231 $ 184 $ 282 $ 503 $ 1,202
</TABLE>
The gross amount of interest that would have been accrued at the original
contract rate on loans on a non-accrual basis (in thousands) was $35,000,
$79,000, $240,000, $331,000 and $408,000 for 1998, 1997, 1996, 1995 and 1994,
respectively. Interest income included in the results of operations relating to
these loans was $20,000 in 1994. The decrease in non-accrual loans from 1997 is
attributable to the continued resolution of non-performing loans throughout
1998. During the second quarter of 1998, the Corporation sold a pool of non-
performing loans. The decrease in the allowance for loan losses is attributable
to charging off previously-reserved amounts directly related to the sale of non-
performing loans referred to above.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS - FINANCIAL RESULTS (CONTINUED)
Westbank Corporation and Subsidiaries
The Bank evaluates each impaired loan to determine the appropriate income
recognition practice. Generally, income is recorded only on a cash basis for
impaired loans. Interest income recognized during 1998 and 1997 on impaired
loans was not significant. At December 31, 1998 and 1997, the recorded
investment in impaired loans was $1,419,000 and $1,809,000 respectively, for
which no additional specific allowance for loan losses was recorded. For the
twelve months ended December 31, 1998, the average recorded investment in
impaired loans was $1,366,000 compared to $2,080,000 for 1997.
RESTRUCTURED LOANS
A restructured loan is one for which the Corporation has modified the
contractual terms to provide a reduction in the rate of interest and, in most
instances, an extension of payments of principal or interest or both because of
a deterioration in the financial position of the borrower. Restructured loans
modified prior to January 1, 1995, which are performing in accordance with their
new terms are not included in non-accrual loans, unless concern exists as to the
ultimate collection of principal or interest, and are not considered to be
impaired. Those entered into after January 1, 1995, are considered to be
impaired as described in Note 1 to the financial statements Restructured loans,
which are classified as accruing loans, amounted to $773,000 in 1995 and
$681,000 in 1994. Interest income reduction because of restructuring was not
significant for 1995 and 1994.
OTHER REAL ESTATE OWNED
The following table sets forth information regarding other real estate owned at
December 31:
<TABLE>
<CAPTION>
(Dollars in Thousands) 1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Other real estate owned - net $ 466 $ 353 $ 631 $ 1,574 $ 1,733
Other real estate owned as a
percentage of total assets .12% .10% .19% .53% .61%
</TABLE>
DEPOSITS
The following table sets forth the average amounts of various classifications of
deposits:
<TABLE>
<CAPTION>
1998 1997 1996
(Dollars in Thousands) Amount Rate Amount Rate Amount Rate
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Savings $ 50,588 2.73% $ 47,020 2.47% $ 43,932 2.23%
Money market 31,663 3.77 17,132 3.34 14,172 2.63
Negotiated rate certificates 22,977 4.87 18,528 4.98 16,621 4.99
Other time deposits 181,085 4.95 184,165 4.97 162,154 4.98
- ------------------------------------------------------------------------------------------------------------------------------
286,313 4.42% 266,845 4.42% 236,879 4.33%
Demand deposits 48,797 45,880 43,976
- ------------------------------------------------------------------------------------------------------------------------------
$335,110 $312,725 $280,855
==============================================================================================================================
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS - FINANCIAL RESULTS (CONTINUED)
Westbank Corporation and Subsidiaries
Certificates of deposits of $100,000 and over at December 31, 1998 had the
following maturities:
<TABLE>
<CAPTION>
3 Months 3 to 6 6 to 12 1 Year to
(Dollars in Thousands) or Less Months Months 5 Years Total
<S> <C> <C> <C> <C> <C>
Totals $13,298 $4,349 $4,090 $3,374 $26,880
=============================================================================================================================
</TABLE>
RETURN ON EQUITY AND ASSETS
The Corporation's return on average equity and assets for each of the years
ended December 31, were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Return on average total assets .88% .97% .68%
Return on average stockholders' equity 11.55 13.73 9.81
Average stockholders' equity to average total assets 7.57 7.07 6.96
Dividend payout ratio 44.54 30.76 36.78
</TABLE>
BORROWINGS
The following table summarizes borrowings. Average interest rates during each
year were computed by dividing total interest expense by the average amount
borrowed:
<TABLE>
<CAPTION>
(Dollars in Thousands) 1998 1997 1996
<S> <C> <C> <C>
Balance at year end $27,807 $11,884 $ 9,269
Average amount outstanding 16,442 9,065 8,714
Maximum amount outstanding at any month-end 28,307 14,036 12,794
Average interest rate for the year 3.83% 3.20% 2.99%
Average interest rate on
year-end balance 3.85 3.15 3.03
</TABLE>
STATEMENTS OF INCOME
In the following sections of Management's Discussion and Analysis of the
Statements of Income, the comparative results of 1998, 1997 and 1996 will be
covered in greater detail. As of December 31, 1998, the principal earning assets
of the holding company consist of a commercial bank, Park West Bank and Trust
Company, and a Connecticut state-chartered savings bank, Cargill Bank.
Noteworthy are the effects of sources of income from earning assets and expense
of interest-bearing liabilities. Presented below is a comparative summary of
percentages of increases and decreases for the three years ended December 31,
1998. The significant changes are discussed in the analysis that follow the
summary.
<TABLE>
<CAPTION>
Percentage of
increase (decrease)
1998 1997
Over Over
(Dollars in Thousands) 1998 1997 1996 1997 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net interest income $15,339 $14,633 $13,535 4.82% 8.11%
Provision for loan losses 41 306 944 (86.60) (67.58)
Non-interest income 2,427 2,529 2,340 (4.03) 8.08
Non-interest expense 12,200 11,066 11,278 10.25 (1.88)
Income taxes 2,148 2,406 1,516 (10.72) 58.71
- ------------------------------------------------------------------------------------------------------
Net Income $ 3,377 $ 3,384 $ 2,137 (0.21%) 58.35%
======================================================================================================
</TABLE>
INTEREST INCOME
Westbank's earning assets include a diverse portfolio of interest-earning
instruments ranging from Westbank's core business of loan extensions to
interest-bearing securities issued by federal, state and municipal authorities.
These earning assets are financed through a combination of interest-bearing and
interest-free sources.
Total interest income for 1998 amounted to $28,631,000 as compared to
$26,724,000 for 1997 and $24,059,000 for 1996. For 1998 this represents an
increase of $1,907,000 or 7% over 1997, while interest income increased by
$2,665,000 or 11% in 1997 versus 1996. The increase in 1998 is the result of an
increase in average earning assets of $34,579,000 or 11%, offset by a decrease
of 25 basis points in average earning interest rate. The increase in 1997 over
1996 is the result of an increase in average earning assets of $35,936,000
offset by a 9 basis point decrease in average earning interest rate.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS - FINANCIAL RESULTS (CONTINUED)
Westbank Corporation and Subsidiaries
INTEREST EXPENSE
Interest expense for 1998 on deposits and borrowings amounted to $13,292,000 as
compared to $12,091,000 in 1997 and $10,524,000 for 1996. Interest expense
increased by $1,201,000 or 10% during 1998 compared to 1997 and 1997 interest
expense increased by $1,567,000 or 15% versus 1996. The 1998 increase is the
result of an increase in average interest-bearing liabilities of $27,309,000 and
a 1 basis point increase in the average rate of interest paid compared to 1997.
The increase in interest expense during 1997 versus 1996 is the result of an
increase of average interest-bearing liabilities of $30,614,000 combined with a
9 basis point increase in average interest rate paid.
NET INTEREST INCOME
Net interest income, the most significant component of earnings, is the amount
by which the interest generated by assets exceeds the interest expense on
liabilities. Westbank's management analyzes its performance by utilizing the
concepts of interest rate spread and net yield on earning assets. The interest
rate spread represents the difference between the yield on earning assets and
interest paid on interest-bearing liabilities. The net yield on earning assets
is the difference between the rate of interest on earning assets and the
effective rate paid on all funds, interest-bearing liabilities, as well as
interest-free sources (primarily demand deposits and stockholders' equity).
The following table sets forth Westbank's net interest income:
<TABLE>
<CAPTION>
(Dollars in Thousands) 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total interest income $28,631 $26,724 $24,059
Total interest expense 13,292 12,091 10,524
- ----------------------------------------------------------------------------------------------------------------
Net interest income $15,339 $14,633 $13,535
================================================================================================================
</TABLE>
The RATE/VOLUME ANALYSIS OF INTEREST MARGIN ON EARNING ASSETS section includes
and sets forth each major category of interest-earning assets and interest-
bearing liabilities which result in net interest income.
PROVISION FOR LOAN LOSSES
The 1998 provision for loan losses totaled $41,000 compared with $306,000 in
1997, a decrease of 87%. During 1997, the provision decreased by $638,000 versus
1996, representing a decrease of 68%. The decrease in the provision for loan
losses during 1998 is directly attributable to the decrease in non-performing
loans and the overall credit quality of the Bank's loan portfolio. A full
discussion appears previously under the headings of LOAN LOSS EXPERIENCE and
NON-PERFORMING ASSETS.
NON-INTEREST INCOME
Income from sources other than interest was $2,427,000 in 1998, a decrease of
$102,000 from the prior year and an increase of $189,000 versus 1996. Non-
interest income for 1998 reflects an increase in Trust Department earnings of
$33,000, a decrease in service charges on deposit accounts and other non-
interest income of $42,000 and decreases from the gain on sale of investments,
other real estate and mortgages totaling $27,000 compared to 1997.
29
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS - FINANCIAL RESULTS (CONTINUED)
Westbank Corporation and Subsidiaries
NON-INTEREST EXPENSE
The components of other operating expenses at December 31 are as follows:
<TABLE>
<CAPTION>
(Dollars in Thousands) 1998 1997 1996
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Salaries and benefits $ 5,797 $ 5,461 $ 5,091
Occupancy 855 780 792
Other non-interest expense 5,444 4,604 4,781
Other real estate
owned expenses and provision 104 221 614
- ----------------------------------------------------------------------------
$12,200 $11,066 $11,278
============================================================================
</TABLE>
Overall non-interest expense increased during 1998 by $1,058,000 versus 1997 and
by $1,099,000 compared to 1996. During 1998, salaries and benefits increased by
$385,000, attributable to overall corporate growth and the staff requirements
for the addition of two new branch offices during 1998. Occupancy remained level
with 1997. Finally, other non-interest expense and depreciation and amortization
expense increased in 1998 by $668,000, the result of the recognition of
approximately $595,000 of merger expense related to the acquisition of Cargill
Bancorp, Inc., combined with overall corporate growth during 1998.
INCOME TAXES
For the year ended December 31, 1998 Westbank Corporation recorded a tax expense
of $2,148,000 compared to 1997, when the Corporation recorded a tax expense of
$2,406,000. The lower tax expense for 1998 was the result of a lower tax rate
during 1998.
NET INCOME
The net income for 1998 of $3,377,000, or $.82 per share basic and $.79 per
share diluted, is based on a weighted average of 4,143,009 basic and 4,272,682
diluted shares outstanding, compared with a net income for 1997 of $3,384,000,
or $.88 per share basic and $.85 per share diluted based on a weighted average
of 3,845,698 basic and 4,003,015 diluted. Net income in 1996 was $2,137,000, or
$.59 per share basic and $.57 per share diluted and based on weighted average
shares of 3,643,270 basic and 3,762,419 diluted.
NEW ACCOUNTING STANDARDS
The Corporation adopted two new accounting standards in 1998, Statement of
Financial Accounting Standards ("SFAS") No. 130, Reporting Comprehensive Income,
and No. 131, Disclosures about Segments of an Enterprise and Related
Information. During 1998, the Financial Accounting Standards Board issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities, and SFAS
No. 134, Accounting for Mortgage-Backed Securities retained after the
Securitization of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise.
For further discussion, see the Summary of Significant Accounting Policies in
the Notes to the Financial Statements.
YEAR 2000
The Corporation has taken steps to ensure that all of its computer systems (the
"Systems") are ready to operate accurately on and beyond January 1, 2000. In the
event that the Corporation's Systems are not Year 2000 compliant as of January
1, 2000, the Corporation would face significant operational difficulties. The
Corporation fully understands the need to prevent disruption of computer and
technical systems, and the Corporation is committed to providing its customers
with high quality services without interruption.
While the Corporation has determined that many of the Systems are Year 2000
compliant, the Corporation has prepared an action plan (the "Year 2000 Project")
to ensure the continued integrity of its Systems. The Year 2000 Project includes
five phases: (1) the awareness phase; (2) the assessment phase; (3) the
renovation phase; (4) the validation phase; and (5) the implementation phase.
The Corporation is currently in the implementation phase.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS - FINANCIAL RESULTS (CONTINUED)
Westbank Corporation and Subsidiaries
YEAR 2000
The Corporation relies on outside providers for the core banking software and
data processing portions of the Systems. The Year 2000 Project applies to such
vendors.
The Year 2000 Project also includes a contingency plan to be implemented in the
event that the Year 2000 Project reveals that any of the Systems are not Year
2000 compliant. In addition, in the event that despite the Year 2000 Project the
Corporation experiences disruption due to Year 2000 problems, the Corporation is
developing a business resumption plan which should be complete by June 30, 1999.
As of December 31, 1998, the Corporation has incurred approximately $141,000 in
Year 2000-related expenses and has estimated that capital expenditures related
to the Year 2000 issue will total approximately $510,000.
The Corporation has designed the Year 2000 Project based upon guidance from the
Federal Financial Institutions Examining Council. In addition, the FDIC monitors
the Corporation's preparation for the Year 2000 on a periodic basis.
The information set forth above is designed to be a "Year 2000 Readiness
Disclosure," as that term is defined in the Year 2000 Information Readiness and
Disclosure Act. This information is forward-looking information, and, as such,
it is subject to risks and uncertainties that would cause actual results to
differ materially from the projected results discussed in this report.
<PAGE>
CONSOLIDATED BALANCE SHEETS
Westbank Corporation and Subsidiaries
<TABLE>
<CAPTION>
December 31,
(Dollars in Thousands, except share amounts) 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks:
Non-interest bearing $ 11,291 $ 10,783
Interest bearing 1,880 2,065
- -----------------------------------------------------------------------------------------------------------------------------
13,171 12,848
Federal funds sold 1,069 3,678
Total cash and cash equivalents 14,240 16,526
- -----------------------------------------------------------------------------------------------------------------------------
Securities (Note 2):
Investment securities available for sale 53,712 20,710
Investment securities held to maturity
(fair value of $30,817 in 1998 and $39,771 in 1997) 30,616 39,602
- -----------------------------------------------------------------------------------------------------------------------------
Total securities 84,328 60,312
- -----------------------------------------------------------------------------------------------------------------------------
Loans, net of allowance for loan losses
of $2,665 in 1998 and $3,057 in 1997 (Note 3) 290,767 263,808
Mortgage loans held for sale (Note 3) 2,346 4,446
- -----------------------------------------------------------------------------------------------------------------------------
Total loans 293,113 268,254
- -----------------------------------------------------------------------------------------------------------------------------
Property and equipment (Note 4) 6,851 5,901
Other real estate owned, net of allowance for losses
$200 in 1997 (Note 5) 466 353
Accrued interest receivable 2,457 2,240
Other assets 1,168 1,981
- -----------------------------------------------------------------------------------------------------------------------------
Total assets $ 402,623 $ 355,567
=============================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits (Note 6):
Non-interest bearing $ 51,395 $ 50,443
Interest bearing 290,872 264,236
- -----------------------------------------------------------------------------------------------------------------------------
Total deposits 342,267 314,679
Borrowed funds (Note 7) 27,807 11,884
Interest payable on deposits 429 385
Other liabilities 1,630 1,701
- -----------------------------------------------------------------------------------------------------------------------------
Total liabilities 372,133 328,649
- -----------------------------------------------------------------------------------------------------------------------------
Commitments and contingent liabilities (Notes 12 and 13)
Stockholders' equity (Notes 10, 11 and 15):
Preferred stock, par value $5 per share, authorized
100,000 shares; none issued
Common stock, par value $2 per share,
authorized 9,000,000 shares; issued and outstanding
4,198,838 shares in 1998 and 3,932,535 shares in 1997 8,397 7,865
Additional paid-in capital 11,076 9,711
Retained earnings 10,803 9,282
Accumulated other comprehensive income 214 60
- -----------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 30,490 26,918
- -----------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 402,623 $ 355,567
=============================================================================================================================
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
Westbank Corporation and Subsidiaries
<TABLE>
<CAPTION>
Years ended December 31,
(Dollars in Thousands, except share amounts) 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest and dividend income:
Interest and fees on loans $23,645 $22,893 $21,011
Interest and dividend income from securities 4,614 3,569 2,773
Interest from interest bearing cash
and federal funds sold 372 262 275
- -----------------------------------------------------------------------------------------------------------------------------
Total interest and dividend income 28,631 26,724 24,059
- -----------------------------------------------------------------------------------------------------------------------------
Interest expense:
Interest on deposits 12,662 11,800 10,263
Interest on borrowed funds 630 291 261
- -----------------------------------------------------------------------------------------------------------------------------
Total interest expense 13,292 12,091 10,524
- -----------------------------------------------------------------------------------------------------------------------------
Net interest income 15,339 14,633 13,535
Provision for loan losses (Note 3) 41 306 944
- -----------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for
loan losses 15,298 14,327 12,591
- -----------------------------------------------------------------------------------------------------------------------------
Non-interest income:
Trust department income 498 465 425
Service charges on deposits 766 808 867
Loan servicing 470 494 505
Gain on sale of securities available for sale 141 259 112
Gain on sale of other real estate owned (Note 5) 43 67 3
Gain on sale of mortgages 120 5 9
Other non-interest income 389 431 419
- -----------------------------------------------------------------------------------------------------------------------------
Total non-interest income 2,427 2,529 2,340
- -----------------------------------------------------------------------------------------------------------------------------
Non-interest expense:
Compensation and benefits (Note 9) 5,797 5,461 5,091
Depreciation and amortization 851 772 743
Data processing 808 751 652
Occupancy expense 802 794 802
Other real estate owned expenses (Note 5) 104 221 614
Other non-interest expense (Note 14) 3,838 3,067 3,376
- -----------------------------------------------------------------------------------------------------------------------------
Total non-interest expense 12,200 11,066 11,278
- -----------------------------------------------------------------------------------------------------------------------------
Income before income taxes 5,525 5,790 3,653
Income taxes (Note 8) 2,148 2,406 1,516
- -----------------------------------------------------------------------------------------------------------------------------
Net income $ 3,377 $ 3,384 $ 2,137
=============================================================================================================================
Earnings per share (Note 11):
- Basic $ .82 $ .88 $ .59
- Diluted .79 .85 .57
=============================================================================================================================
Weighted average shares outstanding (Note 11):
- Basic 4,143,009 3,845,698 3,643,270
- Diluted 4,272,682 4,003,015 3,762,419
=============================================================================================================================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Westbank Corporation and Subsidiaries
<TABLE>
<CAPTION>
Years ended December 31,
(Dollars in Thousands) 1998 1997 1996
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Income $3,377 $3,384 $2,137
- -------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) on securities available for sale, net of income taxes
(benefit) of $150 in 1998, $271 in 1997, and ($71) in 1996. 249 327 (99)
Less: reclassification adjustment for gains
included in net income, net of income taxes of
$49 in 1998, $76 in 1997, and $46 in 1996. 92 168 66
- -------------------------------------------------------------------------------------------------------------------------------
Other Comprehensive Income (Loss) 157 159 (165)
- -------------------------------------------------------------------------------------------------------------------------------
Comprehensive Income $3,534 $3,543 $1,972
===============================================================================================================================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Westbank Corporation and Subsidiaries
<TABLE>
<CAPTION>
Accumulated
Common Stock Additional Other
Par paid-in Retained Comprehensive
(Dollars in Thousands, except share amounts) Shares Value capital earnings Income/(Loss) Total
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 3,530,981 $7,062 $ 7,816 $ 5,842 $66 $20,786
Net income 2,137 2,137
Cash dividends declared
($.24 per share) (784) (784)
Stock dividend
(1% on Cargill Bancorp shares) 15,248 30 78 (108)
Shares issued:
Stock option plan 30,584 61 25 86
Dividend reinvestment
and stock purchase plan 94,615 190 467 657
Change in unrealized gain (loss)
on securities available for sale (165) (165)
- ------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 3,671,428 7,343 8,386 7,087 (99) 22,717
Net income 3,384 3,384
Cash dividends declared
($.30 per share) (1,040) (1,040)
Stock dividend
(1% on Cargill Bancorp shares) 16,076 32 117 (149)
Shares issued:
Stock option plan 98,612 197 116 313
Dividend reinvestment
and stock purchase plan 146,419 293 1,092 1,385
Changes in unrealized gain (loss) on
securities available for sale 159 159
- ------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 3,932,535 7,865 9,711 9,282 60 26,918
Net income 3,377 3,377
Cash dividends declared
($.40 per share) (1,503) (1,503)
Stock dividend
(1% on Cargill Bancorp shares) 17,389 35 93 (129) (1)
Shares issued:
Stock option plan 199,799 399 742 1,141
Dividend reinvestment
and stock purchase plan 49,115 98 530 628
Cargill interim loss for the quarter
ended December 31, 1998 (Note 1) (224) (224)
Changes in unrealized gain (loss) on
securities available for sale 154 154
- ------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 4,198,838 $8,397 $11,076 $10,803 $214 $30,490
==============================================================================================================================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Westbank Corporation and Subsidiaries
<TABLE>
<CAPTION>
Years ended December 31,
(Dollars in Thousands) 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities:
Net income $ 3,377 $ 3,384 $ 2,137
Adjustments to reconcile net income to
net cash provided (used) by operating activities:
Cargill interim loss for period ended December 31, 1998 (224)
Provision for loan losses 41 306 944
Provision for other real estate owned 22 109 501
Depreciation and amortization 851 772 743
Realized gain on sale of securities (141) (259) (112)
Realized gain on sale of other real estate owned (43) (67) (3)
Realized gain on miscellaneous assets (83)
Realized gain on sale of mortgages (120) (5) (9)
Deferred income taxes (107) 164 368
Change in:
(Increase)/Decrease in loans held for sale 2,100 (8,099) 1,313
(Increase)/Decrease in accrued interest receivable (217) (314) 13
Other assets 814 90 431
Interest payable on deposits 44 51 19
Increase/(Decrease)Other liabilities 36 147 272
- ------------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities 6,433 (3,721) 6,534
==============================================================================================================================
Investing activities:
Securities:
Held to maturity:
Purchases (21,473) (28,920) (14,373)
Proceeds from maturities 30,459 15,557 10,467
Available for sale:
Purchases (41,210) (8,748) (3,013)
Proceeds from sales 8,607 10,019 2,857
Proceeds from maturities 5,164 2,484 6,858
Proceeds on sale of miscellaneous assets 296
Purchases of premises and equipment (1,801) (835) (1,099)
Net increase in loans (32,987) (15,210) (29,076)
Proceeds from sale of other real estate owned 618 791 1,182
- ------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (52,623) (24,862) (25,901)
==============================================================================================================================
Financing activities:
Net increase in deposits 27,588 16,660 28,493
Net increase in short-term borrowings 8,923 2,615 1,592
Increase in long-term borrowings 7,000
Proceeds from exercise of stock options
and stock purchase plan 1,897 1,699 743
Dividends paid (1,504) (1,041) (785)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash used by financing activities 43,904 19,933 30,043
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (2,286) (8,650) 10,676
Cash and cash equivalents at beginning of year 16,526 25,176 14,500
- ------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $14,240 $16,526 $25,176
==============================================================================================================================
Cash paid during the year:
Interest on deposits and other borrowings $13,075 $11,754 $10,506
Income taxes 2,103 1,990 1,287
Supplemental disclosure of cash flow information:
Securitization of loans into mortgage-backed securities 5,067 9,314 3,639
Transfers of loans to other real estate owned 701 806 1,280
Transfer of miscellaneous asset from other real estate owned
to premises and equipment 291
Loans to facilitate the sale of other real estate owned 618 120 667
</TABLE>
See notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Westbank Corporation and Subsidiaries
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Westbank Corporation (the
"Corporation") and its subsidiaries are in conformity with generally accepted
accounting principles and general practices within the banking industry. The
following is a description of the more significant policies.
NATURE OF BUSINESS
As of December 31, 1998, the Corporation operates two banking subsidiaries (the
"Banks"), Park West Bank and Trust Company ("Park West") with thirteen banking
offices and a trust department located in Hampden County, Massachusetts, and
Cargill Bank ("Cargill") with three offices in Windham County, Connecticut. A
full range of retail banking services are furnished to individuals, businesses
and non-profit organizations. The Corporation's primary source of revenue is
derived from providing loans to customers, predominately located in Western
Massachusetts and Northeast Connecticut.
MERGER
Effective January 29, 1999, Cargill Bancorp, Inc., and its subsidiary
("Cargill") were merged with and into Westbank Corporation ("Westbank"),
pursuant to a plan of merger dated July 15, 1998. Each share of Cargill common
stock was converted into 1.3655 shares of the Corporation's common stock. A
total of 400,164 Westbank common shares were issued for the outstanding common
stock of Cargill.
The transaction was accounted for using the pooling-of-interests method and,
accordingly, all historical financial data has been restated to include both
entities for all periods presented. Directs costs of mergers accounted for by
the pooling-of-interests method are expensed as incurred. Merger-related costs
expensed in 1998 aggregated $595,000. These merger expenses included legal,
accounting, regulatory and severance costs, as well as integration costs such as
conversions, abandonments and relocations, etc. The restatement of the
historical financial data is based on Westbank's fiscal year end December 31 and
Cargill's fiscal year end September 30. The Cargill loss of $224,000 for the
quarter ended December 31, 1998, has been included directly in stockholders'
equity in order to conform Cargill's reporting periods to the Corporation's as
of December 31, 1998. For the quarter ended December 31, 1998, Cargill had net
interest income of $456,000 and a net loss of $224,000. Included in operating
expenses were $346,000 of merger and related costs that were primarily the cause
of their loss.
The following table presents summary results of operations for the companies for
the immediate years prior to the merger:
<TABLE>
<CAPTION>
(Dollar amounts in thousands)
Westbank Cargill Combined
-------- ------- --------
<S> <C> <C> <C>
1998: Net interest income $13,442 $1,897 $15,339
Net income 3,256 121 3,377
1997: Net interest income $12,784 $1,849 $14,633
Net income 3,231 153 3,384
1996: Net interest income $11,842 $1,693 $13,535
Net income (loss) 2,248 (111) 2,137
</TABLE>
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Corporation
and its wholly-owned subsidiaries, Park West Bank and Trust Company, its
subsidiaries, Lorac Leasing Corp., Park West Securities Corporation and PWB&T
Inc., and Cargill Bank. All material intercompany balances and transactions have
been eliminated upon consolidation. Certain amounts in the 1997 and 1996
financial statements have been reclassified to conform to the 1998 presentation.
The Corporation operates two community banks offering different products and
services. Since the Corporation derives a significant portion of its revenue and
expense from the Banks, no meaningful allocation of its resources is possible.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Westbank Corporation and Subsidiaries
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and affect the reported amounts of income and expenses for each year.
Material estimates that are particularly susceptible to significant change
relate to the determination of the allowance for loan losses and the valuation
of real estate acquired in connection with foreclosures or in satisfaction of
loans. In connection with the determination of the allowances for loan losses
and other real estate owned, management obtains independent appraisals for
significant properties. In addition, various regulatory agencies, as an integral
part of their examination process, periodically review the Corporation's
allowances for losses on loans and other real estate owned. Such agencies may
require the Corporation to recognize additions to the allowances based on their
judgments about information available to them at the time of their examination.
NEW ACCOUNTING STANDARDS
As of January 1, 1998, the Corporation adopted a Statement of Financial
Accounting Standards ("SFAS") No. 130, Reporting Comprehensive Income, which
establishes standards for reporting and displaying of comprehensive income and
SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information, which establishes standards for the way public companies report
information about operating segments in both interim and annual financial
statements and related disclosures. Adoption of these statements did not impact
the Corporation's consolidated balance sheets, statements of income or cash
flows and was limited to the form and content of its disclosures. Both
statements were effective for fiscal years beginning after December 31, 1997,
and required restatement of all prior periods presented to conform to the
provisions of these statements.
In June 1998, the Financial Accounting Standards Board (the "FASB") issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities. This
statement established accounting and reporting standards for derivative
instruments including derivative activities. This statement will be effective
for the Corporation's fiscal 2001 financial statements.
In October 1998, the FASB issued SFAS No. 134, Accounting for Mortgage-Backed
Securities Retained After the Securitization of Mortgage Loans Held for Sale by
a Mortgage Banking Enterprise. This statement further amends SFAS No. 65 to
require that, after the securitization of mortgage loans held for sale, an
entity engaged in mortgage banking activities classify the resulting
mortgage-backed securities or other retained interests based on its ability and
intent to sell or hold these investments. This statement will be effective for
the Corporation's 1999 financial statements. Management is currently evaluating
the future impact of these standards.
CASH AND CASH EQUIVALENTS
The Corporation defines cash and due from banks and federal funds
sold to be cash and cash equivalents. The Bank is required to maintain average
reserve balances with the Federal Reserve Bank. These balances can be in the
form of either vault cash or funds left on deposit with the Federal Reserve
Bank. The average amount of these balances was $3,049,000 for 1998.
SECURITIES
Securities that management has the positive intent and ability to hold until
maturity are stated at cost, adjusted for amortization of premiums and accretion
of discounts. Those securities which have been identified as assets for which
there is not a positive intent to hold to maturity, including all marketable
equity securities, are classified as available for sale with unrealized gains
(losses), net of income taxes, reported as a separate component of stockholders'
equity. The Corporation determines if securities will be classified as held to
maturity or available for sale at the time of purchase. In addition, any
mortgage-backed securities created out of the Corporation's own inventory of
residential real estate loans are also considered available for sale. Gains and
losses on sales of securities are recognized in other income at the time of sale
on a specific identification basis. Securities which have experienced an other
than temporary decline in value are written down to estimated fair value,
establishing a new cost basis with the amount of the write-down expensed as a
realized loss. The Corporation does not engage in trading activities.
Mortgage-backed securities held to maturity are stated at cost, adjusted for
amortization of premiums and accretion of discounts determined by a method that
approximates the level-yield method. Management has the positive ability and the
intent to hold these assets until maturity.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Westbank Corporation and Subsidiaries
LOANS
Loans have been reduced by deferred loan fees and the allowance for loan losses.
Interest on commercial and real estate loans is accrued on the principal amount
of loans outstanding. Interest on installment and other loans is calculated by
using the simple interest method on daily balances of the principal amount
outstanding. Loan origination fees, net of certain direct loan origination
costs, are deferred and recognized as income over the life of the related loan
as an adjustment to the loan's yield.
Non-accrual loans are loans on which the accrual of interest ceases when the
collection of principal or interest payments is determined to be doubtful by
management. It is the general policy of the Corporation to discontinue the
accrual of interest when principal or interest payments are delinquent 90 days,
unless the loan principal and interest are determined by management to be fully
collectible. Any unpaid amounts previously accrued on these loans are reversed
from income. Interest received on a loan in non-accrual status is applied to
reduce principal or, if management determines that the principal is collectible,
applied to interest on a cash basis. A loan is returned to accrual status after
the borrower has brought the loan current and has demonstrated compliance with
the loan terms for a sufficient period, and management's doubts concerning
collectibility have been removed.
The Corporation measures impairment of commercial loans by using the present
value of expected future cash flows discounted at the loan's effective interest
rate. Commercial real estate loans are generally measured based on the fair
value of the underlying collateral. Smaller balance homogenous loans, including
residential real estate and consumer loans, are collectively evaluated for
impairment based on the present value of expected future cash flows discounted
at the loan's effective interest rate or, as a practical expedient, at the
loan's observable market price or the fair value of the collateral if the loan
is collateral-dependent. The Corporation evaluates each impaired loan to
determine the appropriate income recognition practice. Generally, income is
recorded only on a cash basis for impaired loans.
The adequacy of the allowance for loan losses is evaluated regularly by
management. Factors considered in evaluating the adequacy of the allowance
include the size of the portfolio, previous loss experience, current economic
conditions and their effect on borrowers, the financial condition of individual
borrowers and the related performance of individual loans in relation to
contract terms. The provision for loan losses charged to operating expense is
based upon management's judgment of the amount necessary to maintain the
allowance at a level adequate to absorb losses. Loan losses are charged against
the allowance for loan losses when management believes the collectibility of the
principal is unlikely.
Mortgage loans originated and intended for sale in the secondary market are
carried at the lower of cost or fair value in the aggregate. Net unrealized
losses are recognized through a valuation allowance charged to income.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation is computed using the straight-line method.
Amortization of leasehold improvements is charged over the terms of the
respective leases, including option periods or the estimated useful lives of the
improvements, whichever is shorter. Gains and losses are recognized upon
disposal of assets. The cost of maintenance and repairs is charged to income as
incurred, whereas significant renewals are capitalized.
OTHER REAL ESTATE OWNED
Other real estate owned ("OREO") includes properties the Corporation has
acquired through foreclosure. OREO is recorded at the lower of cost or fair
value at the date of acquisition, less estimated selling costs. At the time of
foreclosure, the excess, if any, of the loan amount over the fair value of the
asset acquired is charged off against the allowance for loan losses. Operating
expenses to administer OREO properties are charged directly to operating
expenses. Valuation allowances are established subsequent to acquisition, as
necessary, based upon management's continuing assessment of the fair values of
the properties. Loans granted in conjunction with sales of OREO are required to
comply with the Corporation's standard underwriting criteria, including receipt
of an adequate down payment.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Westbank Corporation and Subsidiaries
LOAN SALES AND SERVICING RIGHTS
The Corporation sells loans in the secondary market and retains the related
servicing rights. Mortgage servicing rights are recognized as an asset when
loans are sold with servicing retained, by allocating the cost of an originated
mortgage loan between the loan and the servicing right based on estimated
relative fair values. The cost allocated to the servicing right is capitalized
as a separate asset and amortized in proportion to, and over the period of,
estimated net servicing income.
Capitalized mortgage servicing rights are evaluated for impairment by comparing
the asset's unamortized cost to its current estimated fair value. Fair values
are estimated using a discounted cash flow approach, which considers future
servicing income and costs, current market interest rates, and anticipated
prepayment and default rates. In making impairment evaluations, mortgage
servicing rights are stratified based on one or more of the predominant risk
characteristics of the underlying loans. The Corporation has stratified its
servicing portfolio for this purpose between fixed and adjustable rate loans.
Impairment losses, if any, are recognized through a valuation allowance for each
impaired stratum. Adjustments to the valuation allowance are charged or credited
to income.
INCOME TAXES
The asset and liability method of accounting for income taxes is utilized.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
basis. To the extent that current available evidence about the future raises
doubt about the realization of a deferred tax asset, a valuation allowance will
be established. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
PENSION PLAN
The Corporation has a trusteed defined contribution pension plan covering
substantially all employees. The Corporation's policy is to fund accrued pension
cost.
STOCK OPTIONS
The Corporation measures compensation cost of stock options on the intrinsic
value of the common stock options granted. Intrinsic value is the excess of the
market value of the common stock over the exercise price at the date of grant.
Because stock options are granted with fixed terms and with an exercise price
equal to the market price of the common stock at the date of grant, there is no
measured compensation cost of stock options. The pro forma disclosures for net
income and earnings per share as if a fair value-based method of accounting had
been applied are contained in these Notes to the Consolidated Financial
Statements.
TRUST DEPARTMENT
Assets held by the Corporation for customers in a fiduciary or agency capacity
are not included in the consolidated financial statements, as such items are not
assets of the Corporation. Such assets totaled approximately $119,797,000 and
$117,234,000 at December 31, 1998 and 1997, respectively. Trust income is
recognized on a cash basis. The amounts recognized under this method are not
materially different from amounts that would be recognized on the accrual basis.
EARNINGS PER SHARE
Basic earnings per share is the result of dividing earnings available to common
stockholders by the weighted average number of common shares outstanding during
the year. Diluted earnings per share gives effect to all potentially dilutive
common shares that were outstanding during the year.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Westbank Corporation and Subsidiaries
2 - SECURITIES
Investment securities held to maturity at December 31 are as follows:
<TABLE>
<CAPTION>
1998
Gross Gross Net
Amortized unrealized unrealized Fair unrealized
(Dollars in Thousands) cost gains losses value gain
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Government obligations $ 998 $ 28 $ 1,026 $ 28
Federal agency obligations 26,890 145 27,035 145
Mortgage-backed securities 2,728 30 $ 2 2,756 28
- ------------------------------------------------------------------------------------------------------------------------------
$30,616 $203 $ 2 $ 30,817 $ 201
==============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
1997
Gross Gross Net
Amortized unrealized unrealized Fair unrealized
(Dollars in Thousands) cost gains losses value gain
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Government obligations $ 4,246 $ 35 $ 1 $ 4,280 $ 34
Federal agency obligations 32,927 121 20 33,028 101
Mortgage-backed securities 2,330 43 9 2,364 34
Certificates of deposit 99 99
- -----------------------------------------------------------------------------------------------------------------------------
$39,602 $ 199 $ 30 $ 39,771 $ 169
=============================================================================================================================
</TABLE>
During 1998 and 1997 there were no sales of investment securities classified as
held to maturity. Investment securities available for sale at December 31 are as
follows:
<TABLE>
<CAPTION>
1998
Gross Gross Net
Amortized unrealized unrealized Fair unrealized
(Dollars in Thousands) cost gains losses value gain/(loss)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Government obligations $ 928 $ 928
Federal agency obligations 26,629 $124 $ 86 26,667 $ 38
Equity securities 1,716 29 1,745 29
Mortgage-backed securities 24,087 299 14 24,372 285
- -----------------------------------------------------------------------------------------------------------------------------
$53,360 $452 $100 $ 53,712 $ 352
=============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
1997
Gross Gross Net
Amortized unrealized unrealized Fair unrealized
(Dollars in Thousands) cost gains losses value gain/(loss)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Government obligations $ 2,058 $ 2,058
Federal agency obligations 3,500 $ 3 $ 17 3,486 $(14)
Equity securities 1,642 22 1,664 22
Mortgage-backed securities 13,406 97 1 13,502 96
- ------------------------------------------------------------------------------------------------------------------------------
$20,606 $122 $18 $20,710 $104
==============================================================================================================================
</TABLE>
During 1998 and 1997, the Corporation recognized gross gains on securities
available for sale totaling $141,000 and $259,000, respectively.
The contractual maturities of held-to-maturity and available-for-sale
securities, other than equity securities, as of December 31, 1998, are
summarized in the following tables. Actual maturities may differ from
contractual maturities because certain issuers have the right to call or prepay
obligations.
For the purposes of the maturity table, mortgage-backed securities, which are
not due at a single maturity date, have been allocated over maturity groupings
based on the contractual maturities of underlying collateral. The
mortgage-backed securities may mature earlier than their contractual maturities
because of principal repayments.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Westbank Corporation and Subsidiaries
<TABLE>
<CAPTION>
Amortized Fair
(Dollars in Thousands) cost value
- -----------------------------------------------------------------------------------------------------------------------------
Held to Maturity:
<S> <C> <C>
Within 1 year $ 499 $ 505
Over 1 year to 5 years 5,821 5,901
Over 5 years to 10 years 23,346 23,458
Over 10 years 950 953
- -----------------------------------------------------------------------------------------------------------------------------
Total bond and debt obligations $30,616 $ 30,817
=============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Amortized Fair
(Dollars in Thousands) cost value
- -----------------------------------------------------------------------------------------------------------------------------
Available for Sale:
<S> <C> <C>
Within 1 year $ 2,484 $ 2,479
Over 1 year to 5 years 558 565
Over 5 years to 10 years 22,475 22,226
Over 10 years 26,454 26,696
- -----------------------------------------------------------------------------------------------------------------------------
Total bond and debt obligations $51,971 $ 51,966
=============================================================================================================================
</TABLE>
At December 31, 1998 securities with a book value and fair value of $17,998,000
and $18,092,000, respectively, were pledged to secure public deposits,
repurchase agreements and for other purposes as required by law.
3 - LOANS AND ALLOWANCE FOR LOAN LOSSES
Loans consisted of the following at December 31:
<TABLE>
<CAPTION>
(Dollars in Thousands) 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial $ 41,760 $ 41,661
Real estate construction 5,998 5,302
Real estate 229,092 208,023
Consumer 19,277 16,648
- ----------------------------------------------------------------------------------------------------------------------------
296,127 271,634
Allowance for loan losses (2,665) (3,057)
Deferred loan origination fees (349) (323)
- ----------------------------------------------------------------------------------------------------------------------------
$293,113 $268,254
=============================================================================================================================
</TABLE>
Changes in the allowance for loan losses are summarized as follows:
<TABLE>
<CAPTION>
(Dollars in Thousands) 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year $ 3,057 $2,699 $3,924
Provision for loan losses 41 306 944
Loans charged off (518) (760) (2,539)
Recoveries 85 812 370
- -----------------------------------------------------------------------------------------------------------------------------
$ 2,665 $3,057 $2,699
=============================================================================================================================
</TABLE>
The aggregate principal balance of non-accrual loans was $797,000 and $1,648,000
at December 31, 1998 and 1997 respectively. Contractual interest income that was
not recognized on such non-accrual loans was $35,000, $79,000 and $240,000 for
1998, 1997 and 1996, respectively.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Westbank Corporation and Subsidiaries
The Corporation did not sell any loans with recourse during 1998 or 1997. The
remaining recourse exposure on prior sales was $2,007,000 at December 31, 1998.
Management does not believe that its recourse obligations subject the
Corporation to any material risk of loss in the future. The Corporation has
suffered no losses as a result of these recourse obligations.
Of the $229,077,000 in real estate loans at December 31, 1998, $168,744,000 are
collateralized by 1-4 family dwellings. The majority of the collateral for these
loans is located in the Corporation's market area of Western Massachusetts and
Northeast Connecticut. Commercial real estate and real estate construction loans
represented $60,348,000 in outstanding principal at December 31, 1998. These
loans encompass a wider region extending throughout Massachusetts and Southern
New England. Most are collateralized by commercial real estate developments.
Commercial loans both collateralized and uncollateralized of $41,760,000 at
December 31, 1998, represent loans made to businesses primarily in Western
Massachusetts.
The Corporation has had, and expects to have in the future, banking transactions
in the ordinary course of business with its directors and officers. Such loans,
in the opinion of management, do not include more than the normal risk of
collectibility nor other unfavorable features. The following summarizes the
activity with respect to indebtedness, both direct and indirect, for directors,
policy-making officers and major stockholders during the years ended December
31:
<TABLE>
<CAPTION>
(Dollars in Thousands) 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Balance at beginning of year $2,386 $1,552
New loans granted 886 2,936
Repayments of principal (231) (2,102)
- -----------------------------------------------------------------------------------------------------------------------------
Balance at end of year $3,041 $2,386
=============================================================================================================================
</TABLE>
At December 31, 1998 and 1997, the recorded investment in impaired loans was
$1,419,000 and $1,809,000, respectively, for which no additional specific
allowance for loan losses was recorded. For the years ended December 31, 1998,
1997 and 1996, the average recorded investment in impaired loans was $1,366,000,
$2,080,000 and $3,890,000, respectively. Interest income recognized during 1998,
1997 and 1996 on impaired loans was not significant.
The Corporation had no commitments to lend additional funds to borrowers having
loans that are on non-accrual status, impaired or restructured.
The Corporation services loans for others which are not included in the
consolidated balance sheets. The unpaid balances of these loans totaled
$115,391,000 and $133,359,000 at December 31, 1998 and 1997, respectively.
4 - PROPERTY AND EQUIPMENT
Major classes of property and equipment at December 31 are summarized as
follows:
<TABLE>
<CAPTION>
Estimated
(Dollars in Thousands) 1998 1997 Lives
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Property (including
land of $1,546 in 1998 and $1,187 in 1997) $5,214 $4,305 15-40 years
Capital lease building 263 263 15 years
Furniture and equipment 4,167 3,181 3-10 years
Leasehold and building
improvements 2,825 3,246 5-15 years
Motor vehicles 114 105 3 years
- -----------------------------------------------------------------------------------------------------------------------------
12,583 11,100
Accumulated depreciation 5,732 5,199
- -----------------------------------------------------------------------------------------------------------------------------
Property and Equipment $6,851 $5,901
=============================================================================================================================
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Westbank Corporation and Subsidiaries
5 - OTHER REAL ESTATE OWNED
At December 31, other real estate owned consisted of properties acquired through
foreclosure as follows:
<TABLE>
<CAPTION>
(Dollars in Thousands) 1998 1997
<S> <C> <C> <C>
Real estate acquired through foreclosure - net of OREO provision 466 353
=============================================================================================================================
Changes in the allowance for other real estate owned losses are summarized as
follows:
(Dollars in Thousands) 1998 1997 1996
=============================================================================================================================
Balance, beginning of year $200 $195 $65
Provision for other real estate owned charged to operations 22 29 390
Write-downs (net of payments) (222) (24) (260)
- -----------------------------------------------------------------------------------------------------------------------------
Balance, end of year $ $200 $195
=============================================================================================================================
</TABLE>
6 - DEPOSITS
Deposit accounts by type as of December 31 are summarized as follows:
<TABLE>
<CAPTION>
(Dollars in Thousands) 1998 1997
=============================================================================================================================
<S> <C> <C>
Demand deposit 51,395 50,443
Savings 53,689 45,902
N.O.W. 25,993 23,027
Money market deposits 29,659 25,677
Other time deposits 181,531 169,630
=============================================================================================================================
342,267 314,679
=============================================================================================================================
</TABLE>
At December 31, 1998, the scheduled maturities of other time deposits and IRA
deposits with a fixed maturity are as follows:
<TABLE>
<CAPTION>
(Dollars in Thousands)
===========================================================================================================
<S> <C>
1999 130,174
2000 27,394
2001 10,219
2002 3,359
2003 and after 1,172
- -----------------------------------------------------------------------------------------------------------
172,318
</TABLE>
Certificates of deposit with balances greater than or equal to $100,000 amounted
to $26,880,000 and $22,621,000 as of December 31, 1998 and 1997, respectively.
Interest paid on these deposits totaled approximately $1,250,000 and $1,046,000,
respectively.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Westbank Corporation and Subsidiaries
7 - BORROWED FUNDS
Short-term borrowings as of December 31 are as follows:
<TABLE>
<CAPTION>
(Dollars in Thousands) 1998 1997
=============================================================================================================================
<S> <C> <C>
Securities sold under agreements
to repurchase $11,953 $8,020
Purchased federal funds 270 270
FHLB Advance 7,310
Treasury tax and loan notes 1,274 3,594
- -----------------------------------------------------------------------------------------------------------------------------
Total short term borrowings $20,807 $11,884
=============================================================================================================================
</TABLE>
The above short-term borrowings generally mature daily.
The following information relates to long-term debt as of December 31, 1998:
<TABLE>
<CAPTION>
(Dollars in Thousands)
=============================================================================================================================
<S> <C>
FHLB Term advance 5.87% due May 12, 2003 $7,000
</TABLE>
The following table summarizes borrowings. Average interest rates during each
year were computed by dividing total interest expense by the average amount
borrowed:
<TABLE>
<CAPTION>
(Dollars in Thousands) 1998 1997 1996
=============================================================================================================================
<S> <C> <C> <C>
Balance at year end $27,807 $11,884 $ 9,269
Average amount outstanding 16,442 9,065 8,714
Maximum amount outstanding at any month-end 28,307 14,036 12,794
Average interest rate for the year 3.83% 3.20% 2.99%
Average interest rate on year-end balance 3.85% 3.15% 3.03%
</TABLE>
The Corporation maintains lines of credit with the Fleet Bank of Massachusetts
for $3,000,000 and the Bank of Boston for $1,500,000. Both are revolving lines
of credit that are renewed on an annual basis. There were no amounts outstanding
against either line as of December 31, 1998 or 1997. The Corporation had
additional short term borrowing capacity through the Federal Home Loan Bank of
$7,244,000 through its Ideal Way program that was unused at year-end 1998.
Advances from the Federal Home Loan Bank of Boston (FHLB) are collateralized by
the Company's holdings of FHLB stock and residential real estate loans.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Westbank Corporation and Subsidiaries
8 - INCOME TAXES
The income taxes (benefits) were as follows:
<TABLE>
<CAPTION>
(Dollars in Thousands) 1998 1997 1996
=============================================================================================================================
Current tax:
<S> <C> <C> <C>
Federal $1,943 $1,836 $921
State 312 408 328
Total current 2,255 2,244 1,249
- -----------------------------------------------------------------------------------------------------------------------------
Deferred tax:
Deferred taxes (107) 164 368
Change in valuation allowance for deferred tax assets (2) (101)
Total deferred (107) 162 267
- -----------------------------------------------------------------------------------------------------------------------------
Total income taxes $2,148 $2,406 $1,516
=============================================================================================================================
</TABLE>
The differences between the effective tax rate and the federal statutory tax
rate on income before taxes are reconciled as follows:
<TABLE>
<CAPTION>
1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory rate 34.0% 34.0% 34.0%
Change in valuation allowance for deferred tax asset 1.0
State income taxes, net of federal benefit 4.4 6.1 6.9
Other .5 .5 .6
- -----------------------------------------------------------------------------------------------------------------------------
38.9% 41.6% 41.5%
=============================================================================================================================
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Westbank Corporation and Subsidiaries
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and liabilities at December 31 are presented below:
<TABLE>
<CAPTION>
(Dollars in Thousands) 1998 1997
=============================================================================================================================
Deferred tax assets:
<S> <C> <C>
Other real estate owned $ 84
Deferred loan fees $ 122 112
Reserve for loan losses 96 86
Deferred income 17 22
Accrued expenses not deducted for tax 176 52
State tax net operating loss carryforward 99
Non-accrual interest 11 48
Amortization 12
Other 95 39
- -----------------------------------------------------------------------------------------------------------------------------
Total gross deferred tax assets 529 542
Valuation allowance (99)
- -----------------------------------------------------------------------------------------------------------------------------
Net deferred tax assets 529 443
- -----------------------------------------------------------------------------------------------------------------------------
Deferred tax liabilities:
Bond accretion 8 17
Unrealized gain on securities 151 44
Depreciation 345 314
Allowance for loan losses 193 249
Deferred FNMA premium 4 5
Prepaid pension 26
Earned income not yet taxed 141 112
Other 37 31
- -----------------------------------------------------------------------------------------------------------------------------
Total gross deferred tax liabilities 879 798
- -----------------------------------------------------------------------------------------------------------------------------
Net deferred tax liability $(350) $(355)
=============================================================================================================================
</TABLE>
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax assets and liabilities, projected future
taxable income, and tax planning strategies in making this assessment. Based
upon the level of historical taxable income and projections for future taxable
income over the periods in which the deferred tax assets are deductible,
management believes it is more likely than not that the Corporation will realize
the benefits of these deductible differences, net of the recorded valuation
allowance.
9 - PENSION PLAN
The Corporation has a defined contribution pension plan (money purchase),
covering substantially all of its employees at Park West and a defined benefit
plan for its employees at Cargill Bank. Contributions to the money purchase plan
are a percentage of individual employees' salary. Total pension expense for
1998, 1997 and 1996 amounted to $212,000, $204,000 and $213,000, respectively.
At May 31, 1998, the most recent plan year end of the money purchase plan, total
plan assets were $3,671,379 and the vested balance was $3,568,546. The money
purchase plan assets are invested in money market funds, government bonds,
corporate and government agency bonds and marketable securities. The defined
benefit plan is a multi-employer plan.
10 - STOCK OPTIONS
The Corporation has four fixed-option plans which reserve shares of common stock
for issuance to executives, key employees and directors. During 1998, 1997 and
1996, no compensation cost was required to be recognized for the stock option
plans. Had compensation costs for the Corporation's four stock option plans been
determined based on the fair value at the grant date for awards in 1998, 1997
and 1996 consistent with the provisions of SFAS No. 123, the Corporation's net
earnings and earnings per share would have been as follows:
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Westbank Corporation and Subsidiaries
<TABLE>
<CAPTION>
(Dollars in Thousands, except per share data) 1998 1997 1996
==============================================================================================================================
<S> <C> <C> <C>
Net earnings - as reported $3,377 $3,384 $2,137
Net earnings - pro forma 2,709 3,003 1,649
Earnings per share - as reported - Basic .82 .88 .59
- Diluted .79 .85 .57
Earnings per share - pro forma - Basic .65 .78 .45
- Diluted .63 .75 .44
</TABLE>
The Corporation offers shares of common stock to officers and key employees
pursuant to the 1985 Incentive Stock Option Plan. As of December 31, 1998, all
options granted are exercisable. The following is a summary of the changes in
options outstanding:
<TABLE>
<CAPTION>
1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Options granted and exercisable
at the beginning of the year 191,466 277,122 307,706
Options exercised:
at $2.00 (27,741) (16,268)
at $2.50 (350) (27,450) (9,200)
at $3.50 (20,302) (5,116)
at $6.00 (146,832) (10,163)
- ------------------------------------------------------------------------------------------------------------------------------
Options granted and exercisable
at the end of the year 44,284 191,466 277,122
==============================================================================================================================
</TABLE>
Unless exercised the options will expire ten years after granting. No options
are available for future grants. The Corporation adopted a Cargill Directors and
Officers Stock Option Plan during 1992.
The following is a summary of the changes in options outstanding under the
Cargill Directors and Officers Stock Option Plan:
<TABLE>
<CAPTION>
1998 1997 1996
==============================================================================================================================
<S> <C> <C> <C>
Options granted and exercisable
at the beginning of the year 113,657 124,113 133,685
Options exercised or expired (9,572)
Options exercised at $4.02 31,617 10,456
- -----------------------------------------------------------------------------------------------------------------------------
Options granted and exercisable
at the end of the year 82,040 113,657 124,113
==============================================================================================================================
</TABLE>
Unless exercised the options will expire twenty years after granting. No options
are available for future grants.
The Corporation adopted a Directors Stock Option Plan during 1995.
The following is a summary of the changes in options outstanding under the
Directors Stock Option Plan:
<TABLE>
<CAPTION>
1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Options granted and exercisable
at the beginning of the year 53,000 44,000 33,000
Options granted and exercisable:
at $7.125 11,000
at $9.375 11,000
at $12.875 9,000
at $14.75 3,000
Options exercised at $6.00 (15,000) (2,000)
at $7.125 (2,000)
at $9.375 (2,000)
- -----------------------------------------------------------------------------------------------------------------------------
Options granted and exercisable
at the end of the year 46,000 53,000 44,000
- -----------------------------------------------------------------------------------------------------------------------------
Options available for future grants 58,000 70,000 81,000
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Unless exercised, the options will expire twenty years after granting.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Westbank Corporation and Subsidiaries
The Corporation adopted an incentive stock option plan during 1996 for directors
and employees. At the 1998 Annual Meeting of Shareholders, the 1996 Incentive
Stock Option Plan was amended to increase the number of shares reserved for
issuance by 200,000 shares. The following is a summary of the changes in the
1996 Incentive Stock Option Plan:
<TABLE>
<CAPTION>
1998 1997 1996
=============================================================================================================================
<S> <C> <C> <C>
Options outstanding at the beginning of the year 36,500 45,500
Options authorized 200,000 178,500
=============================================================================================================================
Options granted and exercisable at the beginning of the year 141,500 133,000
- -----------------------------------------------------------------------------------------------------------------------------
Options granted and exercisable to directors at $8.00 11,000
Options granted and exercisable to employees at $8.125 122,500
Options granted and exercisable to directors at $9.00 9,000
Options granted and exercisable to directors at $15.25 10,000
Options granted and exercisable to employees at $13.375 107,000
Options exercised at $8.125 (500)
Options exercised at $8.00 (2,000)
Options terminated (500)
Options granted and exercisable at the end of the year 256,500 141,500 133,000
- -----------------------------------------------------------------------------------------------------------------------------
Options available for future grants 119,500 36,500 45,500
=============================================================================================================================
</TABLE>
11 - EARNINGS PER SHARE
The following is a reconciliation of the shares and earnings per share utilized
for the basic and diluted earnings per share computations.
<TABLE>
<CAPTION>
Shares Per Share
===========================================================================================
<S> <C> <C>
Basic Earnings Per Share:
1998 4,143,009 $.82
1997 3,845,698 .88
1996 3,643,270 .59
Effect of Dilutive Option Shares:
1998 129,673 .03
1997 157,317 .03
1996 119,149 .02
Diluted Earnings Per Share:
1998 4,272,682 .79
1997 4,003,015 .85
1996 3,762,419 .57
</TABLE>
12 - LEASES
The Corporation leases certain facilities under long-term operating lease
agreements. The following is a schedule of future minimum lease payments for
such operating leases as of December 31, 1998:
<TABLE>
<CAPTION>
(Dollars in Thousands)
=========================================================================================
<S> <C>
1999 $ 298
2000 297
2001 196
2002 183
2003 117
After 2003 438
- -----------------------------------------------------------------------------------------
Total minimum lease payments $1,529
=========================================================================================
</TABLE>
Rent expense for 1998, 1997 and 1996 amounted to $274,000, $273,000 and
$261,000, respectively.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Westbank Corporation and Subsidiaries
13 - COMMITMENTS, CONTINGENT LIABILITIES
AND FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
In the normal course of business, various commitments and contingent liabilities
are outstanding, such as guarantees, standby letters of credit, commitments to
extend credit and various financial instruments with off-balance-sheet risk that
are not reflected in the financial statements. Financial instruments with off-
balance-sheet risk involve elements of credit risk, interest rate risk,
liquidity risk and market risk. Management does not anticipate any significant
losses as a result of these transactions.
The following table summarizes the contractual value of financial instruments
and other commitments at December 31:
<TABLE>
<CAPTION>
(Dollars in Thousands) 1998 1997
===========================================================================================================
<S> <C> <C>
Commitments to grant loans $ 9,281 $10,257
Stand-by letters of credit and financial guarantees 1,012 1,022
Commitments to advance funds under existing loan agreements 31,457 29,533
</TABLE>
The Corporation uses the same credit policies in making commitment and
conditional obligations as it does for on-balance-sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since commitments may be expected to expire without
being drawn upon, the total commitment amounts do not necessarily represent
future cash requirements. The Corporation evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained, if
deemed necessary by the Corporation upon extension of credit, is based on
management's credit evaluation of the borrower. Collateral held varies but may
include accounts receivable, inventory, property, plant and equipment, and
income-producing commercial properties.
In the normal course of business, certain litigation is pending against the
Corporation. Management, after consultation with legal counsel, does not
anticipate that any ultimate liability arising out of such litigation will have
a material effect on the Corporation's financial condition or results of
operations.
14 - OTHER NON-INTEREST EXPENSE
The components of other non-interest expense, which are in excess of 1% of the
aggregate of total non-interest expense and not shown separately on the
consolidated statements of income, are as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
(Dollars in Thousands) 1998 1997 1996
======================================================================================
<S> <C> <C> <C>
Merger related expenses $595
Professional fees $322
Advertising 385 $350 358
Supplies 324 277 40
</TABLE>
15 - STOCKHOLDERS' EQUITY AND REGULATORY MATTERS
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
addresses the legal and regulatory environment for insured depository
institutions, including reductions in insurance coverage for certain kinds of
deposits, increased supervision by the federal regulatory agencies, increased
reporting requirements for insured institutions, and new regulations concerning
internal controls, accounting, and operations.
Both the Corporation and the Banks are subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory and possibly
additional discretionary actions by regulators that, if undertaken, could have a
direct material effect on the Corporation's or banking
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Westbank Corporation and Subsidiaries
subsidiaries' financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, a bank must meet specific
capital guidelines that involve quantitative measures of a bank's assets,
liabilities, and certain off-balance-sheet items as calculated under regulatory
accounting practices. A bank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require a bank to maintain minimum amounts and ratios (as defined in the
regulations) of total and Tier I capital to risk-weighted assets and of Tier I
capital to average assets. Management believes, as of December 31, 1998, that
the Corporation meets all capital adequacy requirements to which it is subject.
As of December 31, 1998, the most recent notification from the Federal Deposit
Insurance Corporation categorized both Park West and Cargill as well capitalized
under the regulatory framework for prompt corrective action. To be categorized
as well capitalized, a bank must maintain minimum total risk-based, Tier I
risk-based, Tier I leverage ratios. There are no conditions or events since that
notification that management believes have changed the institution's category.
The Corporation's, Park West's and Cargill's actual capital amounts and ratios
are also presented in the following table:
<TABLE>
<CAPTION>
Minimum Capital
to be considered
well capitalized
under Prompt
Minimum Capital Corrective Action
Actual Adequacy Purposes Provisions
(Dollars in Thousands) Amount Ratio Amount Ratio Amount Ratio
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
December 31, 1998
Total Capital
(To risk-weighted assets):
Park West $27,890 12.20% $18,291 8.00% $22,864 10.00%
Cargill 3,475 14.93 1,862 8.00 2,327 10.00
Holding Company 32,946 13.00 20,281 8.00 N/A N/A
Tier I Capital (To risk-weighted assets):
Park West 25,510 11.16 9,146 4.00 13,718 6.00
Cargill 3,189 13.70 931 4.00 1,396 6.00
Holding Company 30,281 11.94 10,141 4.00 N/A N/A
Tier I Capital (To average assets):
Park West 25,510 7.24 14,102 4.00 17,628 5.00
Cargill 3,189 6.69 1,907 4.00 2,364 5.00
Holding Company 30,281 7.53 16,092 4.00 N/A N/A
December 31, 1997
Total Capital
(To risk weighted-assets):
Park West 24,535 11.97 16,397 8.00 20,496 10.00
Cargill 3,317 13.10 2,022 8.00 2,528 10.00
Holding Company 29,654 12.77 18,570 8.00 N/A N/A
Tier I Capital
(To risk weighted-assets)
Park West 21,969 10.70 8,198 4.00 12,298 6.00
Cargill 3,108 12.70 1,011 4.00 1,517 6.00
Holding Company 26,858 11.57 9,285 4.00 N/A N/A
Tier I Capital (To average assets):
Park West 21,969 7.04 12,493 4.00 15,617 5.00
Cargill 3,108 6.60 1,880 4.00 2,350 5.00
Holding Company 26,858 7.44 16,092 4.00 N/A N/A
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Westbank Corporation and Subsidiaries
On November 19, 1997, the Board of Directors of the Corporation adopted an
Amended and Restated Shareholder Rights Plan (the "Rights Plan"). Pursuant to
the terms of the Rights Plan, the Board of Directors declared a dividend
distribution to stockholders of record as of the close of business on December
4, 1997 (the "Record Date") of one Preferred Stock Purchase Right (a "Right")
for each outstanding share of Common Stock of the Corporation. In addition, one
Right automatically attaches to each share of Common Stock issued subsequent to
the Record Date, until November 19, 2007. Each Right entitles the registered
holder to purchase from the Corporation a unit of one ten-thousandths of a share
(a "Unit") of Series A Junior Participating Cumulative Preferred Stock, par
value $5.00 per share ("Preferred Stock"), at a cash exercise price of $60.00
per share of Common Stock, subject to adjustment. The Corporation has reserved
12,000 shares of Preferred Stock for issuance upon exercise of the Rights.
Currently, the Rights are not exercisable and are attached to and trade with the
outstanding shares of Common Stock. The Rights will separate from the Common
Stock and become exercisable upon the earliest to occur of (i) the close of
business on the tenth calendar day following the first public announcement that
a person or group of affiliated or associated persons has acquired beneficial
ownership of 15% or more of the outstanding shares of the Corporation's Common
Stock (an "Acquiring Person"), (ii) the close of business on the tenth business
day (or such date as the Board of Directors may determine) following the
commencement of a tender offer or exchange offer that would result upon its
consummation in a person or a group becoming the beneficial owner of 15% of the
outstanding shares of the Corporation's Common Stock, (iii) the determination by
the Board of Directors that any person is an "Adverse Person."
Upon the occurrence of any one of the above events, each holder of a Right
(other than the Acquiring Person or the Adverse Person, as the case may be) is
entitled to acquire such number of Units of the Preferred Stock of the
Corporation as are equivalent to such number of shares of Common Stock having a
value twice the current exercise price of the Right. If the Corporation is
acquired in a merger or other business combination transaction, after any such
event each holder of a Right is then entitled to purchase, at the then current
exercise price, shares of the acquiring company's common stock having a value of
twice the exercise price of the Right.
Until a Right is exercised, the holder has no rights as a stockholder of the
Corporation (beyond those rights as an existing stockholder), including the
right to vote or to receive dividends. While the distribution of the Rights is
not taxable to stockholders or to the Corporation, stockholders may, depending
upon the circumstances, recognize taxable income in the event the Rights become
exercisable for Units, other securities of the Corporation, other consideration
or for shares of common stock of an acquiring company.
The Rights may be redeemed in whole by the Corporation, under certain
circumstances, at a price of $.001 per Right. The Rights and the Rights Plan
expire on November 19, 2007.
Retained earnings at September 30, 1998, include $458,000 which is set aside in
accordance with existing provisions of the Internal Revenue Code to absorb
losses on loans. If, in the future, this amount were used for any other
purposes, a tax liability could be incurred. It is not anticipated that such
amount will be made available for dividends or that a tax thereon will be
imposed.
Cargill previously converted from a state chartered mutual savings and loan
association to a state chartered stock savings and loan association. At the time
of conversion, Cargill established a liquidation account in an amount equal to
Cargill's net worth. In the event of a complete liquidation of Cargill (and only
in such event), each eligible account holder will be entitled to receive a
liquidation distribution from the liquidation account before any liquidation
distribution may be made with respect to capital stock. The balance in the
liquidation account at September 30, 1998, was $85,000.
Cargill may not declare or pay a cash dividend on or purchase any of its stock
if the effect would be to reduce the net worth of Cargill below either the
amount of the liquidation account or the capital requirements of its regulators.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Westbank Corporation and Subsidiaries
16 - EMPLOYEE STOCK OWNERSHIP PLAN
The Corporation established an Employees' Stock Ownership Plan ("ESOP"). The
ESOP has been funded by a $100 contribution from the Corporation. At December
31, 1998 and 1997, the ESOP held no shares of the Corporation's stock.
17 - FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value estimates, methods, and assumptions are set forth below for the
Corporation's financial instruments. The following table represents the carrying
amount and estimated fair value of the Corporation's financial instruments at
December 31:
<TABLE>
<CAPTION>
1998 1997
=========================================================================================================================
Carrying Estimated Carrying Estimated
(Dollars in Thousands) Amount Fair Value Amount Fair Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Cash and due from banks $ 13,171 $ 13,171 $ 12,848 $ 12,848
Federal funds sold 1,069 1,069 3,678 3,678
Investment securities held to maturity 30,616 30,817 39,602 39,771
Investment securities available for sale 53,712 53,712 20,710 20,710
Loans 293,113 301,442 268,254 269,665
Liabilities:
Deposits 342,267 343,814 314,679 315,577
Borrowed funds 27,807 27,807 11,884 11,884
</TABLE>
CASH AND DUE FROM BANKS AND FEDERAL FUNDS SOLD
The carrying amount for cash and due from banks and for federal funds sold
approximates fair value and matures in 90 days or less.
INVESTMENT SECURITIES
The fair value of securities, except certain state and municipal securities, is
estimated based on bid prices published in financial newspapers or bid
quotations received from securities dealers.
LOANS
Fair values are estimated for portfolios of loans with similar financial
characteristics. Loans are segregated by type, such as commercial, commercial
real estate, residential mortgage and other consumer. Each loan category is
further segmented into fixed and adjustable rate interest terms, and by
performing and non-performing categories.
The fair value of performing loans, except residential mortgages, is calculated
by discounting scheduled cash flows through the estimated maturity, using
estimated market discount rates that reflect the credit and interest rate risk
inherent in the loan. The estimate of maturity is based on the Corporation's
historical experience with repayments for each loan classification, modified, as
required, by an estimate of the effect of current economic and lending
conditions. For performing residential mortgage loans, including loans held for
sale, fair value is estimated by discounting contractual cash flows adjusted for
prepayment estimates, using discount rates based on secondary market sources
adjusted to reflect differences in servicing and credit costs.
Fair value for significant non-performing loans is based on recent external
appraisals. If appraisals are not available, estimated cash flows are discounted
using a rate commensurate with the risk associated with the estimated cash
flows. Assumptions regarding credit risk, cash flows and discount rates are
judgmentally determined, using available market information and specific
borrower information.
DEPOSITS
The fair value of deposits with no stated maturity, such as non-interest bearing
demand deposits, regular savings, NOW accounts and money market accounts, is
equal to the amount payable on demand. The fair value of certificates of deposit
is based on the discounted value of contractual cash flows. The discount rate is
estimated using the rates currently offered for deposits of similar remaining
maturities.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Westbank Corporation and Subsidiaries
BORROWED FUNDS
The fair value of such borrowings was estimated by utilizing future cash flows
discounted using current borrowing rates for similar instruments. For short-term
borrowings, the carrying amount approximates the fair value due to their
short-term nature.
COMMITMENTS TO EXTEND CREDIT
The stated value of commitments to extend credit approximates fair value, as the
current fees charged for similar commitments does not differ significantly from
quoted fees. For fixed-rate loan commitments, fair value also considers the
difference between current levels of interest rates and the committed rates.
Such differences are not considered significant.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Westbank Corporation and Subsidiaries
18 - SUMMARY OF UNAUDITED QUARTERLY FINANCIAL INFORMATION
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
1998
----
Q1 (1) Q2 (1)
----------------------------------------- -----------------------------------------
Westbank Cargill Restated Westbank Cargill Restated
-------- ------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Interest income $5,842 $880 $6,722 $6,264 $892 $7,156
Interest expense 2,579 419 2,998 2,982 401 3,383
--------------------------------------------------------------------------------------------
Net interest income 3,263 461 3,724 3,282 491 3,773
Provision for losses 19 9 28 12 12
Non-interest income 608 8 616 598 43 641
Non-interest expense 2,455 381 2,836 2,458 399 2,857
--------------------------------------------------------------------------------------------
Income before income taxes 1,397 79 1,476 1,422 123 1,545
Income taxes 558 35 593 537 52 589
Net income $ 839 $ 44 $ 883 $ 885 $ 71 $ 956
============================================================================================
Earnings per share
- Basic $ .22 $ .21 $ .24 $ .23
- Diluted .22 .21 .23 .22
============================================================================================
</TABLE>
<TABLE>
<CAPTION>
1998
----
Q3 (1) Q4 (1)
------------------------------------------- -------------------------------------------
Westbank Cargill Restated Westbank Cargill Restated
-------- ------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Interest income $6,561 $889 $7,450 $6,418 $ 885 $7,303
Interest expense 3,161 416 3,577 2,921 413 3,334
--------------------------------------------------------------------------------------------
Net interest income 3,400 473 3,873 3,497 472 3,969
Provision for losses 1 1 1
Non-interest income 542 47 589 496 85 581
Non-interest expense 2,483 355 2,838 2,975 694 3,669
--------------------------------------------------------------------------------------------
Income before income taxes 1,459 165 1,624 1,018 (138) 880
Income taxes 549 70 619 396 (49) 347
--------------------------------------------------------------------------------------------
Net income $ 910 $ 95 $1,005 $ 622 $ (89) $ 533
============================================================================================
Earnings per share
- Basic $ .24 $ .24 $ .16 $ .13
- Diluted .24 .24 .16 .12
============================================================================================
</TABLE>
<TABLE>
<CAPTION>
1997
----
Q1 (1) Q2 (1)
----------------------------------------- -----------------------------------------
Westbank Cargill Restated Westbank Cargill Restated
-------- ------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Interest income $5,428 $854 $6,282 $5,698 $891 $6,589
Interest expense 2,411 424 2,835 2,534 436 2,970
--------------------------------------------------------------------------------------------
Net interest income 3,017 430 3,447 3,164 455 3,619
Provision for losses 150 31 181 40 10 50
Non-interest income 506 109 615 485 53 538
Non-interest expense 2,293 407 2,700 2,323 437 2,760
--------------------------------------------------------------------------------------------
Income before income taxes 1,080 101 1,181 1,286 61 1,347
Income taxes 443 30 473 549 20 569
--------------------------------------------------------------------------------------------
Net income $ 637 $ 71 $ 708 $ 737 $ 41 $ 778
============================================================================================
Earnings per share
- Basic $ .19 $ .19 $ .22 $ .21
- Diluted .18 .18 .21 .20
============================================================================================
</TABLE>
<TABLE>
<CAPTION>
1997
----
Q3 (1) Q4 (1)
------------------------------------------- -------------------------------------------
Westbank Cargill Restated Westbank Cargill Restated
-------- ------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Interest income $5,979 $916 $6,895 $6,051 $ 907 $6,958
Interest expense 2,740 429 3,169 2,687 430 3,117
--------------------------------------------------------------------------------------------
Net interest income 3,239 487 3,726 3,364 477 3,841
Provision for losses 75 75
Non-interest income 565 54 619 705 52 757
Non-interest expense 2,397 461 2,858 2,300 448 2,748
--------------------------------------------------------------------------------------------
Income before income taxes 1,407 5 1,412 1,769 81 1,850
Income taxes 589 5 594 730 40 770
============================================================================================
Net income $ 818 $ 818 $1,039 41 $1,080
Earnings per share
- Basic $ .23 $ .21 $ .29 $ .27
- Diluted .24 .20 .28 .26
============================================================================================
</TABLE>
(1) Previously reported balances of the merged companies have been reclassified
to conform to the Corporation's presentation and restated to give effect to
the combination.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Westbank Corporation and Subsidiaries
19 - CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS
December 31,
<TABLE>
<CAPTION>
(Dollars in Thousands) 1998 1997
====================================================================================
<S> <C> <C>
BALANCE SHEETS
Assets
Cash $ 66 $ 87
Investment in subsidiaries 28,912 25,136
Other investments 922 1,372
Other assets 762 344
- ------------------------------------------------------------------------------------
Total assets $30,662 $26,939
====================================================================================
Liabilities $ 172 $ 21
- ------------------------------------------------------------------------------------
Stockholders' equity
Preferred stock - none
Common stock, par value $2 per share 8,397 7,865
Additional paid-in capital 11,076 9,711
Retained earnings 10,803 9,282
Accumulated other comprehensive income 214 60
- ------------------------------------------------------------------------------------
Stockholders' equity 30,490 26,918
- ------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $30,662 $26,939
</TABLE>
<TABLE>
<CAPTION>
1998 1997 1996
==========================================================================================================================
<S> <C> <C> <C>
STATEMENTS OF INCOME
Dividend from subsidiary $ 100 $ 550 $ 550
Interest income 85 38 19
Other income (expense) - net (735) (144) (143)
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) before taxes and
undistributed income of subsidiaries (550) 444 426
Income tax benefit 215 2 26
Undistributed income of subsidiaries 3,712 2,938 1,685
- --------------------------------------------------------------------------------------------------------------------------
Net income $ 3,377 $ 3,384 $ 2,137
==========================================================================================================================
STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
Net income $ 3,377 $ 3,384 $ 2,137
Cargill interim loss for quarter ended 12/31/98 (224)
Operating activities:
Equity in income of subsidiaries (3,622) (2,938) (1,685)
Increase in other assets (418) (33) (302)
Increase in other liabilities 151 2 19
- --------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities (736) 415 169
- --------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Investment securities (purchases) maturities 450 (1,039) (88)
- --------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from stock options exercised 1,141 314 86
Proceeds from dividend reinvestment and optional
stock purchases 628 1,385 657
Dividends paid (1,504) (1,041) (786)
- --------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities 265 658 (43)
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (21) 34 38
Cash and cash equivalents at the beginning of the year 87 53 15
- --------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at the end of the year $ 66 $ 87 $ 53
==========================================================================================================================
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
Westbank Corporation and Subsidiaries
Shareholders and Board of Directors,
Westbank Corporation
We have audited the consolidated balance sheets of Westbank Corporation and
subsidiaries (the "Corporation") as of December 31, 1998 and 1997 and the
related consolidated statements of income, comprehensive income, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1998. These financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. The consolidated financial statements give
retroactive effect to the merger on January 29, 1999 of Cargill Bancorp, Inc.,
and subsidiary and Westbank Corporation and subsidiaries, which has been
accounted for as a pooling of interests as described in Note 1 to the
consolidated financial statements. We did not audit the consolidated balance
sheets of Cargill Bancorp, Inc., as of September 30, 1998 and 1997, or the
related statements of income, comprehensive income, stockholders' equity and
cash flows of Cargill Bancorp, Inc., for each of the three years in the period
ended September 30, 1998, which statements reflect total assets of $48,241,000
and $47,302,000 as of September 30, 1998 and 1997, and net interest income of
$1,897,000, 1,849,000 and $1,693,000 for the years ended September 30, 1998,
1997 and 1996, respectively. Those statements were audited by other auditors
whose report dated October 30, 1998 has been furnished to us and our opinion,
insofar as it relates to the amounts included for Cargill Bancorp, Inc., and
subsidiary for 1998, 1997 and 1996 is based solely on the report of such other
auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditors, such
consolidated financial statements present fairly, in all material respects, the
financial position of Westbank Corporation and subsidiaries at December 31, 1998
and 1997, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1998, in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Hartford, Connecticut
January 29, 1999
(July 30, 1999 as to effects of
the merger described in Note 1)
<PAGE>
INDEPENDENT AUDITORS' REPORT
Westbank Corporation and Subsidiaries
Shareholders and Board of Directors,
Cargill Bancorp, Inc.
We have audited the consolidated statements of financial condition of Cargill
Bancorp, Inc., and subsidiary as of September 30, 1998 and 1997, and the related
consolidated statements of operations, comprehensive income, changes in
stockholders' equity and cash flows for the years ended September 3, 1998, 1997
and 1996. These consolidated financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
consolidated financial statements, based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used, and significant estimates made, by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Cargill Bancorp,
Inc., and subsidiary as of September 30, 1998 and 1997, and the results of its
operations and its cash flows for the years ended September 30, 1998, 1997 and
1996, in conformity with generally accepted accounting principles.
SNYDER & HALLER
Hartford, Connecticut
October 30, 1998
<PAGE>
CORPORATE DIRECTORY AND INFORMATION
Westbank Corporation and Subsidiaries
DIRECTORS
WESTBANK CORPORATION AND
PARK WEST BANK AND TRUST COMPANY
ERNEST N. LAFLAMME, JR.
Chairman of the Board
Westbank Corporation
Treasurer
City of Chicopee
ROLAND O. ARCHAMBAULT
Owner
Park Supply Company
MARK A. BEAUREGARD
Attorney at Law
Resnic, Beauregard, Waite & Driscoll
DAVID R. CHAMBERLAND
President
Chicopee Building Supply, Inc.
DONALD R. CHASE
President and Chief Executive Officer
Westbank Corporation
President and Chief Executive Officer
Park West Bank and Trust Company
LEROY F. JARRETT
President and Treasurer (Retired)
New England Church Interiors
G. WAYNE MCCARY
President & CEO
Eastern States Exposition
ROBERT J. PERLAK
Private Investor
GEORGE R. SULLIVAN
Executive Vice President
Sullivan Paper Company, Inc.
JAMES E. TREMBLE
President
Valley Cinema, Inc.
OFFICERS
WESTBANK CORPORATION
ERNEST N. LAFLAMME, JR.
Chairman of the Board
DONALD R. CHASE
President and Chief Executive Officer
JOHN M. LILLY
Treasurer and Chief Financial Officer
ROBERT J. PERLAK
Corporate Clerk
PARK WEST BANK AND TRUST COMPANY
DONALD R. CHASE
President and Chief Executive Officer
ROBERT J. PERLAK
Corporate Clerk
FINANCE DIVISION
JOHN M. LILLY
Executive Vice President and Treasurer
IRVING M. WALKER, JR., CMA
Accounting Officer
LOAN DIVISION
GARY L. BRIGGS
Executive Vice President
PAUL M. ACCORSI
Senior Vice President
DAVID M. BARSZCZ
Vice President
CLIFFORD R. BORDEAUX
Assistant Vice President
GERARD E. DRAPEAU
VICE President
RICHARD N. HANCHETT
Vice President
MICHAEL M. LEFEBVRE
Vice President
JOSEPH S. LEMAY
Assistant Vice President
JOHN E. O'BRIEN
Loan Operations Officer
RESIDENTIAL REAL ESTATE
STANLEY F. OSOWSKI
Senior Vice President
WOLFGANG A. ADAMETZ
Vice President
LOAN CREDIT & COLLECTION
TRENTON E. TAYLOR
Senior Vice President
PATRICIA A. NABOSKY
Assistant Vice President
EDP/OPERATIONS
S. STEVE KONIECKI
Senior Vice President
MARKETING
JOSEPH L. ROLAK
Director of Marketing and Vice President
COMPLIANCE
JANE M. KNAPP
Vice President
BRANCH ADMINISTRATION/
HUMAN RESOURCES
KATHLEEN A. JALBERT
Senior Vice President
DEBORAH A. KUMIEGA
Assistant Vice President
GARY B. SZYMANIAK
COMMUNITY BANKING OFFICER
AUDITING DIVISION
LLOYD S. HALL, CBA
Director of Auditing
TRUST DIVISION
ROBERT A. GIBOWICZ
Senior Trust Officer
Westbank Corporation
Westbank Tower, 225 Park Avenue
West Springfield, MA 01089-3310
(413) 747-1400
<PAGE>
Annual Meeting
The Annual Meeting of Stockholders of Westbank Corporation will be held on
Wednesday, April 21, 1999 at nine o'clock in the morning at the Carriage House
at Storrowton Tavern, 1305 Memorial Avenue, West Springfield, Massachusetts.
TRANSFER AGENT AND REGISTRAR
Park West Bank and Trust Company -- Trust Department
INDEPENDENT AUDITORS
Deloitte & Touche, LLP
Hartford, Connecticut
CORPORATE COUNSEL
Doherty, Wallace, Pillsbury and Murphy, P.C.
Springfield, Massachusetts
INFORMATION SERVICE
Westbank Corporation welcomes stockholder and public interest in our services
and activities. Questions pertaining to material presented in this Report and
requests for a copy of the Annual Report (Form 10-K) filed with the Securities
and Exchange Commission should be directed to John M. Lilly, Treasurer and Chief
Financial Officer, at the above address
COMMON STOCK - MARKET INFORMATION
The table below shows cash dividend data and the range of bid prices by quarter
for the Corporation's common stock. The source of the bid ranges is the local
newspaper's listing of the NASD regional market quotations:
<TABLE>
<CAPTION>
1998 1997
Bid Bid
High Low Dividend High Low Dividend
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First $17 1/4 $12 $0.10 $10 $8 3/4 $0.075
Second 16 5/8 13 7/8 0.10 9 1/2 8 -1/2 0.075
Third 14 3/4 10 3/8 0.10 11 8 5/8 0.075
Fourth 13 9 3/8 0.10 13 5/8 10 5/8 0.075
</TABLE>
The above quotations of the Corporation's common stock represent prices between
dealers. They do not include retail markup, markdown or commissions. At January
31, 1999 the Corporation had 1,202 stockholders. Westbank Corporation's common
stock is traded on the NASDAQ National Market Exchange, the trading symbol is
"WBKC". For information on the Westbank Corporation Dividend Reinvestment and
Stock Purchase Plan, call: Park West Bank and Trust Company, Trust Department
(413) 747-1482. The following firms make a market in Westbank Corporation's
Common Stock:
Advest, Inc.
First Albany Corporation
McConnell, Budd & Downes, Inc.
Keefe, Bruyette & Woods, Inc.
CORPORATE COUNSEL
EQUAL OPPORTUNITY EMPLOYER
The Corporation has maintained its commitment to equal opportunity and
affirmative action in employment and personnel policies and pledges to recruit,
hire, train and promote persons in all job classifications without regard to
race, color, religion, sex, national origin, veterans status, age or handicap.
<PAGE>
21. SUBSIDIARIES OF THE REGISTRANT
1. Park West Bank and Trust Company - Massachusetts
a. Lorac Leasing Corp. - Massachusetts
<PAGE>
Appendix B
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
Commission file number 0 - 12784
WESTBANK CORPORATION
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2830731
(State or other jurisdiction (I.R.S. Employer I.D. No.)
of incorporation or organization)
225 PARK AVENUE, WEST SPRINGFIELD, MASSACHUSETTS 01090-0149
(Address of principal executive offices) (Zip Code)
(413) 747-1400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [_]
Common stock, par value $2 per share: 4,263,838 shares outstanding as of July
31, 1999
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
----
<S> <C>
Financial Statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Statements of Comprehensive Income 5
Condensed Consolidated Statements of Stockholders' Equity 6
Condensed Consolidated Statements of Cash Flows 7
Notes to Condensed Consolidated Financial Statements 8-10
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-19
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings 20
ITEM 2. Changes in Rights of Securities Holders 20
ITEM 3. Defaults by Company on its Senior Securities 20
ITEM 4. Results of Votes on Matters Submitted
to a Vote of Security Holders 20
ITEM 5. Other Events 20
ITEM 6. Exhibits and Reports on Form 8-K 21
Signatures 22
</TABLE>
2
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION> (Unaudited)
June 30, 1999 December 31, 1998
(Dollar amounts in thousands) _____________ -----------------
- ----------------------------
ASSETS
<S> <C> <C>
Cash and due from banks:
Non-interest bearing $ 12,310 $ 11,291
Interest bearing 1,506 1,880
Federal funds sold 866 1,069
-------- --------
Total cash and cash equivalents 14,682 14,240
-------- --------
Investment securities available for sale 57,635 53,712
Investment securities held to maturity
(fair value of $12,370 in 1999 and $30,817 in 1998) 12,560 30,616
-------- --------
Total securities 70,195 84,328
-------- --------
Loans 338,701 293,432
Mortgage loans held-for-sale 2,184 2,346
Allowance for loan losses (2,721) (2,665)
-------- --------
Net loans 338,164 293,113
Bank premises and equipment 6,910 6,851
Accrued interest receivable 2,601 2,457
Other assets 1,871 1,634
-------- --------
TOTAL ASSETS $434,423 $402,623
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 51,223 $ 51,395
Interest bearing 318,861 290,872
-------- --------
Total Deposits 370,084 342,267
Borrowed funds 25,057 20,807
Federal Home Loan borrowing 7,000 7,000
Accrued interest payable 470 429
Other liabilities 846 1,630
-------- --------
Total Liabilities 403,457 372,133
-------- --------
Stockholders' Equity:
Common stock - $2 par value
Authorized - 9,000,000 shares
Issued - 4,229,931 shares in 1999 and
4,198,838 shares in 1998 8,460 8,397
Additional paid in capital 11,337 11,076
Retained earnings 12,094 10,803
Accumulated other comprehensive income (loss) (925) 214
-------- --------
Total Stockholders' Equity 30,966 30,490
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $434,423 $402,623
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(Unaudited)
(Dollar amounts in thousands)
QUARTER ENDED SIX MONTHS ENDED
06-30-99 06-30-98 06-30-99 06-30-98
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Income:
Interest and fees on loans $ 6,504 $ 5,904 $ 12,533 $ 11,637
Interest on federal funds sold 35 130 73 183
Interest on securities 1,114 1,122 2,390 2,058
---------- ---------- ---------- ----------
7,653 7,156 14,996 13,878
Interest expense 3,481 3,383 6,806 6,381
---------- ---------- ---------- ----------
Net interest income 4,172 3,773 8,190 7,497
Provision for loan losses 2 12 77 40
---------- ---------- ---------- ----------
Net interest income after provision 4,170 3,761 8,113 7,457
---------- ---------- ---------- ----------
Investment security gains 0 142 92 139
Other non-interest income 492 499 1,018 1,118
---------- ---------- ---------- ----------
Total non-interest income 492 641 1,110 1,257
---------- ---------- ---------- ----------
Operating expense:
Salaries and benefits 1,470 1,417 2,967 2,838
Other operating expenses 1,163 1,204 2,273 2,357
Occupancy - net 306 236 614 498
---------- ---------- ---------- ----------
Total operating expenses 2,939 2,857 5,854 5,693
---------- ---------- ---------- ----------
Income before income taxes 1,723 1,545 3,369 3,021
Income taxes 652 589 1,277 1,182
---------- ---------- ---------- ----------
Net Income $ 1,071 $ 956 $ 2,092 $ 1,839
========== ========== ========== ==========
Earnings per share
- Basic $ 0.25 $ 0.23 $ 0.50 $ 0.45
- Diluted $ 0.25 $ 0.22 $ 0.48 $ 0.43
Weighted average shares outstanding
- Basic 4,225,943 4,139,880 4,218,407 4,108,567
- Dilutive option shares 94,132 169,808 118,172 163,590
- Diluted 4,320,075 4,309,688 4,336,579 4,272,157
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
(Unaudited)
(Dollar amounts in thousands)
QUARTER ENDED SIX MONTHS ENDED
06-30-99 06-30-98 06-30-99 06-30-98
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Net Income $ 1,071 $ 956 $ 2,092 $ 1,839
--------- ---------- ---------- ---------
Other comprehensive income:
Unrealized gain/(loss) on securities available for sale, net of income
taxes (benefits) of $(481) and $(145) for the quarter and $(733) and
$(134) for the six-month periods ended June 30, 1999
and 1998, respectively (785) (236) (1,196) (221)
Reclassification adjustment for gains included in net income, net of
income taxes of $35 for the six-month period ended June 30, 1999 and $54
and $53 for the three- and six-month
periods ended June 30, 1998 88 57 86
--------- ---------- ---------- ---------
Other comprehensive income (loss) (785) (148) (1,139) (135)
--------- ---------- ---------- ---------
Comprehensive Income $ 286 $ 808 $ 953 $ 1,704
========= ========== ========== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1998 AND SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
(1999 unaudited)
(Dollar amounts in thousands)
ACCUMULATED
OTHER
COMMON STOCK ADDITIONAL COMPREHENSIVE
NUMBER PAR PAID IN RETAINED INCOME/
OF SHARES VALUE CAPITAL EARNINGS (LOSS) TOTAL
--------- -------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE - DECEMBER 31, 1997 3,932,535 $ 7,865 $ 9,711 $ 9,282 $ 60 $ 26,918
Net income 3,377 3,377
Cash dividend declared
($.30 per share) (1,503) (1,503)
Stock dividend
(1% on Cargill Bancorp shares) 17,389 35 93 (129) (1)
Shares issued:
Stock Option Plan 199,799 399 742 1,141
Dividend Reinvestment
and Stock Purchase Plan 49,115 98 530 628
Cargill interim loss for the
quarter ended December 31, 1998 (224) (224)
Changes in unrealized gain on
securities available for sale 154 154
--------- -------- ---------- ---------- ----------- ---------
BALANCE - DECEMBER 31, 1998 4,198,838 8,397 11,076 10,803 214 30,490
Net income 2,092 2,092
Cash dividend declared
($.20 per share) (801) (801)
Shares issued:
Stock Option Plan 5,301 11 23 34
Dividend Reinvestment
and Stock Purchase Plan 25,792 52 238 290
Changes in unrealized gain on
securities available for sale (1,139) (1,139)
--------- -------- ---------- ---------- ----------- ---------
BALANCE - JUNE 30, 1999 4,229,931 $ 8,460 $ 11,337 $ 12,094 $ (925) $ 30,966
========= ======== ========== ========== =========== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
WESTBANK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<CAPTION>
(Unaudited)
(Dollar amounts in thousands)
1999 1998
-------- --------
<S> <C> <C>
Operating activities:
Net income $ 2,092 $ 1,839
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for loan losses 77 40
Depreciation and amortization 471 499
Provision for other real estate owned 27
Changes in assets and liabilities:
(Increase)/Decrease in accrued interest receivable (144) (257)
Realized gain on sale of securities (92) (139)
Realized (gain)/loss on sale of other real estate owned 19 10
Increase/(Decrease) in interest payable on deposits 41 115
(Increase)/Decrease in other assets (618) (505)
Increase/(Decrease) in other liabilities (784) (95)
-------- --------
Net cash provided by operating activities 1,062 1,534
-------- --------
Investing activities:
Investments and mortgage-backed securities:
Held to maturity:
Purchases (1,050) (20,103)
Proceeds from maturities and principal payments 19,106 20,741
Available for sale:
Purchases (20,686) (22,531)
Proceeds from sales 4,679 8,607
Proceeds from maturities 10,307 4,405
Purchases of premises and equipment (530) (989)
Net (increase)/decrease in loans (44,417) (19,339)
Proceeds from sale of other real estate owned 381 62
-------- --------
Net cash used in investing activities (32,210) (29,147)
-------- --------
Financing activities:
New increase/(decrease) in other borrowed funds 4,250 6,913
Net increase/(decrease) in deposits 27,817 32,957
Proceeds from exercise of stock options and stock purchase plan 324 1,367
Dividends paid (801) (749)
-------- --------
Net cash used in financing activities 31,590 40,488
-------- --------
Increase/(Decrease) in cash and cash equivalents 442 12,875
Cash and cash equivalents at beginning of period 14,240 16,526
-------- --------
Cash and cash equivalents at end of period $ 14,682 $ 29,401
======== ========
Cash paid during the period:
Interest on deposits and other borrowings $ 6,765 $ 6,266
Income taxes 1,191 1,172
Transfers of loans to other real estate owned 374
Sales of other real estate owned financed by the bank 135
</TABLE>
See accompanying notes to condensed consolidated financial statements.
7
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
QUARTER AND SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 1998
(Unaudited)
NOTE A - GENERAL INFORMATION
Westbank Corporation (hereinafter sometimes referred to as "Westbank" or the
"Corporation") is a registered Bank Holding Company organized to facilitate the
expansion and diversification of the business of Park West Bank and Trust
Company and Cargill Bank (hereinafter sometimes referred to as "Park West" and
"Cargill") into additional financial services related to banking. Substantially
all operating income and net income of the Corporation are presently accounted
for by Park West and Cargill.
NOTE B - ACQUISITION OF CARGILL BANCORP, INC.
The Corporation completed the acquisition of Cargill Bancorp, Inc. ("Cargill")
on January 29, 1999. Cargill served as the holding company for Cargill Bank,
which will continue to operate its three banking offices in Northeastern
Connecticut and will retain its name and Connecticut charter as a separate
subsidiary of the Corporation. Under the terms of the merger agreement, each
share of Cargill was exchanged for 1.3655 shares of the Corporation. Westbank
issued a total of 400,164 shares. The transaction was accounted for using the
pooling-of-interests method and, accordingly, all historical financial data has
been restated to include both entities for all periods presented. Direct costs
of the merger accounted for by the pooling-of-interests method are expensed as
incurred. Merger-related costs expensed for the year ended December 31, 1998,
aggregate $595,000. These merger expenses included legal, accounting, regulatory
and severance costs, as well as integration costs.
Westbank's fiscal year ends December 31 and Cargill's fiscal year ends September
30. The financial statements combine the financial information of Westbank at
and for the quarters ended June 30, 1998 and 1999, and the year ended December
31, 1998, with financial information of Cargill for the quarters ended June 30,
1999 and March 31, 1998, and the year ended September 30, 1998. The Cargill loss
of $224,000 for the quarter ended December 31, 1998, has been included directly
in stockholders' equity in order to conform Cargill's reporting periods to the
Corporation's as of December 31, 1998. For the quarter ended December 31, 1998,
Cargill had net interest income of $456,000 and a net loss of $224,000. Included
in operating expenses were $346,000 of merger and related costs that were
primarily the cause of their loss.
The following table sets forth the unaudited results of operations of the
combined entities for the periods prior to this acquisition:
<TABLE>
<CAPTION>
(In thousands, except per-share data)
Westbank Cargill Combined
-------- ------- --------
<S> <C> <C> <C>
Month ended January 31, 1999
Net interest income $1,192 $138 $1,330
Net income 355 21 376
Quarter ended June 30, 1998
Net interest income $3,282 $491 $3,773
Net income 885 71 956
Six months ended June 30, 1998
Net interest income $6,545 $952 $7,497
Net income 1,724 115 1,839
</TABLE>
8
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
QUARTER AND SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 1998
(Unaudited)
NOTE C - CURRENT OPERATING ENVIRONMENT
Park West operates thirteen banking offices located in Hampden County,
Massachusetts, and also operated a Trust Department providing services normally
associated with holding property in a fiduciary or agency capacity. A full range
of retail banking services is furnished to individuals, businesses and
non-profit organizations. Cargill Bank operates three offices in Windham County,
Connecticut. A full range of retail banking services is furnished to
individuals, businesses and non-profit organizations. The primary source of
revenue for Park West and Cargill is derived from providing loans to customers
who are predominantly located in Park West's and Cargill's service areas.
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
imposes significant regulatory restrictions and requirements on banking
institutions insured by the FDIC and their holding companies. FDICIA established
capital categories into which financial institutions are placed based on capital
level. Each capital category establishes different degrees of regulatory
restrictions that can apply to a financial institution. As of June 30, 1999,
Park West and Cargill's capital was at a level that placed the Banks in the
"well capitalized" category as defined by FDICIA.
FDICIA imposes a variety of other restrictions and requirements on insured
banks. These include significant regulatory reporting requirements such as
insuring that a system of risk-based deposit insurance premiums and civil money
penalties for inaccurate deposit assessment reports exists. In addition, FDICIA
imposes a system of regulatory standards for bank and bank holding company
operations, detailed truth in savings disclosure requirements, and restrictions
on activities authorized by state law but not authorized for national banks.
NOTE D - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements for the
quarter and six months ended June 30, 1999 and 1998 have been prepared in
accordance with generally accepted accounting principles for interim information
and with instructions for Form 10-Q. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting or normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the quarter and six-month
period ended June 30, 1999 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1999.
For further information, please refer to the Consolidated Financial Statements
and footnotes thereto included in the Westbank Corporation's Annual Report on
Form 10-K for the year ended December 31, 1998.
NOTE E - COMMITMENTS AND CONTINGENT LIABILITIES
In the normal course of business, there are outstanding commitments and
contingent liabilities, such as standby letters of credit and commitments to
extend credit. As of June 30, 1999, standby letters of credit amounted to
$715,000 and loan commitments were $36,060,000 and unused balances available on
home equity lines of credit were $7,434,000.
Trust Assets - Property with a book value of $114,374,000 at June 30, 1999 held
for customers in a fiduciary or agency capacity is not included in the
accompanying balance sheet since such items are not assets of the Bank.
9
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
QUARTER AND SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 1998
(Unaudited)
NOTE F - STOCKHOLDERS' EQUITY
The FDIC imposes leverage capital ratio requirements for state non-member banks.
In addition, the FDIC has established risk-based capital requirements for
insured institutions for Tier 1 risk-based capital of 4.00% and total risk-based
capital of 8.0%.
The capital ratios of Park West and Cargill as of June 30, 1999 were as follows:
<TABLE>
<CAPTION>
Park West Bank
and Trust Company Cargill Bank
----------------- ------------
<S> <C> <C>
Leverage Capital Ratio 7.11% 6.89%
Tier 1 Risk-Based Capital 10.59% 12.74%
Total Risk-Based Capital 11.53% 13.84%
</TABLE>
As of June 30, 1999, both Park West and Cargill met the criteria which
classified them as well capitalized financial institutions.
NOTE G - BRANCH PURCHASE AGREEMENT
As part of its strategy of regional expansion through acquisition, on April 13,
1999 the Corporation announced the signing of a Branch Purchase Agreement with
Phoenix Home Life Mutual Insurance to acquire the Connecticut banking division
of New London Trust, F.S.B., New London, New Hampshire.
The Connecticut division of New London Trust operates offices in Danielson and
Putnam, Connecticut, with assets totaling $110 million. The acquisition, which
is subject to regulatory approval, is expected to be completed in the fourth
quarter of this year and the Corporation will use the purchase method of
accounting for this acquisition. Upon completion, the New London Trust offices
in Danielson and Putnam, Connecticut, will become offices of Cargill Bank, which
will operate a total of five banking offices.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Changes in Financial Condition
Total consolidated assets amounted to $434,423,000 on June 30, 1999, compared to
$402,623,000 on December 31, 1998. As of June 30, 1999 and June 30, 1998,
earning assets amounted to, respectively, $413,452,000 or 95% of total assets
and $383,071,000 or 95% of total assets. Earning assets increased during the
first six months of 1999 as a result of an increase in loans. Deposits
originated throughout the Corporation's branch system and short-term borrowings
with the Federal Home Loan Bank, provided the funds to support the increase in
earning assets.
Changes in Results of Operations
For the quarter ended June 30, 1999, net income totaled $1,071,000, compared to
$956,000 for the quarter ended June 30, 1998. For the six months ended June 30,
1999, net income was $2,092,000, compared to $1,839,000 for the same period
during 1998. Included in the results for the six months ended June 30, 1999 is a
gain on the sale of securities available for sale totaling $92,000.
An overall increase in interest income and interest expense reflects an increase
in volume and decrease in interest rates on earning assets and an increase in
volume and decrease on rates on interest-bearing deposits. Further analysis is
provided in sections on net interest revenue and supporting schedules.
Allowance for Loan Losses and Non-Performing Assets
The Corporation's provision for loan losses in the current quarter was $2,000,
compared to $12,000 for the same period in 1998. Loans written off against the
allowance for loan losses after recoveries amounted to $21,000 for the six
months ended June 30, 1999.
After giving effect to the actions described above, the allowance for loan
losses at June 30, 1999, totaled $2,721,000 or 0.80% of total loans, as compared
to $2,665,000 or 0.90% at December 31, 1998.
Non-performing past due loans at June 30, 1999, aggregated $840,000 or 0.25% of
total loans, compared to $1,099,000 or 0.37% at December 31, 1998. The
percentage of non-performing and past due loans compared to total assets on
those same dates, respectively, amounted to 0.19% and 0.27%.
Other real estate owned at June 30, 1999, totaled $85,000 and stands at 0.02% of
total assets at the end of the current quarter.
Management has made every effort to recognize all circumstances known at this
time that could affect the collectibility of loans and has reflected these in
the provision for loan losses, the write-down of other real estate owned and
impaired loans to fair value and other loans (watch list) monitored by
management, the charge-off of loans and the balance in the allowance for loan
losses. Management deems that the provision for the quarter and the balance in
the allowance for loan losses are adequate, based on results provided by the
loan grading system and circumstances known at this time.
11
<PAGE>
Year 2000
The Corporation has taken steps to ensure that all of its computer systems (the
"systems") are ready to operate accurately on and beyond January 1, 2000. In the
event that the Corporation's systems are not Year 2000 compliant as of January
1, 2000, the Corporation would face significant operational difficulties. The
Corporation fully understands the need to prevent disruption of computer and
technical systems, and the Corporation is committed to providing its customers
with high quality services without interruption.
While the Corporation has determined that many of the Systems are Year 2000
compliant, the Corporation has prepared an action plan (the "Year 2000 Project")
to ensure the continued integrity of its systems. The Year 2000 Project includes
five phases: (1) the awareness phase; (2) the assessment phase; (3) the
renovation phase; (4) the validation phase; and (5) the implementation phase.
The Corporation is currently in the implementation phase.
The Corporation relies on outside providers for the core banking software and
data processing portions of the Systems. The Year 2000 Project applies to such
vendors with whom the Corporation has had continuous contact and updates as to
their Year 2000 readiness.
The Year 2000 Project also includes a contingency plan to be implemented in the
event the Year 2000 Project reveals that any of the systems are not Year 2000
compliant. In addition, in the event that, despite the Year 2000 Project, the
Corporation experiences disruption due to Year 2000 problems, the Corporation
has developed a business resumption plan that would be implemented in this
event.
As of June 30, 1999, the Corporation has incurred approximately $218,000 in Year
2000-related expenses and has estimated that capital expenditures related to the
Year 2000 issue will total approximately $510,000.
As of June 30, 1999, the Corporation has completed testing of all critical
systems and believes that these systems are ready to operate without disruption
of service on January 1, 2000 and thereafter.
The Corporation has designed the Year 2000 Project based on guidance from the
Federal Financial Institutions Examining Council. In addition, the FDIC monitors
the Corporation's preparation for the Year 2000 on a periodic basis.
The information set forth above is designed to be a "Year 2000 Readiness
Disclosure" as that term is defined in the Year 2000 Information Readiness and
Disclosure Act. This information is forward-looking information and, as such, it
is subject to risks and uncertainties that would cause actual results to differ
materially from the projected results discussed in this report.
12
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
NET INTEREST INCOME
The Corporation's earning assets include a diverse portfolio of earning
instruments, ranging from the Corporation's core business of loan extensions to
interest-bearing securities issued by federal, state and municipal authorities.
These earning assets are financed through a combination of interest-bearing and
interest-free sources.
Net interest income, the most significant component of earnings, is the amount
by which the interest generated by assets exceeds the interest expense on
liabilities.
The Corporation analyzes its performance by utilizing the concepts of interest
rate spread and net yield on earning assets. The interest rate spread represents
the difference between the yield on earning assets and interest paid on
interest-bearing liabilities. The net yield on earning assets is the difference
between the rate of interest on earning assets and the effective rate paid on
all funds -interest-bearing liabilities as well as interest-free sources
(primarily demand deposits and shareholders' equity).
The balances and rates derived for the analysis of net interest income presented
on the following pages reflect the consolidated assets and liabilities of the
Corporation's principal earning subsidiaries, Park West Bank and Trust Company
and Cargill Bank.
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
06-30-99 06-30-98 06-30-99 06-30-98
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest and dividend income $7,653 $7,156 $14,996 $13,878
Interest expense 3,481 3,383 6,806 6,381
-------- -------- -------- --------
Net interest income $4,172 $3,773 $8,190 $7,497
======== ======== ======== ========
</TABLE>
INTEREST RATE SPREAD AND NET YIELD ON EARNING ASSETS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
QUARTER ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
Average Average Average Average
Balance Rate Balance Rate Balance Rate Balance Rate
-------- ---- -------- ---- -------- ---- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earning Assets $403,316 7.59% $361,667 7.91% $394,995 7.59% $348,268 7.97%
-------- ---- -------- ---- -------- ---- -------- ----
Interest-bearing liabilities 338,717 4.11 303,717 4.46 331,640 4.10 290,001 4.40
-------- ---- -------- ---- -------- ---- -------- ----
Interest rate spread 3.48 3.45 3.49 3.57
-------- ---- -------- ---- -------- ---- -------- ----
Interest-free resources
used to fund earning assets 64,599 57,950 63,355 58,267
-------- ---- -------- ---- -------- ---- -------- ----
Total Sources of Funds $403,316 $361,667 $394,995 $348,268
======== ==== ======== ==== ======== ==== ======== ====
Net Yield on Earning Assets 4.14% 4.17% 4.15% 4.31%
======== ==== ======== ==== ======== ==== ======== ====
</TABLE>
13
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
CHANGES IN NET INTEREST INCOME
<TABLE>
<CAPTION>
(Dollar amounts in thousands)
QUARTER ENDED 06-30-99 SIX MONTHS ENDED 06-30-99
OVER OVER
QUARTER ENDED 06-30-98 SIX MONTHS ENDED 06-30-98
----------------------------- -----------------------------
CHANGE DUE TO CHANGE DUE TO
VOLUME RATE TOTAL VOLUME RATE TOTAL
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Interest Income:
Loans $ 1,000 $ (400) $ 600 $ 1,668 $ (772) $ 896
Securities (52) 44 (8) 265 67 332
Federal funds (70) (25) (95) (75) (35) (110)
------- ------- ------- ------- ------- -------
Total Interest Earned 878 (381) 497 1,858 (740) 1,118
------- ------- ------- ------- ------- -------
Interest Expense:
Interest-bearing deposits 287 (265) 22 641 (457) 184
Other borrowed funds 80 (4) 76 218 23 241
------- ------- ------- ------- ------- -------
Total Interest Expense 367 (269) 98 859 (434) 425
------- ------- ------- ------- ------- -------
Net Interest Income $ 511 $ (112) $ 399 $ 999 $ (306) $ 693
======= ======= ======= ======= ======= =======
</TABLE>
Net interest earned increased by $399,000 during the second quarter of 1999
compared to the second quarter of 1998. For the six-month period ended June 30,
1999, net interest income increased by $693,000 versus the same period of 1998.
Average earning assets increased by $46,724,000 during the first six months of
1999. The average earning base was $394,992,000 compared to $348,268,000 in the
same period last year.
OPERATING EXPENSES
The components of total operating expenses for the periods and their percentage
of gross income are as follows:
<TABLE>
<CAPTION>
(Dollars amounts in thousands)
QUARTER ENDED SIX MONTHS ENDED
06-30-99 06-30-98 06-30-99 06-30-98
--------------- ---------------- --------------- ---------------
Amount Percent Amount Percent Amount Percent Amount Percent
------ ------- ------- ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Salaries and benefits $1,470 18.05% $1,417 18.17% $2,967 18.42% $2,838 18.75%
Other non-interest expense 1,163 14.28 1,204 15.44 2,273 14.11 2,357 15.57
Occupancy - net 306 3.75 236 3.03 614 3.82 498 3.29
------ ----- ------ ----- ------ ----- ------ -----
Total Operating Expenses $2,939 36.08% $2,857 36.64% $5,854 36.35% $5,693 37.61%
====== ===== ====== ===== ====== ===== ====== =====
</TABLE>
For the six-month period ended June 30, 1999, operating expenses increased by
approximately $161,000 over the 1998 period. The increase was a result of
increases in salary and benefits totaling $129,000, occupancy expense totaling
$116,000 and a decrease in other non-interest expense of $84,000. The increases
are primarily the result of overall growth of the Corporation.
14
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
CAPITAL RATIOS
06-30-99 06-30-98
-------- --------
Ratio of "Tier 1" leverage capital
to total assets at end of period 7.34% 6.90%
Regulatory risk-based capital requirements take into account the different risk
categories of banking organizations by assigning risk weight to assets and the
credit equivalent amounts of off-balance sheet exposures.
In addition, capital is divided into two tiers. For this Corporation, Tier 1
includes the common stockholders' equity. Tier 2, or supplementary capital,
includes not only the equity but, also, a portion of the allowance for loan
losses. Net unrealized gain/(losses) on securities available for sale are not
permitted to be included for regulatory capital purposes.
The following are the Corporation's risk-based capital ratios at June 30, 1999:
Tier 1 Capital (minimum required 4.00%) 11.44%
Tier 2 Capital (minimum required 8.00%) 12.41%
INTEREST RATE SENSITIVITY
The following table sets forth the distribution of the repricing of the
Corporation's earning assets and interest-bearing liabilities as of June 30,
<TABLE>
<CAPTION>
(Dollar amounts in thousands)
Three Over Three Over One
Months Months to Year to Over
or Less One Year Five Years Five Years Total
------------ ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Earning Assets $ 56,457 $ 45,283 $ 115,516 $ 196,196 $ 413,452
Interest-Bearing
Liabilities 115,678 111,038 123,973 229 350,918
------------ ----------- ----------- ---------- ----------
Interest Rate
Sensitivity Gap $ (59,221) $ (65,755) $ (8,457) $ 195,967 $ 62,534
============ =========== =========== ========== ==========
Cumulative Interest
Rate
Sensitivity Gap $ (59,221) $ (124,976) $ (133,433) $ 62,534
Interest Rate
Sensitivity
Gap Ratio (14.32)% (15.90)% (2.05)% 47.40% 15.12%
Cumulative Interest
Rate Sensitivity
Gap Ratio (14.32)% (30.23)% (32.27)% 15.12%
</TABLE>
15
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
LIQUIDITY
Liquidity management requires close scrutiny of the mix and maturity of deposits
and borrowings and short-term investments. Cash and due from banks, federal
funds sold, investment securities and mortgage-backed securities, as compared to
deposits, are used by Westbank to compute its liquidity on a daily basis as
adjusted for regulatory purposes. In addition, Westbank is subject to Regulation
D of the Federal Reserve Bank (FRB), which requires depository institutions to
maintain reserve balances on deposit with the FRB based on certain average
depositor balances. Westbank is in compliance with Regulation D. Management of
Westbank believes that its current liquidity is sufficient to meet current and
anticipated funding needs.
PROVISION AND ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
(Dollar amounts in thousands)
QUARTER ENDED SIX MONTHS ENDED
06-30-99 06-30-98 06-30-99 06-30-98
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balance at beginning of period $ 2,669 $ 3,077 $ 2,665 $ 3,057
Provision charged to expense 2 12 77 40
--------- --------- --------- ---------
2,671 3,089 2,742 3,097
--------- --------- --------- ---------
Charge-offs:
Loans secured by real estate 300 340
Commercial and industrial loans 40 87 47
Consumer loans 22 13 40 26
--------- --------- --------- ---------
22 353 127 413
--------- --------- --------- ---------
Recoveries:
Loans secured by real estate 70 2 86 33
Commercial and industrial loans 15 15
Consumer loans 2 4 5 10
--------- --------- --------- ---------
72 6 106 58
--------- --------- --------- ---------
Net charge-offs (recoveries) (50) 347 21 355
--------- --------- --------- ---------
Balance at end of period $ 2,721 $ 2,742 $ 2,721 $ 2,742
========= ========= ========= =========
Net charge-offs to:
Average loans (.02)% .12% .01% .13%
Loans at end of period (.01)% .12% .01% .12%
Allowance for loan losses (1.84)% 12.65% .77% 12.98%
Allowance for loan losses as a percentage of:
Average loans .82% .97% .85% .99%
Loans at end of period .80% .95% .80% .95%
</TABLE>
The approach the Corporation uses in determining the adequacy of the allowance
for loan losses is the combination of a target reserve and a general reserve
allocation. Quarterly, based on an internal review of the loan portfolio, the
Corporation identifies required reserve allocations targeted to recognized
problem loans that, in the opinion of management, have potential loss exposure
or questions relative to the depth of the collateral on these same loans. In
addition, the Corporation allocates a general reserve against the remainder of
the loan portfolio.
16
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
NON-ACCRUAL, PAST DUE AND RESTRUCTURED LOANS
<TABLE>
<CAPTION>
(Dollar amounts in thousands)
06-30-99 03-31-99 12-31-98 09-30-98 06-30-98
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Non-Accrual Loans $ 595 $ 952 $ 869 $ 817 $ 828
--------- --------- --------- --------- ---------
Loans contracturally past
due 90 days or more
and still accruing 245 147 231 218 175
--------- --------- --------- --------- ---------
Total non-accrual, past due
and restructured loans $ 840 $ 1,099 $ 1,100 $ 1,035 $ 1,003
--------- --------- --------- --------- ---------
Non-accrual, past due and
restructured loans as a
percentage of total loans .25% .34% .37% .36% .35%
--------- --------- --------- --------- ---------
Allowance for loan losses as a
percentage of non-accrual,
past due and restructured loans 323.93% 264.52% 242.27% 265.80% 273.38%
--------- --------- --------- --------- ---------
Other real estate owned - net $ 85 $ 347 $ 466 $ 304 $ 571
--------- --------- --------- --------- ---------
Total non-performing assets $ 925 $ 1,446 $ 1,566 $ 1,339 $ 1,574
--------- --------- --------- --------- ---------
Non-performing assets as a
percentage of total assets .21% .35% .39% .33% .40%
--------- --------- --------- --------- ---------
</TABLE>
17
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
QUARTER-TO-DATE AVERAGE BALANCES
INTEREST EARNED - INTEREST EXPENSE
<TABLE>
<CAPTION>
(Dollar amounts in thousands)
FOR THE QUARTER ENDED FOR THE QUARTER ENDED
JUNE 30, 1999 JUNE 30, 1998
Balance Interest Rate Balance Interest Rate
--------- -------- ------- --------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Federal funds sold and
temporary investments $ 2,849 $ 35 4.91% $ 8,235 $ 130 6.31%
Securities 67,374 1,114 6.61 70,619 1,122 6.35
Loans 333,093 6,504 7.81 282,813 5,904 8.35
-------- ------ ------ -------- -------- ------
Total earning assets 403,316 $7,653 7.59% 361,667 $7,156 7.91%
Loan loss allowance (2,746) (3,061)
All other assets 22,916 21,972
-------- ------ ------ -------- -------- ------
TOTAL ASSETS $ 423,486 $380,578
======== ======= ====== ======== ======== ======
LIABILITIES AND EQUITY
Interest-bearing deposits $313,686 $3,230 4.12% $286,688 $3,208 4.48%
Borrowed funds 25,031 251 4.01 17,029 175 4.11
-------- ------ ------ -------- -------- ------
Total interest-bearing liabilities 338,717 $3,481 4.11 303,717 $3,383 4.46
-------- ------ ------ -------- -------- ------
Interest rate spread 3.48% 3.45%
Demand deposits 52,032 46,893
Other liabilities 1,617 1,192
Shareholders' equity 31,120 28,776
-------- ------ ------ -------- -------- ------
TOTAL LIABILITIES
AND EQUITY $423,486 $380,578
======== ====== ====== ======== ======== ======
NET INTEREST INCOME $4,172 $3,773
======== ====== ====== ======== ======== ======
Interest Earned/Earning Assets 7.59% 7.91%
Interest Expense/Earning Assets 3.45 3.74
-------- ------ ------ -------- -------- ----
Net Yield on Earning Assets 4.14% 4.17%
======== ====== ====== ======== ======== ====
</TABLE>
18
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
YEAR-TO-DATE AVERAGE BALANCES
INTEREST EARNED - INTEREST EXPENSE
<TABLE>
<CAPTION>
(Dollar amounts in thousands)
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1999 JUNE 30, 1998
Balance Interest Rate Balance Interest Rate
----------- -------- ------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Federal funds sold and
temporary investments $ 3,374 $ 73 4.33% $ 6,276 $ 183 5.83%
Securities 72,321 2,390 6.61 64,373 2,058 6.39
Loans 319,300 12,533 7.85 277,619 11,637 8.38
-------- ------- ------ -------- -------- ------
Total earning assets 394,995 $14,996 7.59% 348,268 $13,878 7.97%
-------- ------- ------ -------- -------- ------
Loan loss allowance (2,714) (3,102)
All other assets 22,766 21,621
-------- ------- ------ -------- -------- ------
TOTAL ASSETS $415,047 $366,787
======== ======= ====== ======== ======== ======
LIABILITIES AND EQUITY
Interest-bearing deposits $306,696 $ 6,310 4.11% $276,348 $ 6,126 4.43%
Borrowed funds 24,944 496 3.98 13,653 255 3.74
-------- ------- ------ -------- -------- ------
Total interest-bearing
liabilities 331,640 $ 6,806 4.10 290,001 $ 6,381 4.40
-------- ------- ------ -------- -------- ------
Interest rate spread 3.49% 3.57%
Demand deposits 50,627 47,000
Other liabilities 1,782 1,410
Shareholders' equity 30,998 28,376
-------- ------- ------ -------- -------- ------
TOTAL LIABILITIES
AND EQUITY $415,047 $366,787
======== ======= ====== ======== ======== ======
NET INTEREST INCOME $ 8,190 $ 7,497
======== ======= ====== ======== ======== ======
Interest Earned/Earning Assets 7.59% 7.97%
Interest Expense/Earning Assets 3.44 3.66
-------- ------- ------ -------- -------- ------
Net Yield on Earning Assets 4.15% 4.31%
======== ======= ====== ======== ======== ======
</TABLE>
19
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings - NONE
ITEM 2. Changes in Rights of Securities Holders - NONE
ITEM 3. Defaults by Company on its Senior Securities - NONE
ITEM 4. Results of Votes on Matters Submitted to a Vote of Security Holders
- NONE
ITEM 5. Other Events
a. Information Concerning Forward-Looking Statements
Westbank has made, and may make in the future, forward-looking
statements concerning future performance, including, but not limited
to, future earnings and events or conditions that may affect such
future performance. These forward-looking statements are based upon
management's expectations and belief concerning possible future
developments and the potential effect of such future developments on
Westbank. There is no assurance that such future developments will be
in accordance with management's expectations and belief or that the
effect of any future developments on Westbank will be those anticipated
by Westbank management.
All assumptions that form the basis of any forward-looking statements
regarding future performance, as well as events or conditions that may
affect such future performance, are based on factors that are beyond
Westbank's ability to control or predict with precision, including
future market conditions and the behavior of other market participants.
Among the factors that could cause actual results to differ materially
from such forward-looking statements are the following:
1. The status of the economy in general, as well as in Westbank's
prime market areas of Western Massachusetts and Northeastern
Connecticut;
2. The real estate market in Western Massachusetts and Northeastern
Connecticut;
3. Competition in Westbank's prime market area from other banks,
especially in light of continued consolidation in the New England
banking industry;
4. Any changes in federal and state bank regulatory requirements;
5. Changes in interest rates; and
6. The cost and other effects of unanticipated legal and
administrative cases and proceedings, settlements and
investigations.
While Westbank periodically reassesses material trends and
uncertainties affecting the Corporation's performance in connection
with its preparation of Management's Discussion and Analysis of Results
of Operations and Financial Condition contained in its quarterly and
annual reports, Westbank does not intend to review or revise any
particular forward-looking statements.
b. Registration on Form S-3
None.
c. Registration of Form S-8
None
20
<PAGE>
ITEM 6. Exhibits and Reports on Form 8
a. Exhibits
EXHIBIT INDEX
3. Articles of Organization, as amended **
(a) Articles of Organization, as amended *
(b) By-Laws, as amended *
10. Material Contracts
(a) Stock Purchase Agreement dated April 12, 1999, among SunLife
Assurance Company of Canada (U.S.), New London Trust, F.S.B., and
PM Holdings, Inc., PM Trust Holding Company, Lake Sunapee Bank,
F.S.B., Mascoma Savings Bank and Cargill Bank.
(b) Purchase and Assumption Agreement dated April 12, 1999, among PM
Holdings, Inc., PM Trust Holding Company, Cargill Bank, Lake
Sunapee Bank, F.S.B., and Mascoma Savings Bank.
(c) Asset and Liability Allocation Agreement dated April 12, 1999,
among Lake Sunapee Bank, F.S.B., Mascoma Savings Bank and Cargill
Bank.
27. Financial Data Schedule To be included
* Incorporated by reference to identically numbered exhibits contained in
Registrant's Annual Report on Form 10-K for the year ended December 31,
1988.
** Incorporated by reference to identically numbered exhibits contained in
Registrant's Annual Report on Form 10-K for the year ended December 31,
1987.
b. Reports on Form 8-K - On February 3, 1999, the Registrant filed a
current report on Form 8-K regarding the acquisition of Cargill
Bancorp, Inc. Subsequent to March 31, 1999, the Registrant filed
the following reports on Form 8-K:
On April 22, 1999, the Registrant filed a report on Form 8-K
regarding the agreement to purchase the Connecticut branches of the
New London Trust, F.S.B.
On April 23, 1999, the Registrant filed a report on Form 8-K that
reported the Corporation's first quarter earnings for 1999.
21
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report to be signed on its behalf by
the undersigned thereunto duly authorized.
WESTBANK CORPORATION
Date: August 11, 1999 /s/ Donald R. Chase
----------------------------------------
Donald R. Chase
President and Chief Executive Officer
Date: August 11, 1999 /s/ John M. Lilly
----------------------------------------
John M. Lilly
Treasurer and Chief Financial Officer
22
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
-------------------------------------------
The Corporation will pay all of the expenses incurred in connection with
the offering described in this registration statement. Such expenses, other than
underwriting commissions and discounts, are estimated to be as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................... $ 4,726
Legal fees and expenses............................................... 75,000
Underwriters' management fee.......................................... 50,000
Accounting fees and expenses.......................................... 65,000
Blue Sky fees and expenses............................................ 5,000
Printing and engraving fees........................................... 100,000
Fees and expenses of registrars, transfer agents, paying agents
and trustees......................................................... 10,000
Listing fees.......................................................... 13,500
NASD Fairness Fees.................................................... 2,200
Miscellaneous......................................................... 4,574
--------
Total................................................................. $330,000
========
</TABLE>
Item 15. Indemnification of Directors and Officers.
-----------------------------------------
Section 145 of the Delaware General Corporation Law, inter alia, empowers a
Delaware corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding (other than an action by or in the right of the corporation)
by reason of the fact that such person is or was a director, officer, employee
or agent of another corporation or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. Similar indemnity is authorized for such person against expenses
(including attorneys' fees) actually and reasonably incurred in connection with
the defense or settlement of any such threatened, pending or completed action or
suit if such person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and provided
further that (unless a court of competent jurisdiction otherwise provides) such
person shall not have been adjudged liable to the corporation. Any such
indemnification may be made only as authorized in each specific case upon a
determination by the stockholders or disinterested directors or by independent
legal counsel in a written opinion that indemnification is proper because the
indemnitee has met the applicable standard of conduct.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him, and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him under Section 145.
The Corporation's certificate of incorporation contains provisions
indemnifying directors and officers to the fullest extent permitted by law.
The Corporation has also entered into employment agreements with certain
executive officers, which agreements require that the Corporation maintain a
directors' and officers' liability policy for the benefit of such officers and
that the Corporation will indemnify such officers to the fullest extent
permitted by law.
The Corporation has obtained directors' and officers' liability insurance
policies which insure its directors and officers and the directors and officers
of its subsidiaries in certain instances.
The Amended and Restated Declaration of Trust (the "Declaration") for
Westbank Capital Trust I (the "Trust") provides that to the full extent
permitted by law, the Corporation shall indemnify any Administrative Trustee or
affiliate of an Administrative Trustee, any officers, directors, stockholders,
members, partners, employees or representatives or agents of any Administrative
Trustee or any employee or agent of the Trust or its affiliates (each, a
"Company Indemnified Person") who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of any such Trust) by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of any such Trust, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
Declaration also provides that to the full extent permitted by law, the
Corporation shall indemnify any Company Indemnified Person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of any such trust to procure a judgment in its
favor by reason of the fact that he is or was a Company Indemnified Person
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of any such trust and except that no such
indemnification shall be made in respect of any claim, issue or matter as to
which such Company Indemnified Person shall have been adjudged to be liable to
the Trust unless and only to the extent that the Court of Chancery of Delaware
or the court in which
II-1
<PAGE>
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such Court of Chancery or such other court shall deem proper. The
Declaration further provides that expenses (including attorneys' fees) incurred
by a Company Indemnified Person in defending a civil, criminal, administrative
or investigative action, suit or proceeding referred to in the immediately
preceding two sentences shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in any such Declaration.
The Declaration for the Trust also provides that the Corporation shall
indemnify the Property Trustee and the Delaware Trustee, any affiliate of the
Property Trustee and the Delaware Trustee, and any officers, directors,
stockholders, members, partners, employees, representatives, nominees,
custodians or agents of the Property Trustee and the Delaware Trustee against
any loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
the trust or trusts under the Trust, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or investigating
any claim or liability in connection with the exercise or performance of any of
its powers or duties thereunder.
Item 16. Exhibits.
---------
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement.
4.1 Certificate of Trust for Westbank Capital Trust I.
4.2 Declaration of Trust for Westbank Capital Trust I.
4.3 Form of Amended and Restated Declaration of Trust.
4.4 Form of Subordinated Debenture.
4.5 Form of Capital Security.
4.6 Form of Capital Securities Guarantee Agreement.
4.7 Form of Indenture.
5.1 Form of Opinion of Thacher Proffitt & Wood as to the legality of the Capital Securities,
Subordinated Debentures and the Guarantee to be issued by the Corporation.
8.1 Form of Opinion of Thacher Proffitt & Wood as to certain tax matters.
10.1 Employment Contract dated October 1, 1986 between William A. Franks, Jr. and Westbank
Corporation (previously filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1986).
10.2 Termination Agreement dated February 17, 1987 between Donald R. Chase and Park West Bank and
Trust Company (previously filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1986).
10.3 Termination Agreement dated February 20, 1987 between Stanley F. Osowski and CCB, Inc.
(previously filed as an exhibit to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1986).
10.4 1985 Incentive Stock Option Plan for Key Employees (previously filed as an exhibit to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1988).
10.5 1995 Director's Stock Option Plan (previously filed as an exhibit to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1995).
10.6 1996 Stock Incentive Option Agreement (previously filed as an exhibit to the Registrant's 1996
Proxy Statement).
10.7 Stock Purchase Agreement dated April 12, 1999 among SunLife Assurance Company of Canada (U.S.),
New London Trust, F.S.B., and PM Holdings, Inc., PM Trust Holding Company, Lake Sunapee Bank,
F.S.B., Mascoma Savings Bank and Cargill Bank (previously filed as an exhibit to the
Registrant's Form 10-Q for the quarter ended March 31, 1999).
10.8 Purchase and Assumption Agreement dated April 12, 1999 among PM Holdings, Inc., PM Trust Holding
Company, Cargill Bank, Lake Sunapee Bank, F.S.B., Mascoma Savings Bank (previously filed as an
exhibit to the Registrant's Form 10-Q for the quarter ended March 31, 1999).
10.9 Asset and Liability Allocation dated April 12, 1999 among Lake Sunapee Bank, F.S.B., Mascoma
Savings Bank and Cargill Bank (previously filed as an exhibit to the Registrant's Form 10-Q
for the quarter ended March 31, 1999).
23.1 Consent of Deloitte & Touche, LLP
23.2 Consent of Thacher Proffitt & Wood (included in Exhibit 5.1).
23.3 Consent of Snyder & Haller
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
25.1 Form T-1 Statement of Eligibility of Wilmington Trust Company to act as trustee under the
Declaration of Trust of Westbank Capital Trust I.*
25.2 Form T-1 Statement of Eligibility of Wilmington Trust Company to act as trustee under the
Indenture.*
25.3 Form T-1 Statement of Eligibility of Wilmington Trust Company to act as trustee under the
Guarantee for the benefit of the holders of Capital Securities of Westbank Capital Trust I.*
27.1 Financial Data Schedule (filed in electronic format only).
27.2 Financial Data Schedule (filed in electronic format only).
27.3 Financial Data Schedule (filed in electronic format only).
</TABLE>
* To be filed by amendment.
Item 17. Undertakings.
(a) Each of the undersigned registrants hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of a registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
each registrant pursuant to the foregoing provisions, or otherwise, each
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by a
registrant of expenses incurred or paid by a director, officer, or controlling
person of a registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the respective registrant will,
unless in the opinion of counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(c) The undersigned registrants hereby undertake to provide to the
Underwriters at the closing specified in the Underwriting Agreement,
certificates in such denominations and registered in such names as required by
the Underwriters to permit the prompt delivery to each purchaser.
(d) The undersigned registrants hereby undertake that:
(1) For the purpose of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of West Springfield, State of Massachusetts, on August
25 , 1999.
WESTBANK CORPORATION
By: /s/ Donald R. Chase
-------------------------------------
Donald R. Chase
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Donald R. Chase and Gary L. Briggs, his true and
lawful attorneys-in-fact, each acting alone, with full powers of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments, including any post-effective
amendments, to this registration statement, and to file the same, with exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said attorneys-in-
fact or their substitutes, each acting alone, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------------ ------------------------------------- ----------------
<S> <C> <C>
/s/ Donald R. Chase President and Chief Executive Officer August 25, 1999
- ------------------------------ (Principal executive officer)
Donald R. Chase
/s/ John M. Lilly Treasurer and Chief Financial Officer August 25 , 1999
- ------------------------------ (Principal accounting officer)
John M. Lilly
/s/ Roland O. Archambault Director August 25, 1999
- ------------------------------
Roland O. Archambault
/s/ Mark A. Beauregard Director August 25 , 1999
- ------------------------------
Mark A. Beauregard
/s/ David R. Chamberland Director August 25 , 1999
- ------------------------------
David R. Chamberland
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------------ ------------------------------------- ----------------
<S> <C> <C>
/s/ Leroy F. Jarrett
- ------------------------------ Director August 25 , 1999
Leroy F. Jarrett
/s/ Ernest N. LaFlamme, Jr. Chairman of the Board and Director August 25 , 1999
- ------------------------------
Ernest N. LaFlamme, Jr.
/s/ G. Wayne McCary Director August 25 , 1999
- ------------------------------
G. Wayne McCary
/s/ Paul J. McKenna Director August 25, 1999
- ------------------------------
Paul J. McKenna
/s/ Robert J. Perlak Corporate Clerk and Director August 25, 1999
- ------------------------------
Robert J. Perlak
/s/ George R. Sullivan Director August 25 , 1999
- ------------------------------
George R. Sullivan
/s/ James E. Tremble Director August 25, 1999
- ------------------------------
James E. Tremble
</TABLE>
II-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of West Springfield, State of Massachusetts, on August
25, 1999.
WESTBANK CAPITAL TRUST I
By: /s/ Donald R. Chase
------------------------------
Donald R. Chase
Administrative Trustee
By: /s/ Gary L. Briggs
------------------------------
Gary L. Briggs
Administrative Trustee
By: /s/ John M. Lilly
-----------------------------
John M. Lilly
Administrative Trustee
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Donald R. Chase and Gary L. Briggs, his
true and lawful attorneys-in-fact, each acting alone, with full powers of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments, including any post-
effective amendments, to this registration statement, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact or their substitutes, each acting alone, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------------------- ---------------------- ---------------
<S> <C> <C>
/s/ Donald R. Chase Administrative Trustee August 25, 1999
- ---------------------
Donald R. Chase
/s/ Gary L. Briggs Administrative Trustee August 25, 1999
- ---------------------
Gary L. Briggs
/s/ John M. Lilly Administrative Trustee August 25, 1999
- ---------------------
John M. Lilly
</TABLE>
II-6
<PAGE>
Exhibit 1.1
1,700,000 CAPITAL SECURITIES
WESTBANK CAPITAL TRUST I
____% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $10 PER CAPITAL SECURITY)
UNDERWRITING AGREEMENT
Boston, Massachusetts August __, 1999
TUCKER ANTHONY CLEARY GULL
One Beacon Street
Boston, Massachusetts 02108
Ladies and Gentlemen:
Westbank Corporation, a Massachusetts corporation (the "Company") and its
financing subsidiary, Westbank Capital Trust I, a Delaware business trust (the
"Trust," and hereinafter together with the Company, the "Offerors"), confirm
their agreement with Tucker Anthony Cleary Gull ("Tucker Cleary") and each of
the other Underwriters, if any, named in Schedule A hereto (collectively, the
"Underwriters," which term shall also include any Underwriters substituted as
hereinafter provided in Section 11), for whom Tucker Cleary is acting as
representative (in such capacity, Tucker Cleary is herein called the
"Representative"), with respect to the sale by the Trust and the purchase by the
Underwriters, acting severally and not jointly, of an aggregate of 1,700,000 of
the Trust's ___% Capital Securities, with a liquidation amount of $10 per
capital security ("Capital Securities"), to be issued under the Trust Agreement
(as defined in Section 2(d) hereof), the terms of which are more fully described
in the prospectus (as hereinafter defined). The words "you" and "your" as used
herein refer to the Representative of the Underwriters.
1. REPRESENTATIONS AND WARRANTIES OF THE OFFERORS.
The Offerors jointly and severally represent and warrant to, and agree
with, each of the Underwriters as of the date hereof, and as of the Closing
Date, as defined in Section 2(a) hereof, as follows:
(a) A registration statement on Form S-2 (File No. 333-______) with respect
to the Capital Securities, the Guarantee (as defined in Section 2(c)
hereof) and $17,000,000 aggregate principal amount of Debentures (as
defined in Section 2(c) hereof), including a prospectus subject to
completion, has been prepared by the Offerors in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
applicable Rules and Regulations (as defined below) of the Securities and
Exchange Commission (the "Commission") and the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act") and the rules and regulations
thereunder, and has been filed with the Commission; such
<PAGE>
-2-
registration statement, and such prospectus subject to completion, have
been declared effective by the Commission; and no further amendments to
such registration statement, and such amended prospectuses subject to
completion, have been filed by the Offerors with the Commission. Copies of
the registration statement and as amended, each related prospectus subject
to completion (collectively, the "Preliminary Prospectuses" and
individually, a "Preliminary Prospectus"), each document incorporated by
reference therein and each exhibit thereto have been delivered to you. For
purposes hereof, "Rules and Regulations" means the rules and regulations
adopted by the Commission under either the Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as applicable. The term
"Registration Statement" as hereinafter used in this Agreement shall mean
such registration statement, including financial statements, schedules and
exhibits in the form in which it became effective (including, if the
Company omitted information from the registration statement pursuant to
Rule 430A(a) of the Rules and Regulations under the Act, the information
deemed to be a part of the registration statement at the time it became
effective pursuant to Rule 430A(b) of the Rules and Regulations under the
Act) and, in the event of any amendment thereto after the effective date of
such registration statement, shall also mean (from and after the
effectiveness of such amendment) such registration statement as so amended,
together with any registration statement filed by the Company pursuant to
Rule 462(b) under the Act. The term "Prospectus" as used in this Agreement
shall mean the prospectus relating to the Capital Securities as included in
such registration statement at the time it became effective, except that if
any revised prospectus shall be provided to the Underwriters by the
Offerors for use in connection with the offering of the Capital Securities
that differs from the Prospectus on file with the Commission at the time
the registration statement became effective (whether or not such revised
prospectus is required to be filed with the Commission pursuant to Rule
424(b)(3) of the Rules and Regulations under the Act), the term
"Prospectus" shall refer to such revised prospectus from and after the time
it is first provided to the Underwriters for such use, together with the
term sheet or abbreviated term sheet filed with the Commission pursuant to
Rule 424(b)(7) under the Act. Any reference herein to the Registration
Statement, the Prospectus, any amendment or supplement thereto or any
Preliminary Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein, and any reference herein to
the terms "amend," "amendment" or "supplement" with respect to the
Registration Statement or Prospectus shall be deemed to refer to and
include the filing of any document with the Commission deemed to be
incorporated by reference therein.
The Offerors understand that, pursuant to Section 2 hereof, the
Underwriters propose to make a public offering of the Capital Securities as
set forth in and pursuant to the Prospectus. The Offerors hereby confirm
that the Underwriters and such dealers who shall purchase any of the
Capital Securities from the Underwriters for distribution in connection
with such public offering have been authorized to distribute or cause to be
distributed each Preliminary Prospectus and are authorized to distribute
the Prospectus (as from time to time amended or supplemented if and to the
extent that the Offerors furnish any such amendments or supplements thereto
to the Underwriters).
<PAGE>
-3-
(b) Neither the Commission nor any state regulatory authority has issued
any order preventing or suspending the use of any Preliminary Prospectus,
at the time of filing thereof, or instituted proceedings for that purpose,
and each such Preliminary Prospectus, at the time of filing thereof, has
conformed in all material respects to the requirements of the Act and the
Rules and Regulations and, at the time of filing thereof, has not included
any untrue statement of a material fact or omitted to state any material
fact necessary to make the statements therein not misleading and at the
time the Registration Statement became or becomes effective and at all
times subsequent thereto up to and including the Closing Date (as
hereinafter defined), and during such longer period as the Prospectus may
be required to be delivered in connection with sales by an Underwriter or a
dealer, (i) the Registration Statement and Prospectus, and any amendments
or supplements thereto, contained and will contain all material information
required to be included therein by the Act and the Rules and Regulations
and conformed and will conform in all material respects to the requirements
of the Act and the Rules and Regulations and the Trust Indenture Act (and
the rules and regulations thereunder), and (ii) neither the Registration
Statement nor the Prospectus, nor any amendment or supplement thereto
included or will include any untrue statement of a material fact or omitted
or will omit to state any material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances
under which they were made not misleading. The documents incorporated by
reference in the Registration Statement, the Prospectus, any amendment or
supplement thereto or any Preliminary Prospectus, when they became or
become effective under the Act or were or are filed with the Commission
under the Exchange Act, conformed or will conform in all material respects
with the requirements of the Act or the Exchange Act, as applicable, and
the Rules and Regulations, and as of the date any such document was or is
filed with the Commission under the Exchange Act such document did not, and
on the Closing Date and will not, omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading.
(c) (i) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of The Commonwealth of
Massachusetts and is duly registered as a bank holding company under the
Bank Holding Company Act, as amended (the "BHC Act"). Each of the
subsidiaries of the Company (collectively, the "Subsidiaries" and
individually, a "Subsidiary") has been duly organized and is validly
existing in good standing under the laws of its jurisdiction of
organization. The Company and each of the Subsidiaries are duly qualified
and licensed as foreign corporations and in good standing in each
jurisdiction in which their respective operations requires such
qualification or licensing, except where the failure to be so qualified
would not have a material adverse effect on the condition, financial or
otherwise, or on the business affairs, position, prospects, value,
operation, properties, business or results of operation of the Company and
the Subsidiaries taken as a whole whether or not arising in the ordinary
course of business (a "Material Adverse Effect"). The Company and each of
the Subsidiaries have all requisite power and authority, and have obtained
any and all necessary authorizations, approvals, orders, licenses,
certificates, franchises and permits of and from all governmental or
regulatory officials and bodies to own or lease their respective properties
and conduct their respective businesses as described in the Prospectus
(collectively, "Government Approvals"), except where the failure
<PAGE>
-4-
to so obtain any such Government Approval would not have a Material Adverse
Effect; the Company and each of the Subsidiaries are and have been doing
business in compliance with all such Government Approvals, except where the
failure to so comply would not have a Material Adverse Effect; and neither
the Company nor any of the Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Government Approvals. All of the outstanding shares of capital stock of
each of the Subsidiaries have been duly authorized and validly issued, are
fully paid and non-assessable and are owned by the Company free and clear
of all liens, encumbrances and security interests, and no options, warrants
or other rights to purchase, agreements or other obligations to issue or
other rights to convert any obligations into, or exchange any securities
for shares of capital stock of or ownership interests in any of the
Subsidiaries are outstanding. The Company's only depository institution
subsidiaries are Park West Bank and Trust Company and Cargill Bank (the
"Banks"). The deposit accounts of the Park West Bank and Trust Company and
Cargill Bank are insured by the Bank Insurance Fund and the Savings
Association Insurance Fund, respectively, administered by the Federal
Deposit Insurance Corporation (the "FDIC"), up to the maximum amount
provided by law and no proceedings for the modification, termination or
revocation of any such insurance are pending or threatened.
(ii) The Trust has been duly created and is validly existing as a
statutory business trust in good standing under the Delaware Business Trust
Act with the power and authority (trust and other) to issue and sell its
common securities (the "Common Securities") to the Company pursuant to the
Trust Agreement, to issue and sell the Capital Securities, to enter into
and perform its obligations under this Agreement and to consummate the
transactions herein contemplated; the Trust has conducted and will conduct
no business other than the transactions contemplated by this Agreement and
described in the Prospectus; the Trust is not a party to or bound by any
agreement or instrument other than this Agreement, the Trust Agreement and
the agreements and instruments contemplated by the Trust Agreement and
described in the Prospectus; the Trust has no liabilities or obligations
other than those arising out of the transactions contemplated by this
Agreement and the Trust Agreement and described in the Prospectus; the
Trust is not a party to or subject to any action, suit or proceeding of any
nature; the Trust is not, and at the Closing Date will not be, to the
knowledge of the Offerors, classified as an association taxable as a
corporation for United States federal income tax purposes; and the Trust
is, and as of the Closing Date will be, treated as a consolidated
subsidiary of the Company pursuant to generally accepted accounting
principles.
(d) (i) The capital stock of the Company and the equity securities of the
Trust, the Debentures and the Guarantee conform to the description thereof
contained in the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), and neither Offeror is a party to or
bound by any instrument, agreement or other arrangement (except as
disclosed in the Prospectus) providing for it to issue any capital stock,
rights, warrants, options or other securities, except for this Agreement.
All issued and outstanding shares of capital stock and equity securities of
each Offeror have been duly authorized and validly issued and are fully
paid and non-assessable and were not issued in violation of any preemptive
rights or other rights to subscribe for or purchase securities.
<PAGE>
-5-
(ii) (A) The Trust has all requisite power and authority to issue,
sell and deliver the Capital Securities in accordance with and upon
the terms and conditions set forth in this Agreement, the Trust
Agreement, the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus). All corporate and trust action required to be taken by
the Offerors for the authorization, issuance, sale and delivery of the
Capital Securities in accordance with such terms and conditions has
been validly and sufficiently taken. The Capital Securities, when
delivered in accordance with this Agreement, will be duly and validly
issued and outstanding, will be fully paid and nonassessable undivided
beneficial interests in the assets of the Trust, will be entitled to
the benefits of the Trust Agreement, will not be issued in violation
of or subject to any preemptive or similar rights, and will conform in
all material respects to the description thereof in the Registration
Statement, the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus) and the Trust Agreement. None
of the Capital Securities, immediately prior to delivery, will be
subject to any security interest, lien, mortgage, pledge, encumbrance,
restriction upon voting or transfer, preemptive rights, claim, equity
or other title defect.
(B) The Debentures have been duly and validly authorized, and,
when duly and validly executed, authenticated and issued as provided
in the Indenture and delivered to the Trust pursuant to the Trust
Agreement, will constitute valid and legally binding obligations of
the Company entitled to the benefits of the Indenture and will conform
in all material respects to the description thereof contained in the
Prospectus.
(C) The Guarantee has been duly and validly authorized, and,
when duly and validly executed and delivered to the guarantee trustee
for the benefit of the Trust, will constitute a valid and legally
binding obligation of the Company and will conform in all material
respects to the description thereof contained in the Prospectus.
(e) The audited and unaudited consolidated financial statements of the
Company, together with the notes and schedules thereto, included in the
Registration Statement, each Preliminary Prospectus and the Prospectus
fairly present the financial position and the results of operations,
changes in cash flows and changes in stockholders' equity of the Company at
the respective dates and for the respective periods to which they apply;
and each of such audited consolidated financial statements has been
prepared in conformity with generally accepted accounting principles and
the Rules and Regulations, consistently applied throughout the periods
involved, all adjustments necessary for a fair presentation of results for
such periods have been made and such unaudited consolidated financial
statements have been prepared on a basis substantially consistent with that
of such audited consolidated financial statements. Except as described in
the Prospectus, there has been no change or development involving a
Material Adverse Effect since the date of the consolidated financial
statements included in any of the Preliminary Prospectuses, the Prospectus
and the
<PAGE>
-6-
Registration Statement, and the outstanding debt, the property, both
tangible and intangible, and the business of the Company and each of the
Subsidiaries conform in all material respects to the descriptions thereof
contained in the Registration Statement and the Prospectus. The summary and
selected consolidated financial and statistical data included in the
Registration Statement and the Prospectus present fairly the information
shown therein or incorporated by reference and have been compiled on a
basis consistent with the unaudited and audited consolidated financial
statements included therein. The Company's internal accounting controls are
sufficient to cause the Company to comply with the Foreign Corrupt
Practices Act of 1977, as amended. Neither the Company nor any of the
Subsidiaries has any material contingent obligation which is not disclosed
in the Registration Statement.
(f) Deloitte & Touche LLP ("Deloitte"), whose reports are filed with the
Commission as a part of the Registration Statement, are independent
certified public accountants as required by the Act and the Rules and
Regulations.
(g) (i) the Company and each of the Subsidiaries have paid all federal,
state, local and foreign taxes for which they are respectively liable and
which are due and payable, including, but not limited to, withholding taxes
and amounts payable under Chapters 21 through 24 of the Internal Revenue
Code of 1986, as amended, and (ii) none of the Company or any Subsidiary
has any tax deficiency or claims outstanding, assessed or, to its
knowledge, proposed against it.
(h) No transfer tax, stamp duty or other similar tax is payable by or on
behalf of the Underwriters in connection with (i) the issuance by the Trust
of the Capital Securities, (ii) the purchase by the Underwriters of the
Capital Securities, or (iii) the consummation by the Offerors of any of
their respective obligations under this Agreement.
(i) The Offerors and each of the Subsidiaries maintain insurance of the
types and in the amounts which are adequate for their businesses, all of
which insurance is in full force and effect.
(j) Except as disclosed in the Prospectus, there is no action, suit,
proceeding, inquiry, investigation, litigation or governmental proceeding,
domestic or foreign, pending or, to the Offerors' knowledge, threatened
against, or involving the properties or business of the Offerors or any of
the Subsidiaries, that (i) questions the validity of the capital stock or
equity securities of the Offerors or this Agreement or of any action taken
or to be taken by the Offerors pursuant to or in connection with this
Agreement, (ii) is required to be disclosed in the Registration Statement
that is not so disclosed (and such proceedings, if any, as are summarized
in the Registration Statement are accurately summarized in all material
respects), or (iii) would have a Material Adverse Effect.
(k) Each of the Offerors has full legal right, power and authority to enter
into this Agreement and to consummate the transactions provided for herein
and therein; and this Agreement has been duly authorized, executed and
delivered by each of the Offerors. This Agreement, assuming it has been
duly authorized, executed and delivered by the
<PAGE>
-7-
Underwriters, constitutes a legal, valid and binding agreement of the each
of the Offerors enforceable against each of the Offerors in accordance with
its terms. Each of the Indenture, the Trust Agreement and the Guarantee has
been duly authorized by the Company, and, when executed and delivered by
the Company on the Closing Date, each of said agreements will constitute a
valid and legally binding obligation of the Company and will be enforceable
against the Company in accordance with its terms. Each of the Indenture,
the Trust Agreement and the Guarantee has been duly qualified under the
Trust Indenture Act and will conform to the description thereof contained
in the Prospectus. The execution and delivery of this Agreement by the
Offerors, their performance hereunder, their consummation of the
transactions contemplated herein and the conduct of their business and that
of each of the Subsidiaries as described in the Registration Statement, the
Prospectus and any amendments or supplements thereto does not and will not
conflict with in any material respect or result in any breach or violation
of any of the material terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other restriction on
equity of any kind whatsoever upon, any property or assets (tangible or
intangible) of either Offeror or any of the Subsidiaries, pursuant to the
terms of (i) the corporate charter, operating agreement or by-laws of the
Company or any of the Subsidiaries or the Trust Agreement, the Guarantee or
the Indenture, (ii) any license, contract, indenture, mortgage, deed of
trust, voting trust agreement, stockholders agreement, note, loan or credit
agreement or any other agreement or instrument to which either Offeror or
any of the Subsidiaries is a party or by which any of them is or may be
bound or to which any of their respective properties or assets (tangible or
intangible) is or may be subject or (iii) any statute, judgment, decree,
order, rule or regulation applicable to either Offeror or any of the
Subsidiaries of any arbitrator, court, regulatory body or administrative
agency or other governmental agency or body, domestic or foreign, having
jurisdiction over either Offeror or any of the Subsidiaries or any of their
respective activities or properties.
(l) No consent, approval, authorization or order of, and no filing with,
any court, regulatory body, government agency or other body, domestic or
foreign, is required for the issuance of the Capital Securities pursuant to
the Prospectus and the Registration Statement, or the performance of this
Agreement, the Trust Agreement, the Guarantee or the Indenture and the
transactions contemplated thereby, except such as have been or may be
obtained under the Act, the Exchange Act or the Rules and Regulations or
may be required under state securities or Blue Sky laws in connection with
the Underwriters' purchase and distribution of the Capital Securities.
(m) All executed agreements which are filed as exhibits to the Registration
Statement to which either Offeror or any of the Subsidiaries is a party or
by which any of them may be bound or to which any of their respective
assets, properties or businesses may be subject have been duly and validly
authorized, executed and delivered by such Offeror or such Subsidiaries,
and, assuming due authorization, execution and delivery by the other
parties thereto, constitute the legal, valid and binding agreements of such
Offeror and such Subsidiaries enforceable against such Offeror and such
Subsidiaries in accordance with their respective terms (except as such
enforceability may be limited by applicable bankruptcy,
<PAGE>
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insolvency, reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditors' rights and the
application of equitable principles in any action, legal or equitable, and
except as rights to indemnity or contribution may be limited by applicable
law). The descriptions in the Registration Statement of contracts and other
documents are accurate in all material respects and fairly present the
information required to be shown with respect thereto by Form S-2, and
there are no contracts or other documents that are required by the Act to
be described in the Registration Statement or filed as exhibits to the
Registration Statements that are not described or filed as required, and
the exhibits that have been filed are complete and correct copies of the
documents of which they purport to be copies.
(n) Subsequent to the respective dates as of which information is set forth
in the Registration Statement and Prospectus, and except as may otherwise
be indicated or contemplated herein or therein, neither Offeror nor any of
the Subsidiaries has (i) issued any securities or, other than in the
ordinary course of business, incurred any liability or obligation, direct
or contingent, for borrowed money, (ii) entered into any transaction which
could reasonably be expected to have a Material Adverse Effect or (iii)
other than in the ordinary course of business, declared or paid any
dividend or made any other distribution on or in respect of its capital
stock or equity securities.
(o) Except as disclosed in the Registration Statement, (i) neither of the
Offerors is in violation of its corporate charter, bylaws or other
governing documents (including without limitation the Trust Agreement), and
(ii) no material default exists in the due performance and observance of
any term, covenant or condition of any license, contract, indenture,
mortgage, installment sale agreement, lease, deed of trust, voting trust
agreement, stockholders agreement, note, loan or credit agreement or any
other agreement or instrument evidencing an obligation for borrowed money,
or any other agreement or instrument to which either Offeror or any of the
Subsidiaries is a party or by which either Offeror or any of the
Subsidiaries may be bound or to which any of the property or assets
(tangible or intangible) of either Offeror or any of the Subsidiaries is
subject or affected.
(p) The Offerors and each of the Subsidiaries have a generally satisfactory
employer-employee relationship with their respective employees and are in
compliance with all federal, state, local, and, where applicable, foreign,
laws and regulations respecting employment and employment practices, terms
and conditions of employment and wages and hours, except where the failure
to so comply would not have a Material Adverse Effect. To the Offerors'
knowledge, there is no unfair labor practice charge or complaint against
either Offeror or any of the Subsidiaries pending before the National Labor
Relations Board or any strike, picketing, boycott, dispute, slowdown or
stoppage pending or threatened against or involving either Offeror or any
of the Subsidiaries, and no such strike, picketing, boycott, dispute,
slowdown or stoppage has ever occurred. No representation question exists
respecting the employees of either Offeror or any of the Subsidiaries, and
no collective bargaining agreement or modification thereof is currently
being negotiated by either Offeror or any of the Subsidiaries. There are
no expired or existing collective bargaining agreements of either Offeror
or any of the Subsidiaries.
<PAGE>
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(q) Neither Offeror nor any of the Subsidiaries has incurred any liability
arising under or as a result of any breach of the provisions of the Act.
(r) Except as disclosed in the Prospectus, neither Offeror nor any of the
Subsidiaries maintains, sponsors or contributes to any program or
arrangement that is an "employee pension benefit plan," an "employee
welfare benefit plan," or a "multiemployer plan" (collectively, the "ERISA
Plans") as such terms are defined in Sections 3(2), 3(1) and 3(37),
respectively, of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). With respect to any ERISA Plan that an Offeror or any
of the Subsidiaries, now or at any time previously, maintains or
contributes to, all applicable federal laws and regulations have been
complied with, except for such instances of noncompliance which, either
singly or in the aggregate, would not have a Material Adverse Effect.
Neither Offeror nor any of the Subsidiaries has ever completely or
partially withdrawn from a "multiemployer plan."
(s) The Offerors and the Subsidiaries have complied in all material
respects with all federal, state and local statutes, regulations,
ordinances and rules applicable to the ownership and operation of their
properties or the conduct of their businesses as described in and
contemplated by the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) and
as currently being conducted.
(t) Each Offeror maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(u) The Offerors have not distributed and will not distribute prior to the
Closing Date any prospectus in connection with the Offering, other than a
Preliminary Prospectus, the Prospectus, the Registration Statement and the
other materials permitted by the 1933 Act and the 1933 Act Regulations and
reviewed by the Underwriters.
(v) No holders of any equity securities of the Offerors or of any options,
warrants or other convertible or exchangeable securities of the Offerors
exercisable for or convertible or exchangeable for equity securities of the
Offerors have the right (except as may have been waived) to include any
securities issued by the Company in the Registration Statement or any
registration statement to be filed by the Company within 180 days of the
date hereof or to require the Company or the Trust to file a registration
statement under the Act during such 180 day period.
<PAGE>
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(w) Neither Offeror has taken or will take, directly or indirectly (except
for any action that may be taken by the Underwriters), any action designed
to or which has constituted or which might reasonably be expected to cause
or result in, under the Exchange Act or otherwise, stabilization or
manipulation of the price of any security of either Offeror to facilitate
the sale or resale of the Capital Securities or otherwise.
(x) Except to the extent disclosed in the Prospectus, (i) the Offerors and
each of the Subsidiaries own or possess, or have a license or other right
to use, the patents, patent rights, licenses, inventions, copyrights, know-
how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
technology, trademarks, service marks and trade names, together with all
applications for any of the foregoing, currently used or held for use by
them in connection with their respective businesses, except where the
failure to own or possess, alone or in aggregate, would not have a Material
Adverse Effect on the Offerors, (ii) neither the Offerors nor any of the
Subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing which has
not been finally resolved and (iii) except as set forth in the Registration
Statement, neither the Offerors nor any of the Subsidiaries is obligated or
under any liability whatsoever to make any material payments by way of
royalties, fees or otherwise to any owner or licensee of, or other claimant
to, any patent, patent right, license, invention, trademark, service mark,
trade name, copyright, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), technology or other intangible asset, with respect
to the use thereof or in connection with the conduct of its business or
otherwise.
(y) The Offerors and each of the Subsidiaries have good and marketable
title to, or valid and enforceable leasehold estates in, all items of real
and personal property stated in the Prospectus (including the financial
statements included or incorporated by reference therein) to be owned or
leased by them, free and clear of all liens, charges, claims, encumbrances,
pledges, security interests, defects or other restrictions on equity of any
kind whatsoever, other than (i) those referred to in the Prospectus
(including such financial statements), (ii) liens for taxes not yet due and
payable and (iii) mechanics, materialmen, warehouse and other statutory
liens arising in the ordinary course of business which, either individually
or in the aggregate, do not have a Material Adverse Effect.
(z) Except as described in the Prospectus under "Underwriting" and on the
cover page thereof, there are no claims, payments, issuances, arrangements
or understandings for services in the nature of a finder's or origination
fee with respect to the sale of the Capital Securities hereunder or any
other arrangements, agreements, understandings, payments or issuance with
respect to the Offerors or any of the Subsidiaries or any of their
respective officers, directors, employees or affiliates that may affect the
Underwriters' compensation, as determined by the National Association of
Securities Dealers, Inc. ("NASD").
(aa) The Capital Securities have been approved for listing on the Nasdaq
Stock Market, Inc.'s National Market System (the "NASDAQ-NM") under the
symbol "WBKCP" subject to official notice of issuance.
<PAGE>
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(bb) The Company is not an "investment company" or an "affiliated person"
or "promoter" of, or "principal underwriters" for, an "investment company",
as such terms are defined in the Investment Company Act of 1940, as amended
(the "1940 Act"), or subject to regulation under the 1940 Act.
(cc) Any certificate signed by any officer of either Offeror and delivered
to the Underwriters or to the Underwriters' Counsel (as hereinafter
defined) shall be deemed a representation and warranty by such Offeror to
the Underwriters as to the matters covered thereby.
(dd) There are no contractual encumbrances or restrictions or material
legal restrictions on the ability of any of the Subsidiaries (i) to pay
dividends or make any other distributions on its capital stock or to pay
any indebtedness owed to the Offerors, (ii) to make any loans or advances
to, or investments in, the Offerors or (iii) to transfer any of its
property or assets to the Offerors.
(ee) (i) Each of the Company and the Banks have adopted a plan (in each
case a "Year 2000 Plan") requiring testing, information-gathering and other
procedures to conform to the deadlines and material requirements and
guidelines applicable to it as a provider of services using Information
Technology and imposed by any federal or state governmental agency or
authority or the Federal Financial Institution Examination Counsel (the
"FFIEC") to cause such Information Technology to be Year 2000 Compliant
(such deadlines, material requirements and guidelines, as they may be in
effect from time to time, being referred to in this Agreement as the "Year
2000 Regulatory Requirements").
(ii) Each of the Company and the Banks have taken appropriate actions and
have committed the resources reasonably necessary or otherwise appropriate
to comply with its Year 2000 Plan in a timely manner. Such actions
(including the testing and information-gathering procedures) have not
produced any preliminary findings or other results which would indicate
that the Information Technology will not be Year 2000 Compliant or that it
will not be in compliance with the Year 2000 Regulatory Requirements; and
it has not received any written notice or preliminary oral notice from any
federal or state governmental agency or authority or the FFIEC to one of
its officers or senior executive employees with respect to any adverse
action against it relating to Year 2000 Compliance.
(iii) For purposes of this Agreement, (A) "Information Technology" means
all computer software, computer hardware (whether general or specific
purpose) or other similar or related items of automated, computerized or
software systems that are used or relied on by the Company or the Banks, or
any of their respective Subsidiaries, in the conduct of their respective
businesses; and (B) "Year 2000 Compliant" means that the Information
Technology is designed to be used prior to, during and after the calendar
year 2000 A.D., and the Information Technology used during each such time
period will accurately receive, provide and process date/time data
(including calculating, comparing and sequencing) from, into and between
the 20th and 21st centuries, including the years 1999 and 2000 and leap-
<PAGE>
-12-
year calculations, and will not malfunction, cease to function, or provide
invalid or incorrect results as a result of date/time data, to the extent
that any other information technology, used in combination with the
Information Technology, properly exchanges date/time data with it.
2. PURCHASE, SALE AND DELIVERY OF THE CAPITAL SECURITIES; DESCRIPTION OF
CAPITAL SECURITIES.
(a) On the basis of the representations, warranties and agreements herein
contained, and subject to the terms and conditions herein set forth, the
Offerors hereby agree that the Trust shall issue and sell the Capital
Securities to the several Underwriters, and each Underwriter, severally and
not jointly, agrees to purchase that number of Capital Securities set forth
in Schedule A opposite its name plus any additional number of Capital
Securities that such Underwriter may become obligated purchase pursuant to
the provisions of Section 11 hereof. The time and date of payment for and
delivery of the Capital Securities is herein called the "Closing Date."
Because the proceeds from the sale of the Capital Securities will be used
to purchase from the Company its Subordinated Debentures (as described in
the Prospectus), the Company shall pay to the Underwriters a commission of
$0.35 per Capital Security purchased (the "Capital Securities Commission").
The price of the Capital Securities shall be $10 per Capital Security.
(b) Payment of the purchase price, net of the Capital Securities
Commission, for the Capital Securities shall be made on the Closing Date by
wire transfer of immediately available funds, payable to the order of the
Trust, and delivery of the Capital Securities shall be made on such date at
the offices of Tucker Cleary at One Beacon Street, Boston, Massachusetts,
or at such other place as shall be agreed upon by the Representative and
the Offerors or, if mutually agreed to by the Representative and the
Offerors, such payment shall be made by wire transfer, upon delivery of a
global certificate(s) (in form and substance satisfactory to the
Representative) representing such securities to the Representative.
Delivery and payment for the Capital Securities shall be made at 10:00 a.m.
(Eastern Time) on the third business day following the public offering, or
at such other time and date as shall be agreed upon by the Representative
and the Trust. The global certificate(s) for the Capital Securities shall
be in definitive, fully registered form, shall bear no restrictive legends
and shall be in such denominations and registered in such names as the
Representative may request in writing at least two (2) business days prior
to the Closing Date. The global certificate(s) for the Capital Securities
shall be made available to the Representative at such office or such other
place as the Representative may designate for inspection and packaging not
later than 9:30 a.m. (Eastern Time) on the last business day prior to the
Closing Date.
(c) The Offerors propose that the Trust issue the Capital Securities
pursuant to an Amended and Restated Trust Agreement among The Wilmington
Trust Company, as Property Trustee, The Wilmington Trust Company, as
Delaware Trustee, the Administrative Trustees named therein (collectively,
the "Trustees"), and the Company, in substantially the form heretofore
delivered to the Underwriters, said Agreement being hereinafter referred to
as the "Trust Agreement." In connection with the issuance of the Capital
Securities, the
<PAGE>
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Company proposes (i) to issue its Subordinated Debentures (the
"Debentures") pursuant to an Indenture between the Company and The
Wilmington Trust Company, as debenture trustee (the "Indenture") in
substantially the form heretofore delivered to the Underwriters and (ii) to
guarantee certain payments on the Capital Securities pursuant to a Capital
Securities Guarantee Agreement between the Company and The Wilmington Trust
Company, as guarantee trustee (the "Guarantee") in substantially the form
heretofore delivered to the Underwriters, to the extent described therein.
3. PUBLIC OFFERING OF THE CAPITAL SECURITIES.
As soon after the Registration Statement becomes effective as the
Underwriters deem advisable, the Underwriters shall make a public offering of
the Capital Securities at the price and upon the other terms set forth in the
Prospectus. The Underwriters may from time to time thereafter reduce the public
offering price and change the other selling terms, provided the proceeds to the
Trust shall not be reduced as a result of such reduction or change. Because the
NASD is expected to view the Capital Securities as interests in a direct
participation program, the offering of the Capital Securities is being made in
compliance with the applicable provisions of Rule 2810 of the NASD's Conduct
Rules.
The Underwriters may reserve and sell such of the Capital Securities
purchased by the Underwriters as the Underwriters may elect to dealers chosen by
them (the "Selected Dealers") at the public offering price set forth in the
Prospectus less the applicable Selected Dealers' concessions set forth therein,
for re-offering by Selected Dealers to the public at the public offering price.
The Underwriters may allow, and Selected Dealers may re-allow, a concession set
forth in the Prospectus to certain other brokers and dealers.
4. COVENANTS OF THE COMPANY.
The Offerors jointly and severally agree with each of the Underwriters as
follows:
(a) The Offerors will use their best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date
that this Agreement is executed and delivered by the parties hereto, to
become effective as promptly as possible; they will notify the
Representative, promptly after they shall receive notice thereof, of the
time when the Registration Statement or any subsequent amendment to the
Registration Statement has become effective or any supplement to the
Prospectus has been filed; if the Offerors omitted information from the
Registration Statement at the time it was originally declared effective in
reliance upon Rule 430A(a), the Offerors will provide evidence satisfactory
to the Representative that the Prospectus contains such information and has
been filed, within the time period prescribed, with the Commission pursuant
to subparagraph (1) or (4) of Rule 424(b) of the Rules and Regulations
under the Act or as part of a post-effective amendment to such Registration
Statement as originally declared effective which is declared effective by
the Commission; if for any reason the filing of the final form of
Prospectus is required under Rule 424(b)(3) of the Rules and Regulations
under the Act, they will provide evidence satisfactory to the
Representative that the Prospectus contains such information and has been
<PAGE>
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filed with the Commission within the time period prescribed; they will
notify the Representative promptly of any request by the Commission for the
amending or supplementing of the Registration Statement or the Prospectus
or for additional information; promptly upon the Representative's request,
they will prepare and file with the Commission any amendments or
supplements to the Registration Statement or Prospectus which, in the
opinion of counsel for the Underwriters ("Underwriters' Counsel"), may be
necessary or advisable so as to comply with all applicable laws and
regulations (including, without limitation, Section 11 under the Act and
Rule 10b-5 under the Exchange Act) in connection with the distribution of
the Capital Securities by the Underwriters; they will promptly prepare and
file with the Commission, and promptly notify the Representative of the
filing of, any amendments or supplements to the Registration Statement or
Prospectus which may be necessary to correct any statements or omissions,
if, at any time when a prospectus relating to the Capital Securities is
required to be delivered under the Act, any event shall have occurred as a
result of which the Prospectus or any other prospectus relating to the
Capital Securities as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; in case any Underwriter is required so as to comply
with all applicable laws and regulations (including, without limitation,
Section 11 under the Act and Rule 10b-5 under the Exchange Act) to deliver
a prospectus nine months or more after the effective date of the
Registration Statement in connection with the sale of the Capital
Securities, they will prepare promptly upon request, but at the expense of
the Underwriters, such amendment or amendments to the Registration
Statement and such prospectus or prospectuses as may be necessary to permit
compliance with the requirements of Section 10(a)(3) of the Act; they will
file no amendment or supplement to the Registration Statement or Prospectus
(other than any document required to be filed under the Exchange Act that
upon filing is deemed incorporated therein by reference) which shall not
previously have been submitted to the Representative a reasonable time
prior to the proposed filing thereof or to which you shall reasonably
object in writing or which is not in compliance with the Act and the Rules
and Regulations under the Act and until the distribution of the Capital
Securities pursuant to the Prospectus has been completed, the Offerors will
furnish to the Representative at or prior to the filing thereof a copy of
any document that upon filing is deemed to be incorporated by reference in
the Registration Statement or Prospectus.
(b) The Offerors will advise the Representative, promptly after they shall
receive notice or obtain knowledge thereof, of the issuance of any stop
order by the Commission suspending the effectiveness of the Registration
Statement or of the initiation or threat of any proceeding for that
purpose; and they will promptly use their best efforts to prevent the
issuance of any stop order or to obtain their withdrawal at the earliest
possible moment if such stop order should be issued.
(c) The Offerors will use their best efforts to qualify the Capital
Securities for offering and sale under the securities laws of such
jurisdictions as the Representative may designate and to continue such
qualifications in effect for so long as may be required for the purposes of
the distribution of the Capital Securities, except that either Offeror
shall not be required
<PAGE>
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in connection therewith or as a condition thereof to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction. In each jurisdiction in which the Capital Securities shall
have been qualified as above provided, the Offerors will make and file such
statements and reports in each year as are or may be reasonably required by
the laws of such jurisdiction.
(d) The Offerors will furnish to the Representative, as soon as available,
copies of the Registration Statement (as filed in EDGAR format, including
exhibits, with the Commission's confirmation of filing), each Preliminary
Prospectus, the Prospectus and any amendment or supplements to such
documents, including any prospectus prepared to permit compliance with
Section 10(a)(3) of the Act, all in such quantities as you may from time to
time reasonably request.
(e) The Offerors will make generally available to their security holders as
soon as practicable, but in any event not later than the 45th day following
the end of the fiscal quarter first occurring after the first anniversary
of the effective date of the Registration Statement, an earnings statement
(which will be in reasonable detail but need not be audited) complying with
the provisions of Section 11(a) of the Act and covering a twelve-month
period beginning after the effective date of the Registration Statement.
(f) For five years from the date hereof, the Offerors shall furnish to the
Representative copies of all reports and communications (financial or
otherwise) furnished by the Offerors to the holders of the Capital
Securities as a class, copies of all reports and financial statements filed
with or furnished to the Commission or with any national securities
exchange or the NASDAQ-NM and such other documents, reports and information
concerning the business and financial conditions of the Offerors as the
Representative may reasonably request. During such five year period the
Offerors' financial statements shall be on a consolidated basis to the
extent that the accounts of the Offerors and the Subsidiaries are
consolidated, and shall be accompanied by similar financial statements for
any Subsidiary which is not so consolidated.
(g) The Offerors will apply the net proceeds from the sale of the Capital
Securities being sold by it in the manner set forth under the caption "Use
of Proceeds" in the Prospectus.
(h) The Offerors will maintain a transfer agent and a registrar (which may
be the same entity as the transfer agent) for the Capital Securities.
(i) If at any time during the 90-day period after the Registration
Statement becomes effective, any publication or event relating to or
affecting either Offeror shall occur as a result of which in your opinion
the market price of the Capital Securities has been or is likely to be
materially affected (regardless of whether such publication or event
necessitates a supplement to or amendment of the Prospectus), the Offerors
will, after written notice from the Representative advising the Offerors to
the effect set forth above, forthwith prepare, consult with the
Representative concerning the substance of and disseminate a press release
<PAGE>
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or other public statement, reasonably satisfactory to the Representative,
responding to or commenting on such publication or event, consistent with
past practice.
(j) For a period ending 180 days from the date of the Prospectus, the
Offerors will not, without your prior written consent, directly or
indirectly, offer for sale, sell or agree to sell or otherwise dispose of
any Capital Securities other than pursuant to this Agreement, any other
beneficial interests in the assets of the Trust or any securities of the
Trust or the Company that are substantially similar to the Capital
Securities or the Debentures, including any guarantee of such beneficial
interests or substantially similar securities, or securities convertible
into or exchangeable for or that represent the right to receive any such
beneficial interest or substantially similar securities.
5. PAYMENT OF EXPENSES.
(a) Subject to Section 5(b), the Company hereby agrees to pay on or prior
to the Closing Date all expenses and fees (other than fees of Underwriters'
Counsel, except as provided in (vi) of this Section 5(a) and Section 5(b)
below) incident to the performance of the obligations of the Offerors under
this Agreement, including, without limitation, (i) the fees and expenses of
accountants and counsel for the Offerors; (ii) all costs and expenses
incurred in connection with the preparation, duplication, printing, filing
(including the filing fees of the Commission), mailing (including postage
with respect thereto) and delivery of the Registration Statement, the
Preliminary Prospectuses and the Prospectus and any amendments and
supplements thereto, including the cost of all copies thereof supplied to
the Representative in quantities as hereinabove stated, (iii) the printing,
engraving, issuance and delivery of the Capital Securities, including any
transfer or other taxes payable thereon, (iv) the qualification of the
Capital Securities under state or foreign securities or Blue Sky laws,
including the costs of printing and mailing a Blue Sky Memorandum and any
supplements or amendments thereto and all disbursements and fees in
connection therewith, (v) fees and expenses of the Trust's transfer agent,
(vi) fees and expenses incurred in connection with the review by the NASD
of certain of the matters set forth in this Agreement, and (viii) the fees
and expenses incurred in connection with the listing of the Capital
Securities on the NASDAQ-NM and any other exchange.
(b) If this Agreement is terminated by the Representative in accordance
with the provisions of Section 6, Section 10(b) or Section 12, or if the
Offerors shall terminate this Agreement under Section 10(a), unless the
basis upon which the Representative terminates this Agreement results from
the default or omission of any Underwriter, the Company shall reimburse and
indemnify the Underwriters for all of their reasonable out-of-pocket
expenses, including the fees and disbursements of Underwriters' Counsel,
which are in excess of $50,000, up to a maximum of $25,000.
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS.
The obligations of the Underwriters hereunder shall be subject to the
continuing accuracy of the representations and warranties of the Offerors herein
as of the date hereof; the accuracy on and
<PAGE>
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as of the Closing Date of the statements of officers of the Offerors made
pursuant to the provisions hereof; and the performance by the Offerors on and as
of the Closing Date of their respective covenants and obligations hereunder and
to the following further conditions:
(a) The Registration Statement shall have become effective not later than
5:00 p.m., Eastern Time, on the date of this Agreement or such later date
and time as shall be consented to in writing by the Representative, and, at
the Closing Date no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or contemplated by
the Commission and any request on the part of the Commission for additional
information shall have been complied with to the satisfaction of
Underwriters' Counsel. If the Offerors have elected to rely upon Rule 430A
of the Rules and Regulations under the Act, the price of the Capital
Securities and any other information previously omitted from the effective
Registration Statement pursuant to such Rule 430A shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) of the
Rules and Regulations under the Act within the prescribed time period, and,
prior to the Closing Date, the Offerors shall have provided evidence
satisfactory to the Representative of such timely filing, or a post-
effective amendment providing such information shall have been promptly
filed and declared effective in accordance with the requirements of Rule
430A of the Rules and Regulations under the Act.
(b) The Representative shall not have advised the Offerors that the
Registration Statement, or any amendment thereto, contains an untrue
statement of fact that, in the Representative's opinion or in the opinion
of Underwriters' Counsel, is material, or omits to state a fact that, in
the Representative's opinion or in the opinion of Underwriters' Counsel, is
material and is required to be stated therein or is necessary to make the
statements therein not misleading, or that the Prospectus, or any
supplement thereto, contains an untrue statement of fact that, in the
Representative's opinion or in the opinion of Underwriters' Counsel, is
material, or omits to state a fact that, in the Representative's opinion or
in the opinion of Underwriters' Counsel, is material and is required to be
stated therein or is necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(c) On the Closing Date the Representative shall have received from
Underwriters' Counsel the favorable opinion to the effect that:
(i) the Capital Securities conform in all material respects to the
description thereof contained in the Prospectus;
(ii) the Registration Statement is effective under the Act, and if
applicable, the filing of all pricing and other information has
been timely made in the appropriate form under Rule 430A of the
Rules and Regulations, and, to such counsel's knowledge, no stop
order suspending the effectiveness of the Registration Statement
has been issued, and no proceedings for that purpose have been
instituted or threatened by the Commission. Such counsel shall
<PAGE>
-18-
state that such counsel has participated in conferences with
officers and other representatives of the Company, counsel for
the Company, representatives of the independent certified public
accountants for the Company and the Representative, at which
conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such
counsel is not passing upon and does not assume any
responsibility for, nor has such counsel independently verified,
the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus (except as
to matters referred to in subparagraph (i) above of this Section
6(c)), no facts have come to the attention of such counsel
(relying as to materiality to a large extent upon the opinions of
officers and other representatives of the Company) that lead them
to believe that either the Registration Statement or any
amendment thereto, at the time such Registration Statement or
amendment became effective or any Preliminary Prospectus (other
than information omitted pursuant to Rule 430A) or the Prospectus
or any amendment or supplement thereto as of the date of such
opinion contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading (it being understood that such counsel need express no
view with respect to the financial statements and schedules and
other financial and statistical data included in any Preliminary
Prospectus, the Registration Statement (including any exhibit
thereto) or the Prospectus or any amendment or supplement
thereto); and
(iii)each of the Preliminary Prospectuses, the Registration Statement
and the Prospectus and any amendments or supplements thereto
(other than the financial statements and schedules, related notes
and other financial and statistical data included therein, as to
which no opinion need be rendered) comply as to form in all
material respects with the requirements of the Act and the Rules
and Regulations.
(d) (1) On the Closing Date the Underwriters shall have received the
favorable opinion of Thacher Proffitt & Wood, counsel to the Offerors,
dated the Closing Date addressed to the Underwriters and in form and
substance reasonably satisfactory to Underwriters' Counsel, to the effect
that:
(i) (A) the Company and each of the Subsidiaries are duly organized,
validly existing and in good standing under the laws of their
respective jurisdictions of organization, (B) the Company is duly
registered as a bank holding company under the BHC Act, and (C)
the Company is duly qualified as a foreign corporation and in
good standing in each jurisdiction in which its ownership of
property or the conduct of its businesses requires such
qualification (except where the failure to so qualify would not
have a Material Adverse Effect on the assets or properties,
business, results of
<PAGE>
-19-
operations or financial condition of the Company, taken as a
whole); all of the outstanding shares of capital stock of each of
the Subsidiaries have been duly authorized and validly issued and
are fully-paid and non-assessable and are owned of record by the
Company; to such counsel's knowledge, based solely upon review of
the Company's and Subsidiaries' stock records, the outstanding
shares of capital stock of the Subsidiaries are owned by the
Company free and clear of all liens, encumbrances and security
interests and, to such counsel's knowledge, no options, warrants
or other rights to purchase, agreements or other obligations to
issue or other rights to convert any obligations into, or
exchange any securities for, any shares of capital stock of or
ownership interests in any of the Subsidiaries are outstanding;
(ii) the Company and each of the Subsidiaries have the corporate power
to own, lease or hold their respective properties and to conduct
their respective businesses as described in the Prospectus;
(iii)The capital stock, Debentures and Guarantee of the Company and
the Capital Securities of the Trust conform in all material
respects to the description thereof contained in the Prospectus
under the captions "Capitalization," "Description of Subordinated
Debentures," "Description of Guarantee," and "Description of
Capital Securities." The capital stock of the Company authorized
and issued as of June 30, 1999 is as set forth under the caption
"Capitalization" in the Prospectus, has been duly authorized and
validly issued, and is fully paid and nonassessable. To such
counsel's knowledge, there are no outstanding rights, options or
warrants to purchase, no other outstanding securities convertible
into or exchangeable for, and no commitments, plans or
arrangements to issue, any shares of capital stock of the Company
or equity securities of the Trust, except as described in the
Prospectus. To such counsel's knowledge, the Capital Securities
are not and will not be subject to any preemptive rights under
the Massachusetts Business Corporation Law or similar statutory
rights. The issuance, sale and delivery of the Capital
Securities and Debentures in accordance with the terms and
conditions of this Agreement and the Indenture have been duly
authorized by all necessary actions of the Offerors. All of the
Capital Securities have been duly and validly authorized and,
when delivered in accordance with this Agreement will be duly and
validly issued, fully paid and nonassessable, and will conform in
all material respects to the description thereof in the
Registration Statement, the Prospectus and the Trust Agreement;
the certificates representing the Capital Securities are in the
form attached as Exhibit A-1 to the Trust Agreement; and the
Capital Securities have been approved for quotation on NASDAQ-NMS
subject to official notice of issuance. There are no preemptive
or other rights to subscribe for or to purchase, and no
restrictions upon the voting or transfer of, any shares of
capital stock or equity securities of the Offerors or the
Subsidiaries pursuant to the corporate charter, by-laws or other
governing documents (including,
<PAGE>
-20-
without limitation, the Trust Agreement) of the Offerors or the
Subsidiaries, or, to the best of such counsel's knowledge, any
agreement or other instrument to which either Offeror or any of
the Subsidiaries is a party or by which either Offeror or any of
the Subsidiaries may be bound. To the best of such counsel's
knowledge, holders of securities of the Offerors either do not
have any right that, if exercised, would require the Offerors to
cause such securities to be included in the Registration
Statement or any registration statement to be filed by the
Company within 180 days of the date hereof or to require the
Company to file a registration statement under the Act during
such 180 day period, or have waived such right.
(iv) the Registration Statement is effective under the Act, and, if
applicable, the filing of all pricing and other information has
been timely made in the appropriate form under Rule 430A of the
Rules and Regulations under the Act, and, to the best of such
counsel's knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued, and no proceedings
for that purpose have been instituted or, to such counsel's
knowledge, threatened by the Commission;
(v) the Registration Statement and the Prospectus and any amendment
or supplement thereto (other than the financial statements and
schedules, related notes and other financial and statistical data
included therein, as to which no opinion need be rendered) comply
as to form in all material respects with the requirements of the
Act and the Rules and Regulations under the Act; and to the best
of such counsel's knowledge, there are no contracts, agreements,
leases or other documents of a character required to be disclosed
in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that are not so disclosed
or filed;
(vi) (A) to such counsel's knowledge, there is not pending or
threatened against the Offerors or any of the Subsidiaries, or
involving any of their respective properties or businesses, any
action, suit, proceeding, inquiry, investigation, litigation or
governmental proceeding, domestic or foreign, that (y) is
required to be disclosed in the Registration Statement and is not
so disclosed (and such proceedings as are summarized in the
Registration Statement are accurately summarized in all material
respects), or (z) questions the validity of the capital stock or
equity securities of the Company or the Trust, this Agreement, or
any action taken or to be taken by the Offerors pursuant to or in
connection with this Agreement and (B) no statute or regulation
or legal or, to such counsel's knowledge, governmental proceeding
required to be described in the Prospectus is not described as
required;
(vii)the Offerors have all requisite corporate and trust power and
authority to enter into this Agreement and to consummate the
transactions provided for herein; and this Agreement has been
duly authorized, executed and delivered
<PAGE>
-21-
by the Offerors and constitutes the legal, valid and binding
obligation of the Offerors enforceable in accordance with its
terms. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein and
in the Trust Agreement does not and will not result in any breach
or violation of any of the material terms or provisions of, or
constitute a default under, or result in the creation or
imposition of any lien, charge, claim, pledge, security interest,
or other encumbrance upon, any property or assets (tangible or
intangible) of the Offerors or any of the Subsidiaries or the
Capital Securities pursuant to the terms of (A) the corporate
charter, operating agreement or by-laws, or other governing
instrument (including without limitation the Trust Agreement) of
the Offerors or any of the Subsidiaries, (B) to such counsel's
knowledge, the Guarantee, the Indenture, any voting trust
agreement or any stockholders agreement, or any indenture,
mortgage, deed of trust, note, loan or credit agreement or other
material agreement or instrument known to such counsel to which
either of the Offerors or any of the Subsidiaries is a party or
by which any of them is or may be bound or to which any of their
respective properties or assets (tangible or intangible) is or
may be subject, or (C) any statute, rule or regulation or, to
such counsel's knowledge, any judgment, decree or order
applicable to either of the Offerors or any of the Subsidiaries
of any arbitrator, court, regulatory body or administrative
agency or other governmental agency or body having jurisdiction
over either of the Offerors or any of the Subsidiaries or any of
their respective activities or properties, the violation of which
would have a Material Adverse Effect;
(viii)each of the Indenture, the Trust Agreement and the Guarantee has
been duly qualified under the Trust Indenture Act, has been duly
authorized, executed and delivered by the Company, and is a valid
and legally binding obligation of the Company enforceable in
accordance with its terms;
(ix) the Debentures have been duly authorized, executed, authenticated
and delivered by the Company, are entitled to the benefits of the
Indenture and are legal, valid and binding obligations of the
Company enforceable against the Company in accordance with their
terms;
(x) no consent, approval, authorization or order of, and no filing
with, any federal or state court, regulatory body, government
agency or authority (other than such as have been effected under
the Act and the Exchange Act and such as may be required under
Blue Sky or state securities laws or the rules of the NASD in
connection with the purchase and distribution of the Capital
Securities by the Underwriters, as to which no opinion need be
rendered) is required in connection with the issuance of the
Capital Securities pursuant to the Prospectus and the
Registration Statement, the performance of this Agreement and the
transactions contemplated hereby;
<PAGE>
-22-
(xi) to such counsel's knowledge neither the Offerors nor any of the
Subsidiaries is in violation of any term or provision of its
corporate charter, operating agreement, or by-laws or other
governing instrument (including without limitation the Trust
Agreement);
(xii)the statements in the Prospectus (or incorporated therein by
reference) under the captions "Capitalization," "Description of
Capital Securities," "Description of Subordinated Debentures,"
"Description of Guarantee," "Relationship Among the Capital
Securities, the Subordinated Debentures and the Guarantee,"
"Certain Federal Income Tax Consequences," and "ERISA
Considerations" have been reviewed by such counsel, and insofar
as they refer to statements of law, descriptions of statutes,
written contracts, or rules or regulations, are correct in all
material respects; and
(xiii)Except as set forth in the Prospectus (or incorporated therein),
to the best of such counsel's knowledge, there are no contractual
encumbrances or restrictions, or material legal restrictions
required to be described therein on the ability of the
Subsidiaries (A) to pay dividends or make any other distributions
on their capital stock or to pay indebtedness owed to the
Offerors, (B) to make any loans or advances to, or investments
in, the Offerors or (C) to transfer any of their property or
assets to the Offerors.
Such counsel shall state that such counsel has participated in conferences with
officers and other representatives of the Offerors and representatives of the
independent certified public accountants for the Offerors, at which conferences
the contents of the Registration Statement and the Prospectus and related
matters were discussed, and, although such counsel is not passing upon and does
not assume any responsibility for, nor has such counsel independently verified,
the accuracy, completeness or fairness of the statements contained in the
Registration Statement and Prospectus, no facts have come to the attention of
such counsel that lead them to believe that either the Registration Statement or
any amendment thereto, at any time such Registration Statement or amendment
became effective or any Preliminary Prospectus circulated by the Underwriters
(other than information omitted pursuant to Rule 430A as of the date of such
Preliminary Prospectus) or the Prospectus or any amendment or supplement thereto
as of the date of such opinion contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances under which they were made (it being understood that such
counsel need express no view with respect to the financial statements and
schedules, related notes, and other financial and statistical data included or
incorporated by reference in any Preliminary Prospectus circulated by the
Underwriters, the Registration Statement (including any exhibit thereto) or the
Prospectus or any amendment or supplement thereto).
The foregoing opinion may be limited to the laws of the State of New York, the
laws of the jurisdictions of incorporation of the Company and the Subsidiaries
and applicable United States federal law. In rendering the foregoing opinions,
counsel may rely, to the extent they deem such reliance proper, on the opinions
of other counsel as to matters governed by the laws of jurisdictions
<PAGE>
-23-
other than the United States the State of New York and the Delaware General
Corporation Law. In rendering such opinions, such counsel may rely as to matters
of fact, to the extent they deem proper, on certificates and written statements
of responsible officers of the Offerors and the Subsidiaries and certificates or
other written statements of officers of departments of various jurisdictions
having custody of documents respecting the corporate existence or good standing
of the Company and the Subsidiaries, provided that copies of any such statements
or certificates shall be delivered to Underwriters' Counsel if requested. For
purposes of any of the opinions to be rendered by such counsel pursuant to this
subsection (d) of Section 6, the term "to such counsel's knowledge" shall mean,
to the extent that such opinion relates to a factual issue or to a mixed
question of law and fact, that after examination of documents in such counsel's
files relating to the Offering and considering the actual knowledge of the
individual attorneys in such counsel's firm who have given substantive attention
to matters on behalf of the Offerors, such counsel finds no reason to believe
that any of such opinions is factually incorrect.
(2) In addition to the provisions of Section 6(d)(1), Thacher Proffitt &
Wood, shall have also furnished to you their signed opinion, dated as of Closing
Date in form and substance satisfactory to Underwriters' Counsel, to the effect
that:
(i) The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act, 12
DEL. C. secs. 3801 ET SEQ. (the "Delaware Act"), with the business
trust power and authority to (a) own its property and conduct its
business as described in the Prospectus, (b) execute and deliver, and
perform its obligations under, this Agreement and (c) issue and
perform its obligations under the Common Securities and the Capital
Securities.
(ii) The Trust Agreement constitutes a legal, valid and binding
obligation of the Company and the trustees of the Trust
enforceable against them in accordance with its terms.
(iii)Under the Trust Agreement and the Delaware Act, all necessary
trust action has been taken on the part of the Trust to duly
authorize the execution and delivery of this Agreement by the
Trust and the performance of its obligations hereunder.
(iv) The Capital Securities have been duly authorized for issuance by
the Trust Agreement and, when issued and delivered in accordance
with the terms of the Trust Agreement and this Agreement and as
described in the Prospectus, will be validly issued and (subject
to the terms of the Trust Agreement) fully paid and non-
assessable undivided beneficial interests in the assets of the
Trust. The holders of the Capital Securities will be entitled to
the benefits of the Trust Agreement and will be entitled to the
same limitation of personal liability extended to stockholders of
private corporations for profit organized under the Delaware
General Corporation Law. Such opinion may note that the holders
of the Capital Securities may be obligated, pursuant to the Trust
<PAGE>
-24-
Agreement, (A) to provide indemnity and/or security in connection
with and pay taxes or governmental charges arising from the
transfers or exchanges of certificates of Capital Securities, and
(B) to provide security or indemnity in connection with requests
of or directions to the Property Trustee to exercise its rights
and powers under the Trust Agreement.
(v) Under the Trust Agreement and the Delaware Act, the issuance of
the Capital Securities is not subject to preemptive rights.
(vi) The issuance and sale by the Trust of the Capital Securities and
the Common Securities, the execution, delivery and performance by
the Trust of this Agreement, and the consummation by the Trust of
the transactions contemplated by this Agreement do not violate
(a) any of the provisions of the Certificate of Trust or the
Trust Agreement or (b) any applicable Delaware law or
administrative regulation.
Such opinion may state that it is limited to the laws of the State of
Delaware and that the opinion expressed in paragraph (ii) above is subject to
the effect upon the Trust Agreement of (i) bankruptcy, insolvency, receivership,
liquidation, fraudulent conveyance, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors' rights and
remedies, (ii) general principles of equity (regardless of whether considered
and applied in a proceeding in equity or at law), and (iii) considerations of
public policy and the effect of applicable law relating to fiduciary duties.
(e) On or prior to the Closing Date Underwriters' Counsel shall have been
furnished such customary documents, certificates and opinions as they may
reasonably require for the purpose of enabling them to review or pass upon
the matters referred to in subsection (d) of this Section 6, or in order to
evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions of the Offerors herein contained.
(f) Prior to the Closing Date, (i) from the respective dates as of which
information is set forth in the Registration Statement and Prospectus,
there shall have been no developments that, individually or in the
aggregate, have had a Material Adverse Effect; (ii) there shall have been
no transaction, not in the ordinary course of business, entered into by
either of the Offerors or any of the Subsidiaries, from the latest date as
of which the financial condition of the Offerors and the Subsidiaries is
set forth in the Registration Statement and Prospectus, that, individually
or in the aggregate, has had a Material Adverse Effect; (iii) neither the
Offerors nor any of the Subsidiaries shall be in default under any
provision of any instrument relating to any of their respective outstanding
indebtedness;(iv) no material amount of the assets of the Offerors or any
of the Subsidiaries shall have been pledged or mortgaged, except as set
forth in the Registration Statement and Prospectus (including the exhibits
to the Registration Statement); (v) no action, suit or proceeding, at law
or in equity, shall have been pending or, to the knowledge of the Offerors,
threatened against the Offerors or any of the Subsidiaries, or affecting
any of their respective properties or businesses before or by any court or
federal, state or foreign commission, board or other administrative agency
wherein
<PAGE>
-25-
an unfavorable decision, ruling or finding would have a Material Adverse
Effect; and (vi) no stop order shall have been issued under the Act and no
proceedings therefor shall have been initiated, or, to the Offerors's
knowledge, threatened or contemplated by the Commission.
(g) At the Closing Date the Representative shall have received a
certificate of the Offerors signed by the principal executive officer and
by the chief financial officer of the Company and by the Administrative
Trustees of the Trust, dated the Closing Date, to the effect that each of
such persons has carefully examined the Registration Statement, the
Prospectus and this Agreement and that:
(i) the representations and warranties of the applicable Offeror in
this Agreement are true and correct, as if made on and as of the
Closing Date, and the applicable Offeror has complied with all
agreements and covenants and satisfied all conditions contained
in this Agreement on its part to be performed or satisfied at or
prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for that purpose
have been instituted or are pending or, to the knowledge of such
officer, are threatened under the Act;
(iii)none of the Registration Statement, the Prospectus nor any
amendment or supplement thereto includes any untrue statement of
a material fact or omits to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading and neither the Preliminary Prospectus nor any
supplement thereto included any untrue statement of a material
fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; and
(iv) subsequent to the respective dates as of which information is
given in the Registration and the Prospectus, neither the
Offerors nor any of the Subsidiaries has incurred up to and
including the Closing Date other than in the ordinary course of
their respective businesses, any material liabilities or
obligations, direct or contingent; the Offerors has not paid or
declared any dividends or other distributions on its capital or
equity securities; neither the Offerors nor any of the
Subsidiaries has entered into any transactions not in the
ordinary course of business; and there has not been any material
change in the capital stock or long-term debt or any material
increase in the short-term borrowings of the Offerors or any of
the Subsidiaries; neither the Offerors nor any of the
Subsidiaries has sustained any material loss or damage to its
property or assets, whether or not insured; there is no
litigation that is pending or, to the knowledge of such officers,
threatened against the Offerors or any of the Subsidiaries that
is required to be set forth in an amended or supplemented
Prospectus that has not been set forth; and there
<PAGE>
-26-
has occurred no event required to be set forth in an amended or
supplemented Prospectus that has not been set forth.
References to the Registration Statement and the Prospectus in this subsection
(g) are to such documents as amended and supplemented at the date of such
certificate.
(h) On the date of this Agreement, the Representative shall have received a
letter in form and substance satisfactory to the Representative and the
Underwriters' Counsel addressed to the Underwriters and dated the date of
this Agreement from Deloitte and signed by such firm with respect to such
matters as shall have been specified to such firm by the Underwriters prior
to the date hereof. At the Closing Date, the Underwriters shall have
received from Deloitte a letter, dated as of the Closing Date reaffirming
the statements made in the letter furnished by Deloitte to the Underwriters
concurrently with the execution of this Agreement, such reaffirming letter
to be in form and substance satisfactory to the Underwriters and the
Underwriters' Counsel.
(i) On the Closing Date there shall have been duly tendered to the
Representative for the several Underwriters' accounts the appropriate
number of Capital Securities.
(j) No order suspending the sale of the Capital Securities in any
jurisdiction designated by the Representative pursuant to subsection (c) of
Section 4 hereof shall have been issued on the Closing Date, and no
proceedings for that purpose shall have been instituted or to the knowledge
of the Representative or the Offerors shall be contemplated.
(k) The Capital Securities delivered on the Closing Date shall have been
duly listed, subject to notice of official issuance, on the NASDAQ-NM.
(l) On the Closing Date, you shall have received duly executed counterparts
of the Trust Agreement, the Guarantee and the Indenture.
(m) The NASD, upon review of the terms of the public offering of the
Capital Securities, shall not have objected to the Underwriters'
participation in such offering.
(n) Prior to the Closing Date, the Offerors shall have furnished to you and
Underwriters' Counsel all such other documents, certificates and opinions
as they have reasonably requested. If any condition to the Underwriters'
obligations hereunder to be fulfilled prior to or at the Closing Date is
not so fulfilled, the Underwriters may terminate this Agreement or, if the
Underwriters so elects, it may waive any such conditions that have not been
fulfilled or extend the time for their fulfillment.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Offerors jointly and severally agree to defend, indemnify and hold
harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims,
<PAGE>
-27-
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any breach of any representation, warranty, agreement or
covenant of the Company or the Trust herein contained or any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; and agrees to
reimburse each Underwriter subject to subsection (d) for any legal or other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Offerors shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, such Preliminary
Prospectus or the Prospectus, or any such amendment or supplement, in
reliance upon and in conformity in all material respects with written
information furnished with respect to any Underwriters by such Underwriter
expressly for use in the Registration Statement, any Preliminary Prospectus
or the Prospectus or any amendment or supplement thereto, provided that
such written information or omissions only pertain to disclosures in the
Registration Statement, any preliminary Prospectus or the Prospectus or any
amendment or supplement thereto directly relating to the transactions
effected by the Underwriters in connection with this offering, and provided
further that the foregoing indemnity with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or to the
benefit of any person controlling such Underwriter) if such untrue
statement or omission or alleged untrue statement or omission made in any
Preliminary Prospectus is eliminated or remedied in the Prospectus and a
copy of the Prospectus has not been furnished to the person asserting any
such loss, claim, damage or liability at or prior to the written
confirmation of the sale of such Capital Securities to such person.
The indemnity agreement in this Section 7(a) shall extend upon the same
terms and conditions to, and shall inure to the benefit of each person, if any,
who controls any Underwriter within the meaning of the Act. This indemnity
agreement shall be in addition to any liabilities which the Offerors may
otherwise have.
(b) Each Underwriter, severally and not jointly, agrees to indemnify and
hold harmless the Offerors to the same extent as the foregoing indemnity
from the Company to the Underwriters but only with respect to statements or
omissions, if any, made in the Registration Statement, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto made in
reliance upon, and in conformity in all material respects with, written
information furnished with respect to any Underwriter by such Underwriter
expressly for use in the Registration Statement, any Preliminary Prospectus
or the Prospectus or any amendment or supplement thereto, provided that
such written information or omissions only pertain to disclosures in the
Registration Statement, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto directly relating to the transactions
effected by the Underwriters in connection with this offering.
<PAGE>
-28-
The indemnity agreement in this Section 7(b) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, each
officer and director of the Company and the Trust who has signed the
Registration Statement, and each person, if any, who controls the Company
or the Trust within the meaning of the Act. This indemnity agreement shall
be in addition to any liabilities which each Underwriter may otherwise
have. For purposes of this Agreement, the Offerors acknowledge that the
statements with respect to the public offering of the Capital Securities
set forth under the heading "UNDERWRITING" and the stabilization legend in
the Prospectus and the last paragraph on the outside front cover page of
the Prospectus have been furnished by the Underwriters expressly for use
therein and constitute the only information furnished in writing by or on
behalf of the Underwriters for inclusion in the Prospectus.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
this Section 7, notify the indemnifying party in writing of the
commencement thereof but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party under this Section 7 (except to the extent that the omissions of such
notice causes actual prejudice to the indemnifying party), or otherwise
than under this Section 7. In case any such action is brought against any
indemnified party, and it notified the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent that it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the indemnified
parties and the indemnifying party and counsel for the indemnified party
shall have reasonably concluded that there may be legal defenses available
to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel reasonably
satisfactory to the indemnifying party or parties to assume such legal
defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from
the indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified
party under this Section 7 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for
the expenses of more than one separate counsel approved by the indemnifying
party, representing all the indemnified parties under Section 7(a), 7(b) or
7(c) hereof who are parties to such action), (ii) the indemnifying party
shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after
notice of commencement of the action, or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. In no event shall any indemnifying
party be liable in respect of any amounts paid in settlement of any action
unless the indemnifying
<PAGE>
-29-
party shall have approved the terms of such settlement; provided however
that such consent shall not be unreasonably withheld.
(d) In order to provide for just and equitable contribution in any action
in which a claim for indemnification is made pursuant to this Section 7 but
it is judicially determined (by the entry of a final judgment or decree by
a court of competent jurisdiction and the expiration of time to appeal or
the denial of the last right of appeal) that such indemnification may not
be enforced in such case notwithstanding the fact that this Section 7
provides for indemnification in such case, all the parties hereto shall
contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in such proportion so
that the Underwriters are responsible pro rata for the portion represented
by the percentage that the underwriting discount bears to the public
offering price, and the Offerors are responsible for the remaining portion,
provided, however, that (i) no Underwriter shall not be required to
contribute any amount in excess of the underwriting discount applicable to
the Capital Securities purchased by such Underwriter and (ii) no person
guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to a contribution from any person who
is not guilty of such fraudulent misrepresentation.
(e) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including without limitation
the provisions of this Section 7, and are fully informed regarding such
provisions. They further acknowledge that the provisions of this Section 7
fairly allocate the risks in light of the ability of the parties to
investigate the Offerors and their business in order to assure that
adequate disclosure is made in the Registration Statement and Prospectus as
required by the Act and the Exchange Act. The parties are advised that
federal or state public policy, as interpreted by the courts in certain
jurisdictions, may be contrary to certain of the provisions of this Section
7, and the parties hereto hereby expressly waive and relinquish any right
or ability to assert such public policy as a defense to a claim under this
Section 7 and further agree not to attempt to assert any such defense.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement
or contained in certificates of officers of the Offerors submitted pursuant
thereto shall be deemed to be representations, warranties and agreements at the
Closing Date, and such representations, warranties and agreements, and the
indemnity and contribution agreements contained in Section 7 hereof, shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any Underwriter, the Offerors or any controlling person,
and shall survive termination of this Agreement or the issuance or sale and
delivery of the Capital Securities to the Underwriters.
<PAGE>
-30-
9. EFFECTIVE DATE.
This Agreement shall become effective at 9:30 a.m., Eastern Time, on the
date hereof, or at such earlier time after the Registration Statement becomes
effective as the Representative, in its sole discretion, shall release the
Capital Securities for the sale to the public, provided, however that the
provisions of Sections 5, 7 and 9 of this Agreement shall at all times be
effective. For purposes of this Section 9, the Capital Securities to be
purchased hereunder shall be deemed to have been so released upon the earlier of
dispatch by the Representative of telegrams to securities dealers releasing such
Capital Securities for offering or the release by the Representative for
publication of the first newspaper advertisement that is subsequently published
relating to the Capital Securities.
10. TERMINATION.
(a) Subject to subsection (d) of this Section 10, the Offerors may at any
time before this Agreement becomes effective in accordance with Section 9,
terminate this Agreement.
(b) Subject to subsection (d) of this Section 10, the Representative shall
have the right to terminate this Agreement, (i) if any calamitous domestic
or international event or act or occurrence has materially disrupted, or in
the Representative's opinion will in the immediate future materially
disrupt, general securities markets in the United States; or (ii) if
trading on the New York Stock Exchange, the NASDAQ-NM or in the over-the-
counter market shall have been suspended, or minimum or maximum prices for
trading shall have been fixed, or maximum ranges for prices for securities
shall have been required on the over-the-counter market by the NASD or by
order of the Commission or any other government authority having
jurisdiction; or (iii) if the United States shall have become involved in a
war or major hostilities; or (iv) if a banking moratorium has been declared
by the State of New York, The Commonwealth of Massachusetts or any federal
authority; or (v) if a moratorium in foreign exchange trading has been
declared; or (vi) if the Company or the Trust shall have sustained a loss
material or substantial to the Company or the Trust by fire, flood,
accident, hurricane, earthquake, theft, sabotage or other calamity or
malicious act that, whether or not such loss shall have been insured, will,
in the Representative's reasonable opinion, make it inadvisable to proceed
with the delivery of the Capital Securities; or (vii) if there shall have
been a Material Adverse Effect.
(c) If any party hereto elects to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 10,
such party shall notify, on the same day as such election is made, the
other parties hereto in accordance with the provisions of Section 13
hereof.
(d) Notwithstanding any contrary provision contained in this Agreement, any
election hereunder or any termination of this Agreement (including, without
limitation, pursuant to Sections 11 and 12 hereof), and whether or not this
Agreement is otherwise carried out, the provisions of Sections 5, 7 and 9
shall not be in any way affected by such election or termination or failure
to carry out the terms of this Agreement or any part thereof.
<PAGE>
-31-
11. SUBSTITUTION OF THE UNDERWRITERS.
If one or more of the Underwriters shall fail (otherwise than for a reason
sufficient to justify the termination of this Agreement under the provisions of
Section 6, Section 10 or Section 12 hereof) to purchase the Capital Securities
that it or they are obligated to purchase on such date under this Agreement (the
"Defaulted Securities"), the Representative shall use its best efforts within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Securities in such amounts as may be agreed upon and upon the terms
herein set forth; if, however, the Representative shall not have completed such
arrangements within such 24 hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the total
number of Capital Securities to be purchased on such date, the non-
defaulting Underwriters shall be obligated to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the total number
of Capital Securities and arrangements satisfactory to the Representative
for the purchase of the Defaulted Securities are not made within 36 hours,
this Agreement shall terminate without liability on the part of any non-
defaulting Underwriters. The Offerors may assist the Representative in
making such arrangements by procuring another party satisfactory to the
Representative to purchase the Defaulted Securities on the terms set forth
herein.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of any default by such Underwriter under
this Agreement.
In the event of any such default that does not result in a termination of
this Agreement, the Representative shall have the right to postpone the Closing
Date for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements.
12. DEFAULT BY THE TRUST.
If the Trust shall fail at the Closing Date to sell and deliver the number
of Capital Securities that it is obligated to sell hereunder on such date, then
this Agreement shall terminate without any liability on the part of any non-
defaulting party other than pursuant to Section 5 and Section 7 hereof. No
action taken pursuant to this Section shall relieve the Trust from liability, if
any, in respect of such default.
13. NOTICES.
All notices and communications hereunder may be mailed or transmitted by
any standard form of telecommunication and, except as herein otherwise
specifically provided, shall be in writing and shall be deemed to have been duly
given when delivered to a notice party hereto at the address
<PAGE>
-32-
specified herein or at the address subsequently communicated in writing to the
notice parties. Notices to the Underwriters shall be directed to the
Representative c/o Tucker Anthony Cleary Gull, One Beacon Street, Boston,
Massachusetts 02108, Attention: Gregory W. Benning, Managing Director, with a
copy to Stephen J. Coukos, Esq., Sullivan & Worcester LLP, One Post Office
Square, Boston, Massachusetts 02109. Notices to the Company or the Trust shall
be directed to c/o Westbank Corporation, 225 park Avenue, West Springfield,
Massachusetts 01089-3326, with a copy to Richard A. Schaberg, Esq., Thacher
Proffitt & Wood, 1700 Pennsylvania Avenue, N.W., Washington, D.C. 20006. In each
case a notice party may change its address for notice hereunder by a written
communication to the other notice parties.
14. PARTIES.
This Agreement shall inure solely to the benefit of and shall be binding
upon, the Underwriters, the Offerors and the controlling persons, directors and
officers referred to in Section 7 hereof, and their respective successors, legal
representatives and assigns, and no other person shall have or be construed to
have any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provisions herein contained. No purchaser of
Capital Securities from any Underwriter shall be deemed to be a successor by
reason merely of such purchase.
15. CONSTRUCTION.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS WITHOUT GIVING
EFFECT TO THE CHOICE OF LAW OR CONFLICT OF LAWS PRINCIPLES.
16. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, and all of which taken together shall be
deemed to be one and the same instrument.
17. ENTIRE AGREEMENT.
This Agreement and the Schedules hereto contain the entire agreement
between the parties hereto in connection with the subject matter hereof and
supersede all prior agreements, written or oral, with respect to such subject
matter.
18. AMENDMENT.
This Agreement and the Schedules hereto may not be amended, modified or
altered without the written agreement of the Offerors and the Underwriters. If
the foregoing correctly sets forth the understanding between the Underwriters
and the Offerors, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among us.
<PAGE>
-33-
Very truly yours,
WESTBANK CORPORATION
By: _________________________________________
Name:
Title:
WESTBANK CAPITAL TRUST I
By: _________________________________________
Name:
Title:
CONFIRMED AND ACCEPTED AS OF THE
DATE FIRST ABOVE WRITTEN:
TUCKER ANTHONY CLEARY GULL
By: _________________________________________
Name:
Title:
<PAGE>
-34-
SCHEDULE A
NAME NUMBER OF CAPITAL SECURITIES
- ---- ----------------------------
Ryan, Beck & Co., Inc.
Tucker Anthony Cleary Gull
Total 1,750,000
<PAGE>
Exhibit 4.1
CERTIFICATE OF TRUST OF
WESTBANK CAPITAL TRUST I
------------------------
THIS Certificate of Trust of Westbank Capital Trust I (the "Trust") is
being duly executed and filed on behalf of the Trust by the undersigned, as
trustee, to form a business trust under the Delaware Business Trust Act
(12 Del. C. (S)3801 et seq.) (the "Act").
------- -- ---
1. Name. The name of the business trust formed by this Certificate
----
of Trust is Westbank Capital Trust I.
2. Delaware Trustee. The name and business address of the trustee
----------------
of the Trust in the State of Delaware is Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attn:
Corporate Trust Administration.
3. Effective Date. This Certificate of Trust shall be effective upon
--------------
filing.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
of Trust in accordance with Section 3811(a)(1) of the Act.
WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as trustee of the Trust.
By: /s/ Anita Dallago
------------------------------------------
Name: Anita Dallago
Title: Administrative Account Manager
<PAGE>
Exhibit 4.2
WESTBANK CAPITAL TRUST I
DECLARATION OF TRUST
--------------------
THIS DECLARATION OF TRUST, dated as of August 24, 1999 (the
"Declaration of Trust" or the "Trust Agreement"), is by and among (i) Westbank
Corporation, a Delaware corporation (the "Sponsor"), and (ii) Wilmington Trust
Company, a Delaware banking corporation, as trustee (the "Trustee"). The
Sponsor and the Trustee hereby agree as follows:
1. Creation of Trust.
------------------
(a) The trust created hereby (the "Trust") shall be known as
"Westbank Capital Trust I."
(b) The Sponsor hereby assigns, transfers, conveys and sets over
to the Trustee the sum of $10.00. The Trustee hereby acknowledges receipt of
such amount in trust from the Sponsor, which amount shall constitute the initial
trust estate. The Trustee hereby declares that it will hold the trust estate in
trust for the Sponsor. It is the intention of the parties hereto that the Trust
created hereby constitute a business trust under Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. (S)3801 et seq. (the "Business Trust Act"), and that
-- ----
this document constitutes the governing instrument of the Trust. The Trustee is
hereby authorized and directed to execute and file a certificate of trust with
the Delaware Secretary of State in accordance with the provisions of the
Business Trust Act.
(c) The Trustee is authorized and directed to enter into such
documents and take such other action as the Sponsor specifically directs in
written instructions delivered to the Trustee; provided, however, the Trustee
shall not be required to take any action if the Trustee shall determine, or
shall be advised by counsel, that such action is likely to result in personal
liability or is contrary to applicable law or any agreement to which the Trustee
is a party.
2. Concerning the Trustee.
-----------------------
(a) Except as otherwise expressly required by Section 1 of this
Declaration of Trust, the Trustee shall not have any duty or liability with
respect to the administration of the Trust, the investment of the Trust's
property or the payment of dividends or other distributions of income or
principal to the Trust's beneficiaries, and no implied obligations shall be
inferred from this Declaration of Trust on the part of the Trustee. The Trustee
shall not be liable for the acts or omissions of the Sponsor nor shall the
Trustee be liable for any act or omission by it in good faith in accordance with
the directions of the Sponsor.
(b) The Trustee accepts the trusts hereby created and agrees to
perform its duties hereunder with respect to the same but only upon the terms of
this Declaration of Trust. The Trustee shall not be personally liable under any
circumstances, except for its own willful misconduct or gross negligence. In
particular, but not by way of limitation:
(i) The Trustee shall not be personally liable for any error
of judgment made in good faith by an officer or employee of the Trustee;
<PAGE>
(ii) No provision of this Declaration of Trust shall require
the Trustee to expend or risk its personal funds or otherwise incur any
financial liability in the performance of its rights or duties hereunder, if the
Trustee shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability is not reasonably assured
or provided to it;
(iii) Under no circumstance shall the Trustee be personally
liable for any representation, warranty, covenant or indebtedness of the Trust;
(iv) The Trustee shall not be personally responsible for or in
respect of the genuineness, form or value of the Trust property, the validity or
sufficiency of this Declaration of Trust or for the due execution hereof by the
Sponsor;
(v) In the event that the Trustee is unsure of the course of
action to be taken by it hereunder, the Trustee may request instructions from
the Sponsor and to the extent the Trustee follows such instructions in good
faith it shall not be liable to any person. In the event that no instructions
are provided within the time requested by the Trustee, it shall have no duty or
liability for its failure to take any action or for any action it takes in good
faith;
(vi) All funds deposited with the Trustee hereunder may be
held in a non-interest bearing trust account and the Trustee shall not be liable
for any interest thereon or for any loss as a result of the investment thereof
at the direction of the Sponsor; and
(vii) To the extent that, at law or in equity, the Trustee has
duties and liabilities relating thereto to the Sponsor or the Trust, the Sponsor
agrees that such duties and liabilities are replaced by the terms of this
Declaration of Trust.
(c) The Trustee shall incur no liability to anyone in acting upon any
document believed by it to be genuine and believed by it to be signed by the
proper party or parties. The Trustee may accept a certified copy of a
resolution of the board of directors or other governing body of any corporate
party as conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or matter
the manner of ascertainment of which is not specifically prescribed herein, the
Trustee may for all purposes hereof rely on a certificate, signed by the
Sponsor, as to such fact or matter, and such certificate shall constitute full
protection to the Trustee for any action taken or omitted to be taken by it in
good faith in reliance thereon.
(d) In the exercise or administration of the trusts hereunder, the
Trustee (i) may act directly or, at the expense of the Trust, through agents or
attorneys, and the Trustee shall not be liable for the default or misconduct of
such agents or attorneys if such agents or attorneys shall have been selected by
the Trustee in good faith, and (ii) may, at the expense of the Trust, consult
with counsel, accountants and other experts, and it shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
advice or opinion of any such counsel, accountants or other experts.
(e) Except as expressly provided in this Section 2, in accepting and
performing the trusts hereby created, the Trustee acts solely as trustee
hereunder and not in its
<PAGE>
individual capacity, and all persons having any claim against the Trustee by
reason of the transactions contemplated by this Declaration of Trust shall look
only to the Trust's property for payment or satisfaction thereof.
3. The Sponsor and the Trustee will enter into an Amended and
Restated Declaration of Trust (including such other parties as stated therein),
satisfactory to each such party and substantially in the form included as an
exhibit to the 1933 Act Registration Statement (as defined below), to provide
for the contemplated operation of the Trust created hereby and the issuance of
the Capital Securities and Common Securities referred to therein. Prior to the
execution and delivery of such amended and restated Declaration of Trust, the
Trustee shall not have any duty or obligation hereunder or with respect to the
trust estate, except as expressly set forth herein or as otherwise required by
applicable law or as may be necessary to obtain prior to such execution and
delivery of any licenses, consents or approvals required by applicable law or
otherwise.
4. The Sponsor and the Trustee hereby authorize and direct the
Sponsor, as the sponsor of the Trust, (i) to file with the Securities and
Exchange Commission (the "Commission") and execute, in each case on behalf of
the Trust, (a) the Registration Statement on Form S-3 (the "1933 Act
Registration Statement"), including any pre-effective or post-effective
amendments to the 1933 Act Registration Statement, relating to the registration
under the Securities Act of 1933, as amended, of the Capital Securities of the
Trust and possibly certain other securities and (b) a Registration Statement on
Form 8-A (the "1934 Act Registration Statement") (including all pre-effective
and post-effective amendments thereto) relating to the registration of the
Capital Securities of the Trust under the Securities Exchange Act of 1934, as
amended; (ii) to file with the New York Stock Exchange or any other national
stock exchange or The Nasdaq National Market (each, an "Exchange") and execute
on behalf of the Trust one or more listing applications and all other
applications, statements, certificates, agreements and other instruments as
shall be necessary or desirable to cause the Capital Securities to be listed on
any of the Exchanges; (iii) to file and execute on behalf of the Trust such
applications, reports, surety bonds, irrevocable consents, appointments of
attorney for service of process and other papers and documents as shall be
necessary or desirable to register the Capital Securities under the securities
or blue sky laws of such jurisdictions as the Sponsor, on behalf of the Trust,
may deem necessary or desirable and (iv) to execute on behalf of the Trust that
certain Underwriting Agreement relating to the Capital Securities, among the
Trust, the Sponsor and the several Underwriters named therein, substantially in
the form included as an exhibit to the 1933 Act Registration Statement.
5. This Declaration of Trust may be executed in one or more
counterparts.
6. The number of Trustees initially shall be one (1) and thereafter
the number of Trustees shall be such number as shall be fixed from time to time
by a written instrument signed by the Sponsor, who may increase or decrease the
number of Trustees; provided, however, that, to the extent required by the
Business Trust Act, one Trustee shall either be a natural person who is a
resident of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware and otherwise meets the
requirements of applicable Delaware law. Subject to the foregoing, the Sponsor
is entitled to appoint or remove without cause any Trustee at any time. The
Trustees may resign upon thirty (30) days' prior written notice to the Sponsor.
<PAGE>
7. This Declaration of Trust shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws principles).
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have caused this Trust Agreement to be duly executed as of the date first
written above.
WESTBANK CORPORATION, as Sponsor
By: /s/ Donald R. Chase
---------------------------------
Name: Donald R. Chase
Title: President and CEO
WILMINGTON TRUST COMPANY, as Trustee
By: /s/ Anita Dallago
----------------------------------
Name: Anita Dallago
Title: Administrative Account Manager
<PAGE>
EXHIBIT 4.3
================================================================================
AMENDED AND RESTATED DECLARATION OF TRUST
OF
WESTBANK CAPITAL TRUST I
Dated as of [_________], 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions....................................................... 2
-----------
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.................................. 9
--------------------------------
SECTION 2.2 Lists of Holders of Securities.................................... 9
------------------------------
SECTION 2.3 Reports by the Property Trustee................................... 10
-------------------------------
SECTION 2.4 Periodic Reports.................................................. 10
----------------
SECTION 2.5 Evidence of Compliance with Conditions Precedent.................. 10
------------------------------------------------
SECTION 2.6 Events of Default; Waiver......................................... 10
-------------------------
SECTION 2.7 Default; Notice................................................... 12
---------------
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.............................................................. 13
----
SECTION 3.2 Office............................................................ 13
------
SECTION 3.3 Purpose........................................................... 13
-------
SECTION 3.4 Authority......................................................... 13
---------
SECTION 3.5 Title to Property of the Trust.................................... 13
------------------------------
SECTION 3.6 Powers and Duties of the Administrative Trustees.................. 14
------------------------------------------------
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.............. 16
----------------------------------------------------
SECTION 3.8 Powers and Duties of the Property Trustee......................... 17
-----------------------------------------
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee....... 19
-----------------------------------------------------------
SECTION 3.10 Certain Rights of Property Trustee................................ 21
----------------------------------
SECTION 3.11 Delaware Trustee.................................................. 23
----------------
SECTION 3.12 Execution of Documents............................................ 24
----------------------
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities............ 24
------------------------------------------------------
SECTION 3.14 Duration of Trust................................................. 24
-----------------
SECTION 3.15 Mergers........................................................... 24
-------
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities........................... 26
---------------------------------------
SECTION 4.2 Responsibilities of the Sponsor................................... 26
-------------------------------
SECTION 4.3 Right to Proceed.................................................. 27
----------------
SECTION 4.4 Right to Dissolve Trust........................................... 27
-----------------------
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
ARTICLE V
TRUSTEES
<S> <C>
SECTION 5.1 Number of Trustees; Appointment of Co-Trustee................ 27
---------------------------------------------
SECTION 5.2 Delaware Trustee............................................. 28
----------------
SECTION 5.3 Property Trustee; Eligibility................................ 28
-----------------------------
SECTION 5.4 Certain Qualifications of Administrative Trustees and
-----------------------------------------------------
Delaware Trustee Generally................................... 29
--------------------------
SECTION 5.5 Administrative Trustees...................................... 30
-----------------------
SECTION 5.6 Appointment, Removal and Resignation of Trustees............. 30
------------------------------------------------
SECTION 5.7 Vacancies among Trustees..................................... 32
------------------------
SECTION 5.8 Effect of Vacancies.......................................... 32
-------------------
SECTION 5.9 Meetings..................................................... 32
--------
SECTION 5.10 Delegation of Power.......................................... 33
------------------
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business.. 33
-----------------------------------------------------------
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions................................................ 33
-------------
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities...................... 34
---------------------------------------
SECTION 7.2 Issuance of Capital Securities and Common Securities......... 34
----------------------------------------------------
SECTION 7.3 The Trust Security Certificates.............................. 35
-------------------------------
SECTION 7.4 Execution and Delivery of Trust Security Certificates........ 35
-----------------------------------------------------
SECTION 7.5 Registrar, Paying Agent and Exchange Agent................... 35
------------------------------------------
SECTION 7.6 Registration of Transfer and Exchange of Capital
------------------------------------------------
Security Certificates........................................ 36
---------------------
SECTION 7.7 Book-Entry Capital Security Certificates; Common
------------------------------------------------
Security Certificate......................................... 36
--------------------
SECTION 7.8 Paying Agent to Hold Money in Trust.......................... 37
-----------------------------------
SECTION 7.9 Replacement Securities....................................... 37
----------------------
SECTION 7.10 Outstanding Capital Securities.............................. 38
-------------------------------
SECTION 7.11 Capital Securities in Treasury............................... 38
------------------------------
SECTION 7.12 Cancellation................................................. 38
------------
SECTION 7.13 CUSIP Numbers................................................ 38
-------------
ARTICLE VIII
DISSOLUTION OF TRUST
SECTION 8.1 Dissolution of Trust......................................... 39
--------------------
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
ARTICLE IX
TRANSFER OF INTERESTS
<S> <C>
SECTION 9.1 Transfer of Securities.................................... 40
----------------------
SECTION 9.2 Definitive Capital Security Certificates.................. 40
----------------------------------------
SECTION 9.3 Temporary Securities...................................... 42
--------------------
SECTION 9.4 Deemed Security Holders................................... 43
-----------------------
SECTION 9.5 Notices to Clearing Agency................................ 43
--------------------------
SECTION 9.6 Appointment of Successor Clearing Agency.................. 43
----------------------------------------
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability................................................. 44
---------
SECTION 10.2 Exculpation............................................... 44
-----------
SECTION 10.3 Fiduciary Duty............................................ 45
--------------
SECTION 10.4 Indemnification........................................... 46
---------------
SECTION 10.5 Outside Businesses........................................ 48
------------------
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year............................................... 49
-----------
SECTION 11.2 Certain Accounting Matters................................ 49
--------------------------
SECTION 11.3 Banking................................................... 49
-------
SECTION 11.4 Withholding............................................... 50
-----------
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments................................................ 50
----------
SECTION 12.2 Meetings of the Holders; Action by Written Consent........ 52
--------------------------------------------------
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEEAND
DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee........ 53
--------------------------------------------------
SECTION 13.2 Representations and Warranties of Delaware Trustee........ 54
--------------------------------------------------
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices................................................... 55
-------
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
SECTION 14.2 Governing Law.................................. 56
-------------
SECTION 14.3 Intention of the Parties....................... 56
------------------------
SECTION 14.4 Headings....................................... 57
--------
SECTION 14.5 Successors and Assigns......................... 57
----------------------
SECTION 14.6 Partial Enforceability......................... 57
----------------------
SECTION 14.7 Counterparts................................... 57
------------
TERMS OF
[_____]% Capital SECURITIES
[_____]% COMMON SECURITIES............................... I-1
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE..................... A1-1
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE...................... A2-1
</TABLE>
iv
<PAGE>
CROSS-REFERENCE TABLE*
Section of
Trust Indenture
Act of 1939, as Section of
amended Declaration
- --------------- -----------
310(a) ............................................. 5.3
310(b) ............................................. 5.3(c), 5.3(d)
311(a) ............................................. 2.2(b)
311(b) ............................................. 2.2(b)
312(a) ............................................. 2.2(a)
312(b) ............................................. 2.2(b)
313 ............................................. 2.3
314(a) ............................................. 2.4; 3.6(j)
314(c) ............................................. 2.5
315(a) ............................................. 3.9
315(b) ............................................. 2.7(a)
315(c) ............................................. 3.9(a)
315(d) ............................................. 3.9(b)
316(a) ............................................. 2.6
316(c) ............................................. 3.6(e)
317(a) ............................................. 3.8(e); 3.8(h)
317(b) ............................................. 3.8(i); 7.5
318 ............................................. 2.1
______________
* This Cross-Reference Table does not constitute part of this Declaration and
shall not affect the interpretation of any of its terms or provisions.
v
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
WESTBANK CAPITAL TRUST I
Dated as of [_________], 1999
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of [_________], 1999, by and among the Trustees (as defined
herein), the Sponsor (as defined herein) and the Holders (as defined herein),
from time to time, of undivided beneficial interests in the assets of the Trust
to be issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established Westbank Capital
Trust I (the "Trust"), a trust created under the Delaware Business Trust Act
pursuant to a Declaration dated as of [__________], 1999 (the "Original
Declaration"), and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on [__________], 1999, for the sole purpose of issuing and
selling certain securities representing undivided beneficial interests in the
assets of the Trust, investing the proceeds thereof solely in certain Debentures
of the Debenture Issuer (each as hereinafter defined) with no power to vary that
investment, and engaging in only those activities necessary, advisable or
incidental thereto; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration;
and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
ratify the actions of each Trustee taken prior to the date hereof;
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration and, in consideration
of the mutual covenants contained herein and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties,
intending to be legally bound hereby, agree as follows:
<PAGE>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
-----------
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined
in the preamble above or elsewhere herein have the respective meanings assigned
to them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration"
are to this Declaration and each Annex and Exhibit hereto, as modified,
supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections
and Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires;
(f) a term defined in the Indenture (as defined herein) has the
same meaning when used in this Declaration unless otherwise defined in this
Declaration or the context otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
"Administrative Trustee" has the meaning set forth in Section
----------------------
5.1.
"Affiliate" has the same meaning as given to that term in Rule
---------
405 under the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent, Registrar or Exchange Agent.
-----
"Authorized Officer" of a Person means any other Person that is
------------------
authorized to legally bind such former Person.
"Book-Entry Interest" means a beneficial interest in the Global
-------------------
Capital Security registered in the name of a Clearing Agency or its nominee,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 9.4.
2
<PAGE>
"Business Day" means any day other than a Saturday or a Sunday or
------------
a day on which banking institutions in
are authorized or required by law or executive order to remain closed.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
------------------
Code, 12 Del. Code (S) 3801 et seq., as it may be amended from time to time, or
-------
any successor legislation.
"Capital Securities" has the meaning specified in Section 7.1(a).
------------------
"Capital Securities Guarantee" means the Capital Securities
----------------------------
Guarantee Agreement, dated as of the Closing Date, by Westbank Corporation in
respect of the Capital Securities.
"Capital Security Beneficial Owner" means, with respect to a
---------------------------------
Book-Entry Interest, a Person who is the beneficial owner of such Book-Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Capital Security Certificate" means a certificate evidencing
----------------------------
ownership of Capital Securities, substantially in the form attached as Exhibit
A-1.
"Clearing Agency" means an organization registered as a "Clearing
---------------
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Capital Securities and in whose name or in the name of a nominee of that
organization shall be registered a global certificate and which shall undertake
to effect book entry transfers and pledges of the Capital Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
---------------------------
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" has the meaning specified in the Underwriting
------------
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from
----
time to time, or any successor legislation.
"Commission" means the United States Securities and Exchange
----------
Commission as from time to time constituted, or if at any time after the
execution of this Declaration such Commission is not existing and performing the
duties now assigned to it under applicable federal securities laws, then the
body performing such duties at such time.
"Common Securities" has the meaning specified in Section 7.1(a).
-----------------
3
<PAGE>
"Common Securities Guarantee" means the Common Securities
---------------------------
Guarantee Agreement, dated as of the Closing Date, entered into by Westbank
Corporation, with respect to the Common Securities.
"Common Securities Subscription Agreement" means the Common
----------------------------------------
Securities Subscription Agreement, dated as of the Closing Date, between the
Trust and , Inc. relating to the Common Securities.
"Common Security Certificate" means a certificate evidencing
---------------------------
ownership of Common Securities, substantially in the form attached as Exhibit
A-2.
"Company Indemnified Person" means (a) any Administrative
--------------------------
Trustee; (b) any Affiliate of any Administrative Trustee; (c) any officers,
directors, shareholders, members, partners, employees, representatives or agents
of any Administrative Trustee; or (d) any officer, employee or agent of the
Trust or its Affiliates.
"Corporate Trust Office" means the office of the Property Trustee
----------------------
at which the corporate trust business of the Property Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Declaration is located at Rodney Square North, 1100 Market
Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration, or at any other time at such other address as the Property
Trustee may designate from time to time by notice to the Holders.
"Covered Person" means: (a) any officer, director, shareholder,
--------------
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Debentures" means the [_____]% Junior Subordinated Deferrable
----------
Interest Debentures due [_________], 2029, of the Debenture Issuer issued
pursuant to the Indenture.
"Debenture Issuer" means Westbank Corporation, a Delaware
----------------
corporation, or any successor entity resulting from any consolidation,
amalgamation, merger or other business combination, in its capacity as issuer of
the Debentures under the Indenture.
"Debenture Subscription Agreement" means the Debenture
--------------------------------
Subscription Agreement, dated as of the Closing Date, between the Debenture
Issuer and the Trust in respect of the Debentures.
"Debenture Trustee" means Wilmington Trust Company, a Delaware
-----------------
corporation, as trustee under the Indenture until a successor is appointed
thereunder, and thereafter means such successor trustee.
"Default" means an event, act or condition that with notice or
-------
lapse of time, or both, would constitute an Event of Default.
"Definitive Capital Securities" has the meaning set forth in
-----------------------------
Section 9.2.
4
<PAGE>
"Delaware Trustee" has the meaning set forth in Section 5.1.
----------------
"Direct Action" has the meaning set forth in Section 3.8(e).
-------------
"Distribution" means a distribution payable to Holders in accordance
------------
with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing
---
Agency.
"Event of Default" with respect to the Securities means an Event of
----------------
Default (as defined in the Indenture) that has occurred and is continuing with
respect to the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
------------
from time to time, or any successor legislation.
"Exchange Agent" has the meaning set forth in Section 7.5.
--------------
"Federal Reserve Board" means the Board of Governors of the Federal
---------------------
Reserve System.
"Fiduciary Indemnified Person" has the meaning set forth in Section
----------------------------
10.4(b).
"Firm Securities Closing Date" has the meaning specified in the
----------------------------
Underwriting Agreement.
"Fiscal Year" has the meaning set forth in Section 11.1.
-----------
"Global Capital Security'' means the Capital Security Certificate
-----------------------
issued to the Clearing Agency at Closing.
"Holder" means a Person in whose name a Security or Successor Security
------
is registered, such Person being a beneficial owner within the meaning of the
Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
------------------
Fiduciary Indemnified Person.
"Indenture" means the Indenture, dated as of the Closing Date, between
---------
the Debenture Issuer and the Debenture Trustee, as amended from time to time.
"Initial Optional Redemption Date" has the meaning set forth in
--------------------------------
Section 4(b) of Annex I hereto.
"Investment Company" means an investment company as defined in the
------------------
Investment Company Act.
5
<PAGE>
"Investment Company Act" means the Investment Company Act of 1940, as
----------------------
amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Section 4(c)
------------------------
of Annex I hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
------------
"Like Amount" has the meaning set forth in Section 3 of Annex I
-----------
hereto.
"List of Holders" has the meaning set forth in Section 2.2(a).
---------------
"Majority in Liquidation Amount " means, with respect to the Trust
------------------------------
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holders of outstanding Trust Securities voting together as
a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of more than 50% of the aggregate liquidation
amount (including the amount that would be paid on redemption, liquidation or
otherwise, plus accumulated and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities of the relevant
class.
"Officers" shall mean, with respect to any Person, including the
--------
Property Trustee and the Delaware Trustee, any of the Chairman of the Board, a
Vice Chairman, the Chief Executive Officer, the President, an Executive or
Senior Vice President, a Vice President, the Chief Financial Officer, the
Secretary or an Assistant Secretary and, with respect to the Property Trustee
and the Delaware Trustee, any Group Director.
"Officers' Certificate" means, with respect to any Person, a
---------------------
certificate signed by two Officers and delivered to the Delaware Trustee. Any
Officers' Certificate delivered by the Trust shall be signed by at least one
Administrative Trustee. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Declaration shall
include:
(a) a statement that each officer signing the Certificate has read
the covenants or conditions and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of each such
officer, such condition or covenant has been complied with.
6
<PAGE>
"Opinion of Counsel" means a written opinion of counsel, who may be an
------------------
employee of the Sponsor, and who shall be acceptable to the Property Trustee.
"Option Securities Closing Date" has the meaning specified in the
------------------------------
Underwriting Agreement.
"Participants" has the meaning specified in Section 7.7(a).
------------
"Paying Agent" has the meaning specified in Section 7.5.
------------
"Payment Amount" has the meaning specified in Section 6.1.
--------------
"Person" means a legal person, including any individual, corporation,
------
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"PORTAL" has the meaning set forth in Section 3.6(b) (iii).
------
"Property Trustee" has the meaning set forth in Section 5.3(a).
----------------
"Property Trustee Account" has the meaning set forth in Section
------------------------
3.8(c)(i).
"Quorum" means a majority of the Administrative Trustees or, if there
------
are only two Administrative Trustees, both of them.
"Redemption Price" has the meaning set forth in Section 4(a) of
----------------
Annex I hereto.
"Registrar" has the meaning set forth in Section 7.5.
---------
"Registration Statement" has the meaning set forth in Section
----------------------
3.6(b).
"Regulatory Capital Event" has the meaning set forth in Section 4(c)
------------------------
of Annex I hereto.
"Related Party" means, with respect to the Sponsor, any direct or
-------------
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means any officer within the Corporate Trust
-------------------
Office of the Property Trustee with direct responsibility for the administration
of this Declaration and also means, with respect to a particular corporate trust
matter, any other officer of the Property Trustee to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
7
<PAGE>
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act, or any
---------
successor rule or regulation.
"Securities" or "Trust Securities" means the Common Securities and
---------- ----------------
the Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time, or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee and
---------------------
the Capital Securities Guarantee.
"Special Event" has the meaning set forth in Section 4(c) of Annex I
-------------
hereto.
"Sponsor" means Westbank Corporation, a Delaware corporation, or any
-------
successor entity resulting from any merger, consolidation, amalgamation or other
business combination, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning set forth in Section
--------------------------
5.6(b)(ii).
"Successor Entity" has the meaning set forth in Section 3.15(b)(i).
----------------
"Successor Property Trustee" has the meaning set forth in Section
--------------------------
3.8(f)(ii).
"Successor Securities" has the meaning set forth in Section
--------------------
3.15(b)(i).
"Super Majority" has the meaning set forth in Section 2.6(a) (ii).
--------------
"Tax Event" has the meaning set forth in Section 4(c) of Annex I
---------
hereto.
"10% in Liquidation Amount" means, with respect to the Trust
-------------------------
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holders of outstanding Trust Securities voting together as
a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of 10% or more of the aggregate liquidation
amount (including the amount that would be paid on redemption, liquidation or
otherwise, plus accumulated and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities of the relevant
class.
"Treasury Regulations" means the income tax regulations, including
--------------------
temporary and proposed regulations, promulgated under the Code by the United
States Treasury Department, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
-------------------
amended from time to time, or any successor legislation.
8
<PAGE>
"Trust Property" means (a) the Debentures, (b) any cash on deposit in
--------------
or owing to the Property Trustee Account and (c) all proceeds and rights in
respect of the foregoing and any other property and assets for the time being
held or deemed to be held by the Property Trustee pursuant to this Declaration.
"Trust Security Certificate" means any one of the Common Security
--------------------------
Certificates or the Capital Security Certificates.
"Trustee" or "Trustees" means each Person who has signed this
------- --------
Declaration as a trustee, so long as such Person shall continue as a trustee of
the Trust in accordance with the terms hereof, and all other Persons who may
from time to time be duly appointed, qualified and serving as Trustees in
accordance with the provisions hereof, and references herein to a Trustee or the
Trustees shall refer to such Person or Persons solely in their capacity as
trustees hereunder.
"Underwriting Agreement" means the Underwriting Agreement, dated
----------------------
[__________], 1999, by and among the Trust, the Debenture Issuer and the
Underwriters named therein, relating to the Capital Securities.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
--------------------------------
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration in order for this
Declaration to be qualified under the Trust Indenture Act and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee that is a trustee
for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by (S)(S) 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
------------------------------
(a) Each of the Sponsor and the Administrative Trustees on behalf of
the Trust shall provide the Property Trustee, unless the Property Trustee is
Registrar for the Securities, (i) within 14 days after each record date for
payment of Distributions, a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Holders ("List of
Holders") as of such record date, provided that, neither the Sponsor nor the
-------- ----
Administrative Trustees on behalf of the Trust shall be obligated to provide
such List of Holders at any time that the List of Holders does
9
<PAGE>
not differ from the most recent List of Holders given to the Property Trustee by
the Sponsor and the Administrative Trustees on behalf of the Trust, and (ii) at
any other time, within days of receipt by the Trust of a written request for
a List of Holders as of a date no more than days before such List of Holders
is given to the Property Trustee. The Property Trustee shall preserve, in as
current a form as is reasonably practicable, all information contained in Lists
of Holders given to it or which it receives in the capacity as Paying Agent (if
acting in such capacity), provided that the Property Trustee may destroy any
-------- ----
List of Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
(S)(S) 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
-------------------------------
Within 60 days after the date hereof, and no later than the
anniversary date hereof in each succeeding year, the Property Trustee shall
provide to the Holders of the Capital Securities such reports as are required by
(S) 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by (S) 313 of the Trust Indenture Act. The Property Trustee shall also
comply with the requirements of (S) 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports.
----------------
Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee, the Commission and the Holders,
such documents, reports and information as are required by (S) 314 (if any) of
the Trust Indenture Act and the compliance certificate required by (S) 314 of
the Trust Indenture Act in the form, in the manner and at the times required by
(S) 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
------------------------------------------------
Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with any
conditions precedent provided for in this Declaration that relate to any of the
matters set forth in (S) 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to (S) 314(c)(1) of the
Trust Indenture Act may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
-------------------------
(a) The Holders of a Majority in Liquidation Amount of Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default in respect of the Capital Securities
and its consequences, provided that, if the underlying Event of Default under
-------- ----
the Indenture:
(i) is not waivable under the Indenture, the Event of Default under
the Declaration shall also not be waivable; or
10
<PAGE>
(ii) requires the consent or vote of greater than a majority in
aggregate principal amount of the holders of the Debentures (a "Super
Majority") to be waived under the Indenture, the Event of Default
under the Declaration may only be waived by the vote of the Holders of
at least the proportion in aggregate liquidation amount of the Capital
Securities that the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of (S)
316(a)(1)(B) of the Trust Indenture Act, and such (S) 316(a)(1)(B) of the Trust
Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
Event of Default shall cease to exist, and any Event of Default with respect to
the Capital Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other Default or an Event of Default with respect to the Capital
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Capital Securities of an Event of Default with respect to the Capital
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote or
consent of the Holders of the Common Securities.
(b) The Holders of a Majority in Liquidation Amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
-------- ----
Default under the Indenture:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event
of Default under the Declaration as provided below in this Section
2.6(b), the Event of Default under the Declaration shall also not be
waivable; or
(ii) requires the consent or vote of a Super Majority to be
waived, except where the Holders of the Common Securities are deemed
to have waived such Event of Default under the Declaration as provided
below in this Section 2.6(b), the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least
the proportion in aggregate liquidation amount of the Common
Securities that the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding;
provided further, each Holder of Common Securities will be deemed to have waived
- -------- -------
any such Event of Default and all Events of Default with respect to the Common
Securities and their consequences if all Events of Default with respect to the
Capital Securities have been cured, waived or otherwise eliminated, and until
such Events of Default have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the Holders of
the Capital Securities, and only the Holders of the Capital Securities will have
the right to direct the Property Trustee in accordance with the terms of the
Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu of
(S)(S) 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act, and such (S)(S)
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly
excluded from this
11
<PAGE>
Declaration and the Securities, as permitted by the Trust Indenture Act. Subject
to the foregoing provisions of this Section 2.6(b), upon such waiver, any such
Default shall cease to exist and any Event of Default with respect to the Common
Securities arising therefrom shall be deemed to have been cured for every
purpose of this Declaration, but no such waiver shall extend to any subsequent
or other Default or Event of Default with respect to the Common Securities or
impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee, at the direction of the Holders of the Capital Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of
(S) 316(a)(1)(B) of the Trust Indenture Act, and such (S) 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Default; Notice.
---------------
(a) The Property Trustee shall, within days after a Responsible
Officer obtains actual knowledge of the occurrence of a Default with respect to
the Securities, transmit by mail, first class postage prepaid, to the Holders,
notices of all such Defaults, unless such Defaults have been cured before the
giving of such notice or previously waived; provided, however, that except in
-------- -------
the case of a Default arising from the nonpayment of principal of or interest
(including Compounded Interest and Additional Sums (as such terms are defined in
the Indenture), if any) on any of the Debentures , the Property Trustee shall be
protected in withholding such notice if and so long as a Responsible Officer in
good faith determines that the withholding of such notice is in the interests of
the Holders.
(b) The Property Trustee shall not be deemed to have knowledge of
any Default or Event of Default except:
(i) a Default or Event of Default under Sections 5.01(a) (other
than the payment of Compounded Interest and Additional Sums) and
5.01(b) of the Indenture; or
(ii) any Default or Event of Default as to which the Property
Trustee shall have received written notice or of which a Responsible
Officer charged with the administration of the Declaration shall have
actual knowledge.
(c) Within five Business Days after a Responsible Officer obtains
actual knowledge of the occurrence of any Event of Default, the Property Trustee
shall transmit notice of such Event of Default to the Holders of the Capital
Securities, the Administrative Trustees and the Sponsor, unless such Event of
Default shall have been cured or waived. The Sponsor and the Administrative
Trustees shall file annually with the Property Trustee a certification as to
whether or not they are in compliance with all the conditions and covenants
applicable to them under this Declaration.
12
<PAGE>
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
----
The Trust is named WESTBANK Capital Trust I as such name may be
modified from time to time by the Administrative Trustees following written
notice to the Delaware Trustee, the Property Trustee and the Holders. The
Trust's activities may be conducted under the name of the Trust or any other
name deemed advisable by the Administrative Trustees.
SECTION 3.2 Office.
------
The address of the principal office of the Trust is Westbank Capital
Trust I, c/o Westbank Corporation, 225 Park Avenue, West Springfield
Massachusetts 01089-3326. On ten Business Days' prior written notice to the
Delaware Trustee, the Property Trustee and the Holders of Securities, the
Administrative Trustees may designate another principal office.
SECTION 3.3 Purpose.
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The exclusive purposes and functions of the Trust are (a) to issue and
sell the Securities, (b) use the proceeds from the sale of the Securities to
acquire the Debentures, and (c) except as otherwise limited herein, to engage in
only those other activities necessary, advisable or incidental thereto,
including without limitation, those activities specified in Sections 3.6, 3.8,
3.9, 3.10, 3.11 and/or 3.12. The Trust shall not borrow money, issue debt or
reinvest proceeds derived from investments, mortgage or pledge any of its
assets, or otherwise undertake (or permit to be undertaken) any activity that
would cause the Trust not to be classified for United States federal income tax
purposes as a grantor trust.
SECTION 3.4 Authority.
---------
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Administrative Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by one or more of the Administrative Trustees in accordance with
their powers shall constitute the act of and serve to bind the Trust and an
action taken by the Property Trustee on behalf of the Trust in accordance with
its powers shall constitute the act of and serve to bind the Trust. In dealing
with the Trustees acting on behalf of the Trust, no Person shall be required to
inquire into the authority of the Trustees to bind the Trust. Persons dealing
with the Trust are entitled to rely conclusively on the power and authority of
the Trustees as set forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
------------------------------
Except as provided in Section 3.8 with respect to the Debentures and
the Property Trustee Account or as otherwise provided in this Declaration, legal
title to all assets of the Trust shall
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be vested in the Trust. The Holders shall not have legal title to any part of
the assets of the Trust, but shall have an undivided beneficial interest in the
assets of the Trust.
SECTION 3.6 Powers and Duties of the Administrative Trustees.
------------------------------------------------
The Administrative Trustees acting individually or together shall have
the power, duty and authority, and are hereby authorized and directed, to cause
the Trust to engage in the following activities:
(a) to execute, enter into and deliver the Common Securities
Subscription Agreement and to execute, deliver, issue and sell the Securities in
accordance with this Declaration; provided, however, that (i) the Trust may
-------- -------
issue no more than one series of Capital Securities and no more than one series
of Common Securities, (ii) there shall be no interests in the Trust other than
the Securities, and (iii) the issuance of Securities shall be limited to a
simultaneous issuance of both Capital Securities and Common Securities on each
Closing Date;
(b) in connection with the issue and sale of the Capital Securities
at the direction of the Sponsor, to:
(i) prepare and execute, if necessary, one or more registration
statements including a prospectus and prospectus supplements and any
amendment thereto, in preliminary and final form, relating to the
offering and sale of the Capital Securities of the Trust under the
Securities Act, and such forms or filings as may be required under the
Securities Act, the Exchange Act or the Trust Indenture Act (each a
"Registration Statement") prepared by the Sponsor;
(ii) execute and file any documents prepared by the Sponsor, or
take any acts as determined by the Sponsor to be necessary in order to
qualify or register all or part of the Capital Securities in any State
in which the Sponsor has determined to qualify or register such
Capital Securities for sale;
(iii) execute and file an application, prepared by the Sponsor,
to permit the Capital Securities to trade or be quoted or listed in or
on the Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") Market or any other securities exchange, quotation
system or the Nasdaq Stock Market's National Market; and
(iv) execute and deliver the letters, documents, or instruments
with DTC and other Clearing Agencies relating to the Capital
Securities, and if required, execute and file with the Commission a
registration statement on Form 8-A, including any amendments thereto,
prepared by the Sponsor, relating to the registration of the Capital
Securities under Section 12(b) or 12(g) of the Exchange Act, as the
case may be.
(c) to execute, enter into and deliver the Debenture Subscription
Agreement and to acquire the Debentures with the proceeds of the sale of the
Capital Securities and the Common
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Securities; provided, however, that the Administrative Trustees shall cause
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legal title to the Debentures to be held of record in the name of the Property
Trustee for the benefit of the Holders;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event;
(e) to establish a record date with respect to all actions to be taken
hereunder that require a record date to be established, including and with
respect to, for the purposes of (S) 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders with respect to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required of
the Administrative Trustees pursuant to the terms of the Securities;
(g) to the fullest extent permitted by law, to bring or defend, pay,
collect, compromise, arbitrate, resort to legal action, or otherwise adjust
claims or demands of or against the Trust ("Legal Action"), unless pursuant to
Section 3.8(e), the Property Trustee has the exclusive power to bring such Legal
Action;
(h) to employ or otherwise engage employees, agents (who may be
designated as officers with titles), managers, contractors, advisors and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate required by (S) 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be executed by any
Administrative Trustee;
(k) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, Registrar and
Exchange Agent for the Securities or to appoint a Paying Agent for the
Securities as provided in Section 7.5 except for such time as such power to
appoint a Paying Agent is vested in the Property Trustee;
(m) to give prompt written notice to the Property Trustee and to the
Holders of any notice received from the Debenture Issuer of its election to
defer payments of interest on the Debentures by extending the interest payment
period under the Indenture;
(n) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders or to enable the Trust
to effect the purposes for which the Trust was created;
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(o) to take any action, not inconsistent with this Declaration or
with applicable law, that the Administrative Trustees determine in their
discretion to be necessary or desirable in carrying out the activities of the
Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
(ii) causing the Trust to continue not to be classified as an
association taxable as a corporation or causing the Trust to be
classified as a grantor trust, in each case for United States federal
income tax purposes; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer for
United States federal income tax purposes;
(p) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed by the Administrative Trustees, on behalf of
the Trust; and
(q) to execute and deliver all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in all
matters necessary, advisable or incidental to the foregoing.
The Administrative Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Administrative Trustees shall not take
any action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Administrative Trustees shall have
none of the powers or the authority of the Property Trustee set forth in Section
3.8.
Any expenses incurred by the Administrative Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
----------------------------------------------------
The Trust shall not, and the Trustees (including the Property Trustee
and the Delaware Trustee) shall not, and the Administrative Trustees shall cause
the Trust not to, engage in any activity other than as required or authorized by
this Declaration. Notwithstanding any provision in this Declaration to the
contrary, the Trust shall not:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders pursuant
to the terms of this Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
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(iii) possess Trust Property for other than a Trust purpose or
execute any mortgage in respect of, or pledge, any Trust Property;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to
vary the Trust Property or the terms of the Securities in any way
whatsoever;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities;
(vii) other than as provided in this Declaration or Annex I
hereto, (A) direct the time, method and place of conducting any
proceeding with respect to any remedy available to the Debenture
Trustee, or exercising any trust or power conferred upon the Debenture
Trustee with respect to the Debentures, (B) waive any past default
that is waivable under the Indenture, or (C) exercise any right to
rescind or annul any declaration that the principal of all the
Debentures shall be due and payable; or
(viii) consent to any amendment, modification or termination of
the Indenture or the Debentures where such consent shall be required
unless the Trust shall have received an opinion of independent tax
counsel experienced in such matters to the effect that such amendment,
modification or termination will not cause more than an insubstantial
risk that the Trust will not be classified as a grantor trust for
United States federal income tax purposes.
SECTION 3.8 Powers and Duties of the Property Trustee.
-----------------------------------------
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the Trust
and the Holders. The right, title and interest of the Property Trustee to the
Debentures shall vest automatically in each Person who may hereafter be
appointed as Property Trustee in accordance with Section 5.6. Such vesting and
cessation of title shall be effective whether or not conveyancing documents with
regard to the Debentures have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Administrative Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing
trust account (the "Property Trustee Account") in the name of and
under the exclusive control of the Property Trustee on behalf of the
Holders and, upon the receipt of
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payments of funds made in respect of the Debentures held by the
Property Trustee, deposit such funds into the Property Trustee Account
and make payments or cause the Paying Agent to make payments to the
Holders from the Property Trustee Account in accordance with Section
6.1; funds in the Property Trustee Account shall be held uninvested
until disbursed in accordance with this Declaration; and the Property
Trustee Account shall be an account that is maintained with a banking
institution the rating on whose long-term unsecured indebtedness by a
"nationally recognized statistical rating organization," as that term
is defined for purposes of Rule 436(g)(2) under the Securities Act, is
at least equal to the rating assigned to the Capital Securities;
(ii) engage in such ministerial activities as shall be necessary
or appropriate to effect the redemption of the Securities to the
extent the Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the
Administrative Trustees in accordance with the terms of the
Securities, engage in such ministerial activities as shall be
necessary or appropriate to effect the distribution of the Debentures
to Holders upon the occurrence of certain events.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of this Declaration and the Securities.
(e) Subject to Section 3.9(a), the Property Trustee shall take any
Legal Action which arises out of or in connection with an Event of Default of
which a Responsible Officer has actual knowledge (other than in the case of
Events of Default under Sections 5.01(a) and 5.01(b) of the Indenture) or the
Property Trustee's duties and obligations under this Declaration or the Trust
Indenture Act may so require; and if the Property Trustee shall have failed to
take such Legal Action following a written request from the Holders, the Holders
of the Capital Securities may, to the fullest extent permitted by law, take such
Legal Action, to the same extent as if such Holders of Capital Securities held
an aggregate principal amount of Debentures equal to the aggregate liquidation
amount of such Capital Securities, without first proceeding against the Property
Trustee or the Trust; provided, however, that if an Event of Default has
-------- -------
occurred and is continuing and such event is attributable to the failure of the
Debenture Issuer to pay the principal of or interest (including Compounded
Interest and Additional Sums, if any) on the Debentures on the date such
principal or interest (including Compounded Interest and Additional Sums, if
any) is otherwise payable (or in the case of redemption, on the redemption
date), then a Holder of Capital Securities may directly institute a proceeding
for enforcement of payment to such Holder of the principal of or interest
(including Compounded Interest and Additional Sums, if any) on the Debentures
having a principal amount equal to the aggregate liquidation amount of the
Capital Securities of such Holder (a "Direct Action") on or after the respective
due date specified in the Debentures. In connection with such Direct Action, the
Holders of the Common Securities will be subrogated to the rights of such Holder
of Capital Securities to the extent of any payment made by the Debenture Issuer
to such Holder of Capital Securities in such Direct Action. Except as provided
in the preceding sentences, the Holders
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of Capital Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures.
(f) The Property Trustee shall continue to serve as a Trustee until
either:
(i) the Trust has been completely liquidated and the proceeds of
the liquidation distributed to the Holders pursuant to the terms of
the Securities and this Declaration; or
(ii) a successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.6 (a "Successor
Property Trustee").
(g) The Property Trustee shall have the legal power to exercise all
of the rights, powers and privileges of a holder of Debentures under the
Indenture, and, if an Event of Default actually known to a Responsible Officer
(other than in the case of Events of Default under Sections 5.01(a) and 5.01(b)
of the Indenture) occurs and is continuing, the Property Trustee shall, for the
benefit of Holders, enforce its rights as holder of the Debentures subject to
the rights of the Holders pursuant to the terms of this Declaration and the
Securities.
(h) The Property Trustee shall be authorized to undertake any actions
set forth in (S) 317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying Agent, the
Property Trustee may authorize one or more Persons to act as additional Paying
Agents and to pay Distributions, redemption payments or liquidation payments on
behalf of the Trust with respect to all Securities, and any such Paying Agent
shall comply with (S) 317(b) of the Trust Indenture Act. Any such additional
Paying Agent may be removed by the Property Trustee at any time the Property
Trustee remains as Paying Agent, and a successor Paying Agent or additional
Paying Agents may be (but are not required to be) appointed at any time by the
Property Trustee while the Property Trustee is acting as Paying Agent.
(j) Subject to this Section 3.8, the Property Trustee shall have none
of the duties, liabilities, powers or the authority of the Administrative
Trustees set forth in Section 3.6.
Notwithstanding anything expressed or implied to the contrary in this
Declaration or any Annex or Exhibit hereto, (i) the Property Trustee must
exercise the powers set forth in this Section 3.8 in a manner that is consistent
with the purposes and functions of the Trust set out in Section 3.3, and (ii)
the Property Trustee shall not take any action that is inconsistent with the
purposes and functions of the Trust set out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.
-----------------------------------------------------------
(a) The Property Trustee, before the occurrence of any Event of
Default (of which, other than in the case of Events of Default under Sections
5.01(a) and 5.01(b) of the Indenture, a Responsible Officer of the Property
Trustee has actual knowledge) and after the curing or waiving of all such Events
of Default that may have occurred, shall undertake to perform only
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such duties as are specifically set forth in this Declaration and in the
Securities, and no implied covenants shall be read into this Declaration against
the Property Trustee. In case an Event of Default has occurred (that has not
been cured or waived pursuant to Section 2.6) of which a Responsible Officer has
actual knowledge (other than in the case of Events of Default under Sections
5.01(a) and 5.01(b) of the Indenture), the Property Trustee shall exercise such
of the rights and powers vested in it by this Declaration, and use the same
degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default (of which,
other than in the case of Events of Default under Sections 5.01(a) and
5.01(b) of the Indenture, a Responsible Officer of the Property
Trustee has actual knowledge) and after the curing or waiving of all
such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee shall be
determined solely by the express provisions of this Declaration
and in the Securities, and the Property Trustee shall not be
liable except for the performance of such duties and obligations
as are specifically set forth in this Declaration and in the
Securities, and no implied covenants or obligations shall be read
into this Declaration against the Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to
the Property Trustee and conforming to the requirements of this
Declaration; provided, however, that in the case of any such
-------- -------
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Property Trustee,
the Property Trustee shall be under a duty to examine the same to
determine whether or not on their face they conform to the
requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall
be proved that the Property Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a Majority in
Liquidation Amount of the Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred upon the
Property Trustee under this Declaration;
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(iv) no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers;
(v) the Property Trustee's sole duty with respect to the
custody, safekeeping and physical preservation of the Debentures and
the Property Trustee Account shall be to deal with such property in a
similar manner as the Property Trustee deals with similar property for
its own account, subject to the protections and limitations on
liability afforded to the Property Trustee under this Declaration and
the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for
or with respect to the value, genuineness, existence or sufficiency of
the Debentures or the payment of any taxes or assessments levied
thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree in
writing with the Sponsor. Money held by the Property Trustee need not
be segregated from other funds held by it except in relation to the
Property Trustee Account maintained by the Property Trustee pursuant
to Section 3.8(c)(i) and except to the extent otherwise required by
law; and
(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the
Sponsor with their respective duties under this Declaration, nor shall
the Property Trustee be liable for any default or misconduct of the
Administrative Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
----------------------------------
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Sponsor or the Administrative
Trustees contemplated by this Declaration may be sufficiently
evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder,
the Property Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith
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on its part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request, shall be promptly
delivered by the Sponsor or the Administrative Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel or other
experts of its selection, and the advice or opinion of such counsel
and experts with respect to legal matters or advice within the scope
of such experts' area of expertise shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with such
advice or opinion; such counsel may be counsel to the Sponsor or any
of its Affiliates, and may include any of its employees; and the
Property Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of
competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration
at the request or direction of any Holder, unless such Holder shall
have provided to the Property Trustee security and indemnity,
reasonably satisfactory to the Property Trustee, against the costs,
expenses (including reasonable attorneys' fees and expenses and the
expenses of the Property Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be
requested by the Property Trustee; provided, however, that, nothing
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contained in this Section 3.10(a)(vi) shall be taken to relieve the
Property Trustee, upon the occurrence of an Event of Default (of
which, other than in the case of Events of Default under Sections
5.01(a) and 5.01(b) of the Indenture, a Responsible Officer of the
Property Trustee has actual knowledge), of its obligation to exercise
the rights and powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents, custodians, nominees or attorneys, and the Property
Trustee shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by it
hereunder;
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(ix) any authorized or required action taken by the Property
Trustee or its agents hereunder shall bind the Trust and the Holders,
and the signature of the Property Trustee or its agents alone shall be
sufficient and effective to perform any such action, and no third
party shall be required to inquire as to the authority of the Property
Trustee to so act or as to its compliance with any of the terms and
provisions of this Declaration, both of which shall be conclusively
evidenced by the Property Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Property Trustee (i) may request instructions from the
Holders, which instructions may only be given by the Holders of the
same proportion in liquidation amount of the Securities as would be
entitled to direct the Property Trustee under the terms of the
Securities in respect of such remedy, right or action, (ii) may
refrain from enforcing such remedy or right or taking such other
action until such instructions are received, and (iii) shall be
protected in conclusively relying on or acting in accordance with such
instructions;
(xi) except as otherwise expressly provided by this Declaration,
the Property Trustee shall not be under any obligation to take any
action that is discretionary under the provisions of this Declaration;
and
(xii) the Property Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith, without
negligence or willful misconduct, and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
----------------
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Trustees described in this Declaration (except as required under the
Business Trust Act). Except as set forth in Section 5.2, the Delaware Trustee
shall be a Trustee for the sole and limited purpose of fulfilling the
requirements of (S) 3807 of the Business Trust Act. In the event the Delaware
Trustee shall at any time be required to take any action or perform any duty
hereunder, the Delaware Trustee shall be entitled to the benefits of Section
3.9(b)(ii) to (viii), inclusive, and Section 3.10. No implied covenants or
obligations shall be read into this Declaration against the Delaware Trustee.
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SECTION 3.12 Execution of Documents.
----------------------
Unless otherwise required by applicable law, each Administrative
Trustee, individually, is authorized to execute and deliver on behalf of the
Trust any documents, agreements, instruments or certificates that the
Administrative Trustees have the power and authority to execute pursuant to
Section 3.6.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
------------------------------------------------------
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the Trust Property or any part thereof. The Trustees
make no representations as to the validity or sufficiency of this Declaration or
the Securities.
SECTION 3.14 Duration of Trust.
-----------------
The Trust, unless dissolved pursuant to the provisions of Article VIII
hereof, shall have existence up to [___________], 2029.
SECTION 3.15 Mergers.
-------
(a) 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 Person, except as described in
Section 3.15(b) and (c) and except with respect to the distribution of
Debentures to Holders pursuant to Section 8.1(a)(iii) of this Declaration or
Section 3 of Annex I.
(b) The Trust may, at the request of the Sponsor, with the consent of
the Administrative Trustees or, if there are more than two, a majority of the
Administrative Trustees and without the consent of the Holders, the Delaware
Trustee or the Property Trustee, 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 (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust under
the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the "Successor
Securities") so long as the Successor Securities rank the same as
the Securities rank in priority with respect to Distributions and
payments upon liquidation, redemption and otherwise;
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(ii) the Sponsor expressly appoints a trustee of the Successor
Entity that possesses the same powers and duties as the Property
Trustee with respect to the Debentures;
(iii) the Successor Securities (excluding any securities
substituted for the Common Securities) are listed, quoted or included
for trading, or any Successor Securities will be listed, quoted or
included for trading upon notification of issuance, on any national
securities exchange or with any other organization on which the
Capital Securities are then listed, quoted or included;
(iv) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Capital Securities
(including any Successor Securities) or the Debentures to be
downgraded by any nationally recognized statistical rating
organization that publishes a rating on the Capital Securities or the
Debentures;
(v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders (including the holders of
any Successor Securities) in any material respect (other than with
respect to any dilution of the interests of such Holders or holders,
as the case may be, in the Successor Entity);
(vi) the Successor Entity has a purpose substantially identical
to that of the Trust;
(vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Sponsor has received
an opinion of 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 (including the
holders of any Successor Securities) in any material respect
(other than with respect to any dilution of the interests of such
Holders or holders, as the case may be, in the Successor Entity);
(B) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor
the Successor Entity will be required to register as an
Investment Company; and
(C) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Trust (or the
Successor Entity) will continue not to be classified as an
association taxable as a corporation and will not be less likely
to be classified as a grantor trust for United States federal
income tax purposes;
25
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(viii) the Sponsor or any permitted successor or assignee owns
all of the common securities of the Successor Entity and guarantees
the obligations of the Successor Entity under the Successor Securities
at least to the extent provided by the Securities Guarantees; and
(ix) there shall have been furnished to the Property Trustee an
Officers' Certificate and an Opinion of Counsel, each to the effect
that all conditions precedent in this Declaration to such transaction
have been satisfied.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with
the consent of Holders of 100% in aggregate liquidation amount of the
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 Person or permit any other Person 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.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
---------------------------------------
On each Closing Date, pursuant to the Common Securities Subscription
Agreement, the Sponsor will purchase all of the Common Securities then issued by
the Trust, in an amount equal to at least 3% of the total capital of the Trust,
at the same time as the Capital Securities are issued and sold.
SECTION 4.2 Responsibilities of the Sponsor.
-------------------------------
In connection with the issue and sale of the Capital Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare and file with the Commission the Registration
Statements and any amendments thereto, and the prospectus to be included
therein, in preliminary and final form, and to prepare for filing by the Trust
with the Commission any other necessary documents, including any amendments
thereto;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Capital Securities and to do any
and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for execution and filing
any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such
States; and
(c) if deemed necessary or advisable by the Sponsor, to prepare for
filing by the Trust an application to permit the Capital Securities to trade or
be quoted or listed in or on the PORTAL market, or any other securities
exchange, quotation system or the Nasdaq Stock Market's
26
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National Market to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A, including any amendments thereto, relating
to the registration of the Capital Securities under Section 12(b) or 12(g) of
the Exchange Act, as the case may be, including any amendments thereto; and to
negotiate the terms of, execute, enter into and deliver the Underwriting
Agreement.
SECTION 4.3 Right to Proceed.
----------------
The Sponsor acknowledges the rights of the Holders of Capital
Securities, in the event that a failure of the Trust to pay Distributions on the
Capital Securities is attributable to the failure of the Debenture Issuer to pay
the principal of or interest on the Debentures, to institute a proceeding
directly against the Debenture Issuer for enforcement of its payment obligations
in respect of the Debentures.
SECTION 4.4 Right to Dissolve Trust.
-----------------------
The Sponsor will have the right at any time to dissolve the Trust and,
after satisfaction of liabilities to creditors of the Trust as required by
applicable law, to cause the Debentures to be distributed to the Holders in
liquidation of the Trust. Such right is subject to the Sponsor's having received
(i) an Opinion of Counsel to the effect that such distribution will not cause
the Holders of Capital Securities to recognize gain or loss for United States
federal income tax purposes and (ii) all required regulatory approvals.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees; Appointment of Co-Trustee.
---------------------------------------------
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a Majority in Liquidation
Amount of the Common Securities voting as a class at a meeting of the Holders of
the Common Securities;
provided, however, that, the number of Trustees shall in no event be less than
- -------- -------
two (2); provided further that (1) one Trustee, in the case of a natural person,
-------- -------
shall be a person who is a resident of the State of Delaware or that, if not a
natural person, is an entity which has its principal place of business in the
State of Delaware (the "Delaware Trustee"); (2) there shall be at least one
Trustee who is an employee or officer of, or is affiliated with, the Sponsor (an
"Administrative Trustee"); and (3) one Trustee shall be the Property Trustee for
so long as this Declaration is required to qualify as an indenture under the
Trust Indenture Act, and such Trustee may also serve as Delaware Trustee if it
meets the applicable requirements. Notwithstanding the above, unless an Event of
Default shall have occurred and be continuing, at any time or times, for the
purpose of meeting the legal requirements of the Trust Indenture Act or of any
jurisdiction in which any part of the Trust Property may at the
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time be located, the Holders of a Majority in Liquidation Amount of the Common
Securities acting as a class at a meeting of the Holders of the Common
Securities, and the Administrative Trustees shall have power to appoint one or
more Persons either to act as a co-trustee, jointly with the Property Trustee,
of all or any part of the Trust Property, or to act as separate trustee of any
such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or Persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of this Declaration. In case an Event of Default has
occurred and is continuing, the Property Trustee alone shall have power to make
any such appointment of a co-trustee.
SECTION 5.2 Delaware Trustee.
----------------
For so long as required by the Business Trust Act, the Delaware
Trustee shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the requirements of
applicable law,
provided, however, that, if the Property Trustee has its principal place of
- -------- -------
business in the State of Delaware and otherwise meets the requirements of
applicable law, then the Property Trustee shall also be the Delaware Trustee and
Section 3.11 shall have no application.
The initial Delaware Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 Market Street
Wilmington, Delaware 19890-0001
Attn.: Corporate Trust Administration
Telephone: (302) 651-1000
Telecopier:(302) 651-8882
SECTION 5.3 Property Trustee; Eligibility.
-----------------------------
(a) There shall at all times be one Trustee (the "Property Trustee")
which shall act as Property Trustee and which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the laws
of the United States of America or any State or Territory thereof or
of the District of Columbia, or a corporation or Person permitted by
the Commission to act as an indenture trustee under the Trust
Indenture Act, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least fifty
million U.S. dollars ($ ), and subject to supervision or
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examination by federal, state, territorial or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then for the purposes of this
Section 5.3(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.
(b) If at any time the Property Trustee shall cease to be eligible to
so act under Section 5.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 5.6(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of (S) 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in (S) 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of (S) 310(b) of the Trust Indenture Act.
(d) The Capital Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first proviso contained in (S) 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 Market Street
Wilmington, Delaware 19890-0001
Attn.: Corporate Trust Administration
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
SECTION 5.4 Certain Qualifications of Administrative Trustees and Delaware
--------------------------------------------------------------
Trustee Generally.
-----------------
Each Administrative Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural person
who is at least 21 years of age or a legal entity that shall act through one or
more Authorized Officers.
SECTION 5.5 Administrative Trustees.
-----------------------
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The initial Administrative Trustees shall be:
c/o Westbank Corporation
225 Park Avenue
West Springfield, Massachusetts 01089-3326
Telephone: ( )
Telecopier: ( )
Except as expressly set forth in this Declaration and except if a
meeting of the Administrative Trustees is called with respect to any matter over
which the Administrative Trustees have power to act, any power of the
Administrative Trustees may be exercised by, or with the consent of, any one
such Administrative Trustee.
SECTION 5.6 Appointment, Removal and Resignation of Trustees.
------------------------------------------------
(a) Subject to Section 5.6(b) hereof and to Section 6(b) of Annex I
hereto, Trustees may be appointed or removed without cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor;
(ii) unless an Event of Default shall have occurred and be
continuing after the issuance of any Securities, by vote of the
Holders of a Majority in Liquidation Amount of the Common Securities
voting as a class at a meeting of the Holders of the Common
Securities; and
(iii) if an Event of Default shall have occurred and be
continuing after the issuance of the Securities, with respect to the
Property Trustee or the Delaware Trustee, by vote of Holders of a
Majority in Liquidation Amount of the Capital Securities voting as a
class at a meeting of Holders of the Capital Securities, and with
respect to the Administrative Trustees, in the manner set forth in
Section 5.6(a)(ii) hereof.
(b) (i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.6(a) until a Successor Property Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Property Trustee and delivered to the removed Property
Trustee, the Administrative Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be
removed in accordance with Section 5.6(a) until a successor Trustee possessing
the qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware
30
<PAGE>
Trustee and delivered to the removed Delaware Trustee, the Property Trustee (if
the removed Delaware Trustee is not also the Property Trustee), the
Administrative Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the other Trustees, the Sponsor and the Trust, which resignation shall take
effect upon such delivery or upon such later date as is specified therein;
provided, however, that:
- -------- -------
(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective:
(A) until a Successor Property Trustee has been appointed and
has accepted such appointment by instrument executed by such
Successor Property Trustee and delivered to the Trust, the
Sponsor, the Delaware Trustee (if the resigning Property Trustee
is not also the Delaware Trustee) and the resigning Property
Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the Holders;
and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by
such Successor Delaware Trustee and delivered to the Trust, the
Property Trustee (if the resigning Delaware Trustee is not also the
Property Trustee), the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities or, if an Event of Default
shall have occurred and be continuing after the issuance of the Securities, the
Holders of the Capital Securities shall use their best efforts to promptly
appoint a Successor Property Trustee or Successor Delaware Trustee, as the case
may be, if the Property Trustee or the Delaware Trustee delivers an instrument
of resignation in accordance with this Section 5.6.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.6 within 60 days after delivery of an instrument of resignation or removal,
the Property Trustee or Delaware Trustee resigning or being removed, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Property Trustee or Successor Delaware Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper to
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
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<PAGE>
(g) At the time of resignation or removal of the Property Trustee or
the Delaware Trustee, the Sponsor shall pay to such Trustee any amounts that may
be owed to such Trustee pursuant to Section 10.4.
(h) Any successor Delaware Trustee shall file an amendment to the
Certificate of Trust with the Secretary of State of the State of Delaware
identifying the name and principal place of business of such Successor Delaware
Trustee in the State of Delaware.
SECTION 5.7 Vacancies among Trustees.
------------------------
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Administrative Trustees or, if
there are more than two, a majority of the Administrative Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee appointed in accordance with Section 5.6.
SECTION 5.8 Effect of Vacancies.
-------------------
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to dissolve, liquidate or annul the Trust or to terminate this
Declaration. Whenever a vacancy in the number of Administrative Trustees shall
occur, until such vacancy is filled by the appointment of an Administrative
Trustee in accordance with Section 5.6, the Administrative Trustees in office,
regardless of their number, shall have all the powers granted to the
Administrative Trustees and shall discharge all the duties imposed upon the
Administrative Trustees by this Declaration.
SECTION 5.9 Meetings.
--------
If there is more than one Administrative Trustee, meetings of the
Administrative Trustees shall be held from time to time upon the call of any
Administrative Trustee. Regular meetings of the Administrative Trustees may be
held at a time and place fixed by resolution of the Administrative Trustees.
Notice of any in-person meetings of the Administrative Trustees shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a hard
copy by overnight courier) not less than 24 hours before such meeting. Notice of
any telephonic meetings of the Administrative Trustees or any committee thereof
shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
a meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of an Administrative Trustee at a meeting shall constitute a waiver
of notice of such meeting except where an Administrative Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Administrative
Trustees may be taken at a meeting by vote of a majority of the Administrative
Trustees present (whether in person or by telephone) and eligible to vote with
respect to such matter, provided that, a Quorum is present, or without a meeting
-------- ----
by the unanimous written consent of the Administrative Trustees. In the event
there is only one
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Administrative Trustee, any and all action of such Administrative Trustee shall
be evidenced by a written consent of such Administrative Trustee.
SECTION 5.10 Delegation of Power.
-------------------
(a) Any Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21 his
or her power for the purpose of executing any documents contemplated in Section
3.6, including any Registration Statement or amendment thereto filed with the
Commission, or making any other governmental filing.
(b) The Administrative Trustees shall have power to delegate from
time to time to such of their number or to officers of the Trust the doing of
such things and the execution of such instruments either in the name of the
Trust or the names of the Administrative Trustees or otherwise as the
Administrative Trustees may deem expedient, to the extent such delegation is not
prohibited by applicable law or contrary to the provisions of this Declaration.
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
Any Person into which the Property Trustee or the Delaware Trustee or
any Administrative Trustee that is not a natural person, as the case may be, may
be merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Property
Trustee or the Delaware Trustee, as the case may be, shall be a party, or any
Person succeeding to all or substantially all the corporate trust business of
the Property Trustee or the Delaware Trustee, as the case may be, shall be the
successor of the Property Trustee or the Delaware Trustee, as the case may be,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, provided such Person shall be otherwise
qualified and eligible under this Article and provided further that, in the case
of the Delaware Trustee, such Person shall file an amendment to the Certificate
of Trust with the Delaware Secretary of State as contemplated in Section 5.6(h).
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
-------------
Holders shall receive Distributions in accordance with the applicable
terms of the relevant Holder's Securities. If and to the extent that the
Debenture Issuer makes a payment of interest (including Compounded Interest and
Additional Sums) and/or principal on the Debentures held by the Property Trustee
(the amount of any such payment being a "Payment Amount"), the Property Trustee
shall and is directed, to the extent funds are available for that purpose, to
make a distribution (a "Distribution") of the Payment Amount to Holders in
accordance with the terms of the Securities.
33
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ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
---------------------------------------
(a) The Administrative Trustees shall, on behalf of the Trust, issue
one class of capital securities representing preferred undivided beneficial
interests in the assets of the Trust having such terms as are set forth in Annex
I (the "Capital Securities") and one class of common securities representing
common undivided beneficial interests in the assets of the Trust having such
terms as are set forth in Annex I (the "Common Securities"). The Trust shall
issue no securities or other interests in the assets of the Trust other than the
Capital Securities and the Common Securities.
(b) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
nonassessable.
(d) Every Person, by virtue of having become a Holder or a Capital
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration.
SECTION 7.2 Issuance of Capital Securities and Common Securities.
----------------------------------------------------
(a) As of [_________], 1999, the Sponsor, on behalf of the Trust and
pursuant to the Original Declaration, executed and delivered the Underwriting
Agreement. Contemporaneously with the execution and delivery of this
Declaration, an Administrative Trustee, on behalf of the Trust, shall execute in
accordance with Section 7.3 and deliver to the Underwriters named in the
Underwriting Agreement, Capital Security Certificates, registered in the name of
the nominee of the initial Clearing Agency, in an aggregate amount of 1,750,000
Capital Securities having an aggregate Liquidation Amount of $17,500,000,
against receipt of an aggregate purchase price of $17,500,000, which amount such
Administrative Trustee shall promptly deliver to the Property Trustee.
(b) Contemporaneously with the execution and delivery of this
Declaration, an Administrative Trustee, on behalf of the Trust, shall execute in
accordance with Section 7.3 and deliver to the Sponsor Common Security
Certificates, registered in the name of the Sponsor, in an aggregate amount of
46,400 Common Securities having an aggregate Liquidation Amount of $464,000
against payment by the Sponsor of an aggregate purchase price of $464,000, which
amount such Administrative Trustee shall promptly deliver to the Property
Trustee. Contemporaneously therewith, an Administrative Trustee, on behalf of
the Trust, shall subscribe to and purchase from the Sponsor Subordinated
Debentures , registered in the name of the Property Trustee and having an
aggregate principal amount equal to $18,041,200, and, in satisfaction of the
purchase price, the Property Trustee, on behalf of the Trust, shall deliver to
the Sponsor the sum of $18,041,200 (being
34
<PAGE>
the sum of the amounts delivered to the Property Trustee pursuant to (i) the
second sentence of Section 7.2(a) and (ii) the first sentence of this Section
7.2(b)).
SECTION 7.3 The Trust Security Certificates
-------------------------------
The Capital Security Certificates shall be issued in minimum
denominations of $10 Liquidation Amount and integral multiples of $10 in excess
thereof, and the Common Security Certificates shall be issued in denominations
of $10 Liquidation Amount and integral multiples thereof. The Trust Security
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of at least one Administrative Trustee. The Capital Security
Certificates shall be authenticated by the Property Trustee by manual signature
of an authorized signatory thereof. Trust Security Certificates bearing the
signatures of individuals who were, at the time when such signatures shall have
been affixed, authorized to sign on behalf of the Trust or the Property Trustee,
shall be validly issued and entitled to the benefits of this Declaration,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the delivery of such Trust Security Certificates or did not
hold such offices at the date of delivery of such Trust Security Certificates.
A transferee of a Trust Security Certificate shall become a Holder, and shall be
entitled to the rights and subject to the obligations of a Holder hereunder,
upon due registration of such Trust Security Certificate in such transferee's
name pursuant to Sections 7.5, 7.7 and 9.2.
SECTION 7.4 Execution and Delivery of Trust Security Certificates
-----------------------------------------------------
On each Closing Date, the Administrative Trustees shall cause Trust
Security Certificates, in an aggregate Liquidation Amount as provided in Section
7.2, to be executed on behalf of the Trust, authenticated by the Property
Trustee and delivered to or upon the written order of the Sponsor, signed by its
chairman of the board, its president, any executive or senior vice president,
any managing director or any vice president, treasurer, assistant treasurer or
controller without further corporate action by the Sponsor, in authorized
denominations.
SECTION 7.5 Registrar, Paying Agent and Exchange Agent.
------------------------------------------
The Trust shall maintain in Wilmington, Delaware (i) an office or
agency where Capital Securities may be presented for registration of transfer
("Registrar"), (ii) an office or agency where Capital Securities may be
presented for payment ("Paying Agent") and (iii) an office or agency where
Securities may be presented for exchange ("Exchange Agent"). The Registrar shall
keep a register of the Capital Securities and of their transfer. The Trust may
appoint the Registrar, the Paying Agent and the Exchange Agent and may appoint
one or more co-registrars, one or more additional paying agents and one or more
additional Exchange Agents in such other locations as it shall determine. The
term "Registrar" includes any additional registrar, the term "Paying Agent"
includes any additional paying agent and the term "Exchange Agent" includes any
additional Exchange Agent. The Trust may change any Paying Agent, Registrar, co-
registrar or Exchange Agent without prior notice to any Holder. The Paying
Agent, Registrar and Exchange Agent shall be permitted to resign as Paying Agent
upon 30 days' written notice to the Property Trustee, the Administrative
Trustees and the Sponsor. The Trust shall notify the Property Trustee of the
name and address of any Agent not a party to this Declaration. If the Trust
fails to appoint or maintain another entity as Registrar, Paying Agent or
Exchange Agent, the Property Trustee shall act as such.
35
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The Trust or any of its Affiliates may act as Paying Agent, Registrar, or
Exchange Agent. The Trust shall act as Paying Agent, Registrar and Exchange
Agent for the Common Securities.
The Trust initially appoints the Property Trustee as Registrar, Paying
Agent and Exchange Agent for the Capital Securities.
SECTION 7.6 Registration of Transfer and Exchange of Capital Security
---------------------------------------------------------
Certificates
- ------------
Upon surrender for registration of transfer of any Capital Security
Certificate at the office or agency maintained pursuant to Section 7.5, the
Administrative Trustee, or any one of them shall execute on behalf of the Trust,
cause to be authenticated by the Property Trustee and deliver, in the name of
the designated transferee or transferees, one or more new Capital Security
Certificates in authorized denominations of a like aggregate Liquidation Amount
dated the date of execution by such Administrative Trustee or Trustees in
accordance with the requirements of Section 9.2(b).
At the option of a Holder, Capital Security Certificates may be
exchanged for other Capital Security Certificates in authorized denominations of
the same class and of a like aggregate Liquidation Amount upon surrender of the
Capital Security Certificates to be exchanged at the office or agency maintained
pursuant to Section 7.5.
Every Capital Security Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to an Administrative Trustee and the
Securities Registrar duly executed by the Holder or such Holder's attorney duly
authorized in writing. Each Capital Security Certificate surrendered for
registration of transfer or exchange shall be canceled and subsequently disposed
of by an Administrative Trustee or the Securities Registrar in accordance with
such Person's customary practice.
SECTION 7.7 Book-Entry Capital Security Certificates; Common Security
---------------------------------------------------------
Certificate
- -----------
(a) The Capital Security Certificates, upon original issuance, will be
issued in the form of a typewritten Capital Security Certificate or Certificates
representing Book-Entry Capital Security Certificates, to be delivered to The
Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the
Trust. Such Capital Security Certificate or Certificates shall initially be
registered on the Securities Register in the name of Cede & Co., the nominee of
the initial Clearing Agency, and no Capital Securities Beneficial Owner will
receive a Definitive Capital Security Certificate representing such Capital
Securities Beneficial Owner's interest in such Capital Securities, except as
provided in Section 9.2. Unless and until Definitive Capital Security
Certificates have been issued to Capital Securities Beneficial Owners pursuant
to Section 9.2:
(i) the provisions of this Section 7.7(a) shall be in full
force and effect;
(ii) the Securities Registrar and the Trustees shall be entitled
to deal with the Clearing Agency for all purposes of this Declaration
relating to the Book-Entry Capital Security Certificates (including
the payment of the Liquidation Amount of and Distributions on the
Capital Securities evidenced by
36
<PAGE>
Book-Entry Capital Security Certificates and the giving of
instructions or directions to Capital Securities Beneficial Owners of
Capital Securities evidenced by Book-Entry Capital Security
Certificates) as the sole Holder of Capital Securities evidenced by
Book-Entry Capital Security Certificates and shall have no obligations
to the Capital Securities Beneficial Owners thereof;
(ii) to the extent that the provisions of this Section 7.7
conflict with any other provisions of this Declaration, the provisions
of this Section 7.7 shall control; and
(iv) the rights of the Capital Securities Beneficial Owners of
the Book-Entry Capital Security Certificates shall be exercised only
through the Clearing Agency and shall be limited to those established
by law and agreements between such Capital Securities Beneficial
Owners and the Clearing Agency and/or members of, or participants in,
the Clearing Agency ("Participants"). Unless and until Definitive
Capital Security Certificates are issued pursuant to Section 9.2, the
initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit payments on the
Capital Securities to such Clearing Agency Participants.
(b) A Common Security Certificate representing the Common Securities
shall be issued to the Sponsor on each Closing Date in the form of a definitive
Common Security Certificate.
SECTION 7.8 Paying Agent to Hold Money in Trust.
-----------------------------------
The Trust shall require each Paying Agent other than the Property
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Property Trustee all money held by the Paying Agent
for the payment of liquidation amounts or Distributions, and will notify the
Property Trustee if there are insufficient funds for such purpose. While any
such insufficiency continues, the Property Trustee may require a Paying Agent to
pay all money held by it to the Property Trustee. The Trust at any time may
require a Paying Agent to pay all money held by it to the Property Trustee and
to account for any money disbursed by it. Upon payment over to the Property
Trustee, the Paying Agent (if other than the Trust or an Affiliate of the Trust)
shall have no further liability for the money. If the Trust or the Sponsor or an
Affiliate of the Trust or the Sponsor acts as Paying Agent, it shall segregate
and hold in a separate trust fund for the benefit of the Holders all money held
by it as Paying Agent.
SECTION 7.9 Replacement Securities.
----------------------
If a Holder claims that a Security owned by it has been lost,
destroyed or wrongfully taken or if such Security is mutilated and is
surrendered to the Trust or in the case of the Capital Securities to the
Property Trustee, an Administrative Trustee shall execute and the Property
Trustee shall authenticate and make available for delivery a replacement
Security if the Property Trustee's requirements are met. An indemnity bond must
be provided by the Holder which, in the judgment of the Property Trustee, is
sufficient to protect the Trustees, the Sponsor, the Trust or any
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authenticating agent from any loss which any of them may suffer if a Security is
replaced. The Trust may charge such Holder for its expenses in replacing a
Security.
SECTION 7.10 Outstanding Capital Securities.
------------------------------
The Capital Securities outstanding at any time are all the Capital
Securities authenticated by the Property Trustee except for those canceled by
it, those delivered to it for cancellation, and those described in this Section
as not outstanding.
If a Capital Security is replaced, paid or purchased pursuant to
Section 7.9 hereof, it ceases to be outstanding unless the Property Trustee
receives proof satisfactory to it that the replaced, paid or purchased Capital
Security is held by a bona fide purchaser.
If Capital Securities are considered paid in accordance with the
terms of this Declaration, they cease to be outstanding and Distributions on
them shall cease to accumulate.
A Capital Security does not cease to be outstanding because one of
the Trust, the Sponsor or an Affiliate of the Sponsor holds the Security.
SECTION 7.11 Capital Securities in Treasury.
------------------------------
In determining whether the Holders of the required amount of
Securities have concurred in any direction, waiver or consent, Capital
Securities owned by the Trust, the Sponsor or an Affiliate of the Sponsor, as
the case may be, shall be disregarded and deemed not to be outstanding, except
that for the purposes of determining whether the Property Trustee shall be fully
protected in relying on any such direction, waiver or consent, only Securities
which the Property Trustee actually knows are so owned shall be so disregarded.
SECTION 7.12 Cancellation.
------------
The Trust at any time may deliver Capital Securities to the Property
Trustee for cancellation. The Registrar, Paying Agent and Exchange Agent shall
forward to the Property Trustee any Capital Securities surrendered to them for
registration of transfer, redemption, exchange or payment. The Property Trustee
shall promptly cancel all Capital Securities surrendered for registration of
transfer, redemption, exchange, payment, replacement or cancellation and shall
dispose of canceled Capital Securities in accordance with its customary
procedures unless the Trust otherwise directs in writing. The Trust may not
issue new Capital Securities to replace Capital Securities that it has paid or
that have been delivered to the Property Trustee for cancellation or that any
Holder has exchanged.
SECTION 7.13 CUSIP Numbers.
-------------
The Trust in issuing the Capital Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Property Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders of Capital
Securities; provided that, any such notice may state that no representation is
-------- ----
made as to the correctness of such numbers either as printed on the
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Capital Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Capital Securities, and any such redemption shall not be affected by any defect
in or omission of such numbers. The Sponsor will promptly notify the Property
Trustee of any change in the CUSIP numbers.
ARTICLE VIII
DISSOLUTION OF TRUST
SECTION 8.1 Dissolution of Trust.
--------------------
(a) The Trust shall automatically dissolve:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or
liquidation or its equivalent with respect to the Sponsor; or the
revocation of the Sponsor's charter and the expiration of 90 days
after the date of revocation without a reinstatement thereof;
(iii) following the distribution of a Like Amount of the
Debentures to the Holders, provided that, the Property Trustee has
-------------
received written notice from the Sponsor directing the Property
Trustee to dissolve the Trust (which direction is optional, and except
as otherwise expressly provided below, within the discretion of the
Sponsor), and provided, further, that such direction and such
-------- -------
distribution is conditioned on (a) the receipt by the Sponsor of any
and all required regulatory approvals, and (b) the Sponsor's receipt
and delivery to the Administrative Trustees of an opinion of
independent tax counsel experienced in such matters to the effect that
the Holders of the Capital Securities will not recognize any gain or
loss for United States federal income tax purposes as a result of the
dissolution of the Trust and the distribution of Debentures ;
(iv) upon the entry of a decree of judicial dissolution of the
Trust by a court of competent jurisdiction;
(v) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the
Securities;
(vi) upon the redemption or repayment of the Debentures or at
such time as no Debentures are outstanding; or
(vii) the expiration of the term of the Trust provided in Section
3.14.
(b) As soon as is practicable upon completion of winding up of the
Trust following the occurrence of an event referred to in Section 8.1(a) and the
satisfaction of creditors of the Trust in accordance with applicable law, the
Administrative Trustees shall terminate the Trust
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by filing a certificate of cancellation with the Secretary of State of the State
of Delaware in accordance with the Business Trust Act.
(c) The provisions of Section 3.9 and Article X shall survive the
dissolution of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
----------------------
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. To the fullest extent permitted by law, any
transfer or purported transfer of any Security not made in accordance with this
Declaration shall be null and void.
(b) Subject to this Article IX, Capital Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration. To the fullest extent permitted by law, any
transfer or purported transfer of any Security not made in accordance with this
Declaration shall be null and void.
(c) For so long as the Securities remain outstanding, the Sponsor
agrees (i) not to transfer ownership of the Common Securities of the Trust,
provided that any permitted successor of the Sponsor under the Indenture may
succeed to the Sponsor's ownership of the 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 liquidation of the Trust, except as provided in this
Declaration and (iii) to use its best efforts to cause the Trust (a) to remain a
business trust, except in connection with the distribution of Debentures to the
Holders in liquidation of the Trust, the redemption of all of the Securities, or
certain mergers, consolidations or amalgamations, each as permitted by this
Declaration, and (b) not to be classified as an association taxable as a
corporation and to be classified as a grantor trust for United States federal
income tax purposes.
SECTION 9.2 Definitive Capital Security Certificates
----------------------------------------
(a) If (i) the Sponsor advises the Trustees in writing that the
Clearing Agency is no longer willing or able to properly discharge its
responsibilities with respect to the Capital Security Certificates, and the
Sponsor is unable to locate a qualified successor, (ii) the Sponsor at its
option advises the Trustees in writing that it elects to terminate the book-
entry system through the Clearing Agency or (iii) after the occurrence of an
Event of Default, Capital Securities Beneficial Owners representing beneficial
interests aggregating at least a majority of the Liquidation Amount advise the
Administrative Trustees in writing that the continuation of a book-entry system
through the Clearing Agency is no longer in the best interest of the Capital
Securities Beneficial Owners, then the Administrative Trustees shall notify the
other Trustees and the Clearing Agency, and the Clearing Agency, in accordance
with its customary rules and procedures, shall notify all Clearing Agency
Participants for whom it holds Capital Securities of the occurrence of any such
event and of the availability of the Definitive Capital Security Certificates to
Capital Securities Beneficial Owners
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of such class or classes, as applicable, requesting the same. Upon surrender to
the Administrative Trustees of the typewritten Capital Security Certificate or
Certificates representing the Book-Entry Capital Security Certificates by the
Clearing Agency, accompanied by registration instructions, the Administrative
Trustees, or any one of them, shall execute the Definitive Capital Security
Certificates in accordance with the instructions of the Clearing Agency or, if
executed on behalf of the Trust by facsimile, countersigned by a transfer agent
or its agent. Neither the Registrar nor the Trustees shall be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be fully protected in relying on, such instructions. Upon the issuance of
Definitive Capital Security Certificates, the Trustees shall recognize the
Holders of the Definitive Capital Security Certificates as Holders. The
Definitive Capital Security Certificates shall be typewritten, printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Administrative Trustees that meets the requirements of any
stock exchange or automated quotation system on which the Capital Securities are
then listed or approved for trading, as evidenced by the execution thereof by
the Administrative Trustees or any one of them.
(b) Obligations with Respect to Transfers and Exchanges of Capital
--------------------------------------------------------------
Securities.
- ----------
(i) To permit registrations of transfers and exchanges, the
Trust shall execute and the Property Trustee shall authenticate
Definitive Capital Securities and the Global Capital Security at the
Registrar's or co-registrar's request in accordance with the terms of
this Declaration.
(ii) Registrations of transfers or exchanges will be effected
without charge, but only upon payment (with such indemnity as the
Trust or the Sponsor may require) in respect of any tax or other
governmental charge that may be imposed in relation to it.
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of (a) Capital Securities during
a period beginning at the opening of business 15 days before the day
of mailing of a notice of redemption or any notice of selection of
Capital Securities for redemption and ending at the close of business
on the day of such mailing or (b) any Capital Security so selected for
redemption in whole or in part, except the unredeemed portion of any
Capital Security being redeemed in part.
(iv) Prior to the due presentation for registration of transfer
of any Capital Security, the Trust, the Property Trustee, the Paying
Agent, the Registrar or any co-registrar may deem and treat the Person
in whose name a Capital Security is registered as the absolute owner
of such Capital Security for the purpose of receiving Distributions on
such Capital Security and for all other purposes whatsoever, and none
of the Trust, the Property Trustee, the Paying Agent, the Registrar or
any co-registrar shall be affected by notice to the contrary.
(v) All Capital Securities issued upon any registration of
transfer or exchange pursuant to the terms of this Declaration shall
evidence the same
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security and shall be entitled to the same benefits under this
Declaration as the Capital Securities surrendered upon such
registration of transfer or exchange.
(c) No Obligation of the Property Trustee.
-------------------------------------
(i) The Property Trustee shall have no responsibility or
obligation to any Capital Security Beneficial Owner, a Participant in
the Clearing Agency or other Person with respect to the accuracy of
the records of the Clearing Agency or its nominee or of any
Participant thereof, with respect to any ownership interest in the
Capital Securities or with respect to the delivery to any Participant,
beneficial owner or other Person (other than the Clearing Agency) of
any notice (including any notice of redemption) or the payment of any
amount, under or with respect to such Capital Securities. All notices
and communications to be given to the Holders and all payments to be
made to Holders under the Capital Securities shall be given or made
only to or upon the order of the registered Holders (which shall be
the Clearing Agency or its nominee in the case of the Global Capital
Security). The rights of Capital Security Beneficial Owners shall be
exercised only through the Clearing Agency subject to the applicable
rules and procedures of the Clearing Agency. The Property Trustee may
conclusively rely and shall be fully protected in relying upon
information furnished by the Clearing Agency or any agent thereof with
respect to its Participants and any Capital Security Beneficial
Owners.
(ii) The Property Trustee and the Registrar shall have no
obligation or duty to monitor, determine or inquire as to compliance
with any restrictions on transfer imposed under this Declaration or
under applicable law with respect to any transfer of any interest in
any Capital Security (including any transfers between or among
Clearing Agency Participants or Capital Security Beneficial Owners)
other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so
if and when expressly required by, the terms of this Declaration, and
to examine the same to determine substantial compliance as to form
with the express requirements hereof.
SECTION 9.3 Temporary Securities.
--------------------
(a) Until Definitive Capital Securities are ready for delivery, the
Trust may prepare and, in the case of the Capital Securities, the Property
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of Definitive Capital Securities, but may have
variations that the Trust considers appropriate for temporary Securities.
Without unreasonable delay, the Trust shall prepare and, in the case of the
Capital Securities, the Property Trustee shall authenticate Definitive Capital
Securities in exchange for temporary Securities.
(b) The Global Capital Security deposited with the Clearing Agency or
with the Property Trustee as custodian for the Clearing Agency shall be
transferred to the beneficial owners thereof in the form of Definitive Capital
Securities only if such transfer complies with Section 9.2
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and (i) the Clearing Agency notifies the Sponsor that it is unwilling or unable
to continue as Clearing Agency for such Global Capital Security or if at any
time such Clearing Agency ceases to be a "clearing agency" registered under the
Exchange Act, and, in each case, a clearing agency is not appointed by the
Sponsor within 90 days of receipt of such notice or of becoming aware of such
condition, (ii) a Default or an Event of Default has occurred and is continuing
or (iii) the Trust at its sole discretion elects to cause the issuance of
Definitive Capital Securities.
(c) Any Global Capital Security that is transferable to the beneficial
owners thereof in the form of Definitive Capital Securities shall be surrendered
by the Clearing Agency to the Property Trustee to be so transferred, in whole or
from time to time in part, without charge, and the Property Trustee shall
authenticate and make available for delivery, upon such transfer of each portion
of such Global Capital Security, an equal aggregate liquidation amount of
Securities of authorized denominations in the form of Definitive Capital
Securities. Any portion of the Global Capital Security transferred pursuant to
this Section shall be registered in such names as the Clearing Agency shall
direct.
(d) Subject to the provisions of Section 9.3(c), the Holder of the
Global Capital Security may grant proxies and otherwise authorize any Person,
including Participants and Persons that may hold interests through Participants,
to take any action which such Holder is entitled to take under this Declaration
or the Securities.
(e) In the event of the occurrence of any of the events specified in
Section 7.9(b), the Trust will promptly make available to the Property Trustee a
reasonable supply of certificated Capital Securities in fully registered form
without distribution coupons.
SECTION 9.4 Deemed Security Holders.
-----------------------
The Trustees may treat the Person in whose name any Security shall be
registered on the books and records of the Trust as the sole owner and Holder of
such Security for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Security on the part of any Person, whether
or not the Trust shall have actual or other notice thereof.
SECTION 9.5 Notices to Clearing Agency.
--------------------------
Whenever a notice or other communication to the Capital Security
Holders is required to be given by a Trustee under this Declaration, such
Trustee shall give all such notices and communications specified herein to be
given to the Holder of the Global Capital Security to the Clearing Agency and
shall have no notice obligations to the Capital Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
----------------------------------------
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Capital Securities, the Administrative
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to such Capital Securities.
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ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
---------
(a) Except as expressly set forth in this Declaration, the Securities
Guarantees and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Holders which
shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder any deficit
upon dissolution of the Trust or otherwise.
(b) The Sponsor shall be liable for all of the debts and obligations
of the Trust (other than in respect of the Securities) to the extent not
satisfied out of the Trust's assets.
(c) Pursuant to (S) 3803(a) of the Business Trust Act, the Holders
shall be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
-----------
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's gross negligence (or in the case
of the Property Trustee or the Delaware Trustee, negligence) or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders might properly be paid.
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SECTION 10.3 Fiduciary Duty.
--------------
(a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between
any Covered Person and any Indemnified Person, or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such interests
and factors as it desires, including its own interests, and shall have
no duty or obligation to give any consideration to any interest of or
factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not
be subject to any other or different standard imposed by this
Declaration or by applicable law.
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SECTION 10.4 Indemnification.
---------------
(a) (i) The Sponsor shall indemnify, to the full extent permitted
by law, any Company Indemnified Person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Trust) by reason of the fact that he is or
was a Company Indemnified Person, against expenses (including attorneys' fees
and expenses), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Company Indemnified Person
did not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(ii) The Sponsor shall indemnify, to the full extent permitted
by law, any Company Indemnified Person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Trust to procure a judgment in its favor by reason of the fact
that he is or was a Company Indemnified Person against expenses (including
attorneys' fees and expenses) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust unless and
only to the extent that the Court of Chancery of Delaware or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such Person is fairly and reasonably entitled to indemnity for such expenses
which such Court of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action without
prejudice or the settlement of an action without admission of liability) in
defense of any action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 10.4(a), or in defense of any claim, issue or matter therein, he
shall be indemnified, to the full extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the Sponsor only as
authorized in the specific case upon a determination that indemnification of the
Company Indemnified Person is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Administrative Trustees by a majority
vote of a Quorum consisting of such Administrative Trustees who were not parties
to such action, suit or proceeding, (2) if such a Quorum is not obtainable, or,
even if obtainable, if a Quorum of
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disinterested Administrative Trustees so directs, by independent legal counsel
in a written opinion, or (3) by the Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees and expenses) incurred
by a Company Indemnified Person in defending a civil, criminal, administrative
or investigative action, suit or proceeding referred to in paragraphs (i) and
(ii) of this Section 10.4(a) shall be paid by the Sponsor in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Sponsor as authorized in this Section 10.4(a).
Notwithstanding the foregoing, no advance shall be made by the Sponsor if a
determination is reasonably and promptly made (i) by the Administrative Trustees
by a majority vote of a Quorum of disinterested Administrative Trustees, (ii) if
such a Quorum is not obtainable, or, even if obtainable, if a Quorum of
disinterested Administrative Trustees so directs, by independent legal counsel
in a written opinion or (iii) by the Common Security Holder of the Trust, that,
based upon the facts known to the Administrative Trustees, counsel or the Common
Security Holder at the time such determination is made, such Company Indemnified
Person acted in bad faith or in a manner that the Common Security Holder did not
believe to be in or not opposed to the best interests of the Trust, or, with
respect to any criminal proceeding, that such Company Indemnified Person
believed or had reasonable cause to believe his conduct was unlawful. In no
event shall any advance be made in instances where the Administrative Trustees,
independent legal counsel or Common Security Holder reasonably determine that a
Company Indemnified Person deliberately breached his duty to the Trust or its
Common or Capital Security Holders.
(vi) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this Section 10.4(a) shall
not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any agreement,
vote of stockholders or disinterested directors of the Sponsor or Capital
Security Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office. All
rights to indemnification under this Section 10.4(a) shall be deemed to be
provided by a contract between the Sponsor and each Company Indemnified Person
who serves in such capacity at any time while this Section 10.4(a) is in effect.
Any repeal or modification of this Section 10.4(a) shall not affect any rights
or obligations then existing.
(vii) The Sponsor or the Trust may purchase and maintain
insurance on behalf of any person who is or was a Company Indemnified Person
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Debenture
Issuer would have the power to indemnify him against such liability under the
provisions of this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in a
consolidation or merger, so that any person who is or was a director, trustee,
officer or employee of such constituent entity, or is or was serving at the
request of such constituent entity as a director, trustee, officer, employee or
agent of another entity, shall stand in the same position under the provisions
of this Section 10.4(a) with respect to the resulting
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or surviving entity as he would have with respect to such constituent entity if
its separate existence had continued.
(ix) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 10.4(a) shall, unless otherwise
provided when authorized or ratified, continue as to a Person who has ceased to
be a Company Indemnified Person and shall inure to the benefit of the heirs,
executors and administrators of such a Person.
(b) The Sponsor agrees to indemnify the (i) Property Trustee, (ii) the
Delaware Trustee, (iii) any Affiliate of the Property Trustee or the Delaware
Trustee, and (iv) any officers, directors, shareholders, members, partners,
employees, representatives, custodians, nominees or agents of the Property
Trustee or the Delaware Trustee (each of the Persons in (i) through (iv),
including the Property Trustee and the Delaware Trustee in their respective
individual capacities, being referred to as a "Fiduciary Indemnified Person")
for, and to hold each Fiduciary Indemnified Person harmless against, any and all
loss, liability, damage, action, suit, claim or expense including taxes (other
than taxes based on the income of such Fiduciary Indemnified Person) of any kind
and nature whatsoever incurred without negligence or bad faith on the part of
such Fiduciary Indemnified Person, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder, including the
costs and expenses (including reasonable legal fees and expenses) of defending
against or investigating any claim or liability in connection with the exercise
or performance of any of the powers or duties of such Fiduciary Indemnified
Person hereunder. The obligation to indemnify as set forth in this Section
10.4(b) shall survive the resignation or removal of the Property Trustee or the
Delaware Trustee and the satisfaction and discharge of this Declaration.
(c) The Sponsor agrees to pay the Property Trustee and the Delaware
Trustee, from time to time, such compensation for all services rendered by the
Property Trustee and the Delaware Trustee hereunder as may be mutually agreed
upon in writing by the Sponsor and the Property Trustee or the Delaware Trustee,
as the case may be, and, except as otherwise expressly provided herein, to
reimburse the Property Trustee and the Delaware Trustee upon its or their
request for all reasonable expenses (including legal fees and expenses),
disbursements and advances incurred or made by the Property Trustee or the
Delaware Trustee, as the case may be, in accordance with the provisions of this
Declaration, except any such expense, disbursement or advance as may be
attributable to its or their negligence or bad faith.
SECTION 10.5 Outside Businesses.
------------------
Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee (subject to Section 5.3(c)) may engage in or possess an interest in
other business ventures of any nature or description, independently or with
others, similar or dissimilar to the business of the Trust, and the Trust and
the Holders shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee, or the Property Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the
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Sponsor, the Delaware Trustee and the Property Trustee shall have the right to
take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
-----------
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
--------------------------
(a) At all times during the existence of the Trust, the Administrative
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants selected
by the Administrative Trustees.
(b) The Administrative Trustees shall cause to be duly prepared and
delivered to each of the Holders any annual United States federal income tax
information statements required by the Code, containing such information with
regard to the Securities held by each Holder as is required by the Code and the
Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Administrative Trustees shall endeavor to
deliver all such information statements within 30 days after the end of each
Fiscal Year of the Trust.
(c) The Administrative Trustees shall cause to be duly prepared and
filed with the appropriate taxing authority, an annual United States federal
income tax return, on a Form 1041 or such other form required by United States
federal income tax law, and any other annual income tax returns required to be
filed by the Administrative Trustees on behalf of the Trust with any state or
local taxing authority.
SECTION 11.3 Banking.
-------
The Trust may maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds in
-------- -------
respect of the Debentures held by the Property Trustee shall be made directly to
the Property Trustee Account and no other funds of the Trust shall be deposited
in the Property Trustee Account. The sole signatories for such
49
<PAGE>
accounts shall be designated by the Administrative Trustees; provided, however,
-------- -------
that the Property Trustee shall designate the signatories for the Property
Trustee Account.
SECTION 11.4 Withholding.
-----------
The Trust and the Administrative Trustees shall comply with all
withholding requirements under United States federal, state and local law and
under foreign law. The Trust shall request, and the Holders shall provide to the
Trust, such forms or certificates as are necessary to establish an exemption
from withholding with respect to each Holder, and any representations and forms
as shall reasonably be requested by the Trust to assist it in determining the
extent of, and in fulfilling, its withholding obligations. The Administrative
Trustees shall cause to be filed required forms with applicable jurisdictions
and, unless an exemption from withholding is properly established by a Holder,
shall remit amounts withheld with respect to the Holder to applicable
jurisdictions. To the extent that the Trust is required to withhold and pay over
any amounts to any authority with respect to Distributions or allocations to any
Holder, the amount withheld shall be deemed to be a Distribution in the amount
of the withholding to the Holder. In the event of any claim of excess
withholding, Holders shall be limited to an action against the applicable
jurisdiction. If the amount required to be withheld was not withheld from actual
Distributions made, the Trust may reduce subsequent Distributions by the amount
of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
----------
(a) Except as otherwise provided in this Declaration (including
Section 7 of Annex I hereto) or by any applicable terms of the Securities, this
Declaration may only be amended by a written instrument approved and executed
by:
(i) the Sponsor and the Administrative Trustees (or, if there
are more than two Administrative Trustees, a majority of the
Administrative Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property
Trustee; and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware
Trustee.
(b) No amendment shall be made, and any such purported amendment shall
be void and ineffective:
(i) unless, in the case of any proposed amendment, the Property
Trustee shall have first received an Officers' Certificate from each
of the Trust and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the terms of the
Securities);
50
<PAGE>
(ii) unless, in the case of any proposed amendment which affects
the rights, powers, duties, obligations or immunities of the Property
Trustee, the Property Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities);
and
(B) an Opinion of Counsel (who may be counsel to the Sponsor or
the Trust) that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the
Securities) and that all conditions precedent to the execution and
delivery of such amendment have been satisfied;
provided, however, that the Property Trustee and the Delaware Trustee shall not
- -------- -------
be required to sign any such amendment which affects its own rights, duties,
warranties or indemnification; and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue not to be classified as an
association taxable as a corporation or to be less likely to be
classified as a grantor trust, in each case for purposes of United
States federal income taxation;
(B) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act.
(c) At such time after the Trust has issued any Securities that remain
outstanding, any amendment that would adversely affect the rights, privileges or
preferences of any Holder (other than an amendment pursuant to (g)(ii) below)
may be effected only with such additional requirements as may be set forth in
the terms of such Securities;
(d) Section 10.1(c) and this Section 12.1 shall not be amended without
the consent of all of the Holders;
(e) Article Four shall not be amended without the consent of the
Holders of a Majority in Liquidation Amount of the Common Securities;
(f) The rights of the Holders of the Common Securities under Article V
to increase or decrease the number of, and appoint and remove Trustees shall not
be amended without the consent of the Holders of a Majority in Liquidation
Amount of the Common Securities; and
(g) Notwithstanding Section 12.1(c), this Declaration may be amended
without the consent of the Holders to:
51
<PAGE>
(i) cure any ambiguity, correct or supplement any provision in
this Declaration that may be inconsistent with any other provision of
this Declaration or to make any other provisions with respect to
matters or questions arising under this Declaration which shall not be
inconsistent with the other provisions of the Declaration; and
(ii) to modify, eliminate or add to any provisions of the
Declaration 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 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) above, such action shall not
- -------- -------
adversely affect in any material respect the interests of the Holders, and any
such amendments of this Declaration shall become effective when notice thereof
is given to the Holders.
SECTION 12.2 Meetings of the Holders; Action by Written Consent.
--------------------------------------------------
(a) Meetings of the Holders of any class of Securities may be called
at any time by the Administrative Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading. The Administrative Trustees shall
call a meeting of the Holders of such class if directed to do so by the Holders
of at least 10% in Liquidation Amount of such class of Securities. Such
direction shall be given by delivering to the Administrative Trustees one or
more notices in writing stating that the signing Holders wish to call a meeting
and indicating the general or specific purpose for which the meeting is to be
called. Any Holders calling a meeting shall specify in writing the Capital
Security or Common Security Certificates held by the Holders exercising the
right to call a meeting and only those Securities specified shall be counted for
purposes of determining whether the required percentage set forth in the second
sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders:
(i) notice of any such meeting shall be given to all the
Holders having a right to vote thereat at least seven days and not
more than 60 days before the date of such meeting. Whenever a vote,
consent or approval of the Holders is permitted or required under this
Declaration or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, such vote, consent or
approval may be given at a meeting of the Holders; any action that may
be taken at a meeting of the Holders may be taken without a meeting if
a consent in writing setting forth the action so taken is signed by
the Holders owning not less than the minimum amount of Securities in
liquidation amount that would be necessary to authorize or take such
action at a meeting at which all
52
<PAGE>
Holders having a right to vote thereon were present and voting; prompt
notice of the taking of action without a meeting shall be given to the
Holders entitled to vote who have not consented in writing; and the
Administrative Trustees may specify that any written ballot submitted
to the Security Holder for the purpose of taking any action without a
meeting shall be returned to the Trust within the time specified by
the Administrative Trustees;
(ii) each Holder may authorize any Person to act for it by proxy
on all matters in which a Holder is entitled to participate, including
waiving notice of any meeting, or voting or participating at a
meeting; no proxy shall be valid after the expiration of eleven months
from the date thereof unless otherwise provided in the proxy; every
proxy shall be revocable at the pleasure of the Holder executing it;
and, except as otherwise provided herein, all matters relating to the
giving, voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders were stockholders of a Delaware
corporation;
(iii) each meeting of the Holders shall be conducted by the
Administrative Trustees or by such other Person that the
Administrative Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms
of the Securities, the Trust Indenture Act or the listing rules of any
stock exchange on which the Capital Securities are then listed or
trading, otherwise provides, the Administrative Trustees, in their
sole discretion, shall establish all other provisions relating to
meetings of Holders, including notice of the time, place or purpose of
any meeting at which any matter is to be voted on by any Holders,
waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person
or by proxy or any other matter with respect to the exercise of any
such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
--------------------------------------------------
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) the Property Trustee is a banking corporation, a national banking
association or a bank or trust company, duly organized, validly existing and in
good standing under the laws of
53
<PAGE>
the jurisdiction of its incorporation, with corporate power and authority to
execute and deliver, and to carry out and perform its obligations under the
terms of, this Declaration;
(b) the execution, delivery and performance by the Property Trustee of
this Declaration has been duly authorized by all necessary corporate action on
the part of the Property Trustee; and this Declaration has been duly executed
and delivered by the Property Trustee and under Delaware law (excluding any
securities laws) constitutes a legal, valid and binding obligation of the
Property Trustee, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general principles of
equity and the discretion of the court (regardless of whether the enforcement of
such remedies is considered in a proceeding in equity or at law);
(c) the execution, delivery and performance of this Declaration by the
Property Trustee does not conflict with or constitute a breach of the charter or
by-laws of the Property Trustee; and
(d) no consent, approval or authorization of, or registration with or
notice to, any federal or Delaware banking authority governing the trust powers
of the Property Trustee is required for the execution, delivery or performance
by the Property Trustee of this Declaration.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
--------------------------------------------------
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) the Delaware Trustee is a banking corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with corporate power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, this Declaration;
(b) the execution, delivery and performance by the Delaware Trustee of
this Declaration has been duly authorized by all necessary corporate action on
the part of the Delaware Trustee; and this Declaration has been duly executed
and delivered by the Delaware Trustee and under Delaware law (excluding any
securities laws) constitutes a legal, valid and binding obligation of the
Delaware Trustee, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general principles of
equity and the discretion of the court (regardless of whether the enforcement of
such remedies is considered in a proceeding in equity or at law);
(c) the execution, delivery and performance of this Declaration by the
Delaware Trustee does not conflict with or constitute a breach of the charter or
by-laws of the Delaware Trustee; and
54
<PAGE>
(d) no consent, approval or authorization of, or registration with or
notice to, any federal or Delaware banking authority governing the trust powers
of the Delaware Trustee is required for the execution, delivery or performance
by the Delaware Trustee of this Declaration; and
(e) the Delaware Trustee is a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its principal
place of business in the State of Delaware, and is a Person that satisfies for
the Trust Section 3807(a) of the Business Trust Act.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
-------
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first class mail, overnight courier service or confirmed telecopy, as
follows:
(a) if given to the Trust, in care of the Administrative Trustees at
the Trust's mailing address set forth below (or such other address as the Trust
may give notice of to the Property Trustee, the Delaware Trustee and the
Holders):
WESTBANK Capital Trust I
c/o Westbank Corporation
225 Park Avenue
West Springfield, Massachusetts 03773-0029
Attn.:
Telephone: ( )
Telecopier: ( )
(b) if given to the Delaware Trustee, at the mailing address set forth
below (or such other address as the Delaware Trustee may give notice of to the
Property Trustee and the Holders):
Wilmington Trust Company
Rodney Square North
1100 Market Street
Wilmington, Delaware 19890-0001
Attn.: Corporate Trust Administration
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
(c) if given to the Property Trustee, at the Property Trustee's
mailing address set forth below (or such other address as the Property Trustee
may give notice of to the Delaware Trustee and the Holders):
55
<PAGE>
Wilmington Trust Company
Rodney Square North
1100 Market Street
Wilmington, Delaware 19890-0001
Attn.: Corporate Trust Administration
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice to the Trust):
Westbank Corporation
225 Park Avenue
Westbank Springfield, Massachusetts 01089-3326
Attn.:
Telephone: ( )
Telecopier: ( )
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 14.2 Governing Law.
-------------
This Declaration and the rights of the parties hereunder shall be
governed by and construed in accordance with the laws of the State of New York
without regard to conflict of laws principles thereof.
SECTION 14.3 Intention of the Parties.
------------------------
It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust and that no
election be made to have the Trust classified as an association taxable as a
corporation for United States federal income tax purposes. The provisions of
this Declaration shall be interpreted to further this intention of the parties.
56
<PAGE>
SECTION 14.4 Headings.
--------
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 14.5 Successors and Assigns.
----------------------
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether or not so expressed.
SECTION 14.6 Partial Enforceability.
----------------------
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to Persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7 Counterparts.
------------
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one or more of such counterpart signature
pages. All of such counterpart signature pages shall be read as though one, and
they shall have the same force and effect as though all of the signers had
signed a single signature page.
57
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
__________________________________________________
as Administrative Trustee
__________________________________________________
as Administrative Trustee
__________________________________________________
as Administrative Trustee
WILMINGTON TRUST COMPANY
as Delaware Trustee
By:_______________________________________________
Name:
Title:
WILMINGTON TRUST COMPANY
as Property Trustee
By:_______________________________________________
Name:
Title:
WESTBANK CORPORATION
as Sponsor and Debenture Issuer
By:_______________________________________________
Name:
Title:
<PAGE>
ANNEX I
TERMS OF
[_____]% CAPITAL SECURITIES
[_____]% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration, dated
as of [_________], 1999 (as amended from time to time, the "Declaration"), the
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Securities are set out below (each capitalized term used but
not defined herein has the meaning set forth in the Declaration or, if not
defined in such Declaration, as defined in the Registration Statement referred
to below):
1. Designation and Number.
----------------------
(a) Capital Securities. 1,700,000 Capital Securities of the Trust
-------------------
with an aggregate liquidation amount with respect to the assets of the Trust of
Seventeen Million Dollars ($1,700,000) and with a liquidation amount with
respect to the assets of the Trust of Dollars ($ ) (the "Liquidation
Amount") per security, are hereby designated for the purposes of identification
only as "[_____]% Capital Securities" (the "Capital Securities"). The
certificates evidencing the Capital Securities shall be substantially in the
form of Exhibit A-1 to the Declaration, with such changes and additions thereto
or deletions therefrom as may be required by ordinary usage, custom or practice
or to conform to the rules of any exchange or quotation system on or in which
the Capital Securities are listed, traded or quoted.
(b) Common Securities. Common Securities of the Trust with an
-----------------
aggregate liquidation amount with respect to the assets of the Trust of
($ ) and a Liquidation
Amount with respect to the assets of the Trust of Dollars ($ ) per
security, are hereby designated for the purposes of identification only as
"[_____]% Common Securities" (the "Common Securities"). The certificates
evidencing the Common Securities shall be substantially in the form of Exhibit
A-2 to the Declaration, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice.
2. Distributions.
-------------
(a) Distributions on each Security will be payable at a fixed rate per
annum of [_____]% (the "Coupon Rate") of the liquidation amount of $ per
Security, such rate being the rate of interest payable on the Debentures to be
held by the Property Trustee. Distributions in arrears for more than one
quarterly period will bear additional Distributions thereon compounded quarterly
at the Coupon Rate (to the extent permitted by applicable law). The term
"Distributions," as used herein, includes distributions of any and all such
interest, if any, payable unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Debentures held by
the Property Trustee and to the extent the Property Trustee has funds legally
available therefor.
I-1
<PAGE>
(b) Distributions on the Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or,
if no Distributions have been paid, from [_________], 1999 and will be payable
quarterly in arrears on , , and of each
year, commencing , 1999 (each, a "Distribution Date"), except as
otherwise described below. Distributions will be computed on the basis of a 360-
day year consisting of twelve 30-day months. As long as no Event of Default has
occurred and is continuing under the Indenture, the Debenture Issuer has the
right under the Indenture to defer payments of interest by extending the
interest payment period at any time and from time to time on the Debentures for
a period not exceeding consecutive quarterly periods, including the first
such quarterly period during such period (each an "Extension Period"), during
which Extension Period no interest shall be due and payable on the Debentures,
provided that no Extension Period shall end on a date other than an Interest
Payment Date for the Debentures or extend beyond the Maturity Date of the
Debentures. As a consequence of such deferral, Distributions will also be
deferred. Notwithstanding such deferral, Distributions will continue to
accumulate with additional Distributions thereon (to the extent permitted by
applicable law but not at a rate greater than the rate at which interest is then
accruing on the Debentures ) at the Coupon Rate compounded quarterly during any
such Extension Period. Prior to the termination of any such Extension Period,
the Debenture Issuer may further defer payments of interest by further extending
such Extension Period, provided that such extension does not cause such
Extension Period, together with all such previous and further extensions within
such Extension Period, to exceed consecutive quarterly periods, including the
first quarterly period during such Extension Period, end on a date other than an
Interest Payment Date for the Debentures or extend beyond the Maturity Date of
the Debentures. Upon the termination of any Extension Period and the payment of
all amounts then due, the Debenture Issuer may commence a new Extension Period,
subject to the above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the close of
business one Business Day prior to the relevant Distribution Date for Capital
Securities in book-entry form and the /th/ day of the month in which the
relevant Distribution Date occurs for Capital Securities not in book-entry form,
which Distribution Dates correspond to the Interest Payment Dates for the
Debentures. Subject to any applicable laws and regulations and the provisions of
the Declaration, each such payment in respect of the Capital Securities will be
made as described in the Prospectus, dated [__________], 1999 of the Debenture
Issuer and the Trust relating to the Securities and the Debentures. The relevant
record dates for the Common Securities shall be the same as the record dates for
the Capital Securities. Distributions payable on any Securities that are not
punctually paid on any Distribution Date, as a result of the Debenture Issuer
having failed to make a payment under the Debentures , will cease to be payable
to the Holder on the relevant record date, and such defaulted Distribution will
instead be payable to the Person in whose name such Securities are registered on
the special record date or other specified date determined in accordance with
the Indenture. If any date on which Distributions are payable on the Securities
is not a Business Day, then payment of the Distributions 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 of any such delay), unless it would thereby
fall in the next calendar year, in which event such date will be the immediately
preceding Business Day with the same force and effect as if made on such date.
I-2
<PAGE>
(d) Payments of Distributions (including Additional Amounts, if
applicable) in respect of the Capital Securities shall be made by check mailed
to the address of the Person entitled thereto as such address shall appear on
the Securities Register or, if the Capital Securities are held by a Clearing
Agency, such Distributions shall be made to the Clearing Agency in immediately
available funds, which shall credit the relevant Persons' accounts at such
Clearing Agency on the applicable Distribution Dates. Payments in respect of the
Common Securities shall be made in such manner as shall be mutually agreed in
writing between the Property Trustee and the Common Security Holder.
(e) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders.
3. Liquidation Distribution Upon Dissolution.
-----------------------------------------
In the event of any dissolution of the Trust, the Trust shall be
liquidated by the Trustees as expeditiously as the Trustees determine to be
possible by distributing to the Holders, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, a Like Amount (as defined
below) of the 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 of
$10 per Security plus accumulated and unpaid Distributions thereon to the date
of payment (such amount being the "Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the
Securities, Securities having a Liquidation Amount equal to the principal amount
of Debentures to be paid in accordance with their terms and (ii) with respect to
a distribution of Debentures upon the liquidation of the Trust, Debentures
having a principal amount equal to the Liquidation Amount of the Securities of
the Holder to whom such Debentures are distributed.
If, upon any such liquidation, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets legally available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Securities shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
---------------------------
(a) Upon the repayment of the Debentures in whole or in part, at
maturity or otherwise (either at the option of the Debenture Issuer or pursuant
to a Special Event, as described below), the proceeds from such repayment shall
be simultaneously applied by the Property Trustee (subject to the Property
Trustee having received written notice no later than days prior to such
repayment) to redeem a Like Amount of the Securities at a redemption price equal
to % of the principal of, plus accrued and unpaid interest (including
Compounded Interest and Additional Sums, if any, thereon to the date of
redemption on the Debentures being so paid or redeemed (the
I-3
<PAGE>
"Redemption Price"). Holders will be given not less than nor more than
days' prior written notice of such redemption.
(b) The Debenture Issuer shall have the right (subject to the
conditions in the Indenture) to elect to redeem the Debentures, in whole or in
part, at any time on or after [_________], 2004 (the "Initial Optional
Redemption Date"), and, simultaneous with such redemption, to cause a Like
Amount of the Securities to be redeemed by the Trust at the Redemption Price on
a Pro Rata basis.
In the case of an optional redemption, if fewer than all the
outstanding Securities are to be so redeemed, the Common Securities and the
Capital Securities shall be redeemed Pro Rata, and the Capital Securities to be
redeemed will be determined as described in Section 4(f)(ii) below. Upon the
entry of an order for the dissolution of the Trust by a court of competent
jurisdiction, the Debentures thereafter will be subject to optional redemption,
in whole, but not in part, on or after the Initial Optional Redemption Date.
(c) If at any time an Investment Company Event, a Regulatory Capital
Event or a Tax Event (each as defined below, and each a "Special Event") occurs,
the Debenture Issuer shall have the right (subject to the conditions set forth
in the Indenture) at any time prior to the Initial Optional Redemption Date,
upon not less than days' nor more than 60 days' notice, to redeem the
Debentures in whole, but not in part, within the days following the
occurrence of such Special Event (the " Day Period"), and, simultaneous with
such redemption, to cause a Like Amount of the Securities to be redeemed by the
Trust at the Redemption Price on a Pro Rata basis.
"Investment Company Event" shall mean the receipt by the Debenture
Issuer and the Trust of an opinion of independent securities 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 any applicable regulatory authority for the Debenture Issuer or (b) any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of original
issuance of the Securities, the Trust is, or within days of the date of such
opinion will be, considered an Investment Company that is required to be
registered under the Investment Company Act.
A "Tax Event" shall occur upon receipt by the Debenture Issuer and the
Trust of an opinion of independent tax 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 which pronouncement or decision is announced on or after
the date of original issuance of the Securities, there is more than an
insubstantial risk that (i) the Trust is, or will be within days of the date
of such opinion, subject to United States federal income tax with respect to
income received or accrued on the Debentures, (ii) the interest payable by the
Debenture Issuer on the Debentures is not, or within days of the date of such
opinion will not be, deductible by the Debenture Issuer, in whole
I-4
<PAGE>
or in part, for United States federal income tax purposes, or (iii) the Trust
is, or will be within days of the date of such opinion, subject to more than
a de minimis amount of other taxes, duties or other governmental charges.
"Regulatory Capital Event" shall mean the receipt by the Debenture
Issuer and the Trust of 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 an applicable regulatory authority for the Debenture Issuer or (b)
any official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after [____________], 1999,
the Capital Securities do not constitute, or within days of the date of such
opinion will not constitute, Tier 1 Capital (or its then equivalent if the
Sponsor were subject to such capital requirement) applied as if the Debenture
Issuer (or its successors) were a bank holding company for purposes of capital
adequacy guidelines of the Federal Reserve Board (or any successor regulatory
authority with jurisdiction over bank holding companies), or any capital
adequacy guidelines as then in effect and applicable to the Debenture Issuer;
provided, however, that the distribution of the Debentures in connection with
- -------- -------
the liquidation of the Trust by the Debenture Issuer shall not in and of itself
constitute a Regulatory Capital Event.
(d) On and from the date fixed by the Trustees for any distribution of
Debentures and liquidation of the Trust: (i) the Securities will no longer be
deemed to be outstanding, (ii) the Clearing Agency or its nominee (or any
successor Clearing Agency or its nominee), as the Holder of the Capital
Securities, will receive a registered global certificate or certificates
representing the Debentures to be delivered upon such distribution, and (iii)
any certificates representing Securities not held by the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee) will be deemed to
represent beneficial interests in a Like Amount of Debentures until such
certificates are presented to the Debenture Issuer or its agent for transfer or
reissue.
(e) The Trust may not redeem fewer than all the outstanding Securities
unless all accumulated and unpaid Distributions have been paid on all Securities
for all quarterly Distribution periods terminating on or before the date of
redemption.
(f) The procedure with respect to redemptions or distributions of
Securities shall be as follows:
(i) Notice of any redemption of, or notice of distribution of Debentures
in exchange for, the Securities (a "Redemption/Distribution Notice") will be
given by the Trust by mail to each Holder to be redeemed or exchanged not fewer
than 30 nor more than days before the date fixed for redemption or exchange
thereof which, in the case of a redemption, will be the date fixed for
redemption of the Debentures. For purposes of the calculation of the date of
redemption or exchange and the dates on which notices are given pursuant to this
Section 4(f)(i), a Redemption/Distribution Notice shall be deemed to be given on
the day such notice is first mailed by first-class mail, postage prepaid, to
Holders. Each Redemption/Distribution Notice shall be addressed to the Holders
at the address of each such Holder appearing in the books and records of the
Trust. No defect in the
I-5
<PAGE>
Redemption/Distribution Notice or in the mailing of either thereof with respect
to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are to be
redeemed, the particular Securities to be redeemed shall be selected on a Pro
Rata basis or by such other method (including, without limitation, by lot)
deemed fair and appropriate by the Property Trustee (based upon Liquidation
Amounts) not more than 60 nor less than 30 days prior to the date fixed for
redemption from the outstanding Securities not previously called for redemption;
provided, however, that any such redemption may be made on the basis of the
aggregate Liquidation Amount of Securities held by each Holder thereof and may
be made by making such adjustments as the Trust deems fair and appropriate in
order that fractional Securities shall not thereafter remain outstanding. With
respect to Capital Securities registered in the name of and held of record by
the Clearing Agency or its nominee (or any successor Clearing Agency or its
nominee) or any nominee, the distribution of the proceeds of such redemption
will be made to the Clearing Agency and disbursed by such Clearing Agency in
accordance with the procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice (which notice will be irrevocable), then (A) with
respect to Capital Securities issued in book-entry form, by 12:00 noon, New York
City time, on the redemption date, provided that the Debenture Issuer has paid
the Property Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Debentures by 10:00 a.m., New York City time, on
the Maturity Date or the date of redemption, as the case requires, the Property
Trustee will deposit irrevocably with the Clearing Agency or its nominee (or
successor Clearing Agency or its nominee) immediately available funds sufficient
to pay the applicable Redemption Price with respect to such Capital Securities
and will give the Clearing Agency irrevocable instructions and authority to pay
the Redemption Price to the relevant Clearing Agency Participants, and (B) with
respect to Capital Securities issued in certificated form and Common Securities,
provided that the Debenture Issuer has paid the Property Trustee a sufficient
amount of cash in connection with the related redemption or maturity of the
Debentures, the Property Trustee will irrevocably deposit with the paying agent
for the Capital Securities (if other than the Property Trustee) funds sufficient
to pay the applicable Redemption Price to the Holders by check mailed to the
address of the relevant Holder appearing on the books and records of the Trust
on the redemption date, and provided, further, that any such payment shall
become due only upon surrender by the Holder of the related certificated Capital
Securities. If a Redemption/Distribution Notice shall have been given and funds
deposited as required, if applicable, then immediately prior to the close of
business on the date of such deposit, or on the redemption date, as applicable,
Distributions will cease to accumulate on the Securities so called for
redemption and all rights of Holders so called for redemption will cease, except
the right of the Holders of such Securities to receive the Redemption Price, but
without interest on such Redemption Price, and such Securities shall cease to be
outstanding.
(iv) Payment of accumulated and unpaid Distributions on the Redemption
Date of the Securities will be subject to the rights of Holders at the close of
business on a regular record date in respect of a Distribution Date occurring on
or prior to such Redemption Date.
Neither the Administrative Trustees nor the Trust shall be required
to register or cause to be registered the transfer of (i) any Securities
beginning at the opening of business 15 days before
I-6
<PAGE>
the day of mailing of a notice of redemption or any notice of selection of
Securities for redemption or (ii) any Securities selected for redemption except
the unredeemed portion of any Security being redeemed. If any date fixed for
redemption of Securities is not a Business Day, then payment of the Redemption
Price payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment with respect to any such
delay), unless it would thereby fall in the next calendar year, in which event
such date will be the immediately preceding Business Day with the same force and
effect as if made on such date. If payment of the Redemption Price with respect
to any Securities is improperly withheld or refused and not paid either by the
Property Trustee or by the Sponsor as guarantor pursuant to the relevant
Securities Guarantee, Distributions on such Securities will continue to
accumulate from the original redemption date to the actual date of payment, in
which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
(v) Redemption/Distribution Notices shall be sent by the Property Trustee
on behalf of the Trust to (A) with respect to Capital Securities issued in book-
entry form, the Clearing Agency or its nominee (or any successor Clearing Agency
or its nominee), (B) with respect to Capital Securities issued in certificated
form, to the Holders thereof, and (C) with respect to the Common Securities, to
the Holders thereof.
(vi) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws and banking laws), the Sponsor
or any of 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.
5. Voting Rights - Capital Securities.
----------------------------------
(a) Except as provided under Sections 5(b), 6(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Capital
Securities will have no voting rights.
(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee or executing any
trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07 of
the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
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 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 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 Debentures. In addition to obtaining the foregoing
approvals of such Holders of the Capital Securities, prior to taking any of the
foregoing actions, the Trustees shall obtain an opinion of counsel experienced
in such matters to the effect that the Trust will continue not to be classified
as an association taxable as a corporation or be less likely
I-7
<PAGE>
to be classified as a grantor trust, in each case for United States federal
income tax purposes, after taking any such action into account.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay principal of or interest on the Debentures on the due date (or, in the
case of redemption, on the redemption date), then a Holder of Capital Securities
may institute a proceeding directly against the Debenture Issuer for enforcement
of payment to such Holder of the principal of or interest on a Like Amount of
Debentures (a "Direct Action") on or after the respective due date specified in
the Debentures. In connection with such Direct Action, the Common Securities
Holder will be subordinated to the rights of the Holders of Capital Securities
to the extent of any payment made by the Debenture Issuer to such Holder of
Capital Securities in such Direct Action. Except as provided in the second
preceding sentence, and, except as set forth in the first sentence of Section
3.8(e) of the Declaration, the Holders of Capital Securities will not be able to
exercise directly any other remedy available to the holders of the Debentures.
Any approval or direction of Holders of Capital Securities may be
given at a separate meeting of Holders of Capital Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust 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 to be mailed
to each Holder of record of Capital Securities. Each such notice will include a
statement setting forth (i) the date of such meeting or the date by which such
action is to be taken, (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consent.
No vote or consent of the Holders of the Capital Securities will be
required for the Trust to redeem and cancel Capital Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
Notwithstanding that Holders of 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 Sponsor or any Affiliate of the Sponsor
shall not be entitled to vote or consent and shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
---------------------------------
(a) Except as provided under Sections 6(b), 6(c) and 7 or as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) Unless a Debenture Event of Default shall have occurred and be
continuing, any 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
voting rights are vested exclusively
I-8
<PAGE>
in the Sponsor as the Holder of the Common Securities. No resignation or removal
of a 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 Declaration.
(c) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07 of
the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
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 Common Securities; provided, however, that where a consent
under the Indenture would require the consent of each holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee without
the prior approval of each Holder of the Common Securities. The Trustees shall
not revoke any action previously authorized or approved by a vote of the Holders
of the Common Securities except by subsequent vote of such Holders. The Property
Trustee shall notify each Holder of Common Securities of any notice of default
with respect to the Debentures. In addition to obtaining the foregoing approvals
of such Holders of the Common Securities, prior to taking any of the foregoing
actions, the Trustees shall obtain an opinion of counsel experienced in such
matters to the effect that the Trust will continue not to be classified as an
association taxable as a corporation or to be less likely to be classified as a
grantor trust, in each case for United States federal income tax purposes, after
taking any such action into account.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay principal of or interest on the Debentures on the due date (or in the
case of redemption, on the redemption date), then a Holder of Common Securities
may institute a Direct Action directly against the Debenture Issuer for
enforcement of payment to such Holder of the principal of or interest on a Like
Amount of Debentures on or after the respective due date specified in the
Debentures. In connection with such Direct Action, the rights of the Common
Securities Holder will be subordinated to the rights of the Holders of Capital
Securities in respect of any payment from the Debenture Issuer in such Direct
Action. Except as provided in the second preceding sentence, the Holders of
Common Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures.
Any approval or direction of Holders of Common Securities may be given
at a separate meeting of Holders of Common Securities convened for such purpose,
at a meeting of all of the Holders of Securities in the Trust or pursuant to
written consent. The Administrative Trustees will cause a notice of any meeting
at which Holders of Common Securities are entitled to vote, or of any matter
upon which action by written consent of such Holders is to be taken, to be
mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
I-9
<PAGE>
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration.
-------------------------
In addition to the requirements set forth in Section 12.1 of the
Declaration, the Declaration may be amended from time to time by the Sponsor,
the Property Trustee and the Administrative Trustees without the consent of the
Holders (i) to cure any ambiguity, correct or supplement any provisions in the
Declaration that may be inconsistent with any other provisions, or to make any
other provisions with respect to matters or questions arising under the
Declaration which shall not be inconsistent with the other provisions of the
Declaration or (ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that the Trust will
not be classified as an association taxable as a corporation and will not be
less likely to be classified as a grantor trust, in each case for United States
federal income tax purposes, at all times that any 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
an amendment pursuant to clause (i) above, such action shall not adversely
affect in any material respect the interests of any Holder, and any such
amendments of the Declaration shall become effective when notice thereof is
given to the Holders. The Declaration may also be amended by the Trustees and
the Sponsor with (i) the consent of Holders representing a Majority in
Liquidation Amount of all outstanding Securities, and (ii) receipt by the
Trustees of an Opinion of Counsel to the effect that such amendment or the
exercise of any power granted to the Trustees in accordance with such amendment
will not affect the Trust's status as not an association taxable as a
corporation or 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, however, that, without the consent of each
Holder of Trust Securities, the Declaration may not be amended to (i) change the
amount or timing of any Distribution on, or the payment 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.
8. Pro Rata.
--------
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
according to the aggregate liquidation amount of the Securities held by such
Holder in relation to the aggregate liquidation amount of all Securities
outstanding unless, in relation to a payment, an Event of Default under the
Declaration has occurred and is continuing, in which case any funds available to
make such payment shall be paid first to each Holder of the Capital Securities
pro rata according to the aggregate liquidation amount of Capital Securities
held by such Holder relative to the aggregate liquidation amount of all Capital
Securities outstanding and then, only after satisfaction of all amounts owed to
the Holders of the Capital Securities, to each Holder of Common Securities pro
rata according to the aggregate liquidation amount of Common Securities held by
such Holder relative to the aggregate liquidation amount of all Common
Securities outstanding.
I-10
<PAGE>
9. Ranking.
-------
The Capital Securities rank pari passu with the Common Securities and
payment thereon shall be made Pro Rata with the Common Securities, except that,
if an Event of Default under the Declaration occurs and is continuing, no
payments in respect of Distributions on, or payments upon liquidation,
redemption or otherwise with respect to, the Common Securities shall be made
until the Holders of the Capital Securities shall be paid in full the
Distributions, Redemption Price, Liquidation Distribution and any other payments
to which they are entitled at such time.
10. Acceptance of Capital Securities Guarantee, Common Securities
-------------------------------------------------------------
Guarantee, Indenture and Debentures.
- ------------------------------------
Each Holder of Capital Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Capital Securities
Guarantee, the Common Securities Guarantee, the Indenture and the Debentures, as
applicable, including the subordination provisions therein.
11. No Preemptive Rights.
--------------------
Neither the issuance of Capital Securities nor the issuance of Common
Securities is subject to preemptive or other similar rights. The Holders shall
have no preemptive or similar rights to subscribe for any additional securities.
12. Miscellaneous.
-------------
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Capital
Securities Guarantee or the Common Securities Guarantee, as applicable, and the
Indenture (including any supplemental indenture) to a Holder without charge upon
written request to the Trust at its principal place of business.
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE MEANING
OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF THE CLEARING
AGENCY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS NOMINEE ONLY IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION, AND NO TRANSFER OF THIS
CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY
THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY OR
A1-1
<PAGE>
BY A NOMINEE OF THE CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER NOMINEE OF
THE CLEARING AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE CLEARING AGENCY TO THE TRUST OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE CLEARING AGENCY AND ANY PAYMENT HEREON IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
A1-2
<PAGE>
Certificate Number: Aggregate Liquidation
Amount: $17,000,000
CUSIP Number:
Certificate Evidencing Capital Securities
of
Westbank Capital Trust I
[_____]% Capital Securities
(liquidation amount $ per Capital Security)
Westbank Capital Trust I, a statutory business trust created under the
laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co.
(the "Holder") is the registered owner of 1,700,000 Capital Securities of the
Trust]/1/ [the aggregate number of Capital Securities of the Trust specified in
Schedule A hereto]/2/ representing undivided preferred beneficial interests in
the assets of the Trust designated the [_____]% Capital Securities, (liquidation
amount $10 per Capital Security) (the "Capital Securities"). The Capital
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Capital
Securities represented hereby are issued and shall in all respects be subject to
the provisions of the Amended and Restated Declaration of the Trust, dated as of
[_________], 1999, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Capital Securities
as set forth in Annex I to the Declaration. Capitalized terms used but not
defined herein shall have the meaning given them in the Declaration. The Sponsor
will provide a copy of the Declaration, the Capital Securities Guarantee and the
Indenture (including any supplemental indenture) to a Holder without charge upon
written request to the Trust at its principal place of business.
Upon receipt of this Certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Capital Securities Guarantee to the extent provided therein.
By acceptance hereof, the Holder agrees, for United States federal
income tax purposes, to treat the Debentures as indebtedness and the Capital
Securities as evidence of indirect beneficial ownership in the Debentures.
_______________________
/1/ Insert in Definitive Capital Securities only.
/2/ Insert in Global Capital Securities only.
A1-3
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this _____
day of _______________, 1999.
WESTBANK CAPITAL TRUST I
By:_______________________________________
Name:
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the [_____]% Capital Securities of Westbank Capital Trust I
referred to in the within-mentioned Declaration.
Dated: _____________, 1999
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Property Trustee
By:_______________________________________
Authorized Signatory
A1-4
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions on each Capital Security will be payable at a fixed rate per
annum of [_____]% (the "Coupon Rate") of the liquidation amount of $ per
Capital Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than one
quarterly period will bear interest thereon compounded quarterly at the Coupon
Rate (to the extent permitted by applicable law). The term "Distributions," as
used herein, includes such cash distributions and any and all such interest, if
any, payable unless otherwise stated. A Distribution is payable only to the
extent that payments are made in respect of the Debentures held by the Property
Trustee and to the extent the Property Trustee has funds legally available
therefor.
Distributions on the Capital Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or,
if no Distributions have been paid, from [_________], 1999 and will be payable
quarterly in arrears, on , , and of each
year, commencing , 1999, except as otherwise described below.
Distributions will be computed on the basis of a 360-day year consisting of
twelve 30-day months. As long as no Event of Default has occurred and is
continuing under the Indenture, the Debenture Issuer has the right under the
Indenture to defer payments of interest by extending the interest payment period
at any time and from time to time on the Debentures for a period not exceeding
20 consecutive calendar quarterly periods, including the first such quarterly
period during such extension period (each an "Extension Period"), provided that
-------- ----
no Extension Period shall end on a date other than an Interest Payment Date for
the Debentures or extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions will also be deferred.
Notwithstanding such deferral, quarterly Distributions will continue to
accumulate with interest thereon (to the extent permitted by applicable law, but
not at a rate exceeding the rate of interest then accruing on the Debentures)
at the Coupon Rate compounded quarterly during any such Extension Period. Prior
to the termination of any Extension Period, the Debenture Issuer may further
defer payments of interest by further extending such Extension Period; provided
--------
that such Extension Period, together with all such previous and further
- ----
extensions within such Extension Period, may not (i) exceed consecutive
quarterly periods, including the first quarterly period during such Extension
Period, (ii) end on a date other than an Interest Payment Date for the
Debentures or (iii) extend beyond the Maturity Date of the Debentures. Payments
of accumulated Distributions will be payable to Holders as they appear on the
books and records of the Trust on the record date immediately preceding the end
of the Extension Period. Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
A1-5
<PAGE>
Subject to receipt by the Sponsor of any and all required regulatory
approvals and to certain other conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time dissolve the Trust and, after satisfaction of liabilities to creditors of
the Trust as provided by applicable law, cause the Debentures to be distributed
to the Holders of the Securities in liquidation of the Trust or, simultaneously
with any redemption of the Debentures, cause a Like Amount of the Securities to
be redeemed by the Trust.
The Capital Securities shall be redeemable as provided in the
Declaration.
A1-6
<PAGE>
--------------------
ASSIGNMENT
--------------------
FOR VALUE RECEIVED, the undersigned hereby assigns and transfers this Capital
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________ agent
to transfer this Capital Security Certificate on the books of the Trust. The
agent may substitute another to act for him or her.
Date:_________________
Signature:____________________________________________
(Sign exactly as your name appears on the other side of
this Capital Security Certificate)
Signature Guarantee:__________________________________
__________________________
Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
A1-7
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS COMMON SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS COMMON SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS COMMON SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH WESTBANK CORPORATION
(THE "CORPORATION") OR ANY "AFFILIATE" OF THE CORPORATION WAS THE OWNER OF THIS
COMMON SECURITY (OR ANY PREDECESSOR OF THIS COMMON SECURITY) ONLY (A) TO THE
CORPORATION, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, OR (C) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT
TO THE RIGHT OF WESTBANK CAPITAL TRUST I (THE "TRUST") AND THE CORPORATION PRIOR
TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND TO REQUIRE THAT THE TRANSFEROR DELIVER TO THE
TRUST A LETTER FROM THE TRANSFEREE. SUBSTANTIALLY TO THE EFFECT THAT SUCH HOLDER
FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS COMMON SECURITY
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
A2-1
<PAGE>
Certificate Evidencing Common Securities
of
Westbank Capital Trust I
[_____]% Common Securities
(liquidation amount $ per Common Security)
NHTB Capital Trust I, a statutory business trust created under the
laws of the State of Delaware (the "Trust"), hereby certifies that Westbank
Corporation (the "Holder") is the registered owner of Common Securities of
the Trust representing undivided beneficial interests in the assets of the Trust
designated the [_____]% Common Securities, (liquidation amount $ per Common
Security) (the "Common Securities"). Subject to the terms of the Declaration (as
defined below), the Common Securities are transferable on the books and records
of the Trust, in person or by a duly authorized attorney, upon surrender of this
Certificate duly endorsed and in proper form for transfer. The designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Common Securities represented hereby are issued and shall in all respects be
subject to the provisions of the Amended and Restated Declaration of the Trust
dated as of [_________], 1999, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Common Securities
as set forth in Annex I to the Declaration. Capitalized terms used but not
defined herein shall have the meaning given them in the Declaration. The Sponsor
will provide a copy of the Declaration, the Common Securities Guarantee and the
Indenture (including any supplemental indenture) to a Holder without charge upon
written request to the Trust at its principal place of business .
Upon receipt of this Certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Common Securities Guarantee to the extent provided therein.
By acceptance hereof, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this
_________ day of _____________, 1999.
WESTBANK CAPITAL TRUST I
By:____________________________________
Name:
Administrative Trustee
A2-2
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions on each Common Security will be payable at a fixed rate per
annum of [_____]% (the "Coupon Rate") of the liquidation amount of $ per
Common Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than one
quarterly period will bear interest thereon compounded quarterly at the Coupon
Rate (to the extent permitted by applicable law). The term "Distributions," as
used herein, includes such cash distributions and any and all such interest
payable unless otherwise stated. A Distribution is payable only to the extent
that payments are made in respect of the Debentures held by the Property Trustee
and to the extent the Property Trustee has funds legally available therefor.
Distributions on the Common Securities will be cumulative, will accrue from
the most recent date to which Distributions have been paid or, if no
Distributions have been paid, from [_________], 1999 and will be payable
quarterly in arrears, on , , and of each
year, commencing , 1999, except as otherwise described below.
Distributions will be computed on the basis of a 360-day year with twelve months
of 30 days each. As long as no Event of Default has occurred and is continuing
under the Indenture, the Debenture Issuer has the right under the Indenture to
defer payments of interest by extending the interest payment period at any time
and from time to time on the Debentures for a period not exceeding
consecutive calendar quarterly periods, including the first such quarterly
period during such extension period (each an "Extension Period"), provided that
-------- ----
no Extension Period shall end on a date other than an Interest Payment Date for
the Debentures or extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions will also be deferred.
Notwithstanding such deferral, quarterly Distributions will continue to
accumulate with interest thereon (to the extent permitted by applicable law, but
not at a rate exceeding the rate of interest then accruing on the Debentures) at
the Coupon Rate compounded quarterly during any such Extension Period. Prior to
the termination of any Extension Period, the Debenture Issuer may further defer
payments of interest by further extending such Extension Period; provided that
-------- ----
such Extension Period, together with all such previous and further extensions
within such Extension Period, may not (i) exceed consecutive quarterly
periods, including the first quarterly period during such Extension Period, (ii)
end on a date other than an Interest Payment Date for the Debentures or (iii)
extend beyond the Maturity Date of the Debentures. Payments of accrued
Distributions will be payable to Holders as they appear on the books and records
of the Trust on the record date immediately preceding the end of the Extension
Period. Upon the termination of any Extension Period and the payment of all
amounts then due, the Debenture Issuer may commence a new Extension Period,
subject to the above requirements.
Subject to the receipt by the Sponsor of any and all required regulatory
approvals and to certain other conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time dissolve the Trust and cause the Debentures to be distributed to the
Holders of the Securities in liquidation of the Trust or, simultaneously with
any redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.
The Common Securities shall be redeemable as provided in the Declaration.
Under certain circumstances, the rights of the holders of the Common
Securities shall be subordinate to the rights of the holders of the Capital
Securities, as provided in the Declaration.
A2-3
<PAGE>
EXHIBIT 4.4
SUBORDINATED DEBENTURE CERTIFICATE
WESTBANK CORPORATION
CUSIP No.:
$17,000,000
Certificate No.
[______]% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
DUE [__________], 2029
Westbank Corporation, a Delaware corporation (the "Corporation," which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to NHTB Capital Trust I or its registered
assigns, the principal sum of $17,000,000 (Seventeen Million Dollars) on
[__________], 2029 (the "Maturity Date"), unless previously prepaid, and to pay
interest on the outstanding principal amount hereof from [_______], 1999, or
from the most recent interest payment date (each such date, an "Interest Payment
Date") to which interest has been paid or duly provided for, quarterly (subject
to deferral as set forth herein) in arrears on ,
, and of each year, commencing [__________],
1999 at the rate of [______]% per annum until the principal hereof shall have
become due and payable, and on any overdue principal and (without duplication
and to the extent that payment of such interest is enforceable under applicable
law) on any overdue installment of interest at the same rate per annum
compounded quarterly ("Compounded Interest"). The amount of interest payable on
any Interest Payment Date shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. In the event that any date on which the
principal of `or interest on this Security is payable is not a Business Day (as
defined in the Indenture), then the payment payable on such date will be made on
the next succeeding day that is a Business Day, 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 (and without any
interest or other payment in respect of any such delay), with the same force and
effect as if made on such date. Pursuant to the Indenture, in certain
circumstances the Corporation will be required to pay Additional Sums (as
defined in the Indenture) with respect to this Security.
The interest installment so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture, be paid to
the Person in whose name this Security (or one or more Predecessor Securities,
as defined in said Indenture) is registered at the close of business on the
regular record date for such interest installment, which shall be one Business
Day prior to the relevant Interest Payment Date for Global Securities and the
/th/ day of the month in which the relevant Interest Payment Date falls for
Definitive Securities. Any such interest installment not punctually paid or
duly provided for shall forthwith cease to be payable to the holders on such
regular record date and may be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on a special record date to be fixed by the Debenture Trustee for the payment of
such defaulted interest, notice whereof shall be given to the holders of
Securities not less than 10 days prior to such special record date, or may be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities
<PAGE>
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture.
The principal of and interest (including Compounded Interest and Additional
Sums, if any) on this Security shall be payable at the office or agency of the
Debenture Trustee maintained for that purpose in any coin or currency of the
United States of America that at the time of payment is legal tender for payment
of public and private debts; provided, however, that payment of interest may be
-------- -------
made at the option of the Corporation by (i) check mailed to the holder at such
address as shall appear in the Security Register or (ii) transfer to an account
maintained by the Person entitled thereto, provided that proper written transfer
instructions have been received by the relevant record date. Notwithstanding
the foregoing, so long as the holder of this Security is the Property Trustee of
Westbank Capital Trust I, the payment of the principal of and interest
(including Compounded Interest and Additional Sums, if any) on this Security
will be made at such place and to such account as may be designated by such
Property Trustee.
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and junior in right of payment to the prior payment
in full of all Senior Indebtedness, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Debenture Trustee on his or her behalf to take such
action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Debenture Trustee his or her
attorney-in-fact for any and all such purposes. Each holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
This Security shall not be entitled to any benefit under the Indenture or
be valid or become obligatory for any purpose until the Certificate of
Authentication hereon shall have been signed by or on behalf of the Debenture
Trustee.
The provisions of this Security are continued on the reverse side hereof
and such provisions shall for all purposes have the same effect as though fully
set forth at this place.
-2-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this instrument to be duly
executed and sealed this ___ day of _________, 1999.
WESTBANK CORPORATION
By:___________________________________
Name:
Title:
Attest:
By:___________________________
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the [______]% Junior Subordinated Deferrable Interest
Debentures of WESTBANK CORPORATION referred to in the within-mentioned
Indenture.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Debenture
Trustee
Dated:__________________ By:___________________________________
Authorized Signatory
-3-
<PAGE>
REVERSE OF SECURITY
This Security is one of the Securities of the Corporation (herein sometimes
referred to as the "Securities"), specified in the Indenture, all issued or to
be issued under and pursuant to an Indenture, dated as of [________], 1999 (the
"Indenture"), duly executed and delivered between the Corporation and Wilmington
Trust Company, as Debenture Trustee (the "Debenture Trustee"), to which
Indenture reference is hereby made for a description of the rights, limitations
of rights, obligations, duties and immunities thereunder of the Debenture
Trustee, the Corporation and the holders of the Securities.
Upon the occurrence and continuation of a Special Event (as defined in the
Indenture), the Corporation shall have the right, at any time within days
following the occurrence of such Special Event, to prepay this Security in whole
(but not in part) at the Prepayment Price. "Prepayment Price" shall mean, with
respect to any prepayment of the Securities, an amount equal to % of the
principal amount of the Securities to be prepaid plus any accrued and unpaid
interest thereon (including Compounded Interest and Additional Sums, if any) to
the date of such prepayment.
In addition, the Corporation shall have the right to prepay this Security,
in whole or in part, at any time on or after the Initial Optional Redemption
Date (an "Optional Prepayment"), at the Prepayment Price plus accrued and unpaid
interest thereon (including Compounded Interest and Additional Sums, if any) to
the date of such prepayment.
The Prepayment Price shall be paid prior to 12:00 noon, New York City time,
on the date of such prepayment or at such earlier time as the Corporation
determines, provided, that the Corporation shall deposit with the Debenture
--------
Trustee an amount sufficient to pay the applicable Prepayment Price by 10:00
a.m., New York City time, on the date such Prepayment Price is to be paid. Any
prepayment pursuant to this paragraph will be made upon not less than days
nor more than 60 days' prior written notice.
If the Securities are only partially prepaid by the Corporation pursuant to
an Optional Prepayment, the particular Securities to be prepaid shall be
selected on a pro rata basis from the outstanding Securities not previously
called for prepayment; provided, however, that with respect to Securityholders
-------- -------
that would be required to hold Securities with an aggregate principal amount of
less than $ but more than an aggregate principal amount of zero as a result of
such pro rata prepayment, the Corporation shall prepay Securities of each such
Securityholder so that after such prepayment such Securityholder shall hold
Securities either with an aggregate principal amount of at least $ or such
Securityholder no longer holds any Securities and shall use such method
(including, without limitation, by lot) as the Corporation shall deem fair and
appropriate; provided, further, that any such proration may be made on the basis
-------- -------
of the aggregate principal amount of Securities held by each Securityholder
thereof and may be made by making such adjustments as the Corporation deems fair
and appropriate in order that only Securities in denominations of $ or
integral multiples thereof shall be prepaid. In the event of prepayment of this
Security in part only, a new Security or Securities for the portion hereof that
has not been prepaid will be issued in the name of the holder hereof upon the
cancellation hereof.
-4-
<PAGE>
Notwithstanding the foregoing, any prepayment of Securities by the
Corporation shall be subject to the receipt of any and all required regulatory
approvals.
In case an Event of Default (as defined in the Indenture) shall have
occurred and be continuing, the principal of all of the Securities may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Corporation and the
Debenture Trustee, with the consent of the holders of a majority in aggregate
principal amount of the Securities at the time outstanding (as defined in the
Indenture), to execute supplemental indentures for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of modifying in any manner the rights of the holders of the
Securities; provided, however, that no such supplemental indenture shall,
-------- -------
without the consent of each holder of Securities then outstanding and affected
thereby, (i) change the Maturity Date of any Security, or reduce the rate or
extend the time of payment of interest thereon (subject to Article XVI of the
Indenture), or reduce the principal amount thereof, or change any of the
prepayment provisions or make the principal thereof or any interest thereon
payable in any coin or currency other than U.S. dollars, or impair or affect the
right of any holder of Securities to institute suit for payment thereof, or (ii)
reduce the aforesaid percentage of Securities the holders of which are required
to consent to any such supplemental indenture. The Indenture also contains
provisions permitting the holders of a majority in aggregate principal amount of
the Securities at the time outstanding affected thereby, on behalf of all of the
holders of the Securities, to waive any past default in the performance of any
of the covenants contained in the Indenture, or established pursuant to the
Indenture, and its consequences, except a default in the payment of the
principal of or interest on any of the Securities or a default in respect of any
covenant or provision under which the Indenture cannot be modified or amended
without the consent of each holder of Securities then outstanding. Any such
consent or waiver by the holder of this Security (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such holder and upon all
future holders and owners of this Security and of any Security issued in
exchange herefor or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Corporation, which
is absolute and unconditional, to pay the principal of and interest (including
Compounded Interest and Additional Sums, if any) on this Security at the time
and place and at the rate and in the money herein prescribed.
So long as no Event of Default shall have occurred and be continuing, the
Corporation shall have the right, at any time and from time to time during the
term of the Securities, to defer payments of interest by extending the interest
payment period (an "Extended Interest Payment Period") of such Securities for a
period not (i) exceeding 20 consecutive quarterly periods, including the first
such quarterly period during such extension period, (ii) extending beyond the
Maturity Date of the Securities or (iii) ending on a date other than an Interest
Payment Date, at the end of which period the Corporation shall pay all interest
then accrued and unpaid (together with interest thereon at the rate specified
for the Securities to the extent that payment of such interest is enforceable
under applicable law). Before the termination of any such Extended Interest
Payment Period, the
-5-
<PAGE>
Corporation may further defer payments of interest by further extending such
Extended Interest Payment Period, provided that such Extended Interest Payment
--------
Period, together with all such previous and further extensions within such
Extended Interest Payment Period, (i) shall not exceed 20 consecutive quarterly
periods including the first quarterly period during such Extended Interest
Payment Period, (ii) shall not end on any date other than an Interest Payment
Date, and (iii) shall not extend beyond the Maturity Date of the Securities.
Upon the termination of any such Extended Interest Payment Period and the
payment of all accrued and unpaid interest and any additional amounts then due,
the Corporation may commence a new Extended Interest Payment Period, subject to
the foregoing requirements. No interest shall be due and payable during an
Extended Interest Payment Period, except at the end thereof, but the Corporation
may prepay at any time all or any portion of the interest accrued during an
Extended Interest Payment Period.
The Corporation has agreed that if (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 constitute, an Event of Default and
(b) in respect of which the Corporation shall not have taken reasonable steps to
cure, (2) if the Securities are held by the Property Trustee of Westbank Capital
Trust I, the Corporation shall be in default with respect to its payment of any
obligations under the Capital Securities Guarantee or (3) the Corporation shall
have given notice of its election to exercise its right to commence an Extended
Interest Payment Period, and shall not have rescinded such Notice, and such
Extended Interest Payment Period or any extension thereof shall have commenced
and be continuing, 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, (ii) make any payment of principal of or
interest on or premium, if any, on or repay, repurchase or redeem any debt
securities (including other Debentures) of the Corporation that rank pari passu
with or junior in right of payment to the Securities or (iii) make any guarantee
payments 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 Securities
(other than (a) dividends or distributions of Corporation's capital stock (which
includes Common Stock and preferred stock), (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 Capital
Securities Guarantee, as defined in the Indenture, (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 or
compensation plans for its directors, officers or employees or any of the
Corporation's dividend reinvestment plans).
Subject to (i) the Corporation having received any required regulatory
approvals and (ii) the Administrative Trustees of Westbank Capital Trust I
having received an opinion of counsel to the effect that such distribution will
not cause the holders of Capital Securities to recognize gain or loss for
federal income tax purposes, the Corporation will have the right at any time to
liquidate the Trust and, after satisfaction of liabilities of creditors of the
Trust as required by applicable law, to cause the Securities to be distributed
to the holders of the Trust Securities in liquidation of the Trust.
-6-
<PAGE>
The Securities are issuable only in registered form without coupons in
minimum denominations of $ and multiples of $ in excess thereof. As
provided in the Indenture and subject to the transfer restrictions limitations
as may be contained herein and therein from time to time, this Security is
transferable by the holder hereof on the Security Register of the Corporation,
upon surrender of this Security for registration of transfer at the office or
agency of the Corporation in Wilmington, Delaware accompanied by a written
instrument or instruments of transfer in form satisfactory to the Corporation or
the Debenture Trustee duly executed by the holder hereof or his or her attorney
duly authorized in writing, and thereupon one or more new Securities of
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
made for any such registration of transfer, but the Corporation may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in relation thereto.
Prior to due presentment for registration of transfer of this Security, the
Corporation, the Debenture Trustee, any authenticating agent, any paying agent,
any transfer agent and the security registrar may deem and treat the holder
hereof as the absolute owner hereof (whether or not this Security shall be
overdue and notwithstanding any notice of ownership or writing hereon made by
anyone other than the security registrar for the Securities) for the purpose of
receiving payment of or on account of the principal hereof and (subject to the
Indenture) interest due hereon and for all other purposes, and neither the
Corporation nor the Debenture Trustee nor any authenticating agent nor any
paying agent nor any transfer agent nor any security registrar shall be affected
by any notice to the contrary.
No recourse shall be had for the payment of the principal of or interest
(including Compounded Interest and Additional Sums, if any) on this Security, or
for any claim based hereon, or otherwise in respect hereof, or based on or in
respect of the Indenture, against any incorporator, stockholder, employee,
officer or director, past, present or future, as such, of the Corporation or of
any predecessor or successor Person, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of the
consideration for the issuance hereof, expressly waived and released.
All terms used in this Security that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAW PRINCIPLES THEREOF.
-7-
<PAGE>
EXHIBIT 4.5
CAPITAL SECURITY CERTIFICATE
THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE MEANING
OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF THE CLEARING
AGENCY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS NOMINEE ONLY IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION, AND NO TRANSFER OF THIS
CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY
THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY OR BY A NOMINEE OF THE
CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER NOMINEE OF THE CLEARING
AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE CLEARING AGENCY TO THE TRUST OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE CLEARING AGENCY AND ANY PAYMENT HEREON IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
<PAGE>
Certificate Number: Aggregate Liquidation
Amount: $17,000,000
CUSIP Number:
Certificate Evidencing Capital Securities
of
Westbank Capital Trust I
[_____]% Capital Securities
(liquidation amount $ per Capital Security)
NHTB Capital Trust I, a statutory business trust created under the
laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co.
(the "Holder") is the registered owner of 17,000,000 Capital Securities of the
Trust]/1/ [the aggregate number of Capital Securities of the Trust specified in
Schedule A hereto]/2/ representing undivided preferred beneficial interests in
the assets of the Trust designated the [_____]% Capital Securities, (liquidation
amount $ per Capital Security) (the "Capital Securities"). The Capital
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Capital
Securities represented hereby are issued and shall in all respects be subject to
the provisions of the Amended and Restated Declaration of the Trust, dated as of
[_________], 1999, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Capital Securities
as set forth in Annex I to the Declaration. Capitalized terms used but not
defined herein shall have the meaning given them in the Declaration. The Sponsor
will provide a copy of the Declaration, the Capital Securities Guarantee and the
Indenture (including any supplemental indenture) to a Holder without charge upon
written request to the Trust at its principal place of business.
Upon receipt of this Certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Capital Securities Guarantee to the extent provided therein.
By acceptance hereof, the Holder agrees, for United States federal
income tax purposes, to treat the Debentures as indebtedness and the Capital
Securities as evidence of indirect beneficial ownership in the Debentures.
________________________
/1/ Insert in Definitive Capital Securities only.
/2/ Insert in Global Capital Securities only.
-2-
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this _____
day of _______________, 1999.
Westbank Capital Trust I
By:_________________________________
Name:
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the [_____]% Capital Securities of Westbank Capital
Trust I referred to in the within-mentioned Declaration.
Dated: _____________, 1999
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Property Trustee
By:_____________________________
Authorized Signatory
-3-
<PAGE>
REVERSE OF SECURITY
Distributions on each Capital Security will be payable at a fixed rate per
annum of [_____]% (the "Coupon Rate") of the liquidation amount of $ per
Capital Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than one
quarterly period will bear interest thereon compounded quarterly at the Coupon
Rate (to the extent permitted by applicable law). The term "Distributions," as
used herein, includes such cash distributions and any and all such interest, if
any, payable unless otherwise stated. A Distribution is payable only to the
extent that payments are made in respect of the Debentures held by the Property
Trustee and to the extent the Property Trustee has funds legally available
therefor.
Distributions on the Capital Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or,
if no Distributions have been paid, from [_________], 1999 and will be payable
quarterly in arrears, on , , and of each
year, commencing [_________], 1999, except as otherwise described below.
Distributions will be computed on the basis of a 360-day year consisting of
twelve 30-day months. As long as no Event of Default has occurred and is
continuing under the Indenture, the Debenture Issuer has the right under the
Indenture to defer payments of interest by extending the interest payment period
at any time and from time to time on the Debentures for a period not exceeding
20 consecutive calendar quarterly periods, including the first such quarterly
period during such extension period (each an "Extension Period"), provided that
-------- ----
no Extension Period shall end on a date other than an Interest Payment Date for
the Debentures or extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions will also be deferred.
Notwithstanding such deferral, quarterly Distributions will continue to
accumulate with interest thereon (to the extent permitted by applicable law, but
not at a rate exceeding the rate of interest then accruing on the Debentures) at
the Coupon Rate compounded quarterly during any such Extension Period. Prior to
the termination of any Extension Period, the Debenture Issuer may further defer
payments of interest by further extending such Extension Period; provided that
-------- ----
such Extension Period, together with all such previous and further extensions
within such Extension Period, may not (i) exceed 20 consecutive quarterly
periods, including the first quarterly period during such Extension Period, (ii)
end on a date other than an Interest Payment Date for the Debentures or (iii)
extend beyond the Maturity Date of the Debentures. Payments of accumulated
Distributions will be payable to Holders as they appear on the books and records
of the Trust on the record date immediately preceding the end of the Extension
Period. Upon the termination of any Extension Period and the payment of all
amounts then due, the Debenture Issuer may commence a new Extension Period,
subject to the above requirements.
Subject to receipt by the Sponsor of any and all required regulatory
approvals and to certain other conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time dissolve the Trust and, after satisfaction of liabilities to creditors of
the Trust as provided by applicable law, cause the Debentures to be distributed
to the Holders of the Securities in liquidation of the Trust or, simultaneously
with any redemption of the Debentures, cause a Like Amount of the Securities to
be redeemed by the Trust.
The Capital Securities shall be redeemable as provided in the
Declaration.
-4-
<PAGE>
_______________________
ASSIGNMENT
_______________________
FOR VALUE RECEIVED, the undersigned hereby assigns and transfers this Capital
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________ agent
to transfer this Capital Security Certificate on the books of the Trust. The
agent may substitute another to act for him or her.
Date:__________
Signature:__________________________________________________________
(Sign exactly as your name appears on the other side of this Capital Security
Certificate)
Signature Guarantee:________________________________________________
______________________
Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
-5-
<PAGE>
EXHIBIT 4.6
==================================================================
CAPITAL SECURITIES GUARANTEE AGREEMENT
WESTBANK CORPORATION
Dated as of [_______], 1999
==================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
ARTICLE I
IDEFINITIONS AND INTERPRETATION
<S> <C>
SECTION 1.1 Definitions and Interpretation............................................................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application............................................................. 5
SECTION 2.2 Lists of Holders of Securities............................................................... 5
SECTION 2.3 Reports by the Capital Securities Guarantee Trustee.......................................... 5
SECTION 2.4 Periodic Reports to the Capital Securities Guarantee Trustee................................. 6
SECTION 2.5 Evidence of Compliance with Conditions Precedent............................................. 6
SECTION 2.6 Waiver of Events of Default.................................................................. 6
SECTION 2.7 Notice of Events of Default.................................................................. 6
SECTION 2.8 Conflicting Interests........................................................................ 7
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities Guarantee Trustee................................ 7
SECTION 3.2 Certain Rights of the Capital Securities Guarantee Trustee................................... 8
SECTION 3.3 Not Responsible for Recitals or Issuance of the Capital Securities Guarantee................. 10
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility............................................ 11
SECTION 4.2 Appointment, Removal and Resignation of the Capital Securities Guarantee Trustee............. 11
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee.................................................................................... 12
SECTION 5.2 Waiver of Notice and Demand.................................................................. 12
SECTION 5.3 Obligations Not Affected..................................................................... 12
SECTION 5.4 Rights of Holders............................................................................ 13
SECTION 5.5 Guarantee of Payment......................................................................... 14
</TABLE>
(i)
<PAGE>
<TABLE>
Page
----
<S> <C>
SECTION 5.6 Subrogation............................................ 14
SECTION 5.7 Independent Obligations................................ 14
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions............................. 14
SECTION 6.2 Ranking................................................ 15
ARTICLE VII
TERMINATION
SECTION 7.1 Termination............................................ 15
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation............................................ 15
SECTION 8.2 Compensation and Indemnification....................... 16
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns................................. 16
SECTION 9.2 Amendments............................................. 16
SECTION 9.3 Notices................................................ 17
SECTION 9.4 Benefit................................................ 18
SECTION 9.5 Governing Law.......................................... 18
</TABLE>
(ii)
<PAGE>
CROSS REFERENCE TABLE
<TABLE>
<CAPTION>
Section of Trust
Indenture Act of Section of Guarantee
1939, as amended Agreement
- ---------------- ---------
<S> <C>
310(a) 4.1(a)
310(b) 4.1(c), 2.8
310(c) Inapplicable
311(a) 2.2(b)
311(b) 2.2(b)
311(c) Inapplicable
312(a) 2.2(a)
312(b) 2.2(b)
313 2.3
314(a) 2.4
314(b) Inapplicable
314(c) 2.5
314(d) Inapplicable
314(e) 1.1, 2.5, 3.2
314(f) 2.1, 3.2
315(a) 3.1(d)
315(b) 2.7
315(c) 3.1(c)
315(d) 3.1(d)
316(a) 1.1, 2.6, 5.4
316(b) 5.3
316(c) 9.2
317(a) Inapplicable
317(b) Inapplicable
318(a) 2.1(a)
318(c) 2.1(b)
</TABLE>
_______________
* This Cross-Reference Table does not constitute part of this Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
(iii)
<PAGE>
CAPITAL SECURITIES GUARANTEE AGREEMENT
This CAPITAL SECURITIES GUARANTEE AGREEMENT (the "Capital Securities
Guarantee"), dated as of [________], 1999, is executed and delivered by WESTBANK
CORPORATION, a Delaware corporation (the "Guarantor"), and WILMINGTON TRUST
COMPANY, a Delaware corporation, as trustee (the "Capital Securities Guarantee
Trustee" or "Trustee"), for the benefit of the Holders (as defined herein), from
time to time, of the Capital Securities (as defined herein) of WESTBANK CAPITAL
TRUST I, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of [_________], 1999, by and among the trustees of the
Issuer named therein, the Guarantor, as sponsor, and the Holders, from time to
time, of undivided beneficial interests in the assets of the Issuer, the Issuer
is issuing capital securities, having a liquidation amount of $10 per capital
security, such capital securities being designated the [_______]% Capital
Securities (the "Capital Securities").
WHEREAS, as incentive for the Holders to purchase the Capital Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth in this Capital Securities Guarantee, to pay the Guarantee Payments
(as defined herein) to the Holders of the Capital Securities, and the Guarantor
agrees to make certain other payments on the terms and conditions set forth
herein.
WHEREAS, the Guarantor is also executing and delivering the Common
Securities Guarantee Agreement, dated as of [__________], 1999 (the "Common
Securities Guarantee"), for the benefit of the holders of the Common Securities
(as defined herein), the terms of which provide that if an Event of Default (as
defined in the Declaration) has occurred and is continuing, the rights of
holders of the Common Securities to receive Guarantee Payments under the Common
Securities Guarantee are subordinated, to the extent and in the manner set forth
in the Common Securities Guarantee, to the rights of Holders of the Capital
Securities to receive Guarantee Payments under this Capital Securities
Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of the
Capital Securities, which purchase the Guarantor hereby acknowledges shall
benefit the Guarantor, the Guarantor executes and delivers this Capital
Securities Guarantee for the benefit of such Holders.
<PAGE>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
------------------------------
In this Capital Securities Guarantee, unless the context otherwise
requires:
(a) capitalized terms used in this Capital Securities Guarantee but not
defined in the preamble above have the respective meanings assigned to them in
this Section 1.1;
(b) terms defined in the Declaration as at the date of execution of this
Capital Securities Guarantee have the same meaning when used in this Capital
Securities Guarantee unless otherwise defined in this Capital Securities
Guarantee,
(c) a term defined anywhere in this Capital Securities Guarantee has the
same meaning throughout;
(d) all references to "the Capital Securities Guarantee" or "this Capital
Securities Guarantee" are references to this Capital Securities Guarantee as
modified, supplemented or amended from time to time;
(e) all references in this Capital Securities Guarantee to Articles and
Sections references are to Articles and Sections of this Capital Securities
Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning when
used in this Capital Securities Guarantee, unless otherwise defined in this
Capital Securities Guarantee or unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 under
---------
the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" shall mean any day other than a Saturday or a Sunday, or a
------------
day on which banking institutions in Wilmington, Delaware, New York, New York or
Newport, New Hampshire are authorized or required by law or executive order to
remain closed.
"Capital Securities Guarantee Trustee" shall mean Wilmington Trust Company
------------------------------------
as Trustee under the Capital Securities Guarantee, until a Successor Capital
Securities Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Capital Securities Guarantee, and
thereafter means each such Successor Capital Securities Guarantee Trustee.
"Common Securities" shall mean the securities representing common undivided
-----------------
beneficial interests in the assets of the Issuer.
"Corporate Trust Office" shall mean the office of the Capital Securities
----------------------
Guarantee Trustee at which the corporate trust business of the Capital
Securities Guarantee Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Agreement
-2-
<PAGE>
is located at Rodney Square North, 1100 Market Street, Wilmington, Delaware
19890-0001, Attention: Corporate Trust Administration, or at any other time at
such other address as the Capital Securities Guarantee Trustee may designate
from time to time by notice to the Issuer.
"Covered Person" shall mean any Holder or beneficial owner of the Capital
--------------
Securities.
"Debentures" shall mean the series of subordinated debt securities of the
----------
Guarantor designated the [_____]% Junior Subordinated Deferrable Interest
Debentures due [________], 2029, held by the Property Trustee (as defined in the
Declaration) of the Issuer.
"Event of Default" shall mean a default by the Guarantor on any of its
----------------
payment or other obligations under this Capital Securities Guarantee; provided,
--------
however, that, except with respect to default in respect of any Guarantee
- -------
Payment, no default by the Guarantor hereunder shall constitute an Event of
Default unless the Guarantor shall have received written notice of the default
and shall not have cured such default within 60 days after receipt thereof.
"Guarantee Payments" shall mean the following payments or distributions,
------------------
without duplication, with respect to the Capital Securities, to the extent not
paid or made by or on behalf of the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Capital Securities, to the extent the Issuer has funds legally available
therefor at such time, (ii) the redemption price, including all accumulated and
unpaid Distributions to the date of redemption (the "Redemption Price"), to the
extent the Issuer has funds legally available therefor at such time, with
respect to any Capital Securities called for redemption, and (iii) upon a
voluntary or involuntary dissolution, winding up or liquidation of the Issuer
(other than in connection with the distribution of Debentures to the Holders in
exchange for Capital Securities or in connection with the redemption of the
Capital Securities, in each case as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount and all accumulated and unpaid
Distributions on the Capital Securities to the date of payment, to the extent
the Issuer has funds legally available therefor at such time, and (b) the amount
of assets of the Issuer remaining available for distribution to Holders after
satisfaction of liabilities to creditors of the Issuer as required by applicable
law (in either case, the "Liquidation Distribution"). If an Event of Default has
occurred and is continuing, no Guarantee Payments under the Common Securities
Guarantee with respect to the Common Securities or any guarantee payment under
any Other Common Securities Guarantee shall be made until the Holders of the
Capital Securities shall be paid in full the Guarantee Payments to which they
are entitled under this Capital Securities Guarantee.
"Holder" shall mean any holder, as registered on the books and records of
------
the Issuer, of any Capital Securities; provided, however, that, in determining
-------- -------
whether the holders of the requisite percentage of Capital Securities have given
any request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Person actually known to a Responsible Officer of the Capital
Securities Guarantee Trustee to be an Affiliate of the Guarantor.
"Indemnified Person" shall mean the Capital Securities Guarantee Trustee
------------------
(including in its individual capacity), any Affiliate of the Capital Securities
Guarantee Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives, nominees, custodians or agents of the Capital
Securities Guarantee Trustee.
"Indenture" shall mean the Indenture, dated as of [________], 1999, between
---------
Westbank Corporation, as issuer of Debentures (the "Debenture Issuer"), and
-3-
<PAGE>
Wilmington Trust Company, as trustee, pursuant to which the Debentures are to be
issued to the Property Trustee of the Issuer.
"Majority in Liquidation Amount of the Capital Securities" shall mean,
--------------------------------------------------------
except as provided by the Trust Indenture Act, a vote by Holder(s) of the
Capital Securities, voting separately as a class, of more than % of the
aggregate liquidation amount (including the amount that would be paid on
redemption, liquidation or otherwise, plus accumulated and unpaid Distributions
to the date upon which the voting percentages are determined) of all outstanding
Capital Securities.
"Officers' Certificate" shall mean, with respect to any Person, a
---------------------
certificate signed by the Chairman of the Board, the Chief Executive Officer,
the President, an Executive or Senior Vice President, a Vice President or the
Chief Financial Officer and the Secretary or an Assistant Secretary. Any
Officers' Certificate delivered with respect to compliance with a condition or
covenant provided for in this Capital Securities Guarantee shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenants or conditions and the definitions relating thereto;
(b) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(c) a statement as to whether or not, in the opinion of each such officer,
such condition or covenant has been complied with.
"Other Common Securities Guarantees" shall have the same meaning as "Other
----------------------------------
Guarantees" in the Common Securities Guarantee.
"Other Debentures" shall mean all junior subordinated debentures, other
----------------
than the Debentures, issued by the Guarantor, from time to time, and sold to
trusts other than the Issuer to be established by the Guarantor (if any), in
each case similar to the Issuer.
"Other Guarantees" shall mean all guarantees, other than this Capital
----------------
Securities Guarantee, issued or to be issued by the Guarantor with respect to
capital securities (if any) similar to the Capital Securities, issued by trusts
other than the Issuer established or to be established by the Guarantor (if
any), in each case similar to the Issuer.
"Person" shall mean a legal person, including any individual, corporation,
------
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Responsible Officer" shall mean, with respect to a Person, any officer
-------------------
with direct responsibility for the administration of any matters relating to
this Capital Securities Guarantee.
"Successor Capital Securities Guarantee Trustee" shall mean a successor
----------------------------------------------
Capital Securities Guarantee Trustee possessing the qualifications to act as
Capital Securities Guarantee Trustee under Section 4.1.
-4-
<PAGE>
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
-------------------
amended.
"Trust Securities" shall mean the Common Securities and the Capital
----------------
Securities.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
--------------------------------
(a) This Capital Securities Guarantee is subject to the provisions of the
Trust Indenture Act that are required to be part of this Capital Securities
Guarantee and shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Capital Securities
Guarantee limits, qualifies or conflicts with the duties imposed by Sections 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control. If any provision of this Capital Securities Guarantee modifies or
excludes any provision of the Trust Indenture Act that may be so modified or
excluded, the modified or excluded provision of the Trust Indenture Act shall be
deemed to apply to this Capital Securities Guarantee as so modified or excluded,
as the case may be.
SECTION 2.2 Lists of Holders of Securities
------------------------------
(a) The Guarantor shall provide the Capital Securities Guarantee Trustee
(unless the Capital Securities Guarantee Trustee is otherwise the registrar of
the Capital Securities) with a list, in such form as the Capital Securities
Guarantee Trustee may reasonably require, of the names and addresses of the
Holders of the Capital Securities ("List of Holders") as of such date, (i)
within fourteen (14) days after each record date for payment of Distributions
(as defined in the Declaration), and (ii) at any other time within 30 days of
receipt by the Guarantor of a written request for a List of Holders as of a date
no more than 14 days before such List of Holders is given to the Capital
Securities Guarantee Trustee; provided, however, that the Guarantor shall not be
-------- -------
obligated to provide such List of Holders at any time the List of Holders does
not differ from the most recent List of Holders given to the Capital Securities
Guarantee Trustee by the Guarantor. The Capital Securities Guarantee Trustee may
destroy any List of Holders previously given to it upon receipt of a new List of
Holders.
(b) The Capital Securities Guarantee Trustee shall comply with its
obligations under Sections 31l(a), 31l(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Capital Securities Guarantee Trustee
---------------------------------------------------
Within 60 days after and of each year, commencing
, 1999, the Capital Securities Guarantee Trustee shall provide to the
Holders of the Capital Securities such reports as are required by Section 313 of
the Trust Indenture Act, if any, in the form and in the manner provided by
Section 313 of the Trust Indenture Act. The Capital Securities Guarantee Trustee
shall also comply with the requirements of Section 313(d) of the Trust Indenture
Act.
-5-
<PAGE>
SECTION 2.4 Periodic Reports to the Capital Securities Guarantee Trustee
------------------------------------------------------------
The Guarantor shall provide to the Capital Securities Guarantee Trustee,
the Securities and Exchange Commission and the Holders such documents, reports
and information as are required by Section 314 of the Trust Indenture Act (if
any) and the compliance certificate required by Section 314 of the Trust
Indenture Act in the form, in the manner and at the times required by Section
314 of the Trust Indenture Act. Delivery of such reports, information and
documents to the Capital Securities Guarantee Trustee is for informational
purposes only, and the Capital Securities Guarantee Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Guarantor's
compliance with any of its covenants hereunder (as to which the Capital
Securities Guarantee Trustee is entitled to rely exclusively on Officers'
Certificates).
SECTION 2.5 Evidence of Compliance with Conditions Precedent
------------------------------------------------
The Guarantor shall provide to the Capital Securities Guarantee Trustee
such evidence of compliance with the conditions precedent, if any, provided for
in this Capital Securities Guarantee that relate to any of the matters set forth
in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given in
the form of an Officers' Certificate.
SECTION 2.6 Waiver of Events of Default
---------------------------
The Holders of a Majority in Liquidation Amount of the Capital Securities
may, by vote, on behalf of the Holders of all of the Capital Securities, waive
any past Event of Default and its consequences. Upon such waiver, any such Event
of Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured, for every purpose of this Capital Securities
Guarantee, but no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent thereon.
SECTION 2.7 Notice of Events of Default
---------------------------
(a) The Capital Securities Guarantee Trustee shall, within Business Days
after the occurrence of an Event of Default with respect to this Capital
Securities Guarantee actually known to a Responsible Officer of the Capital
Securities Guarantee Trustee, transmit by mail, first class postage prepaid, to
all Holders of the Capital Securities, notices of all such Events of Default,
unless such Events of Default have been cured before the giving of such notice;
provided, however, that, except in the case of an Event of Default arising from
- -------- -------
the non-payment of any Guarantee Payment, the Capital Securities Guarantee
Trustee shall be protected in withholding such notice if and so long as a
Responsible Officer of the Capital Securities Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Capital Securities.
(b) The Capital Securities Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Capital Securities Guarantee
Trustee shall have received written notice, or a Responsible Officer of the
Capital Securities Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge, of such Event of Default.
-6-
<PAGE>
SECTION 2.8 Conflicting Interests
---------------------
The Declaration shall be deemed to be specifically described in this
Capital Securities Guarantee for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities Guarantee Trustee
-------------------------------------------------------------
(a) This Capital Securities Guarantee shall be held by the Capital
Securities Guarantee Trustee for the benefit of the Holders of the Capital
Securities, and the Capital Securities Guarantee Trustee shall not transfer this
Capital Securities Guarantee to any Person except a Holder of the Capital
Securities exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Capital Securities Guarantee Trustee on acceptance by such Successor
Capital Securities Guarantee Trustee of its appointment to act as Successor
Capital Securities Guarantee Trustee. The right, title and interest of the
Capital Securities Guarantee Trustee shall automatically vest in any Successor
Capital Securities Guarantee Trustee, and such vesting and succession of title
shall be effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Capital Securities
Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of the
Capital Securities Guarantee Trustee has occurred and is continuing, the Capital
Securities Guarantee Trustee shall enforce this Capital Securities Guarantee for
the benefit of the Holders of the Capital Securities.
(c) The Capital Securities Guarantee Trustee, before the occurrence of any
Event of Default (of which, other than a default in respect of any Guarantee
Payment, a Responsible Officer of the Property Trustee has actual knowledge) and
after the curing of all such Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Capital Securities Guarantee, and no implied covenants or obligations shall be
read into this Capital Securities Guarantee against the Capital Securities
Guarantee Trustee. In case an Event of Default has occurred (that has not been
cured or waived pursuant to Section 2.6) and is actually known to a Responsible
Officer of the Capital Securities Guarantee Trustee, the Capital Securities
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Capital Securities Guarantee, and use the same degree of care and skill in
its exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Capital Securities Guarantee shall be construed to
relieve the Capital Securities Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default (of which, other
than a default in respect of any Guarantee Payment, a Responsible Officer
of the Property Trustee
-7-
<PAGE>
actual knowledge) and after the curing or waiving of all such Events of
Default that may have occurred:
(A) the duties and obligations of the Capital Securities Guarantee
Trustee shall be determined solely by the express provisions of this
Capital Securities Guarantee, and the Capital Securities Guarantee Trustee
shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Capital Securities
Guarantee, and no implied covenants or obligations shall be read into this
Capital Securities Guarantee against the Capital Securities Guarantee
Trustee; and
(B) in the absence of bad faith on the part of the Capital
Securities Guarantee Trustee, the Capital Securities Guarantee Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished
to the Capital Securities Guarantee Trustee and conforming to the
requirements of this Capital Securities Guarantee; provided, however, that
-------- -------
in the case of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the Capital Securities
Guarantee Trustee, the Capital Securities Guarantee Trustee shall be under
a duty to examine the same to determine whether or not on their face they
conform to the requirements of this Capital Securities Guarantee;
(ii) the Capital Securities Guarantee Trustee shall not be liable for
any errors of judgment made in good faith by a Responsible Officer of the
Capital Securities Guarantee Trustee, unless it shall be proved that the
Capital Securities Guarantee Trustee or such Responsible Officer was
negligent in ascertaining the pertinent facts upon which such judgment was
made;
(iii) the Capital Securities Guarantee Trustee shall not be liable
with respect to any actions taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of a Majority in
Liquidation Amount of the Capital Securities relating to the time, method
and place of conducting any proceeding for any remedy available to the
Capital Securities Guarantee Trustee, or exercising any trust or power
conferred upon the Capital Securities Guarantee Trustee under this Capital
Securities Guarantee; and
(iv) no provision of this Capital Securities Guarantee shall require
the Capital Securities Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers, if the
Capital Securities Guarantee Trustee shall have reasonable grounds for
believing that the repayment of such funds or liability is not reasonably
assured to it under the terms of this Capital Securities Guarantee or
indemnity, reasonably satisfactory to the Capital Securities Guarantee
Trustee, against such risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of the Capital Securities Guarantee Trustee
----------------------------------------------------------
(a) Subject to the provisions of Section 3.1:
(i) the Capital Securities Guarantee Trustee may conclusively rely,
and shall be fully protected in acting or refraining from acting, upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note,
-8-
<PAGE>
other evidence of indebtedness or other paper or document believed by it to
be genuine and to have been signed, sent or presented by the proper party
or parties;
(ii) any direction or act of the Guarantor contemplated by this
Capital Securities Guarantee may be sufficiently evidenced by an Officers'
Certificate;
(iii) whenever, in the administration of this Capital Securities
Guarantee, the Capital Securities Guarantee Trustee shall deem it desirable
that a matter be proved or established before taking, suffering or omitting
any action hereunder, the Capital Securities Guarantee Trustee (unless
other evidence is herein specifically prescribed) may, in the absence of
bad faith on its part, request and conclusively rely upon an Officers'
Certificate, which, upon receipt of such request, shall be promptly
delivered by the Guarantor;
(iv) the Capital Securities Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any instrument or other
document (or any rerecording, refiling or registration thereof);
(v) the Capital Securities Guarantee Trustee may consult with
counsel of its selection, and the advice or opinion of such counsel with
respect to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion; and
such counsel may be counsel to the Guarantor or any of its Affiliates and
may include any of its employees; the Capital Securities Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Capital Securities Guarantee from any court of
competent jurisdiction;
(vi) the Capital Securities Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Capital Securities Guarantee at the request or direction of any Holder,
unless such Holder shall have provided to the Capital Securities Guarantee
Trustee such security and indemnity, reasonably satisfactory to the Capital
Securities Guarantee Trustee, against the costs, expenses (including
attorneys' fees and expenses and the expenses of the Capital Securities
Guarantee Trustee's agents, nominees or custodians) and liabilities that
might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the Capital
Securities Guarantee Trustee, provided, however, that nothing contained in
-------- -------
this Section 3.2(a)(vi) shall be taken to relieve the Capital Securities
Guarantee Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this Capital
Securities Guarantee;
(vii) the Capital Securities Guarantee Trustee shall have no
obligation to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the Capital
Securities Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit;
(viii) the Capital Securities Guarantee Trustee may execute any of
the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, nominees, custodians or attorneys, and
the Capital Securities Guarantee Trustee shall not
-9-
<PAGE>
be responsible for any misconduct or negligence on the part of any such
person appointed with due care by it hereunder;
(ix) any action taken by the Capital Securities Guarantee Trustee or
its agents hereunder shall bind the Holders of the Capital Securities, and
the signature of the Capital Securities Guarantee Trustee or its agents
alone shall be sufficient and effective to perform any such action; and no
third party shall be required to inquire as to the authority of the Capital
Securities Guarantee Trustee to so act or as to its compliance with any of
the terms and provisions of this Capital Securities Guarantee, both of
which shall be conclusively evidenced by the Capital Securities Guarantee
Trustee's or its agent's taking such action;
(x) whenever in the administration of this Capital Securities
Guarantee the Capital Securities Guarantee Trustee shall deem it desirable
to receive instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Capital Securities Guarantee Trustee
(i) may request instructions from the Holders of a Majority in Liquidation
Amount of the Capital Securities, (ii) may refrain from enforcing such
remedy or right or taking such other action until such instructions are
received, and (iii) shall be protected in conclusively relying on or acting
in accordance with such instructions; and
(xi) the Capital Securities Guarantee Trustee shall not be liable for
any action taken, suffered, or omitted to be taken by it in good faith,
without negligence, and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Capital
Securities Guarantee.
(b) No provision of this Capital Securities Guarantee shall be deemed to
impose any duty or obligation on the Capital Securities Guarantee Trustee to
perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be illegal, or
in which the Capital Securities Guarantee Trustee shall be unqualified or
incompetent in accordance with applicable law, to perform any such act or acts
or to exercise any such right, power, duty or obligation. No permissive power or
authority available to the Capital Securities Guarantee Trustee shall be
construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of the
-----------------------------------------------
Capital Securities Guarantee
----------------------------
The recitals contained in this Capital Securities Guarantee shall be taken
as the statements of the Guarantor, and the Capital Securities Guarantee Trustee
does not assume any responsibility for their correctness. The Capital Securities
Guarantee Trustee makes no representation as to the validity or sufficiency of
this Capital Securities Guarantee.
-10-
<PAGE>
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility
-------------------------------------------------
(a) There shall at all times be a Capital Securities Guarantee Trustee that
shall
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation or other Person organized and doing business
under the laws of the United States of America or any state or territory
thereof or of the District of Columbia, or a corporation or other Person
permitted by the Securities and Exchange Commission to act as an indenture
trustee under the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of
at least fifty million U.S. dollars ($50,000,000), and subject to
supervision or examination by federal, state, territorial or District of
Columbia authority; it being understood that if such corporation or other
Person publishes reports of condition at least annually, pursuant to law or
to the requirements of the supervising or examining authority referred to
above, then, for the purposes of this Section 4.1(a)(ii) and to the extent
permitted by the Trust Indenture Act, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.
(b) If at any time the Capital Securities Guarantee Trustee shall cease to
be eligible to so act under Section 4.1(a), the Capital Securities Guarantee
Trustee shall immediately resign in the manner and with the effect set out in
Section 4.2(c).
(c) If the Capital Securities Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Capital Securities Guarantee Trustee and Guarantor shall in
all respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of the Capital
---------------------------------------------------
Securities Guarantee Trustee
----------------------------
(a) Subject to Section 4.2(b), the Capital Securities Guarantee Trustee may
be appointed or removed without cause at any time by the Guarantor except during
an Event of Default.
(b) The Capital Securities Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Capital Securities Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Capital Securities Guarantee Trustee and
delivered to the Guarantor.
(c) The Capital Securities Guarantee Trustee shall hold office until a
Successor Capital Securities Guarantee Trustee shall have been appointed or
until its removal or resignation. The Capital Securities Guarantee Trustee may
resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Capital Securities Guarantee Trustee and
delivered to the Guarantor, which resignation shall not take effect until a
Successor Capital
-11-
<PAGE>
Securities Guarantee Trustee has been appointed and has accepted such
appointment by instrument in writing executed by such Successor Capital
Securities Guarantee Trustee and delivered to the Guarantor and the resigning
Capital Securities Guarantee Trustee.
(d) If no Successor Capital Securities Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery of an instrument of removal or resignation, the Capital
Securities Guarantee Trustee resigning or being removed may petition any court
of competent jurisdiction for appointment of a Successor Capital Securities
Guarantee Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper, appoint a Successor Capital Securities Guarantee
Trustee.
(e) No Capital Securities Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Capital Securities Guarantee Trustee.
(f) Upon termination of this Capital Securities Guarantee or removal or
resignation of the Capital Securities Guarantee Trustee pursuant to this Section
4.2, the Guarantor shall pay to the Capital Securities Guarantee Trustee all
amounts due to the Capital Securities Guarantee Trustee accrued to the date of
such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
---------
The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by the Issuer), as and when due, regardless of any defense, right of set-off or
counterclaim that the Issuer may have or assert. The Guarantor's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
---------------------------
The Guarantor hereby waives notice of acceptance of this Capital Securities
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 5.3 Obligations Not Affected
------------------------
The obligations, covenants, agreements and duties of the Guarantor under
this Capital Securities Guarantee shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
-12-
<PAGE>
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Capital Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Capital Securities or the extension of
time for the performance of any other obligation under, arising out of, or in
connection with, the Capital Securities;
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Capital Securities, or any
action on the part of the Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency in, the Capital Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred;
(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor;
it being the intent of this Section 5.3 that the obligations of the Guarantor
with respect to the Guarantee Payments shall be absolute and unconditional under
any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 5.4 Rights of Holders
-----------------
(a) The Holders of a Majority in Liquidation Amount of the Capital
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Capital Securities Guarantee Trustee
in respect of this Capital Securities Guarantee or exercising any trust or power
conferred upon the Capital Securities Guarantee Trustee under this Capital
Securities Guarantee.
(b) If the Capital Securities Guarantee Trustee fails to enforce this
Capital Securities Guarantee, any Holder of the Capital Securities may institute
a legal proceeding directly against the Guarantor to enforce the Capital
Securities Guarantee Trustee's rights under this Capital Securities Guarantee,
without first instituting a legal proceeding against the Issuer, the Capital
Securities Guarantee Trustee or any other person or entity. The Guarantor waives
any right or remedy to require that any action be brought first against the
Issuer or any other person or entity before proceeding directly against the
Guarantor.
-13-
<PAGE>
SECTION 5.5 Guarantee of Payment
--------------------
This Capital Securities Guarantee creates a guarantee of payment and not of
collection.
SECTION 5.6 Subrogation
-----------
The Guarantor shall be subrogated to all (if any) rights of the Holders of
Capital Securities against the Issuer in respect of any amounts paid to such
Holders by the Guarantor under this Capital Securities Guarantee; provided,
--------
however, that the Guarantor shall not (except to the extent required by
- -------
mandatory provisions of law) be entitled to enforce or exercise any right that
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Capital Securities
Guarantee, if, at the time of any such payment, any amounts are due and unpaid
under this Capital Securities Guarantee. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, the Guarantor agrees to hold
such amount in trust for the Holders and to pay over such amount to the Holders.
SECTION 5.7 Independent Obligations
-----------------------
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the Capital Securities, and
that the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Capital Securities Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
--------------------------
So long as any Capital Securities remain outstanding, if (l) there shall
have occurred any event of which the Guarantor has actual knowledge that (A) is
a Default or Event of Default (each as defined in the Indenture) and (B) in
respect of which the Guarantor shall not have taken reasonable steps to cure,
(2) if the Debentures are held by the Property Trustee, the Guarantor shall be
in default with respect to its payment of any obligations under this Capital
Securities Guarantee or (3) the Guarantor shall have given notice of its
election of the exercise of its right to commence an Extended Interest Payment
Period as provided in the Indenture and shall not have rescinded such notice,
and such Extended Interest Payment Period, or an extension thereof, shall have
commenced and be continuing, the Guarantor shall 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 Guarantor's capital stock, (ii)
make any payment of principal of, or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Guarantor (including Other
Debentures) that rank pari passu with or junior in right of payment to the
Debentures or (iii) make any guarantee payments with respect to any guarantee by
the Guarantor of the debt securities of any subsidiary of the Guarantor
(including Other Guarantees) if such guarantee ranks pari passu with or junior
in right of payment to the Debentures (other than (a) dividends or distributions
in shares of, or options, warrants, rights to subscribe for or purchase shares
of, common stock of the Guarantor, (b) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
-14-
<PAGE>
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under this Capital
Securities Guarantee, (d) as a result of a reclassification of the Guarantor's
capital stock or the exchange or the conversion of one class or series of the
Guarantor's capital stock for another class or series of the Guarantor's capital
stock, (e) the purchase of fractional interests in shares of the Guarantor'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
Guarantor's benefit or compensation plans for its directors, officers or
employees or any of the Guarantor's dividend reinvestment plans).
SECTION 6.2 Ranking
-------
This Capital Securities Guarantee will constitute an unsecured obligation
of the Guarantor and will rank (i) subordinate and junior in right of payment to
Senior Indebtedness (as defined in the Indenture), to the same extent and in the
same manner that the Debentures are subordinated to Senior Indebtedness pursuant
to the Indenture, it being understood that the terms of Article XV of the
Indenture shall apply to the obligations of the Guarantor under this Capital
Securities Guarantee as if such Article XV were set forth herein in full, (ii)
pari passu with the most senior preferred or preference stock now or hereafter
issued by the Guarantor, any Other Guarantee and, except to the extent set forth
therein, the Common Securities Guarantee, any Other Common Securities Guarantee,
and any guarantee now or hereafter entered into by the Guarantor in respect of
any preferred or preference stock of any Affiliate of the Guarantor, and (iii)
senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
-----------
This Capital Securities Guarantee shall terminate and be of no further
force or effect upon (i) full payment of the Redemption Price of all Capital
Securities or (ii) the dissolution, winding up or liquidation of the Issuer,
immediately following the full payment of the amounts payable in accordance with
the Declaration or the distribution of all of the Debentures to the holders of
the Trust Securities (as defined in the Declaration). Notwithstanding the
foregoing, this Capital Securities 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
under this Capital Securities Guarantee.
ARTICLE VII
INDEMNIFICATION
SECTION 8.1 Exculpation
-----------
(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Capital Securities
Guarantee and in a manner that such Indemnified Person reasonably
-15-
<PAGE>
believed to be within the scope of the authority conferred on such Indemnified
Person by this Capital Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith
upon the records of the Guarantor and upon such information, opinions, reports
or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of the Capital Securities might properly be paid.
SECTION 8.2 Compensation and Indemnification
--------------------------------
The Guarantor agrees to pay to the Capital Securities Guarantee Trustee
such compensation for its services as shall be mutually agreed upon by the
Guarantor and the Capital Securities Guarantee Trustee. The Guarantor shall
reimburse the Capital Securities Guarantee Trustee upon request for all
reasonable out-of-pocket expenses incurred by it, including the reasonable
compensation and expenses of the Capital Securities Guarantee Trustee's agents
and counsel, except any expense as may be attributable to the negligence or bad
faith of the Capital Securities Guarantee Trustee.
The Guarantor agrees to indemnify each Indemnified Person for, and to hold
each Indemnified Person harmless against, any and all loss, liability, damage,
action, suit, claim or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The provisions of this
Section 8.2 shall survive the termination of this Capital Securities Guarantee
and shall survive the resignation or removal of the Capital Securities Guarantee
Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
----------------------
All guarantees and agreements contained in this Capital Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Capital Securities then outstanding.
SECTION 9.2 Amendments
----------
Except with respect to any changes that do not materially adversely affect
the rights of Holders of the Capital Securities (in which case no consent of
such Holders will be required), this Capital Securities Guarantee may only be
amended with the prior approval of the Holders of a Majority in Liquidation
Amount of the Capital Securities. The provisions of Section 12.2 of the
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<PAGE>
Declaration with respect to meetings of Holders of the Trust Securities apply to
the giving of such approval. This Capital Securities Guarantee may not be
amended, and no amendment hereof that affects the Capital Securities Guarantee
Trustee's rights, duties or immunities hereunder or otherwise, shall be
effective, unless such amendment is executed by the Capital Securities Guarantee
Trustee (which shall have no obligation to execute any such amendment, but may
do so in its sole discretion).
SECTION 9.3 Notices
-------
All notices provided for in this Capital Securities Guarantee shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, as follows:
(a) If given to the Issuer, in care of the Administrative Trustees at the
Issuer's mailing address set forth below (or such other address as the Issuer
may give notice of to the Capital Securities Guarantee Trustee and the Holders
of the Capital Securities):
WESTBANK CAPITAL TRUST I
c/o WESTBANK CORPORATION
225 Park Avenue
West Springfield, Massachusetts 01089-3326
Attention:
Telephone:
Telecopier:
(b) If given to the Capital Securities Guarantee Trustee, at the Capital
Securities Guarantee Trustee's mailing address set forth below (or such other
address as the Capital Securities Guarantee Trustee may give notice of to the
Holders of the Capital Securities):
Wilmington Trust Company
Rodney Square North
1100 Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
(c) If given to the Guarantor, at the Guarantor's mailing address set forth
below (or such other address as the Guarantor may give notice of to the Capital
Securities Guarantee Trustee and the Holders of the Capital Securities):
WESTBANK CORPORATION
225 Park Avenue
West Springfield, Massachusetts 01089-3326
Attention:
Telephone:
Telecopier:
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<PAGE>
(d) If given to any Holder of the Capital Securities, at the address set
forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.4 Benefit
-------
This Capital Securities Guarantee is solely for the benefit of the Holders
of the Capital Securities and, subject to Section 3.1(a), is not separately
transferable from the Capital Securities.
SECTION 9.5 Governing Law
-------------
THIS CAPITAL SECURITIES GUARANTEE SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THEREOF.
This Capital Securities Guarantee is executed as of the day and year first
above written.
WESTBANK CORPORATION
as Guarantor
By:__________________________________________
President and Chief Executive Officer
WILMINGTON TRUST COMPANY,
as Capital Securities Guarantee Trustee
By:__________________________________________
Name:
Title:
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<PAGE>
EXHIBIT 4.7
- --------------------------------------------------------------------------------
WESTBANK CORPORATION
__________________________
__________________________
INDENTURE
Dated as of [__________], 1999
__________________________
WILMINGTON TRUST COMPANY,
as Debenture Trustee
__________________________
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions............................................... 1
SECTION 1.02 Business Day Certificate.................................. 9
ARTICLE II
SECURITIES
SECTION 2.01 Forms Generally........................................... 9
SECTION 2.02 Execution and Authentication.............................. 9
SECTION 2.03 Form and Payment.......................................... 9
SECTION 2.04 Global Security........................................... 10
SECTION 2.05 Interest.................................................. 11
SECTION 2.06 Transfer and Exchange..................................... 12
SECTION 2.07 Replacement Securities.................................... 13
SECTION 2.08 Temporary Securities...................................... 13
SECTION 2.09 Cancellation.............................................. 14
SECTION 2.10 Defaulted Interest........................................ 14
SECTION 2.11 CUSIP Numbers............................................. 15
ARTICLE III
PARTICULAR COVENANTS OF THE CORPORATION
SECTION 3.01 Payment of Principal and Interest......................... 15
SECTION 3.02 Offices for Notices and Payments, etc..................... 15
SECTION 3.03 Appointments to Fill Vacancies in Debenture Trustee's
Office.................................................... 16
SECTION 3.04 Provision as to Paying Agent.............................. 16
SECTION 3.05 Certificate to Debenture Trustee.......................... 16
SECTION 3.06 Compliance with Consolidation Provisions.................. 17
SECTION 3.07 Limitation on Dividends................................... 17
SECTION 3.08 Covenants as to WESTBANK Capital Trust I.................. 18
SECTION 3.09 Payment of Expenses....................................... 18
SECTION 3.10 Payment Upon Resignation or Removal....................... 19
</TABLE>
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<PAGE>
ARTICLE IV
LIST OF SECURITYHOLDERS AND REPORTS BY THE
CORPORATION AND THE DEBENTURE TRUSTEE
<TABLE>
<S> <C>
SECTION 4.01 List of Securityholders................................... 19
SECTION 4.02 Preservation and Disclosure of Lists...................... 19
SECTION 4.03 Reports by the Corporation................................ 21
SECTION 4.04 Reports by the Debenture Trustee.......................... 21
ARTICLE V
REMEDIES OF THE DEBENTURE TRUSTEE AND
SECURITYHOLDERS UPON EVENT OF DEFAULT
SECTION 5.01 Events of Default......................................... 22
SECTION 5.02 Payment of Securities on Default; Suit Therefor........... 24
SECTION 5.03 Application of Moneys Collected by Debenture Trustee...... 25
SECTION 5.04 Proceedings by Securityholders............................ 26
SECTION 5.05 Proceedings by Debenture Trustee.......................... 26
SECTION 5.06 Remedies Cumulative and Continuing........................ 27
SECTION 5.07 Direction of Proceedings and Waiver of Defaults by
Majority of Securityholders.............................. 27
SECTION 5.08 Notice of Defaults........................................ 28
SECTION 5.09 Undertaking to Pay Costs.................................. 28
ARTICLE VI
CONCERNING THE DEBENTURE TRUSTEE
SECTION 6.01 Duties and Responsibilities of Debenture Trustee.......... 29
SECTION 6.02 Reliance on Documents, Opinions, etc...................... 30
SECTION 6.03 No Responsibility for Recitals, etc....................... 32
SECTION 6.04 Debenture Trustee, Authenticating Agent, Paying Agents,
Transfer Agents and Registrar May Own Securities......... 32
SECTION 6.05 Moneys to be Held in Trust................................ 32
SECTION 6.06 Compensation and Expenses of Debenture Trustee............ 32
SECTION 6.07 Officers' Certificate as Evidence......................... 33
SECTION 6.08 Conflicting Interest of Debenture Trustee................. 33
SECTION 6.09 Eligibility of Debenture Trustee.......................... 33
SECTION 6.10 Resignation or Removal of Debenture Trustee............... 34
SECTION 6.11 Acceptance by Successor Debenture Trustee................. 35
SECTION 6.12 Succession by Merger, etc................................. 36
SECTION 6.13 Limitation on Rights of Debenture Trustee as a Creditor... 36
SECTION 6.14 Authenticating Agents..................................... 36
</TABLE>
-ii-
<PAGE>
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
<TABLE>
<S> <C>
SECTION 7.01 Action by Securityholders................................. 37
SECTION 7.02 Proof of Execution by Securityholders..................... 38
SECTION 7.03 Who Are Deemed Absolute Owners............................ 38
SECTION 7.04 Securities Owned by Corporation Deemed Not Outstanding.... 39
SECTION 7.05 Revocation of Consents; Future Holders Bound.............. 39
ARTICLE VIII
MEETINGS OF SECURITYHOLDERS
SECTION 8.01 Purposes of Meetings...................................... 39
SECTION 8.02 Call of Meetings by Debenture Trustee..................... 40
SECTION 8.03 Call of Meetings by Corporation or Securityholders........ 40
SECTION 8.04 Qualifications for Voting................................. 40
SECTION 8.05 Regulations............................................... 41
SECTION 8.06 Voting.................................................... 41
ARTICLE IX
AMENDMENTS
SECTION 9.01 Without Consent of Securityholders........................ 42
SECTION 9.02 With Consent of Securityholders........................... 43
SECTION 9.03 Compliance with Trust Indenture Act; Effect of Supplemental
Indentures............................................... 44
SECTION 9.04 Notation on Securities.................................... 44
SECTION 9.05 Evidence of Compliance of Supplemental Indenture to be
Furnished to Debenture Trustee........................... 44
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE, TRANSFER AND LEASE
SECTION 10.01 Corporation May Consolidate, etc., on Certain Terms...... 45
SECTION 10.02 Successor Person to be Substituted for Corporation....... 45
SECTION 10.03 Opinion of Counsel to be Given Debenture Trustee......... 46
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01 Discharge of Indenture................................... 46
SECTION 11.02 Deposited Moneys and U.S. Government Obligations to be Held
in Trust by Debenture Trustee........................... 47
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
SECTION 11.03 Reinstatement............................................ 47
SECTION 11.04 Paying Agent to Repay Moneys Held........................ 47
SECTION 11.05 Return of Unclaimed Moneys............................... 47
SECTION 11.06 Defeasance Upon Deposit of Moneys or U.S. Government
Obligations............................................. 48
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.01 Indenture and Securities Solely Corporate Obligations.... 49
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01 Successors............................................... 49
SECTION 13.02 Official Acts by Successor Corporation................... 49
SECTION 13.03 Surrender of Corporation Powers.......................... 50
SECTION 13.04 Addresses for Notices, etc............................... 50
SECTION 13.05 Governing Law............................................ 50
SECTION 13.06 Evidence of Compliance with Conditions Precedent......... 50
SECTION 13.07 Business Days............................................ 51
SECTION 13.08 Trust Indenture Act to Control........................... 51
SECTION 13.09 Table of Contents, Headings, etc......................... 51
SECTION 13.10 Execution in Counterparts................................ 51
SECTION 13.11 Separability............................................. 51
SECTION 13.12 Assignment............................................... 51
SECTION 13.13 Acknowledgment of Rights................................. 52
ARTICLE XIV
PREPAYMENT OF SECURITIES;NO SINKING FUND
SECTION 14.01 Special Event Prepayment................................. 52
SECTION 14.02 Optional Prepayment by Corporation....................... 52
SECTION 14.03 No Sinking Fund.......................................... 53
SECTION 14.04 Notice of Prepayment; Selection of Securities............ 53
SECTION 14.05 Payment of Securities Called for Prepayment.............. 54
ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.01 Agreement to Subordinate................................. 54
</TABLE>
-iv-
<PAGE>
<TABLE>
<S> <C>
SECTION 15.02 Default on Senior Indebtedness........................... 55
SECTION 15.03 Liquidation; Dissolution; Bankruptcy..................... 55
SECTION 15.04 Subrogation.............................................. 56
SECTION 15.05 Debenture Trustee to Effectuate Subordination............ 57
SECTION 15.06 Notice by the Corporation................................ 57
SECTION 15.07 Rights of the Debenture Trustee; Holders of Senior
Indebtedness............................................ 58
SECTION 15.08 Subordination May Not Be Impaired........................ 59
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01 Extension of Interest Payment Period..................... 59
SECTION 16.02 Notice of Extension...................................... 60
</TABLE>
TESTIMONIUM
SIGNATURES
EXHIBIT A
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<PAGE>
Tie Sheet of provisions of Trust Indenture Act of 1939 with Indenture dated
as of [________], 1999 between Westbank Corporation and Wilmington Trust
Company, as Debenture Trustee:
<TABLE>
<CAPTION>
ACT SECTION INDENTURE SECTION
<S> <C>
310(a)(1)................................ 6.09
(a)(2)................................ 6.09
310(a)(3)................................ N/A
(a)(4)................................ N/A
310(a)(5)................................ 6.09, 6.10, 6.11
310(b)................................... N/A
310(c)................................... 6.13
311(a) and (b)........................... N/A
311(c)................................... N/A
312(a)................................... 4.01(a), 4.02(a)
312(b) and (c)........................... 4.02(b), 4.04(c)
313(a)................................... 4.04(a)
313(b)................................... 4.04(a)
313(b)(2)................................ 4.04(a)
313(c)................................... 4.04(a)
313(d)................................... 4.04(b)
314(a)................................... 4.03
314(b)................................... N/A
314(c)(1) and (2)........................ 6.07, 13.06, 13.06
314(c)(3)................................ N/A
314(d)................................... N/A
314(e)................................... 6.07, 13.06
314(f)................................... N/A
315(a)(c) and (d)........................ 6.01
315(b)................................... 5.08
315(e)................................... 5.09
316(a)(1)................................ 5.07
316(a)(2)................................ N/A
316(a) last sentence..................... 9.02
316(b)................................... 9.02
317(a)................................... 5.05
317(b)................................... 6.05
318...................................... 13.08
</TABLE>
________________
THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
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<PAGE>
THIS INDENTURE, dated as of [_________], 1999, between Westbank
Corporation, a Delaware corporation (hereinafter called the "Corporation"), and
Wilmington Trust Company, a Delaware corporation, as debenture trustee
(hereinafter sometimes called the "Debenture Trustee").
W I T N E S S E T H :
In consideration of the premises, and the purchase of the Securities (as
defined below) by the holders thereof, the Corporation covenants and agrees with
the Debenture Trustee for the equal and proportionate benefit of the respective
holders from time to time of the Securities, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions.
-----------
The terms defined in this Section 1.01 (except as herein otherwise
expressly provided or unless the context otherwise requires) for all purposes of
this Indenture shall have the respective meanings specified in this Section
1.01. All other terms used in this Indenture which are defined in the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), or which are by
reference therein defined in the Securities Act of 1933, as amended (the
"Securities Act"), shall (except as herein otherwise expressly provided or
unless the context otherwise requires) have the meanings assigned to such terms
in said Trust Indenture Act and in said Securities Act as in force at the date
of this Indenture as originally executed. The following terms have the meanings
given to them in the Declaration: (i) Clearing Agency; (ii) Delaware Trustee;
(iii) Property Trustee; (iv) Administrative Trustees; (v) Capital Securities;
(vi) Direct Action; (vii) Capital Securities Guarantee; (viii) Distributions;
and (ix) Underwriters. All accounting terms used herein and not expressly
defined shall have the meanings assigned to such terms in accordance with
generally accepted accounting principles, and the term "generally accepted
accounting principles" means such accounting principles as are generally
accepted at the time of any computation. The words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision. Headings are
used for convenience of reference only and do not affect interpretation. The
singular includes the plural and vice versa.
"Additional Sums" shall have the meaning set forth in Section 2.05(c).
"Affiliate" shall have the meaning given to that term in Rule 405 under the
Securities Act or any successor rule thereunder.
"Authenticating Agent" shall mean any agent or agents of the Debenture
Trustee which at the time shall be appointed and acting pursuant to Section
6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors.
<PAGE>
"Board of Directors " shall mean either the Board of Directors of the
Corporation or any duly authorized committee of that board.
"Board Resolution" shall mean a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Corporation to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Debenture Trustee.
"Book-Entry Capital Securities" shall have the meaning set forth in Section
2.04(a)(i).
"Business Day" shall mean, with respect to any series of Securities, any
day other than a Saturday or a Sunday or a day on which banking institutions in
are authorized or
required by law or executive order to remain closed.
"Capital Securities" shall mean undivided beneficial interests in the
assets of the Trust which are designated as "[______]% Capital Securities" and
rank pari passu with the Common Securities issued by the Trust; provided,
--------
however, that if an Event of Default has occurred and is continuing, no payments
- -------
in respect of Distributions on, or payments upon liquidation, redemption or
otherwise with respect to, the Common Securities shall be made until the holders
of the Capital Securities shall be paid in full the Distributions and the
liquidation, redemption and other payments to which they are entitled.
"Capital Securities Guarantee" shall mean any guarantee agreement that the
Corporation may enter into with Wilmington Trust Company or other Persons that
operates directly or indirectly for the benefit of holders of Capital Securities
of Westbank Capital Trust I and shall include the Capital Securities Guarantee
with respect to the Capital Securities.
"Commission" shall mean the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Securities" shall mean undivided beneficial interests in the assets
of the Trust which are designated as "[______]% Common Securities," and rank
pari passu with Capital Securities issued by the Trust; provided, however, that
-------- -------
if an Event of Default has occurred and is continuing, no payments in respect of
Distributions on, or payments upon liquidation, redemption or otherwise with
respect to, the Common Securities shall be made until the holders of the Capital
Securities shall be paid in full the Distributions and the liquidation,
redemption and other payments to which they are then entitled.
"Common Securities Guarantee" shall mean any guarantee that the Corporation
may enter into that operates directly or indirectly for the benefit of holders
of Common Securities.
"Common Stock" shall mean the Common Stock, par value $ per share, of
the Corporation or any other class of stock resulting from changes or
reclassifications of such Common
-2-
<PAGE>
Stock consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value.
"Compounded Interest" shall have the meaning set forth in Section 16.01.
"Corporation" shall mean the person identified as the "Corporation" in the
preamble to this Indenture and, subject to the provisions of Article X, shall
also include its successors and assigns.
"Corporation Request" or "Corporation Order" shall mean a written request
or order signed in the name of the Corporation by an Officer and delivered to
the Debenture Trustee.
"Custodian" shall mean any receiver, trustee, assignee, liquidator, or
similar official under any Bankruptcy Law.
"Debenture Trustee" shall mean the Person identified as "Debenture Trustee"
in the preamble to this Indenture and, subject to the provisions of Article VI
hereof, shall also include its successors and assigns.
"Declaration" shall mean the Amended and Restated Declaration of Trust of
the Trust, dated as of [________], 1999, by and among the Trustees (as defined
therein), the Corporation, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Trust, as amended from time
to time.
"Default" shall mean any event, act or condition that with notice or lapse
of time, or both, would constitute an Event of Default.
"Defaulted Interest" shall have the meaning set forth in Section 2.10.
"Deferred Interest" shall have the meaning set forth in Section 16.01.
"Definitive Securities" shall mean those securities issued in fully
registered certificated form not otherwise in global form.
"Depositary" shall mean, with respect to the Securities for which the
Corporation shall determine that such Securities will be issued as a Global
Security, The Depository Trust Company, New York, New York, or another clearing
agency, or any successor registered as a clearing agency pursuant to Section 17A
of the Exchange Act or other applicable statute or regulation, which, in each
case, shall be designated by the Corporation pursuant to Section 2.04(d).
"Dissolution Event" shall mean any event resulting in the dissolution of
the Trust pursuant to the Declaration, and the distribution of the Securities
held by the Property Trustee to the holders of the Trust Securities issued by
the Trust pro rata in accordance with the Declaration.
"Event of Default" shall mean any event specified in Section 5.01,
continued for the period of time, if any, and after the giving of the notice, if
any, therein designated.
-3-
<PAGE>
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Extended Interest Payment Period" shall have the meaning set forth in
Section 16.01.
"Federal Reserve" shall mean the Board of Governors of the Federal Reserve
System.
"Global Security" shall mean, with respect to the Securities, a Security
executed by the Corporation and delivered by the Debenture Trustee to the
Depositary or pursuant to the Depositary's instruction, or if no instructions
are received then held by the Property Trustee, all in accordance with this
Indenture, which Security shall be registered in the name of the Depositary or
its nominee.
"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 arising in the ordinary
course of business.
"Indebtedness Ranking on a Parity with the Securities" shall mean (i)
Indebtedness for Money Borrowed, whether outstanding on the date of execution of
this Indenture or hereafter created, assumed or incurred, to the extent such
indebtedness specifically by its terms ranks pari passu with and not prior to
the Securities in the right of payment upon the happening of the dissolution,
winding-up, liquidation or reorganization of the Corporation and (ii) all other
debt securities, and guarantees in respect of those debt securities, issued to
any trust other than the 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 Capital Securities Guarantee. The securing of any
Indebtedness for Money Borrowed otherwise constituting Indebtedness Ranking on a
Parity with the Securities shall not be deemed to prevent such Indebtedness for
Money Borrowed from constituting Indebtedness Ranking on a Parity with the
Securities.
"Indebtedness Ranking Junior to the Securities" shall mean any Indebtedness
for Money Borrowed, whether outstanding on the date of execution of this
Indenture or hereafter created, assumed or incurred, to the extent such
indebtedness specifically by its terms ranks junior to and not pari passu with
or prior to the Securities (and any other Indebtedness Ranking on a Parity with
the Securities) 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 on
Parity with the Securities or Indebtedness Ranking Junior to the Securities, as
the case may be, shall not be deemed to prevent such Indebtedness for Money
Borrowed from constituting Indebtedness on Parity with the Securities or
Indebtedness Ranking Junior to the Securities, as the case may be.
"Indenture" shall mean this instrument as originally executed or, if
amended as herein provided, as so amended.
-4-
<PAGE>
"Initial Optional Redemption Date" shall mean [__________], 2004.
"Interest Payment Date" shall have the meaning set forth in Section
2.05(a).
"Investment Company" shall mean an investment company as defined in the
Investment Company Act.
"Investment Company Act" shall mean the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Investment Company Event" shall mean the receipt by the Debenture Issuer
and the Trust of an opinion of independent securities 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 any
applicable regulatory authority for the Debenture Issuer or (b) any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after the date of original issuance
of the Securities, the Trust is, or within 90 days of the date of such opinion
will be, considered an investment company that is required to be registered
under the Investment Company Act.
"Like Amount" shall mean (i) with respect to a redemption of the Trust
Securities, Trust Securities having a liquidation amount equal to the principal
amount of Securities to be paid in accordance with their terms and (ii) with
respect to a distribution of Securities upon the liquidation of the Trust,
Securities having a principal amount equal to the liquidation amount of the
Trust Securities of the holder to whom Securities are distributed.
"Maturity Date" shall mean [__________], 2029.
"Non Book-Entry Capital Securities" shall have the meaning set forth in
Section 2.04(a)(ii).
"Officers" shall mean any of the Chairman of the Board, a Vice Chairman,
the Chief Executive Officer, the President, an Executive or Senior Vice
President, a Vice President, the Chief Financial Officer, the Group Director,
the Secretary or an Assistant Secretary of the Corporation.
"Officers' Certificate" shall mean a certificate signed by two Officers and
delivered to the Debenture Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel, who may be an
employee of the Corporation, and who shall be reasonably acceptable to the
Debenture Trustee.
"Other Debentures" shall mean all junior subordinated debentures other than
the Securities issued by the Corporation from time to time and sold to trusts
other than the Trust to be established by the Corporation (if any), in each case
similar to the Trust.
-5-
<PAGE>
"Other Guarantees" shall mean all guarantees, other than the Capital
Securities Guarantee issued by the Corporation with respect to preferred
beneficial interests (if any) issued by trusts to be established by the
Corporation (if any), other than the Trust, in each case similar to the Trust.
The term "outstanding" when used with reference to the Securities, shall
mean, subject to the provisions of Section 7.04, as of any particular time, all
Securities authenticated and delivered by the Debenture Trustee or the
Authenticating Agent under this Indenture, except
(a) Securities theretofore canceled by the Debenture Trustee or the
Authenticating Agent or delivered to the Debenture Trustee for
cancellation;
(b) Securities, or portions thereof, for the payment or prepayment of
which moneys in the necessary amount shall have been deposited in
trust with the Debenture Trustee or with any paying agent (other
than the Corporation) or shall have been set aside and segregated
in trust by the Corporation (if the Corporation shall act as its
own paying agent); provided that, if such Securities, or portions
thereof, are to be prepaid prior to maturity thereof, notice of
such prepayment shall have been given as set forth in Article XIV
or provision satisfactory to the Debenture Trustee shall have been
made for giving such notice; and
(c) Securities in lieu of or in substitution for which other
Securities shall have been authenticated and delivered pursuant to
the terms of Section 2.07 unless proof satisfactory to the
Corporation and the Debenture Trustee is presented that any such
Securities are held by bona fide holders in due course.
"Person" shall mean any individual, corporation, estate, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Predecessor Security" of any particular Security shall mean every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 2.07 in lieu of a lost, destroyed or
stolen Security shall be deemed to evidence the same debt as the lost, destroyed
or stolen Security.
"Prepayment Price" shall mean the prepayment price of the Debentures equal
to 100% of the principal amount of the Debentures to be prepaid plus any accrued
and unpaid interest (including Compounded Interest and Additional Sums, if any,
thereon to the date of prepayment).
"Principal Office of the Debenture Trustee," or other similar term, shall
mean the principal office of the Debenture Trustee at which at any particular
time its corporate trust business shall be administered, which office at the
date of the execution of this Indenture is located at Rodney Square North, 1100
Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration, or at any other time at such other address as the Debenture
Trustee may designate from time to time by notice to the Issuer.
-6-
<PAGE>
"Regulatory Capital Event" shall mean the receipt by the Corporation and
the Trust of 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 an
applicable regulatory authority for the Debenture Issuer or (b) any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after the date of original issuance
of the Securities, the Capital Securities do not constitute, or within 180 days
of the date of such opinion will not constitute, Tier 1 Capital (or its then
equivalent if the Debenture Issuer were subject to such capital requirement)
applied as if the Debenture Issuer (or its successors) were a bank holding
company for purposes of capital adequacy guidelines of the Federal Reserve Board
(or any successor regulatory authority with jurisdiction over bank holding
companies), or any capital adequacy guidelines as then in effect and applicable
to the Debenture Issuer; provided, however, that the distribution of the
-------- -------
Securities in connection with the liquidation of the Trust by the Corporation
shall not in and of itself constitute a Regulatory Capital Event.
"Responsible Officer" shall mean, when used with respect to the Debenture
Trustee, any officer within the Principal Office of the Debenture Trustee,
including any Vice President, Managing Director, Assistant Vice President,
Secretary, Assistant Secretary, Treasurer or Assistant Treasurer or any other
officer of the Debenture Trustee customarily performing functions similar to
those performed by any of the above designated officers and also, with respect
to a particular matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
"Securities" shall mean the Corporation's [______]% Junior Subordinated
Deferrable Interest Debentures due [__________], 2029, as authenticated and
issued under this Indenture.
"Securityholder," "holder of Securities," or other similar terms, shall
mean any Person in whose name at the time a particular Security is registered in
the Security Register kept by the Corporation or the Debenture Trustee for that
purpose in accordance with the terms of this Indenture.
"Security Register" shall mean (i) prior to a Dissolution Event, the list
of holders provided to the Debenture Trustee pursuant to Section 4.01, and (ii)
following a Dissolution Event, any security register maintained by a security
registrar for the Securities appointed by the Corporation following the
execution of a supplemental indenture providing for transfer procedures as
provided for in Section 2.05(a).
"Senior Indebtedness" shall mean all Indebtedness for Money Borrowed,
whether outstanding on the date of execution of this Indenture or hereafter
created, assumed or incurred, except Indebtedness Ranking on a Parity with the
Securities or Indebtedness Ranking Junior to the Securities, and any deferrals,
renewals or extensions of such Senior Indebtedness.
"Special Event" shall mean an Investment Company Event, a Regulatory
Capital Event or a Tax Event, as the context requires.
-7-
<PAGE>
"Subsidiary" shall mean with respect to any Person, (i) any corporation at
least a majority of the outstanding voting stock of which is owned, directly or
indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries, (ii) any general partnership, joint
venture, limited liability company or similar entity, at least a majority of
whose outstanding partnership, membership or similar interests shall at the time
be owned by such Person or by one or more of its Subsidiaries, or by such Person
and one or more of its Subsidiaries and (iii) any limited partnership of which
such Person or any of its Subsidiaries is a general partner. For the purposes of
this definition, "voting stock" means shares, interests, participations or other
equivalents in the equity interest (however designated) in such Person having
ordinary voting power for the election of a majority of the directors (or the
equivalent) of such Person, other than shares, interests, participations or
other equivalents having such power only by reason of the occurrence of a
contingency.
"Tax Event" shall mean the receipt by the Trust and the Corporation of an
opinion of independent tax 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 which pronouncement or decision is announced on or after the date
of original issuance of the Securities, 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 Securities, (ii) the interest payable by the Corporation on the
Securities 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.
"Trust" shall mean Westbank Capital Trust I, a Delaware business trust
created for the purpose of issuing its undivided beneficial interests in
connection with the issuance of Securities under this Indenture.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939 as in
force and effect at the date of execution of the Indenture, except as provided
in Section 9.03.
"Trust Securities" shall mean, collectively, the Capital Securities and the
Common Securities.
"Underwriting Agreement" shall mean the Underwriting Agreement, dated as of
[_______], 1999, by and among the Corporation, the Trust and the Underwriters
named therein.
"U.S. Government Obligations" shall mean securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii), are not callable or prepayable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such U.S. Government
-8-
<PAGE>
Obligation or a specific payment of interest on or principal of any such U.S.
Government Obligation held by such custodian for the account of the holder of a
depository receipt, provided that (except as required by law) such custodian is
not authorized to make any deduction with respect to the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of interest on
or principal of the U.S. Government Obligation evidenced by such depository
receipt.
SECTION 1.02 Business Day Certificate.
------------------------
On the date of execution and delivery of this Indenture (with respect to
the remainder of calendar year 1999) and within days prior to the end of each
calendar year while this Indenture remains in effect (with respect to succeeding
calendar years), the Corporation shall deliver to the Debenture Trustee an
Officers' Certificate specifying the days on which banking institutions or trust
companies in
are then authorized or obligated by law or executive order to remain closed.
ARTICLE II
SECURITIES
SECTION 2.01 Forms Generally.
---------------
The Securities and the Debenture Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto, the terms of which are
incorporated in and made a part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Corporation is subject or usage. Each Security shall be
dated the date of its authentication.
SECTION 2.02 Execution and Authentication.
----------------------------
An Officer shall sign the Securities for the Corporation by manual or
facsimile signature. If an Officer whose signature is on a Security no longer
holds that office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the manual signature
of the Debenture Trustee. The signature of the Debenture Trustee shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Debenture Trustee shall, upon a Corporation Order, authenticate for
original issue up to, and the aggregate principal amount of Securities
outstanding at any time may not exceed, $17,000,000 aggregate principal amount
of the Securities, except as provided in Sections 2.06, 2.07, 2.08 and 14.05.
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<PAGE>
SECTION 2.03 Form and Payment.
----------------
Except as provided in Section 2.04, the Securities shall be issued in fully
registered certificated form without interest coupons. Principal of and interest
on the Securities issued in certificated form will be payable, the transfer of
such Securities will be registrable and such Securities will be exchangeable for
Securities bearing identical terms and provisions, at the office or agency of
the Corporation maintained for such purpose under Section 3.02; provided,
--------
however, that payments of interest may be made at the option of the Corporation
- -------
(i) by check mailed to the holder at such address as shall appear in the
Security Register, or (ii) by transfer to an account maintained by the Person
entitled thereto, provided that proper transfer instructions have been received
in writing by the relevant record date. Notwithstanding the foregoing, so long
as the holder of any Securities is the Property Trustee, the payment of the
principal of and interest (including Compounded Interest and Additional Sums, if
any) on such Securities held by the Property Trustee will be made at such place
and to such account as may be designated by the Property Trustee.
SECTION 2.04 Global Security.
---------------
(a) In connection with a Dissolution Event,
(i) if any Capital Securities are held in book-entry form ("Book-
Entry Capital Securities"), a Like Amount of Definitive Securities shall be
presented to the Debenture Trustee (if an arrangement with the Depositary has
been maintained) by the Property Trustee in exchange for one or more Global
Securities (as may be required pursuant to Section 2.06), to be registered in
the name of the Depositary, or its nominee, and delivered by the Debenture
Trustee to the Depositary for crediting to the accounts of its participants
pursuant to the instructions of the Administrative Trustees; the Corporation
upon any such presentation shall execute one or more Global Securities in such
aggregate principal amount and deliver the same to the Debenture Trustee for
authentication and delivery in accordance with this Indenture; and payments on
the Securities issued as a Global Security will be made to the Depositary; and
(ii) if any Capital Securities are held in certificated form, the
related Definitive Securities may be presented to the Debenture Trustee by the
Property Trustee, and any Capital Security certificates which represent Capital
Securities other than Book-Entry Capital Securities ("Non Book-Entry Capital
Securities") will be deemed to represent beneficial interests in Securities
presented to the Debenture Trustee by the Property Trustee having an aggregate
principal amount equal to the aggregate liquidation amount of the Non Book-Entry
Capital Securities until such Capital Security certificates are presented to the
security registrar for the Securities for transfer or reissuance, at which time
such Capital Security certificates will be canceled, and a Security in a Like
Amount, registered in the name of the holder of the Capital Security certificate
or the transferee of the holder of such Capital Security certificate, as the
case may be, will be executed by the Corporation and delivered to the Debenture
Trustee for authentication and delivery in accordance with this Indenture; and
upon the issuance of such Securities, Securities with an equivalent aggregate
principal amount that were presented by the Property Trustee to the Debenture
Trustee will be canceled.
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<PAGE>
(b) The Global Securities shall represent the aggregate amount of
outstanding Securities from time to time endorsed thereon; provided, however,
-------- -------
that the aggregate principal amount of outstanding Securities represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and prepayments. Any endorsement of a Global Security to
reflect the amount of any increase or decrease in the aggregate principal amount
of outstanding Securities represented thereby shall be made by the Debenture
Trustee, in accordance with instructions given by the Corporation as required by
this Section 2.04.
(c) The Global Securities may be transferred, in whole but not in part,
only to the Depositary, to another nominee of the Depositary, or to a successor
Depositary selected or approved by the Corporation or to a nominee of such
successor Depositary.
(d) If at any time the Depositary notifies the Corporation that it is
unwilling or unable to continue as Depositary or the Depositary has ceased to be
a Clearing Agency registered under the Exchange Act, and, in each case, a
successor Depositary is not appointed by the Corporation within 90 days after
the Corporation receives such notice or becomes aware of such condition, as the
case may be, the Corporation will execute, and the Debenture Trustee, upon
receipt of a Corporation Order, will authenticate and make available for
delivery the Definitive Securities, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Security,
in exchange for such Global Security. If there is a Default or an Event of
Default, the Depositary shall have the right to exchange the Global Securities
for Definitive Securities. In addition, the Corporation may at any time
determine that the Securities shall no longer be represented by a Global
Security. In the event of such an Event of Default or such a determination, the
Corporation shall execute, and subject to Section 2.06, the Debenture Trustee,
upon receipt of an Officers' Certificate evidencing such determination by the
Corporation and a Corporation Order, will authenticate and make available for
delivery the Definitive Securities, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Security,
in exchange for such Global Security. Upon the exchange of the Global Security
for such Definitive Securities, in authorized denominations, the Global Security
shall be canceled by the Debenture Trustee. Such Definitive Securities issued in
exchange for the Global Security shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the Debenture
Trustee. The Debenture Trustee shall deliver such Definitive Securities to the
Depositary for delivery to the Persons in whose names such Definitive Securities
are so registered.
SECTION 2.05 Interest.
--------
(a) Each Security will bear interest, at the rate of [______]% per annum
(the "Coupon Rate"), from the most recent date to which interest has been paid
or duly provided for or, if no interest has been paid or duly provided for, from
[_________], 1999, until the principal thereof becomes due and payable, and at
the Coupon Rate on any overdue principal and (to the extent that payment of such
interest is enforceable under applicable law) on any overdue installment of
interest, compounded quarterly, payable (subject to the provisions of Article
XVI) quarterly in arrears on and , of
each year (each, an "Interest Payment Date"), commencing , 1999, to
the Person in whose name such Security or any predecessor Security is registered
at the close of business on the regular record date for such interest
installment,
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<PAGE>
which shall be one Business Day prior to the relevant Interest Payment Date for
Global Securities and the /th/ day of the month in which the relevant Interest
Payment Date falls for Definitive Securities.
(b) The amount of interest payable on any Interest Payment Date shall be
computed on the basis of a 360-day year consisting of twelve 30-day months.
(c) During such time as the Property Trustee is the holder of any
Securities, the Corporation shall pay any additional amounts on the Securities
as may be necessary in order that the amount of Distributions then due and
payable by the Trust on the outstanding Trust 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 ("Additional Sums").
SECTION 2.06 Transfer and Exchange.
---------------------
(a) Transfer Restrictions.
---------------------
(i) The Securities may not be transferred except in compliance with
the legend contained in Exhibit A unless otherwise determined by the Corporation
in accordance with applicable law. Upon any distribution of the Securities
following a Dissolution Event, the Corporation and the Debenture Trustee shall
enter into a supplemental indenture pursuant to Section 9.01 to provide for the
transfer procedures with respect to the Securities substantially similar to
those contained in the Declaration to the extent applicable in the circumstances
existing at such time.
(ii) The Securities will be issued and may be transferred only in
blocks having an aggregate principal amount of not less than $ and in
multiples of $ in excess thereof. Any attempted transfer of the Securities in
a block having an aggregate principal amount of less than $ shall be deemed to
be voided and of no legal effect whatsoever. Any such purported transferee shall
be deemed not to be a holder of such Securities for any purpose, including, but
not limited to the receipt of payments on such Securities, and such purported
transferee shall be deemed to have no interest whatsoever in such Securities.
(b) General Provisions Relating to Transfers and Exchanges. To permit
------------------------------------------------------
registrations of transfers and exchanges, the Corporation shall execute and the
Debenture Trustee shall authenticate Definitive Securities and Global Securities
at the request of the security registrar for the Securities. All Definitive
Securities and Global Securities issued upon any registration of transfer or
exchange of Definitive Securities or Global Securities shall be the valid
obligations of the Corporation, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Definitive Securities or Global
Securities surrendered upon such registration of transfer or exchange.
No service charge shall be made to a holder for any registration of
transfer or exchange, but the Corporation may require payment of a sum
sufficient to cover any transfer tax or similar governmental charge payable in
connection therewith.
The Corporation shall not be required to: (i) issue, register the transfer
of or exchange Securities during a period beginning at the opening of business
15 days before the day of mailing of
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<PAGE>
a notice of prepayment or any notice of selection of Securities for prepayment
under Article XIV hereof and ending at the close of business on the day of such
mailing; or (ii) register the transfer of or exchange any Security so selected
for prepayment in whole or in part, except the nonprepaid portion of any
Security being prepaid in part.
Prior to due presentment for the registration of a transfer of any
Security, the Debenture Trustee, the Corporation and any agent of the Debenture
Trustee or the Corporation may deem and treat the Person in whose name any
Security is registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and interest on such Securities, and none of
the Debenture Trustee, the Corporation or any agents of the Debenture Trustee or
the Corporation shall be affected by notice to the contrary.
SECTION 2.07 Replacement Securities.
----------------------
If any mutilated Security is surrendered to the Debenture Trustee, or the
Corporation and the Debenture Trustee receive evidence to their satisfaction of
the destruction, loss or theft of any Security, the Corporation shall issue and
the Debenture Trustee shall authenticate a replacement Security if the Debenture
Trustee's requirements for replacements of Securities are met. An indemnity bond
must be supplied by the holder that is sufficient in the judgment of the
Debenture Trustee and the Corporation to protect the Corporation, the Debenture
Trustee, any agent thereof or any authenticating agent from any loss that any of
them may suffer if a Security is replaced. The Corporation or the Debenture
Trustee may charge for its expenses in replacing a Security.
Every replacement Security is an obligation of the Corporation and shall be
entitled to all of the benefits of this Indenture equally and proportionately
with all other Securities duly issued hereunder.
SECTION 2.08 Temporary Securities.
--------------------
Pending the preparation of Definitive Securities, the Corporation may
execute, and upon Corporation Order the Debenture Trustee shall authenticate and
make available for delivery, temporary Securities that are printed,
lithographed, typewritten, mimeographed or otherwise reproduced, in any
authorized denomination, substantially of the tenor of the Definitive Securities
in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the Officers executing such
Securities may determine, as conclusively evidenced by their execution of such
Securities.
If temporary Securities are issued, the Corporation shall cause Definitive
Securities to be prepared without unreasonable delay. The Definitive Securities
shall be printed, lithographed or engraved, or provided by any combination
thereof, or in any other manner permitted by the rules and regulations of any
applicable securities exchange, all as determined by the Officers executing such
Definitive Securities. After the preparation of Definitive Securities, the
temporary Securities shall be exchangeable for Definitive Securities upon
surrender of the temporary Securities at the office or agency maintained by the
Corporation for such purpose pursuant to Section 3.02 hereof, without charge to
the holder thereof. Upon surrender for cancellation of any one or more temporary
Securities, the Corporation shall execute, and the Debenture Trustee shall
authenticate and make
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<PAGE>
available for delivery, in exchange therefor the same aggregate principal amount
of Definitive Securities of authorized denominations. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as Definitive Securities.
SECTION 2.09 Cancellation.
------------
The Corporation at any time may deliver Securities to the Debenture Trustee
for cancellation. The Debenture Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment,
replacement or cancellation and shall return such canceled Securities to the
Corporation. The Corporation may not issue new Securities to replace Securities
that have been prepaid or paid or that have been delivered to the Debenture
Trustee for cancellation.
SECTION 2.10 Defaulted Interest.
------------------
Any interest on any Security that is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the holder on the relevant
regular record date by virtue of having been such holder; and such Defaulted
Interest shall be paid by the Corporation, at its election, as provided in
clause (a) or clause (b) below:
(a) The Corporation may make payment of any Defaulted Interest on
Securities to the Persons in whose names such Securities (or their
respective Predecessor Securities) are registered at the close of business
on a special record date for the payment of such Defaulted Interest, which
shall be fixed in the following manner: the Corporation shall notify the
Debenture Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each such Security and the date of the proposed payment, and
at the same time the Corporation shall deposit with the Debenture Trustee
an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory
to the Debenture Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of
the Persons entitled to such Defaulted Interest as in this clause provided.
Thereupon, the Debenture Trustee shall fix a special record date for the
payment of such Defaulted Interest which shall not be more than 15 nor less
than 10 days prior to the date of the proposed payment and not less than 10
days after the receipt by the Debenture Trustee of the notice of the
proposed payment. The Debenture Trustee shall promptly notify the
Corporation of such special record date and, in the name and at the expense
of the Corporation, shall cause notice of the proposed payment of such
Defaulted Interest and the special record date therefor to be mailed, first
class postage prepaid, to each Securityholder at his or her address as it
appears in the Security Register, not less than 10 days prior to such
special record date. Notice of the proposed payment of such Defaulted
Interest and the special record date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the Persons in whose
names such Securities (or their respective Predecessor Securities) are
registered on such special record date and shall be no longer payable
pursuant to the following clause (b).
(b) The Corporation may make payment of any Defaulted Interest on any
Securities in any other lawful manner not inconsistent with the
requirements of any securities
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<PAGE>
exchange on which such Securities may be listed, and upon such notice as
may be required by such exchange, if, after notice given by the Corporation
to the Debenture Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the Debenture
Trustee.
SECTION 2.11 CUSIP Numbers.
-------------
The Corporation in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Debenture Trustee shall use "CUSIP" numbers
in notices of prepayment as a convenience to Securityholders; provided, however,
-------- -------
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a prepayment and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such prepayment shall
not be affected by any defect in or omission of such numbers. The Corporation
will promptly notify the Debenture Trustee of any change in the CUSIP numbers.
ARTICLE III
PARTICULAR COVENANTS OF THE CORPORATION
SECTION 3.01 Payment of Principal and Interest.
---------------------------------
The Corporation covenants and agrees for the benefit of the holders of the
Securities that it will duly and punctually pay or cause to be paid the
principal of and interest on the Securities at the place, at the respective
times and in the manner provided herein. The Corporation further covenants to
pay any and all amounts due in respect of the Securities, including, without
limitation, Additional Sums, as may be required pursuant to Section 2.05(c) and
Compounded Interest, as may be required pursuant to Section 16.01.
SECTION 3.02 Offices for Notices and Payments, etc.
-------------------------------------
So long as any of the Securities remain outstanding, the Corporation will
maintain in Wilmington, Delaware, an office or agency where the Securities may
be presented for payment, an office or agency where the Securities may be
presented for registration of transfer and for exchange as in this Indenture
provided and an office or agency where notices and demands to or upon the
Corporation in respect of the Securities or this Indenture may be served. The
Corporation will give to the Debenture Trustee written notice of the location of
any such office or agency and of any change of location thereof. Until
otherwise designated from time to time by the Corporation in a notice to the
Debenture Trustee, any such office or agency for all of the above purposes shall
be the Principal Office of the Debenture Trustee. In case the Corporation shall
fail to maintain any such office or agency in Wilmington, Delaware, or shall
fail to give such notice of the location or of any change in the location
thereof, presentations and demands may be made and notices may be served at the
Principal Office of the Debenture Trustee.
In addition to any such office or agency, the Corporation may from time to
time designate one or more offices or agencies outside Wilmington, Delaware,
where the Securities may be
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<PAGE>
presented for payment, for registration of transfer and for exchange and where
notices and demands to or upon the Corporation in respect of the Securities or
this Indenture may be served in the manner provided in this Indenture, and the
Corporation may from time to time rescind such designation, as the Corporation
may deem desirable or expedient; provided, however, that no such designation or
-------- -------
rescission shall in any manner relieve the Corporation of its obligation to
maintain any such office or agency in Wilmington, Delaware, for the purposes
above mentioned. The Corporation will give to the Debenture Trustee prompt
written notice of any such designation or rescission thereof.
SECTION 3.03 Appointments to Fill Vacancies in Debenture Trustee's Office.
------------------------------------------------------------
The Corporation, whenever necessary to avoid or fill a vacancy in the
office of Debenture Trustee, will appoint, in the manner provided in Section
6.10, a Debenture Trustee, so that there shall at all times be a Debenture
Trustee hereunder.
SECTION 3.04 Provision as to Paying Agent.
----------------------------
(a) If the Corporation shall appoint a paying agent other than the
Debenture Trustee with respect to the Securities, it will cause such paying
agent to execute and deliver to the Debenture Trustee an instrument in which
such agent shall agree with the Debenture Trustee, subject to the provisions of
this Section 3.04,
(1) that it will hold all sums held by it as such agent for the
payment of the principal of or interest on the Securities
(whether such sums have been paid to it by the Corporation or by
any other obligor on the Securities) in trust for the benefit of
the holders of the Securities; and
(2) that it will give the Debenture Trustee notice of any failure by
the Corporation (or by any other obligor on the Securities) to
make any payment of the principal of or interest (including
Additional Sums and Compounded Interest, if any) on the
Securities when the same shall be due and payable.
(b) If the Corporation shall act as its own paying agent, it will, on or
before each due date of the principal of or interest on the Securities, set
aside, segregate and hold in trust for the benefit of the holders of the
Securities a sum sufficient to pay such principal or interest so becoming due
and will notify the Debenture Trustee of any failure to take such action and of
any failure by the Corporation (or by any other obligor under the Securities) to
make any payment of the principal of or interest on the Securities when the same
shall become due and payable.
(c) Anything in this Section 3.04 to the contrary notwithstanding, the
Corporation may, at any time, for the purpose of obtaining a satisfaction and
discharge with respect to the Securities hereunder, or for any other reason, pay
or cause to be paid to the Debenture Trustee all sums payable with respect to
the Securities, such sums to be held by the Debenture Trustee upon the trusts
herein contained.
(d) Anything in this Section 3.04 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 3.04 is subject to
Sections 11.03 and 11.04.
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<PAGE>
SECTION 3.05 Certificate to Debenture Trustee.
--------------------------------
The Corporation will deliver to the Debenture Trustee on or before days
after the end of each fiscal year of the Corporation, commencing with the first
fiscal year ending after the date hereof, so long as Securities are outstanding
hereunder, an Officers' Certificate, one of the signers of which shall be the
principal executive, principal financial or principal accounting officer of the
Corporation, stating that in the course of the performance by the signers of
their duties as officers of the Corporation they would normally have knowledge
of any Default by the Corporation in the performance of any covenants contained
herein, stating whether or not they have knowledge of any such Default and, if
so, specifying each such Default of which the signers have knowledge, the nature
thereof and the action, if any, the Corporation intends to undertake as a result
of such Default.
SECTION 3.06 Compliance with Consolidation Provisions.
----------------------------------------
The Corporation will not, while any of the Securities remain outstanding,
consolidate with, or merge into, or merge into itself, or sell or convey all or
substantially all of its property to any other Person unless the provisions of
Article X hereof are complied with.
SECTION 3.07 Limitation on Dividends.
-----------------------
If (1) there shall have occurred any event of which the Corporation has
actual knowledge that (a) is a Default or an Event of Default and (b) in respect
of which the Corporation shall not have taken reasonable steps to cure, (2) if
the Securities are held by the Property Trustee, the Corporation shall be in
default with respect to its payment of any obligations under the Capital
Securities Guarantee or (3) the Corporation shall have given notice of its
election to exercise its right to commence an Extended Interest Payment Period
and shall not have rescinded such notice, and such Extended Interest Payment
Period or any extension thereof shall have commenced and be continuing, the
Corporation 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, (ii) make any payment of principal of 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 Securities or (iii) make any guarantee payments with
respect to any guarantee (other than the Capital Securities 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 Securities (other than (a) dividends or distributions
in shares of, or options, warrants or rights to subscribe for or purchase shares
of, Common Stock), (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 or compensation plans for its directors,
officers or employees or any of the Corporation's dividend reinvestment plans).
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<PAGE>
SECTION 3.08 Covenants as to Westbank Capital Trust I
----------------------------------------
In the event Securities are issued to the Trust or a trustee of such Trust
in connection with the issuance of Trust Securities by the Trust, for so long as
such Trust Securities remain outstanding, the Corporation (i) will maintain 100%
direct or indirect ownership of the Common Securities of the Trust; provided,
--------
however, that any successor of the Corporation, permitted pursuant to Article X,
- -------
may succeed to the Corporation's ownership of such Common Securities, (ii) will
use commercially reasonable efforts to cause the Trust (a) to remain a business
trust, except in connection with a distribution of Securities to the holders of
Trust Securities in liquidation of the Trust, the redemption of all of the Trust
Securities of the Trust, or certain mergers, consolidations or amalgamations,
each as permitted by the Declaration, and (b) not to be classified as an
association taxable as a corporation and to be classified as a grantor trust, in
each case for United States federal income tax purposes, (iii) will use
commercially reasonable efforts to cause each holder of the Trust Securities to
be treated as owning an undivided beneficial interest in the Securities and (iv)
will not cause, as sponsor of the Trust, or permit, as holder of the Common
Securities, the dissolution, winding-up or liquidation of the Trust, except as
provided in the Declaration.
SECTION 3.09 Payment of Expenses.
-------------------
In connection with the offering, sale and issuance of the Securities to the
Trust and in connection with the sale of the Trust Securities by the Trust, the
Corporation, in its capacity as borrower with respect to the Securities, shall:
(a) pay all costs and expenses relating to the offering, sale and issuance
of the Securities and compensation of the Debenture Trustee in
accordance with the provisions of Section 6.06;
(b) pay all costs and expenses of the Trust, including, but not limited
to, costs and expenses relating to the organization of the Trust, the
registration, offering, sale and issuance of the Trust Securities
(including commissions payable to the Underwriters pursuant to the
Underwriting Agreement in connection therewith), the fees and expenses
of the Property Trustee and the Delaware Trustee, the costs and
expenses relating to the operation of the Trust, including without
limitation, costs and expenses of accountants, attorneys, statistical
or bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, paying agent(s), registrar(s),
transfer agent(s), duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in
connection with the acquisition, financing, and disposition of assets
of the Trust;
(c) be primarily and fully liable for any indemnification obligations
arising with respect to the Declaration;
(d) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs
and expenses with respect to such taxes of the Trust; and
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(e) pay all other fees, expenses, debts and obligations (other than in
respect of the Trust Securities) related to the Trust.
SECTION 3.10 Payment Upon Resignation or Removal.
-----------------------------------
Upon termination of this Indenture or the removal or resignation of the
Debenture Trustee, unless otherwise stated, the Corporation shall pay to the
Debenture Trustee all amounts accrued and owing to the Debenture Trustee to the
date of such termination, removal or resignation. Upon termination of the
Declaration or the removal or resignation of the Delaware Trustee or the
Property Trustee, as the case may be, pursuant to Section 5.7 of the
Declaration, the Corporation shall pay to the Delaware Trustee or the Property
Trustee, as the case may be, all amounts accrued and owing to such trustee(s) to
the date of such termination, removal or resignation.
ARTICLE IV
LIST OF SECURITYHOLDERS AND REPORTS BY THE
CORPORATION AND THE DEBENTURE TRUSTEE
SECTION 4.01 List of Securityholders.
-----------------------
The Corporation covenants and agrees that it will furnish or cause to be
furnished to the Debenture Trustee:
(a) on a quarterly basis on each regular record date for the Securities, a
list, in such form as the Debenture Trustee may reasonably require, of
the names and addresses of the Securityholders as of such record date;
and
(b) at such other times as the Debenture Trustee may request in writing,
within days after the receipt by the Corporation, of any such
request, a list of similar form and content as of a date not more than
days prior to the time such list is furnished,
except that, no such lists need be furnished so long as the Debenture Trustee is
in possession thereof by reason of its acting as security registrar for the
Securities.
SECTION 4.02 Preservation and Disclosure of Lists.
------------------------------------
(a) The Debenture Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of the Securities (1) contained in the most recent list furnished to it
as provided in Section 4.01 or (2) received by it in the capacity of security
registrar (if so acting) hereunder. The Debenture Trustee may destroy any list
furnished to it as provided in Section 4.01 upon receipt of a new list so
furnished.
(b) In case three or more holders of Securities (hereinafter referred to
as "applicants") apply in writing to the Debenture Trustee and furnish to the
Debenture Trustee reasonable proof that each such applicant has owned a Security
for a period of at least six months preceding the date of such application, and
such application states that the applicants desire to communicate with other
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holders of Securities or with holders of all Securities with respect to their
rights under this Indenture and is accompanied by a copy of the form of proxy or
other communication which such applicants propose to transmit, then the
Debenture Trustee shall within five Business Days after the receipt of such
application, at its election, either:
(1) afford such applicants access to the information preserved at the
time by the Debenture Trustee in accordance with the provisions
of subsection (a) of this Section 4.02, or
(2) inform such applicants as to the approximate number of holders of
all Securities whose names and addresses appear in the
information preserved at the time by the Debenture Trustee in
accordance with the provisions of subsection (a) of this Section
4.02, and as to the approximate cost of mailing to such
Securityholders the form of proxy or other communication, if any,
specified in such application.
If the Debenture Trustee shall elect not to afford such applicants access
to such information, the Debenture Trustee shall, upon the written request of
such applicants, mail to each Securityholder whose name and address appear in
the information preserved at the time by the Debenture Trustee in accordance
with the provisions of subsection (a) of this Section 4.02 a copy of the form of
proxy or other communication which is specified in such request with reasonable
promptness after a tender to the Debenture Trustee of the material to be mailed
and of payment, or provision for the payment, of the reasonable expenses of
mailing, unless within five Business Days after such tender, the Debenture
Trustee shall mail to such applicants and file with the Commission, together
with a copy of the material to be mailed, a written statement to the effect
that, in the opinion of the Debenture Trustee, such mailing would be contrary to
the best interests of the holders of Securities or would be in violation of
applicable law. Such written statement shall specify the basis of such opinion.
If the Commission, after opportunity for a hearing upon the objections specified
in the written statement so filed, shall enter an order refusing to sustain any
of such objections or if, after the entry of an order sustaining one or more of
such objections, the Commission shall find, after notice and opportunity for
hearing, that all the objections so sustained have been met and shall enter an
order so declaring, the Debenture Trustee shall mail copies of such material to
all such Securityholders with reasonable promptness after the entry of such
order and the renewal of such tender; otherwise the Debenture Trustee shall be
relieved of any obligation or duty to such applicants respecting their
application.
(c) Each and every holder of Securities, by receiving and holding the
same, agrees with the Corporation and the Debenture Trustee that neither the
Corporation nor the Debenture Trustee nor any paying agent shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the holders of Securities in accordance with the provisions of
subsection (b) of this Section 4.02, regardless of the source from which such
information was derived, and that the Debenture Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
said subsection (b).
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SECTION 4.03 Reports by the Corporation.
--------------------------
(a) The Corporation covenants and agrees to file with the Debenture
Trustee, within 15 days after the date on which the Corporation is required to
file the same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as said Commission may from time to time by rules and regulations
prescribe) which the Corporation may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the
Corporation is not required to file information, documents or reports pursuant
to either of such sections, then to provide to the Debenture Trustee, such of
the supplementary and periodic information, documents and reports which would
have been required pursuant to Section 13 of the Exchange Act in respect of a
security listed and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations. The Corporation also
covenants and agrees to comply with the provisions of Section 314(a) of the
Trust Indenture Act.
(b) The Corporation covenants and agrees to file with the Debenture
Trustee and the Commission, in accordance with the rules and regulations
prescribed from time to time by said Commission, such additional information,
documents and reports with respect to compliance by the Corporation with the
conditions and covenants provided for in this Indenture as may be required from
time to time by such rules and regulations.
(c) The Corporation covenants and agrees to transmit by mail to all
holders of Securities, as the names and addresses of such holders appear upon
the Security Register, within days after the filing thereof with the
Debenture Trustee, such summaries of any information, documents and reports
required to be filed by the Corporation pursuant to subsections (a) and (b) of
this Section 4.03 as may be required by rules and regulations prescribed from
time to time by the Commission.
(d) Delivery of such reports, information and documents to the Debenture
Trustee is for informational purposes only and the Debenture Trustee's receipt
of such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Corporation's compliance with any of its covenants hereunder (as to which the
Debenture Trustee is entitled to rely exclusively on Officers' Certificates).
SECTION 4.04 Reports by the Debenture Trustee.
--------------------------------
(a) The Debenture Trustee shall transmit to Securityholders such reports
concerning the Debenture Trustee and its actions under this Indenture as may be
required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant thereto. If required by Section 313(a) of the Trust Indenture
Act, the Debenture Trustee shall, within days after [____________,_____], and
no later than [_______________] in each succeeding year, deliver to
Securityholders a brief report, dated as of each such date which complies with
the provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such transmission to
Securityholders, be filed by the Debenture Trustee with each stock exchange, if
any, upon which the Securities are
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listed, with the Commission and with the Corporation. The Corporation will
promptly notify the Debenture Trustee when the Securities are listed on any
stock exchange.
ARTICLE V
REMEDIES OF THE DEBENTURE TRUSTEE AND
SECURITYHOLDERS UPON EVENT OF DEFAULT
SECTION 5.01 Events of Default.
-----------------
One or more of the following events of default shall constitute an Event of
Default hereunder (whatever the reason for such 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):
(a) default in the payment of any interest (including Compounded Interest
and Additional Sums, if any) on the Securities or any Other Debentures
(about which a Responsible Officer of the Debenture Trustee has actual
knowledge) when due, and continuance of such default for a period of
30 days; provided, however, that a valid extension of an interest
-------- -------
payment period by the Corporation in accordance with the terms hereof
or thereof shall not constitute a default in the payment of interest
for this purpose; or
(b) default in the payment of any principal of the Securities or any Other
Debentures (about which a Responsible Officer of the Debenture Trustee
has actual knowledge) when due, whether at maturity, upon prepayment,
by declaration of acceleration of maturity or otherwise; or
(c) default in the performance, or breach in any material respect, of any
covenant or warranty of the Corporation in this Indenture (other than
a covenant or warranty a default in whose performance or whose breach
is elsewhere in this Section specifically dealt with), and continuance
of such default or breach for a period of days after there has been
given, by registered or certified mail, to the Corporation by the
Debenture Trustee or to the Corporation and the Debenture Trustee by
the holders of at least % in aggregate principal amount of the
outstanding Securities a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is
a "Notice of Default" hereunder; or
(d) a court having jurisdiction in the premises shall enter a decree or
order for relief in respect of the Corporation in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of
the Corporation or for any substantial part of its property, or
ordering the winding-up or liquidation of its affairs and such
decree or order shall remain unstayed and in effect for a period of
consecutive days; or
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(e) the Corporation shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official)
of the Corporation or of any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due.
If an Event of Default with respect to Securities at the time outstanding
occurs and is continuing, then in every such case the Debenture Trustee or the
holders of not less than % in aggregate principal amount of the Securities
then outstanding may declare the principal amount of all Securities to be due
and payable immediately, by a notice in writing to the Corporation (and to the
Debenture Trustee if given by the holders of the outstanding Securities), and
upon any such declaration the same shall become immediately due and payable.
The foregoing provisions, however, are subject to the condition that if, at
any time after the principal of the Securities shall have been so declared due
and payable, and before any judgment or decree for the payment of the moneys due
shall have been obtained or entered as hereinafter provided, (i) the Corporation
shall pay or shall deposit with the Debenture Trustee a sum sufficient to pay
(A) all matured installments of interest (including Compounded Interest and
Additional Sums, if any) on all the Securities and the principal of any and all
Securities which shall have become due otherwise than by acceleration (with
interest upon such principal and, to the extent that payment of such interest is
enforceable under applicable law, on overdue installments of interest, at the
same rate as the rate of interest specified in the Securities to the date of
such payment or deposit) and (B) such amount as shall be sufficient to cover
compensation and expenses due to the Debenture Trustee and each predecessor
Debenture Trustee, their respective agents, attorneys and counsel, pursuant to
Section 6.06, and (ii) any and all Events of Default under the Indenture, other
than the non-payment of the principal of the Securities which shall have become
due solely by such declaration of acceleration, shall have been cured, waived or
otherwise remedied as provided herein, then, in every such case, the holders of
a majority in aggregate principal amount of the Securities then outstanding, by
written notice to the Corporation and to the Debenture Trustee, may rescind and
annul such declaration and its consequences, but no such waiver or rescission
and annulment shall extend to or shall affect any subsequent default or shall
impair any right consequent thereon.
In case the Debenture Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Debenture Trustee, then and in every
such case the Corporation, the Debenture Trustee and the holders of the
Securities shall be restored respectively to their several positions and rights
hereunder, and all rights, remedies and powers of the Corporation, the Debenture
Trustee and the holders of the Securities shall continue as though no such
proceeding had been taken.
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SECTION 5.02 Payment of Securities on Default; Suit Therefor.
-----------------------------------------------
The Corporation covenants that (a) in case default shall be made in the
payment of any installment of interest (including Compounded Interest and
Additional Sums, if any) on any of the Securities as and when the same shall
become due and payable, and such default shall have continued for a period of
days, or (b) in case default shall be made in the payment of the principal
of any of the Securities as and when the same shall have become due and payable,
whether at maturity of the Securities or upon prepayment or by declaration or
otherwise, then, upon demand of the Debenture Trustee, the Corporation will pay
to the Debenture Trustee, for the benefit of the holders of the Securities, the
whole amount that then shall have become due and payable on all such Securities
for principal or interest (including Compounded Interest and Additional Sums, if
any) or both, as the case may be, with interest upon the overdue principal and
(to the extent that payment of such interest is enforceable under applicable law
and, if the Securities are held by the Trust or a trustee of such Trust, without
duplication of any other amounts paid by the Trust or a trustee in respect
thereof) upon the overdue installments of interest (including Compounded
Interest and Additional Sums, if any) at the rate borne by the Securities; and,
in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including reasonable compensation to the
Debenture Trustee, its agents, attorneys and counsel, and any other amount due
to the Debenture Trustee pursuant to Section 6.06.
In case the Corporation shall fail forthwith to pay such amounts upon such
demand, the Debenture Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any actions or proceedings
at law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Corporation or any other
obligor on the Securities and collect in the manner provided by law out of the
property of the Corporation or any other obligor on the Securities, wherever
situated, the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or for the
reorganization of the Corporation or any other obligor on the Securities under
Title 11, United States Code, or any other applicable law, or in case a receiver
or trustee shall have been appointed for the property of the Corporation or such
other obligor, or in the case of any other similar judicial proceedings relative
to the Corporation or other obligor upon the Securities, or to the creditors or
property of the Corporation or such other obligor, the Debenture Trustee,
irrespective of whether the principal of the Securities shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Debenture Trustee shall have made any demand pursuant to the
provisions of this Section 5.02, shall be entitled and empowered, by
intervention in such proceedings or otherwise, to file and prove a claim or
claims for the whole amount of principal and interest owing and unpaid in
respect of the Securities and, in case of any judicial proceedings, to file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Debenture Trustee (including any claim for
amounts due to the Debenture Trustee pursuant to Section 6.06) and of the
Securityholders allowed in such judicial proceedings relative to the Corporation
or any other obligor on the Securities, or to the creditors or property of the
Corporation or such other obligor, unless prohibited by applicable law and
regulations, to vote on behalf of the holders of the Securities in any election
of a trustee or a standby trustee in arrangement, reorganization, liquidation or
other bankruptcy or insolvency proceedings or person performing
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similar functions in comparable proceedings, and to collect and receive any
moneys or other property payable or deliverable on any such claims, and to
distribute the same after the deduction of its charges and expenses; and any
receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of the Securityholders to make such payments to the Debenture
Trustee, and, in the event that the Debenture Trustee shall consent to the
making of such payments directly to the Securityholders, to pay to the Debenture
Trustee such amounts as shall be sufficient to cover reasonable compensation to,
and expenses of, the Debenture Trustee, each predecessor Debenture Trustee and
their respective agents, attorneys and counsel, and all other amounts due to the
Debenture Trustee pursuant to Section 6.06.
Nothing herein contained shall be construed to authorize the Debenture
Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any holder thereof or to
authorize the Debenture Trustee to vote in respect of the claim of any
Securityholder in any such proceeding.
All rights of action and of asserting claims under this Indenture, or under
any of the Securities, may be enforced by the Debenture Trustee without the
possession of any of the Securities, or the production thereof on any trial or
other proceeding relative thereto, and any such suit or proceeding instituted by
the Debenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment shall be for the ratable benefit of the
holders of the Securities.
In any proceedings brought by the Debenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Debenture Trustee shall be a party), the Debenture Trustee shall be
held to represent all the holders of the Securities, and it shall not be
necessary to make any holders of the Securities parties to any such proceedings.
SECTION 5.03 Application of Moneys Collected by Debenture Trustee.
----------------------------------------------------
Any moneys collected by the Debenture Trustee shall be applied in the
following order, at the date or dates fixed by the Debenture Trustee for the
distribution of such moneys, upon presentation of the Securities in respect of
which moneys have been collected, and stamping thereon the payment, if only
partially paid, and upon surrender thereof if fully paid:
First: To the payment of costs and expenses of collection applicable to the
Securities and all other amounts due to the Debenture Trustee under Section
6.06;
Second: To the payment of all Senior Indebtedness of the Corporation if and
to the extent required by Article XV;
Third: To the payment of the amounts then due and unpaid upon Securities
for principal of and interest (including Compounded Interest and Additional
Sums, if any) on the Securities, in respect of which or for the benefit of which
money has been collected, ratably, without preference of priority of any kind,
according to the amounts due on such Securities for principal and interest,
respectively; and
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Fourth: To the Corporation.
SECTION 5.04 Proceedings by Securityholders.
------------------------------
No holder of any Security shall have any right by virtue of or by availing
of any provision of this Indenture to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Indenture or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
such holder previously shall have given to the Debenture Trustee written notice
of an Event of Default and of the continuance thereof with respect to the
Securities specifying such Event of Default, as hereinbefore provided, and
unless also the holders of not less than 25% in aggregate principal amount of
the Securities then outstanding shall have made written request upon the
Debenture Trustee to institute such action, suit or proceeding in its own name
as Debenture Trustee hereunder and shall have offered to the Debenture Trustee
such reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Debenture Trustee for 60
days after its receipt of such notice, request and offer of indemnity shall have
failed to institute any such action, suit or proceeding, it being understood and
intended, and being expressly covenanted by the taker and holder of every
Security with every other taker and holder and the Debenture Trustee, that no
one or more holders of Securities shall have any right in any manner whatever by
virtue of or by availing of any provision of this Indenture to affect, disturb
or prejudice the rights of any other holder of Securities, or to obtain or seek
to obtain priority over or preference to any other such holder, or to enforce
any right under this Indenture, except in the manner herein provided and for the
equal, ratable and common benefit of all holders of Securities.
Notwithstanding any other provisions in this Indenture, however, the right
of any holder of any Security to receive payment of the principal of and
interest on (including Compounded Interest and Additional Sums, if any) on such
Security, on or after the same shall have become due and payable, or to
institute suit for the enforcement of any such payment, shall not be impaired or
affected without the consent of such holder, and by accepting a Security
hereunder it is expressly understood, intended and covenanted by the taker and
holder of every Security with every other such taker and holder and the
Debenture Trustee, that no one or more holders of Securities shall have any
right in any manner whatsoever by virtue or by availing of any provision of this
Indenture to affect, disturb or prejudice the rights of the holders of any other
Securities, or to obtain or seek to obtain priority over or preference to any
other such holder, or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all
holders of Securities. For the protection and enforcement of the provisions of
this Section, each and every Securityholder and the Debenture Trustee shall be
entitled to such relief as can be given either at law or in equity.
The Corporation and the Debenture Trustee acknowledge that pursuant to the
Declaration, the holders of Capital Securities are entitled, in the
circumstances and subject to the limitations set forth therein, to commence a
Direct Action with respect to any Event of Default referred to in clause (a) or
(b) of Section 5.01.
SECTION 5.05 Proceedings by Debenture Trustee.
--------------------------------
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In case an Event of Default occurs with respect to Securities and is
continuing, the Debenture Trustee may in its discretion proceed to protect and
enforce the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Debenture Trustee shall deem most effectual to protect and
enforce any of such rights, either by suit in equity or by action at law or by
proceeding in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Indenture or in aid of the exercise
of any power granted in this Indenture, or to enforce any other legal or
equitable right vested in the Debenture Trustee by this Indenture or by law.
SECTION 5.06 Remedies Cumulative and Continuing.
----------------------------------
All powers and remedies given by this Article V to the Debenture Trustee or
to the Securityholders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any other powers and remedies available to the
Debenture Trustee or the holders of the Securities, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture or otherwise established with respect to
the Securities, and no delay or omission of the Debenture Trustee or of any
holder of any of the Securities to exercise any right or power accruing upon any
Event of Default occurring and continuing as aforesaid shall impair any such
right or power, or shall be construed to be a waiver of any such default or an
acquiescence therein; and, subject to the provisions of Section 5.04, every
power and remedy given by this Article V or by law to the Debenture Trustee or
to the Securityholders may be exercised from time to time, and as often as shall
be deemed expedient, by the Debenture Trustee or by the Securityholders.
SECTION 5.07 Direction of Proceedings and Waiver of Defaults by Majority
-----------------------------------------------------------
of Securityholders.
- ------------------
The holders of a majority in aggregate principal amount of the Securities
at the time outstanding shall have the right to 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 the Debenture Trustee;
provided, however, that (subject to the provisions of Section 6.01) the
- -------- -------
Debenture Trustee shall have the right to decline to follow any such direction
if the Debenture Trustee shall determine that the action so directed would be
unjustly prejudicial to the holders not taking part in such direction or if the
Debenture Trustee being advised by counsel determines that the action or
proceeding so directed may not lawfully be taken or if the Debenture Trustee in
good faith by one of its Responsible Officers shall determine that the action or
proceedings so directed would involve the Debenture Trustee in personal
liability. Prior to any declaration accelerating the maturity of the
Securities, the holders of a majority in aggregate principal amount of the
Securities at the time outstanding may on behalf of the holders of all of the
Securities waive any past Default or Event of Default and its consequences
except a Default (a) in the payment of principal of or interest on (including
Compounded Interest and Additional Sums, if any) any of the Securities (unless
such default has been cured and a sum sufficient to pay all matured installments
of interest (including Compounded Interest and Additional Sums, if any) and
principal due otherwise than by acceleration has been deposited with the
Debenture Trustee) or (b) in respect of covenants or provisions hereof which
cannot be modified or amended without the consent of the holder of each Security
affected; provided, however, that if the Securities are held by the Property
-------- -------
Trustee, such waiver or modification to such waiver shall not be effective until
the holders of a majority in aggregate
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liquidation amount of Trust Securities shall have consented to such waiver or
modification to such waiver; provided, further, that if the consent of the
-------- -------
holder of each outstanding Security is required, such waiver shall not be
effective until each holder of the Trust Securities shall have consented to such
waiver. Upon any such waiver, the Default covered thereby shall be deemed to be
cured for all purposes of this Indenture and the Corporation, the Debenture
Trustee and the holders of the Securities shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend to
any subsequent or other Default or impair any right consequent thereon. Whenever
any Default or Event of Default hereunder shall have been waived as permitted by
this Section 5.07, said Default or Event of Default shall for all purposes of
the Securities and this Indenture be deemed to have been cured and to be not
continuing.
SECTION 5.08 Notice of Defaults.
------------------
(a) The Debenture Trustee shall, within 90 days after the occurrence of a
Default with respect to the Securities actually known to a Responsible Officer
of the Debenture Trustee, mail to all Securityholders, as the names and
addresses of such holders appear upon the Security Register, notice of all such
Defaults, unless such Default shall have been cured before the giving of such
notice (the term "Default" for the purpose of this Section 5.08 being hereby
defined to be any of the events specified in clauses (a), (b), (c), (d) and (e)
of Section 5.01, not including periods of grace, if any, provided for therein,
and irrespective of the giving of written notice specified in clause (c) of
Section 5.01); provided, however, that, except in the case of Default in the
-------- -------
payment of the principal of or interest (including Compounded Interest or
Additional Sums, if any) on any of the Securities, the Debenture Trustee shall
be protected in withholding such notice if and so long as the board of
directors, the executive committee, or a trust committee of directors and/or
Responsible Officers of the Debenture Trustee in good faith determines that the
withholding of such notice is in the interests of the Securityholders; provided,
--------
further, that in the case of any Default of the character specified in Section
- -------
5.01(c), no such notice to Securityholders shall be given until at least 60 days
after the occurrence thereof, but shall be given within 90 days after such
occurrence.
(b) Within five Business Days of a Responsible Officer of the Debenture
Trustee receiving actual knowledge of an Event of Default, the Debenture Trustee
shall transmit notice of such Event of Default to all Securityholders as their
names and addresses appear on the Security Register, unless such Event of
Default shall have been cured or waived.
SECTION 5.09 Undertaking to Pay Costs.
------------------------
All parties to this Indenture agree, and each holder of any Security by its
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Debenture Trustee for any action
taken or omitted by it as Debenture Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees and expenses, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 5.09 shall not apply to any suit instituted
by the Debenture Trustee, to any suit instituted by any Securityholder, or group
of Securityholders, holding in the aggregate more than % in aggregate
principal amount of the Securities outstanding, or to any suit
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instituted by any Securityholder for the enforcement of the payment of the
principal of or interest (including Compounded Interest and Additional Sums, if
any) on any Security against the Corporation on or after the same shall have
become due and payable.
ARTICLE VI
CONCERNING THE DEBENTURE TRUSTEE
SECTION 6.01 Duties and Responsibilities of Debenture Trustee.
------------------------------------------------
With respect to the holders of the Securities issued hereunder, the
Debenture Trustee, prior to the occurrence of an Event of Default (which, other
than in the case of Sections 5.01(a) and 5.01(b) hereof, is actually known to a
Responsible Officer of the Debenture Trustee) and after the curing or waiving of
all such Events of Default which may have occurred, undertakes to perform such
duties and only such duties as are specifically set forth in this Indenture. In
case an Event of Default (which, other than in the case of Sections 5.01(a) and
5.01(b) hereof, is actually known to a Responsible Officer of the Debenture
Trustee) has occurred (which has not been cured or waived), the Debenture
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
No provision of this Indenture shall be construed to relieve the Debenture
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default (which, other than in
the case of Sections 5.01(a) and 5.01(b) hereof, is actually known to
a Responsible Officer of the Debenture Trustee) and after the curing
or waiving of all such Events of Default which may have occurred,
(1) the duties and obligations of the Debenture Trustee shall be
determined solely by the express provisions of this Indenture,
and the Debenture Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the
Debenture Trustee; and
(2) in the absence of bad faith on the part of the Debenture Trustee,
the Debenture Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Debenture Trustee and conforming to the requirements of this
Indenture; but, in the case of any such certificates or opinions
which by any provision hereof are specifically required to be
furnished to the Debenture Trustee, the Debenture Trustee shall
be under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture;
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(b) the Debenture Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers,
unless it shall be proved that the Debenture Trustee was negligent in
ascertaining the pertinent facts; and
(c) the Debenture Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with
the direction of the Securityholders pursuant to Section 5.07,
relating to the time, method and place of conducting any proceeding
for any remedy available to the Debenture Trustee, or exercising any
trust or power conferred upon the Debenture Trustee, under this
Indenture.
None of the provisions contained in this Indenture shall require the
Debenture Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if it reasonably believes that the repayment of
such funds or liability is not reasonably assured to it under the terms of this
Indenture or adequate indemnity against such risk is not reasonably assured to
it.
SECTION 6.02 Reliance on Documents, Opinions, etc.
------------------------------------
Except as otherwise provided in Section 6.01:
(a) the Debenture Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, note, debenture or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request, direction, order or demand of the Corporation mentioned
herein may be sufficiently evidenced by an Officers' Certificate
(unless other evidence in respect thereof be herein specifically
prescribed); and any Board Resolution may be evidenced to the
Debenture Trustee by a copy thereof certified by the Secretary or an
Assistant Secretary of the Corporation;
(c) the Debenture Trustee may consult with counsel of its selection and
any advice or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in accordance
with such advice or Opinion of Counsel;
(d) the Debenture Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request,
order or direction of any of the Securityholders, pursuant to the
provisions of this Indenture, unless such Securityholders shall have
offered to the Debenture Trustee reasonable and sufficient security or
indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby;
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(e) the Debenture Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture; nothing contained herein shall, however, relieve the
Debenture Trustee of the obligation, upon the occurrence of an Event
of Default (which, other than in the case of Sections 5.01(a) and
5.01(b) hereof, is actually known to a Responsible Officer of the
Debenture Trustee) (that has not been cured or waived), to exercise
such of the rights and powers vested in it by this Indenture, and to
use the same degree of care and skill in their exercise as a prudent
person would exercise or use under the circumstances in the conduct of
his or her own affairs;
(f) the Debenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond, debenture, coupon or other paper or document,
unless requested in writing to do so by the holders of a majority in
aggregate principal amount of the outstanding Securities; provided,
--------
however, that if the payment within a reasonable time to the Debenture
-------
Trustee of the costs, expenses or liabilities likely to be incurred by
it in the making of such investigation is, in the opinion of the
Debenture Trustee, not reasonably assured to the Debenture Trustee by
the security afforded to it by the terms of this Indenture, the
Debenture Trustee may require reasonable indemnity against such
expense or liability as a condition to so proceeding;
(g) the Debenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents (including any Authenticating Agent) or attorneys, and
the Debenture Trustee shall not be responsible for any misconduct or
negligence on the part of any such agent or attorney appointed by it
with due care;
(h) the Debenture Trustee shall not be charged with knowledge of any
Default or Event of Default unless (1) such Default or Event of
Default falls within Section 5.01(a) (other than a default with
respect to the payment of Compounded Interest or Additional Sums) or
Section 5.01(b) of the Indenture, (2) a Responsible Officer shall have
actual knowledge of such Default or Event of Default or (3) written
notice of such Default or Event of Default shall have been given to
the Debenture Trustee by the Corporation or any other obligor on the
Securities or by any holder of the Securities; and
(i) the Debenture Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith, without negligence or willful
misconduct and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture.
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SECTION 6.03 No Responsibility for Recitals, etc.
-----------------------------------
The recitals contained herein and in the Securities (except in the
certificate of authentication of the Debenture Trustee or the Authenticating
Agent) shall be taken as the statements of the Corporation, and the Debenture
Trustee and the Authenticating Agent assume no responsibility for the
correctness of the same. The Debenture Trustee and the Authenticating Agent
make no representations as to the validity or sufficiency of this Indenture or
of the Securities. The Debenture Trustee and the Authenticating Agent shall not
be accountable for the use or application by the Corporation of any Securities
or the proceeds of any Securities authenticated and delivered by the Debenture
Trustee or the Authenticating Agent in conformity with the provisions of this
Indenture.
SECTION 6.04 Debenture Trustee, Authenticating Agent, Paying Agents,
-------------------------------------------------------
Transfer Agents and Registrar May Own Securities.
- ------------------------------------------------
The Debenture Trustee or any Authenticating Agent or any paying agent or
any transfer agent or any security registrar for the Securities, in its
individual or any other capacity, may become the owner or pledgee of Securities
with the same rights it would have if it were not Debenture Trustee,
Authenticating Agent, paying agent, transfer agent or security registrar for the
Securities.
SECTION 6.05 Moneys to be Held in Trust.
--------------------------
Subject to the provisions of Section 11.04, all moneys received by the
Debenture Trustee or any paying agent shall, until used or applied as herein
provided, be held in trust for the purpose for which they were received, but
need not be segregated from other funds except to the extent required by law.
The Debenture Trustee and any paying agent shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed in
writing with the Corporation. So long as no Event of Default shall have
occurred and be continuing, all interest allowed on any such moneys shall be
paid from time to time upon the written order of the Corporation, signed by an
Officer thereof.
SECTION 6.06 Compensation and Expenses of Debenture Trustee.
----------------------------------------------
The Corporation, as issuer of Securities under this Indenture, covenants
and agrees to pay to the Debenture Trustee from time to time, and the Debenture
Trustee shall be entitled to, such compensation as shall be agreed to in writing
between the Corporation and the Debenture Trustee (which shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust), and the Corporation will pay or reimburse the Debenture Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or made
by the Debenture Trustee in accordance with any of the provisions of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ),
except any such expense, disbursement or advance as may arise from its
negligence or bad faith. The Corporation also covenants to indemnify each of
the Debenture Trustee (including in its individual capacity) and any predecessor
Debenture Trustee (and its officers, agents, directors and employees) for, and
to hold it harmless against, any and all loss, damage, claim, liability or
expense including taxes (other than taxes based on the income of the Debenture
Trustee) incurred without negligence or bad faith on the part of the Debenture
Trustee and arising out of or in connection with the
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acceptance or administration of this trust, including the costs and expenses of
defending itself against any claim of liability. The obligations of the
Corporation under this Section 6.06 to compensate and indemnify the Debenture
Trustee and to pay or reimburse the Debenture Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder.
Such additional indebtedness shall be secured by a lien prior to that of the
Securities upon all property and funds held or collected by the Debenture
Trustee as such, except funds held in trust for the benefit of the holders of
particular Securities.
When the Debenture Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.01(d) or Section
5.01(e), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for its services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the resignation or removal of
the Debenture Trustee and the defeasance or other termination of this Indenture.
SECTION 6.07 Officers' Certificate as Evidence.
---------------------------------
Except as otherwise provided in Sections 6.01 and 6.02, whenever in the
administration of the provisions of this Indenture the Debenture Trustee shall
deem it necessary or desirable that a matter be proved or established prior to
taking or omitting any action hereunder, such matter (unless other evidence in
respect thereof is herein specifically prescribed) may, in the absence of
negligence or bad faith on the part of the Debenture Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to the
Debenture Trustee, and such Officers' Certificate, in the absence of negligence
or bad faith on the part of the Debenture Trustee, shall be full warrant to the
Debenture Trustee for any action taken or omitted by it under the provisions of
this Indenture upon the faith thereof.
SECTION 6.08 Conflicting Interest of Debenture Trustee.
-----------------------------------------
If the Debenture Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture Act, the Debenture
Trustee and the Corporation shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act.
SECTION 6.09 Eligibility of Debenture Trustee.
--------------------------------
The Debenture Trustee hereunder shall at all times be a corporation
organized and doing business under the laws of the United States of America or
any state or territory thereof or of the District of Columbia, or a corporation
or other Person permitted to act as trustee by the Commission authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least fifty million U.S. dollars ($50,000,000) and subject to
supervision or examination by federal, state, territorial, or District of
Columbia authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section 6.09 the combined
capital and surplus of
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such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published.
The Corporation may not, nor may any Person directly or indirectly
controlling, controlled by, or under common control with the Corporation, serve
as Debenture Trustee.
In case at any time the Debenture Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.09, the Debenture Trustee shall
resign immediately in the manner and with the effect specified in Section 6.10.
SECTION 6.10 Resignation or Removal of Debenture Trustee.
-------------------------------------------
(a) The Debenture Trustee, or any trustee or trustees hereafter appointed,
may at any time resign by giving written notice of such resignation to the
Corporation and by mailing notice thereof to the holders of the Securities at
their addresses as they shall appear on the Security Register. Upon receiving
such notice of resignation, the Corporation shall promptly appoint a successor
trustee or trustees by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Debenture Trustee and one copy to
the successor trustee. If no successor trustee shall have been so appointed and
have accepted appointment within days after the mailing of such notice of
resignation to the affected Securityholders, the resigning Debenture Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee, or any Securityholder who has been a bona fide holder of a Security for
at least six months may, subject to the provisions of Section 5.09, on behalf of
himself and all others similarly situated, petition any such court for the
appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.
(b) In case at any time any of the following shall occur:
(1) the Debenture Trustee shall fail to comply with the provisions of
Section 6.08 after written request therefor by the Corporation or
by any Securityholder who has been a bona fide holder of a
Security or Securities for at least six months, or
(2) the Debenture Trustee shall cease to be eligible in accordance
with the provisions of Section 6.09 and shall fail to resign
after written request therefor by the Corporation or by any such
Securityholder, or
(3) the Debenture Trustee shall become incapable of acting, or shall
be adjudged a bankrupt or insolvent, or a receiver of the
Debenture Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Debenture
Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, the Corporation may remove the Debenture Trustee and
appoint a successor trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Debenture Trustee so removed and one
copy to the successor trustee, or, subject to the provisions
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of Section 5.09, any Securityholder who has been a bona fide holder of a
Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Debenture Trustee and the appointment of a successor trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
remove the Debenture Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Securities at the time outstanding may at any time remove the Debenture Trustee
and nominate a successor trustee, which shall be deemed appointed as successor
trustee unless within days after written notification of such nomination the
Corporation objects thereto, or if no successor trustee shall have been so
appointed and shall have accepted appointment within days after such removal,
in which case the Debenture Trustee so removed or any Securityholder, upon the
terms and conditions and otherwise as in subsection (a) of this Section 6.10
provided, may petition any court of competent jurisdiction for an appointment of
a successor trustee.
(d) Any resignation or removal of the Debenture Trustee and appointment of
a successor trustee pursuant to any of the provisions of this Section 6.10 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 6.11.
(e) The Corporation shall pay the Debenture Trustee all amounts owed to
such Debenture Trustee pursuant to this Indenture upon the resignation or
removal of the Debenture Trustee.
SECTION 6.11 Acceptance by Successor Debenture Trustee.
-----------------------------------------
Any successor trustee appointed as provided in Section 6.10 shall execute,
acknowledge and deliver to the Corporation and to its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the retiring trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with like effect as if originally named as trustee herein; but, nevertheless, on
the written request of the Corporation or of the successor trustee, the trustee
ceasing to act shall, upon payment of all amounts then due it pursuant to the
provisions of Section 6.06, execute and deliver an instrument transferring to
such successor trustee all the rights and powers of the trustee so ceasing to
act and shall duly assign, transfer and deliver to such successor trustee all
property and money held by such retiring trustee thereunder. Upon request of
any such successor trustee, the Corporation shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming to
such successor trustee all such rights and powers. Any trustee ceasing to act
shall, nevertheless, retain a lien upon all property or funds held or collected
by such trustee to secure any amounts then due it pursuant to the provisions of
Section 6.06.
No successor trustee shall accept appointment as provided in this Section
6.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 6.08 and eligible under the provisions
of Section 6.09.
Upon acceptance of appointment by a successor trustee as provided in this
Section 6.11, the Corporation shall mail notice of the succession of such
trustee hereunder to the holders of Securities
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at their addresses as they shall appear on the Security Register. If the
Corporation fails to mail such notice within 10 days after the acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Corporation.
SECTION 6.12 Succession by Merger, etc.
-------------------------
Any corporation into which the Debenture Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Debenture Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Debenture Trustee, shall be the successor of the
Debenture Trustee hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
In case any Securities shall have been authenticated but not delivered at
the time such successor to the Debenture Trustee shall succeed to the trusts
created by this Indenture, any such successor to the Debenture Trustee may adopt
the certificate of authentication of any predecessor trustee, and deliver such
Securities so authenticated; and in case at that time any of the Securities
shall not have been authenticated, any successor to the Debenture Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of the successor trustee; and in all such cases such certificates
shall have the full force which the Securities or this Indenture elsewhere
provides that the certificate of the Debenture Trustee shall have; provided,
--------
however, that the right to adopt the certificate of authentication of any
- -------
predecessor Debenture Trustee or authenticate Securities in the name of any
predecessor Debenture Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
SECTION 6.13 Limitation on Rights of Debenture Trustee as a Creditor.
-------------------------------------------------------
The Debenture Trustee shall comply with Section 311(a) of the Trust
Indenture Act, excluding any creditor relationship described in Section 311(b)
of the Trust Indenture Act. A Debenture Trustee who has resigned or been
removed shall be subject to Section 311(a) of the Trust Indenture Act to the
extent included therein.
SECTION 6.14 Authenticating Agents.
---------------------
There may be one or more Authenticating Agents appointed by the Debenture
Trustee upon the request of the Corporation with power to act on its behalf and
subject to its direction in the authentication and delivery of Securities issued
upon exchange or transfer thereof as fully to all intents and purposes as though
any such Authenticating Agent had been expressly authorized to authenticate and
deliver Securities; provided, however, that the Debenture Trustee shall have no
-------- -------
liability to the Corporation for any acts or omissions of the Authenticating
Agent with respect to the authentication and delivery of Securities. Any such
Authenticating Agent shall at all times be a corporation organized and doing
business under the laws of the United States or of any state or territory
thereof or of the District of Columbia authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of at least
$5,000,000 and being subject to supervision or examination by federal, state,
territorial or District of Columbia authority. If such corporation publishes
reports of condition at least annually pursuant to law or the requirements of
such authority,
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then for the purposes of this Section 6.14 the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which any Authenticating Agent shall be a party, or any
corporation succeeding to the corporate trust business of any Authenticating
Agent, shall be the successor of such Authenticating Agent hereunder, if such
successor corporation is otherwise eligible under this Section 6.14 without the
execution or filing of any paper or any further act on the part of the parties
hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written notice of
resignation to the Debenture Trustee and to the Corporation. The Debenture
Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice of termination to such Authenticating Agent and to the
Corporation. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible under this Section 6.14, the Debenture Trustee may, and upon the
request of the Corporation shall, promptly appoint a successor Authenticating
Agent eligible under this Section 6.14, shall give written notice of such
appointment to the Corporation and shall mail notice of such appointment to all
Securityholders as the names and addresses of such holders appear on the
Security Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all rights, powers, duties and
responsibilities of its predecessor hereunder, with like effect as if originally
named as Authenticating Agent herein.
The Corporation, as issuer of the Securities, agrees to pay to any
Authenticating Agent from time to time reasonable compensation for its services.
Any Authenticating Agent shall have no responsibility or liability for any
action taken by it as such in accordance with the directions of the Debenture
Trustee.
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01 Action by Securityholders.
-------------------------
Whenever in this Indenture it is provided that the holders of a specified
percentage in aggregate principal amount of the Securities may take any action
(including the making of any demand or request, the giving of any notice,
consent or waiver or the taking of any other action), the fact that at the time
of taking any such action the holders of such specified percentage have joined
therein may be evidenced (a) by any instrument (including by way of electronic
transmission) or any number of instruments of similar tenor executed by such
Securityholders in person or by agent or proxy appointed in writing, or (b) by
the record of such holders of Securities voting in favor thereof at any meeting
of such Securityholders duly called and held in accordance with the provisions
of
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Article VIII, or (c) by a combination of such instrument or instruments and
any such record of such a meeting of such Securityholders.
If the Corporation shall solicit from the Securityholders any request,
demand, authorization, direction, notice, consent, waiver or other action, the
Corporation may, at its option, as evidenced by an Officers' Certificate, fix in
advance a record date for the determination of Securityholders entitled to give
such request, demand, authorization, direction, notice, consent, waiver or other
action, but the Corporation shall have no obligation to do so. If such a record
date is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other action may be given before or after the record date, but only
the Securityholders of record at the close of business on the record date shall
be deemed to be Securityholders for the purposes of determining whether
Securityholders of the requisite proportion of outstanding Securities have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other action, and for that purpose the
outstanding Securities shall be computed as of the record date; provided,
--------
however, that no such authorization, agreement or consent by such
- -------
Securityholders on the record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than six
months after the record date.
SECTION 7.02 Proof of Execution by Securityholders.
-------------------------------------
Subject to the provisions of Sections 6.01, 6.02 and 8.05, proof of the
execution of any instrument by a Securityholder or his agent or proxy shall be
sufficient if made in accordance with such reasonable rules and regulations as
may be prescribed by the Debenture Trustee or in such manner as shall be
satisfactory to the Debenture Trustee. The ownership of Securities shall be
proved by the Security Register or by a certificate of the security registrar
for the Securities. The Debenture Trustee may require such additional proof of
any matter referred to in this Section as it shall deem necessary.
The record of any Securityholders' meeting shall be proved in the manner
provided in Section 8.06.
SECTION 7.03 Who Are Deemed Absolute Owners.
------------------------------
Prior to due presentment for registration of transfer of any Security, the
Corporation, the Debenture Trustee, any Authenticating Agent, any paying agent,
any transfer agent and any security registrar for the Securities may deem the
person in whose name such Security shall be registered upon the Security
Register to be, and may treat him as, the absolute owner of such Security
(whether or not such Security shall be overdue) for the purpose of receiving
payment of or on account of the principal of and (subject to Section 2.05)
interest on such Security and for all other purposes; and neither the
Corporation nor the Debenture Trustee nor any Authenticating Agent nor any
paying agent nor any transfer agent nor any security registrar for the
Securities shall be affected by any notice to the contrary. All such payments
so made to any holder for the time being or upon his order shall be valid and,
to the extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Security.
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SECTION 7.04 Securities Owned by Corporation Deemed Not Outstanding.
------------------------------------------------------
In determining whether the holders of the requisite aggregate principal
amount of Securities have concurred in any direction, consent or waiver under
this Indenture, Securities that are owned by the Corporation or any other
obligor on the Securities or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Corporation or
any other obligor on the Securities shall be disregarded and deemed not to be
outstanding for the purpose of any such determination; provided, however, that
-------- -------
for the purposes of determining whether the Debenture Trustee shall be protected
in relying on any such direction, consent or waiver, only Securities which a
Responsible Officer of the Debenture Trustee actually knows are so owned shall
be so disregarded. Securities so owned which have been pledged in good faith
may be regarded as outstanding for the purposes of this Section 7.04 if the
pledgee shall establish to the satisfaction of the Debenture Trustee the
pledgee's right to vote such Securities and that the pledgee is not the
Corporation or any such other obligor or Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Corporation or any such other obligor. In the case of a dispute as to such
right, any decision by the Debenture Trustee taken upon the advice of counsel
shall be full protection to the Debenture Trustee.
SECTION 7.05 Revocation of Consents; Future Holders Bound.
--------------------------------------------
At any time prior to (but not after) the evidencing to the Debenture
Trustee, as provided in Section 7.01, of the taking of any action by the holders
of the percentage in aggregate principal amount of the Securities specified in
this Indenture in connection with such action, any holder of a Security (or any
Security issued in whole or in part in exchange or substitution therefor),
subject to Section 7.01, the serial number of which is shown by the evidence to
be included in the group of Securities the holders of which have consented to
such action, may, by filing written notice with the Debenture Trustee at its
principal office and upon proof of holding as provided in Section 7.02, revoke
such action so far as concerns such Security (or so far as concerns the
principal amount represented by any exchanged or substituted Security). Except
as aforesaid, any such action taken by the holder of any Security shall be
conclusive and binding upon such holder and upon all future holders and owners
of such Security, and of any Security issued in exchange or substitution
therefor, irrespective of whether or not any notation in regard thereto is made
upon such Security or any Security issued in exchange or substitution therefor.
ARTICLE VII
MEETINGS OF SECURITYHOLDERS
SECTION 8.01 Purposes of Meetings.
--------------------
A meeting of Securityholders may be called at any time and from time to
time pursuant to the provisions of this Article VIII for any of the following
purposes:
(a) to give any notice to the Corporation or to the Debenture Trustee, or
to give any directions to the Debenture Trustee, or to consent to the
waiving of any Default
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hereunder and its consequences, or to take any other action authorized
to be taken by Securityholders pursuant to any of the provisions of
Article V;
(b) to remove the Debenture Trustee and nominate a successor trustee
pursuant to the provisions of Article VI;
(c) to consent to the execution of an indenture or indentures supplemental
hereto pursuant to the provisions of Section 9.02; or
(d) to take any other action authorized to be taken by or on behalf of the
holders of any specified aggregate principal amount of such Securities
under any other provision of this Indenture or under applicable law.
SECTION 8.02 Call of Meetings by Debenture Trustee.
-------------------------------------
The Debenture Trustee may at any time call a meeting of Securityholders to
take any action specified in Section 8.01, to be held at such time and at such
place in Wilmington, Delaware or Newport New Hampshire, as the Debenture Trustee
shall determine. Notice of every meeting of the Securityholders, setting forth
the time and the place of such meeting and in general terms the action proposed
to be taken at such meeting, shall be mailed to holders of Securities at their
addresses as they shall appear on the Security Register. Such notice shall be
mailed not less than 20 nor more than 180 days prior to the date fixed for the
meeting.
SECTION 8.03 Call of Meetings by Corporation or Securityholders.
--------------------------------------------------
In case at any time the Corporation, pursuant to a resolution of the Board
of Directors, or the holders of at least % in aggregate principal amount of
the Securities then outstanding, shall have requested the Debenture Trustee to
call a meeting of Securityholders, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Debenture Trustee shall not have mailed the notice of such meeting within
days after receipt of such request, then the Corporation or such Securityholders
may determine the time and the place in Wilmington, Delaware or Newport, New
Hampshire for such meeting and may call such meeting to take any action
authorized in Section 8.01, by mailing notice thereof as provided in Section
8.02.
SECTION 8.04 Qualifications for Voting.
-------------------------
To be entitled to vote at any meeting of Securityholders, a Person shall be
(a) a holder of one or more Securities or (b) a Person appointed by an
instrument in writing as proxy by a holder of one or more Securities. The only
Persons who shall be entitled to be present or to speak at any meeting of
Securityholders shall be the Persons entitled to vote at such meeting and their
counsel and any representatives of the Debenture Trustee and its counsel and any
representatives of the Corporation and its counsel.
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SECTION 8.05 Regulations.
-----------
Notwithstanding any other provisions of this Indenture, the Debenture
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Securityholders, in regard to proof of the holding of Securities and
of the appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit.
The Debenture Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Corporation or by Securityholders as provided in Section 8.03, in which case
the Corporation or the Securityholders calling the meeting, as the case may be,
shall in like manner appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by majority vote of the
meeting.
Subject to the provisions of Section 8.04, at any meeting each holder of
Securities or proxy therefor shall be entitled to one vote for each $
principal amount of Securities held or represented by him; provided, however,
-------- -------
that no vote shall be cast or counted at any meeting in respect of any Security
challenged as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other than
by virtue of Securities held by him or instruments in writing as aforesaid duly
designating him as the person to vote on behalf of other Securityholders. Any
meeting of Securityholders duly called pursuant to the provisions of Section
8.02 or 8.03 may be adjourned from time to time by a majority of those present,
and the meeting may be held as so adjourned without further notice.
SECTION 8.06 Voting.
------
The vote upon any resolution submitted to any meeting of holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of such holders or of their representatives by proxy and the serial
number or numbers of the Securities held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
triplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts setting forth a
copy of the notice of the meeting and showing that said notice was mailed as
provided in Section 8.02. The record shall show the serial numbers of the
Securities voting in favor of or against any resolution. The record shall be
signed and verified by the affidavits of the permanent chairman and secretary of
the meeting and one of the duplicates shall be delivered to the Corporation and
the other to the Debenture Trustee to be preserved by the Debenture Trustee, the
latter to have attached thereto the ballots voted at the meeting. Any record so
signed and verified shall be conclusive evidence of the matters therein stated.
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ARTICLE IX
AMENDMENTS
SECTION 9.01 Without Consent of Securityholders.
----------------------------------
The Corporation and the Debenture Trustee may from time to time and at any
time amend this Indenture, without the consent of the Securityholders, for one
or more of the following purposes:
(a) to evidence the succession of another Person to the Corporation, or
successive successions, and the assumption by the successor Person of
the covenants, agreements and obligations of the Corporation pursuant
to Article X hereof;
(b) to add to the covenants of the Corporation such further covenants,
restrictions or conditions for the protection of the Securityholders
as the Board of Directors and the Debenture Trustee shall consider to
be for the protection of the Securityholders, and to make the
occurrence, or the occurrence and continuance, of a default in any of
such additional covenants, restrictions or conditions a Default or an
Event of Default permitting the enforcement of all or any of the
remedies provided in this Indenture as herein set forth; provided,
--------
however, that in respect of any such additional covenant, restriction
-------
or condition such amendment may provide for a particular period of
grace after default (which period may be shorter or longer than that
allowed in the case of other defaults) or may provide for an immediate
enforcement upon such default or may limit the remedies available to
the Debenture Trustee upon such default;
(c) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained herein or
in any supplemental indenture; or to make such other provisions in
regard to matters or questions arising under this Indenture, provided
that any such action shall not materially adversely affect the
interests of the holders of the Securities;
(d) to evidence and provide for the acceptance of appointment hereunder by
a successor trustee with respect to the Securities;
(e) to make provision for transfer procedures, certification, book-entry
provisions, the form of restricted securities legends, if any, to be
placed on Securities, and all other matters required pursuant to
Section 2.06 or otherwise necessary, desirable or appropriate in
connection with the issuance of Securities to holders of Capital
Securities in the event of a distribution of Securities by the Trust
following a Dissolution Event, provided that any such action shall not
materially adversely affect the interests of the holders of the
Securities;
(f) to qualify or maintain qualification of this Indenture under the Trust
Indenture Act; or
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(g) to make any change that does not adversely affect the rights of any
Securityholder in any material respect.
The Debenture Trustee is hereby authorized to join with the Corporation in
the execution of any supplemental indenture to effect such amendment, to make
any further appropriate agreements and stipulations which may be therein
contained and to accept the conveyance, transfer and assignment of any property
thereunder, but the Debenture Trustee shall not be obligated to, but may in its
discretion, enter into any such supplemental indenture which affects the
Debenture Trustee's own rights, duties or immunities under this Indenture or
otherwise.
Any amendment to this Indenture authorized by the provisions of this
Section 9.01 may be executed by the Corporation and the Debenture Trustee
without the consent of the holders of any of the Securities at the time
outstanding, notwithstanding any of the provisions of Section 9.02.
SECTION 9.02 With Consent of Securityholders.
-------------------------------
With the consent (evidenced as provided in Section 7.01) of the holders of
a majority in aggregate principal amount of the Securities at the time
outstanding, the Corporation, when authorized by a Board Resolution, and the
Debenture Trustee may from time to time and at any time amend this Indenture for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the rights
of the holders of the Securities; provided, however, that no such amendment
-------- -------
shall, without the consent of the holders of each Security then outstanding and
affected thereby (i) change the Maturity Date of any Security, or reduce the
rate or extend the time of payment of interest thereon (except as contemplated
by Article XVI), or reduce the principal amount thereof, or change any
prepayment provisions, or make the principal thereof or any interest thereon
payable in any coin or currency other than U.S. dollars, or impair or affect the
right of any Securityholder to institute suit for payment thereof, or (ii)
reduce the aforesaid percentage of Securities, the holders of which are required
to consent to any such amendment to the Indenture; provided, however, that if
-------- -------
the Securities are held by the Trust, such amendment shall not be effective
until the holders of a majority in liquidation amount of Trust Securities shall
have consented to such amendment; provided, further, that if the consent of the
-------- -------
holder of each outstanding Security is required, such amendment shall not be
effective until each holder of the Trust Securities shall have consented to such
amendment.
Upon the request of the Corporation accompanied by a copy of a resolution
of the Board of Directors certified by its Secretary or Assistant Secretary
authorizing the execution of any supplemental indenture effecting such
amendment, and upon the filing with the Debenture Trustee of evidence of the
consent of Securityholders as aforesaid, the Debenture Trustee shall join with
the Corporation in the execution of such supplemental indenture unless such
supplemental indenture affects the Debenture Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Debenture
Trustee may in its discretion, but shall not be obligated to, enter into such
supplemental indenture.
Promptly after the execution by the Corporation and the Debenture Trustee
of any supplemental indenture pursuant to the provisions of this Section, the
Debenture Trustee shall transmit by mail, first class postage prepaid, a notice,
prepared by the Corporation, setting forth in
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general terms the substance of such supplemental indenture, to the
Securityholders as their names and addresses appear upon the Security Register.
Any failure of the Debenture Trustee to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture.
It shall not be necessary for the consent of the Securityholders under this
Section 9.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
SECTION 9.03 Compliance with Trust Indenture Act; Effect of Supplemental
-----------------------------------------------------------
Indentures.
- ----------
Any supplemental indenture executed pursuant to the provisions of this
Article IX shall comply with the Trust Indenture Act. Upon the execution of any
supplemental indenture pursuant to the provisions of this Article IX, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Debenture Trustee, the Corporation
and the holders of Securities shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications and amendments,
and all the terms and conditions of any such supplemental indenture shall be and
be deemed to be part of the terms and conditions of this Indenture for any and
all purposes.
SECTION 9.04 Notation on Securities.
----------------------
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article IX may bear a
notation in form approved by the Debenture Trustee as to any matter provided for
in such supplemental indenture. If the Corporation or the Debenture Trustee
shall so determine, new Securities so modified as to conform, in the opinion of
the Debenture Trustee and the Board of Directors, to any modification of this
Indenture contained in any such supplemental indenture may be prepared and
executed by the Corporation, authenticated by the Debenture Trustee or the
Authenticating Agent and delivered in exchange for the Securities then
outstanding.
SECTION 9.05 Evidence of Compliance of Supplemental Indenture to be
------------------------------------------------------
Furnished to Debenture Trustee.
- ------------------------------
The Debenture Trustee, subject to the provisions of Sections 6.01 and 6.02,
may receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any supplemental indenture executed pursuant hereto is authorized
by and complies with the requirements of this Article IX and this Indenture.
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ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE, TRANSFER AND LEASE
SECTION 10.01 Corporation May Consolidate, etc., on Certain Terms.
---------------------------------------------------
Nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation or merger of the Corporation with or into any other
Person (whether or not affiliated with the Corporation, as the case may be), or
successive consolidations or mergers in which the Corporation or its successor
or successors, as the case may be, shall be a party or parties, or shall prevent
any sale, conveyance, transfer or lease of the property of the Corporation, or
its successor or successors as the case may be, as an entirety, or substantially
as an entirety, to any other Person (whether or not affiliated with the
Corporation, or its successor or successors, as the case may be) authorized to
acquire and operate the same, provided that (a) the Corporation is the surviving
--------
Person, or the Person formed by or surviving any such consolidation or merger
(if other than the Corporation) or to which such sale, conveyance, transfer or
lease of property is made is a Person organized and existing under the laws of
the United States or any State thereof or the District of Columbia, and (b) if
the Corporation is not the surviving Person, upon any such consolidation,
merger, sale, conveyance, transfer or lease, the due and punctual payment of the
principal of and interest on the Securities according to their tenor and the due
and punctual performance and observance of all the covenants and conditions of
this Indenture to be kept or performed by the Corporation shall be expressly
assumed by the surviving Person, by supplemental indenture (which shall conform
to the provisions of the Trust Indenture Act as then in effect) satisfactory in
form to the Debenture Trustee executed and delivered to the Debenture Trustee by
the Person formed by such consolidation, or into which the Corporation shall
have been merged, or by the Person which shall have acquired such property, as
the case may be, and (c) after giving effect to such consolidation, merger,
sale, conveyance, transfer or lease, no Default or Event of Default shall have
occurred and be continuing.
SECTION 10.02 Successor Person to be Substituted for Corporation.
--------------------------------------------------
In case of any such consolidation, merger, sale, conveyance, transfer or
lease, and upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Debenture Trustee and satisfactory in
form to the Debenture Trustee, of the obligation of due and punctual payment of
the principal of and interest on all of the Securities and the due and punctual
performance and observance of all of the covenants and conditions of this
Indenture to be performed or observed by the Corporation, such successor Person
shall succeed to and be substituted for the Corporation, with the same effect as
if it had been named herein as a party hereto, and the Corporation thereupon
shall be relieved of any further liability or obligation hereunder or upon the
Securities. Such successor Person thereupon may cause to be signed, and may
issue either in its own name or in the name of the Corporation, any or all of
the Securities issuable hereunder which theretofore shall not have been signed
by the Corporation and delivered to the Debenture Trustee or the Authenticating
Agent; and, upon the order of such successor Person instead of the Corporation
and subject to all the terms, conditions and limitations in this Indenture
prescribed, the Debenture Trustee or the Authenticating Agent shall authenticate
and deliver any Securities which previously shall have been signed and delivered
by any Officer of the Corporation to the Debenture Trustee or the Authenticating
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Agent for authentication, and any Securities which such successor Person
thereafter shall cause to be signed and delivered to the Debenture Trustee or
the Authenticating Agent for that purpose. All the Securities so issued shall in
all respects have the same legal rank and benefit under this Indenture as the
Securities theretofore or thereafter issued in accordance with the terms of this
Indenture as though all of such Securities had been issued at the date of the
execution hereof.
SECTION 10.03 Opinion of Counsel to be Given Debenture Trustee.
------------------------------------------------
The Debenture Trustee, subject to the provisions of Sections 6.01 and 6.02,
may receive an Opinion of Counsel as conclusive evidence that any consolidation,
merger, sale, conveyance, transfer or lease, and any assumption, permitted or
required by the terms of this Article X is authorized by and complies with the
provisions of this Article X and this Indenture.
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01 Discharge of Indenture.
----------------------
When (a) the Corporation shall deliver to the Debenture Trustee for
cancellation all Securities theretofore authenticated (other than any Securities
which shall have been destroyed, lost or stolen and which shall have been
replaced as provided in Section 2.07) and not theretofore canceled, or (b) all
the Securities not theretofore canceled or delivered to the Debenture Trustee
for cancellation shall have become due and payable, or are by their terms to
become due and payable within one year or are to be called for prepayment within
one year under arrangements satisfactory to the Debenture Trustee for the giving
of notice of prepayment, and the Corporation shall deposit with the Debenture
Trustee, in trust, funds sufficient to pay on the Maturity Date or upon
prepayment all of the Securities (other than any Securities which shall have
been destroyed, lost or stolen and which shall have been replaced as provided in
Section 2.07) not theretofore canceled or delivered to the Debenture Trustee for
cancellation, including principal and interest (including Compounded Interest
and Additional Sums, if any) due or to become due to the Maturity Date or
prepayment date, as the case may be, but excluding, however, the amount of any
moneys for the payment of principal of or interest (including Compounded
Interest and Additional Sums, if any) on the Securities (1) theretofore repaid
to the Corporation in accordance with the provisions of Section 11.04, or (2)
paid to any State or to the District of Columbia pursuant to its unclaimed
property or similar laws, and if, in either case the Corporation shall also pay
or cause to be paid all other sums payable hereunder by the Corporation, then
this Indenture shall cease to be of further effect except for the provisions of
Sections 2.02, 2.06, 2.07, 3.01, 3.02, 3.04, 6.06, 6.10 and 11.04 hereof, which
shall survive until such Securities shall mature and be paid. Thereafter,
Sections 6.06, 6.10 and 11.04 shall survive, and the Debenture Trustee, on
demand of the Corporation accompanied by any Officers' Certificate and an
Opinion of Counsel and at the cost and expense of the Corporation, shall execute
proper instruments acknowledging satisfaction of and discharging this Indenture;
the Corporation, however, hereby agrees to reimburse the Debenture Trustee for
any costs or expenses thereafter reasonably and properly incurred by the
Debenture Trustee in connection with this Indenture or the Securities.
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SECTION 11.02 Deposited Moneys and U.S. Government Obligations to be Held in
--------------------------------------------------------------
Trust by Debenture Trustee.
- --------------------------
Subject to the provisions of Section 11.04, all moneys and U.S. Government
Obligations deposited with the Debenture Trustee pursuant to Sections 11.01 or
11.05 shall be held in trust and applied by it to the payment, either directly
or through any paying agent (including the Corporation if acting as its own
paying agent), to the holders of the particular Securities for the payment of
which such moneys or U.S. Government Obligations have been deposited with the
Debenture Trustee, of all sums due and to become due thereon for principal and
interest.
The Corporation shall pay and indemnify the Debenture Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Governmental
Obligations deposited pursuant to Section 11.05 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the holders of outstanding Securities.
SECTION 11.03 Reinstatement.
-------------
If the Debenture Trustee is unable to apply any money in accordance with
Section 11.02 by reason of any order or judgment or any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the Corporation's obligations under the Securities of such series shall be
revived and reinstated as though no deposit had occurred pursuant to this
Article XI until such time as the Debenture Trustee is permitted to apply all
such money in accordance with Section 11.02, provided, however, that if the
-------- -------
Corporation makes any payment of principal of or interest on any such Security
following reinstatement of its obligations, the Corporation shall be subrogated
to the rights of the Securityholders of such Securities to receive such payment
from money held by the Debenture Trustee.
SECTION 11.04 Paying Agent to Repay Moneys Held.
---------------------------------
Upon the satisfaction and discharge of this Indenture all moneys then held
by any paying agent of the Securities (other than the Debenture Trustee) shall,
upon written demand of the Corporation, be repaid to it or paid to the Debenture
Trustee, and thereupon such paying agent shall be released from all further
liability with respect to such moneys.
SECTION 11.05 Return of Unclaimed Moneys.
--------------------------
Any moneys deposited with or paid to the Debenture Trustee or any paying
agent for payment of the principal of or interest (including Compounded Interest
and Additional Sums, if any) on Securities and not applied but remaining
unclaimed by the holders of Securities for two years after the date upon which
the principal of or interest (including Compounded Interest and Additional Sums,
if any) on such Securities, as the case may be, shall have become due and
payable, shall be repaid to the Corporation by the Debenture Trustee or such
paying agent; and the holder of any of the Securities shall thereafter look only
to the Corporation for any payment which such holder may be entitled to collect
and all liability of the Debenture Trustee or such paying agent with respect to
such moneys shall thereupon cease.
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SECTION 11.06 Defeasance Upon Deposit of Moneys or U.S. Government
----------------------------------------------------
Obligations.
- -----------
The Corporation shall be deemed to have been Discharged (as defined below)
from its obligations with respect to the Securities on the 91st day after the
applicable conditions set forth below have been satisfied:
(a) the Corporation shall have deposited or caused to be deposited
irrevocably with the Debenture Trustee or the Defeasance Agent (as
defined below) as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the holders of
the Securities (i) cash in an amount, or (ii) non-callable U.S.
Government Obligations, without reinvestment thereof, which through
the payment of interest and principal in respect thereof in accordance
with their terms will provide, not later than one day before the due
date of any payment, money in an amount, or (iii) a combination of (i)
and (ii), sufficient, in the opinion (with respect to (ii) and (iii))
of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the
Debenture Trustee and the Defeasance Agent, if any, to pay and
discharge each installment of principal of and interest on the
outstanding Securities on the dates such installments of principal and
interest are due;
(b) if the Securities are then listed on any national securities exchange,
the Corporation shall have delivered to the Debenture Trustee and the
Defeasance Agent, if any, an Opinion of Counsel to the effect that the
exercise of the option under this Section 11.05 would not cause such
Securities to be delisted from such exchange;
(c) no Default or Event of Default with respect to the Securities shall
have occurred and be continuing on the date of such deposit; and
(d) the Corporation shall have delivered to the Debenture Trustee and the
Defeasance Agent, if any, an Opinion of Counsel to the effect that
holders of the Securities will not recognize income, gain or loss for
United States federal income tax purposes as a result of the exercise
of the option under this Section 11.05 and will be subject to United
States federal income tax on the same amount and in the same manner
and at the same times as would have been the case if such option had
not been exercised.
"Discharged" means that the Corporation shall be deemed to have paid and
discharged the entire indebtedness represented by, and obligations under, the
Securities and to have satisfied all the obligations under this Indenture
relating to the Securities (and the Debenture Trustee, at the expense of the
Corporation, shall execute proper instruments acknowledging the same), except
(1) the rights of holders of Securities to receive, from the trust fund
described in clause (a) above, payment of the principal of and the interest on
the Securities when such payments are due; (2) the Corporation's obligations
with respect to the Securities under Sections 2.06, 2.07, 5.02 and 11.04; and
(3) the rights, powers, trusts, duties and immunities of the Debenture Trustee
hereunder.
"Defeasance Agent" means another financial institution which is eligible to
act as Debenture Trustee hereunder and which assumes all of the obligations of
the Debenture Trustee necessary to
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enable the Debenture Trustee to act hereunder. In the event such a Defeasance
Agent is appointed pursuant to this Section, the following conditions shall
apply:
(1) the Debenture Trustee shall have approval rights over the document
appointing such Defeasance Agent and the document setting forth such
Defeasance Agent's rights and responsibilities; and
(2) the Defeasance Agent shall provide verification to the Debenture
Trustee acknowledging receipt of sufficient money and/or U.S.
Government Obligations to meet the applicable conditions set forth in
this Section 11.05.
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.01 Indenture and Securities Solely Corporate Obligations.
-----------------------------------------------------
No recourse for the payment of the principal of or interest (including
Compounded Interest and Additional Sums, if any) on any Security, or for any
claim based thereon or otherwise in respect thereof, and no recourse under or
upon any obligation, covenant or agreement of the Corporation in this Indenture,
or in any Security, or because of the creation of any indebtedness represented
thereby, shall be had against any incorporator, stockholder, employee, officer
or director, as such, past, present or future, of the Corporation or of any
successor Person to the Corporation, either directly or through the Corporation
or any successor Person to the Corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly understood that all such liability is
hereby expressly waived and released as a condition of, and as a consideration
for, the execution of this Indenture and the issuance of the Securities.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 13.01 Successors.
----------
All of the covenants, stipulations, promises and agreements of the
Corporation contained in this Indenture shall also bind the Corporation's
successors and assigns whether so expressed or not.
SECTION 13.02 Official Acts by Successor Corporation.
--------------------------------------
Any act or proceeding that, by any provision of this Indenture, is
authorized or required to be done or performed by any board, committee or
officer of the Corporation shall and may be done and performed with like force
and effect by the like board, committee or officer of any corporation that shall
at the time be the lawful sole successor of the Corporation.
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SECTION 13.03 Surrender of Corporation Powers.
-------------------------------
The Corporation by instrument in writing executed by authority of 2/3 (two-
thirds) of its Board of Directors and delivered to the Debenture Trustee may
surrender any of the powers reserved to the Corporation hereunder, and thereupon
such power so surrendered shall terminate both as to the Corporation, as the
case may be, and as to any successor Person.
SECTION 13.04 Addresses for Notices, etc.
--------------------------
Any notice or demand which by any provision of this Indenture is required
or permitted to be given or served by the Debenture Trustee or by the holders of
Securities on the Corporation may be given or served by being deposited postage
prepaid by first class mail, registered or certified mail, overnight courier
service or conformed telecopy addressed (until another address is filed by the
Corporation with the Debenture Trustee for the purpose) to Westbank Corporation
225 Park Avenue, West Springfield, Massachusetts 01089-3326, Attention: Chief
Financial Officer. Any notice, direction, request or demand by any
Securityholder to or upon the Debenture Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or made in writing at the
office of Wilmington Trust Company, Rodney Square North, 1100 Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration
(unless another address is provided by the Debenture Trustee to the Corporation
for such purpose). Any notice or communication to a Securityholder shall be
mailed by first class mail to his or her address shown on the Security Register
kept by the security registrar for the Securities.
SECTION 13.05 Governing Law.
-------------
This Indenture and each Security shall be deemed to be a contract made
under the laws of the State of New York, and for all purposes shall be governed
by and construed in accordance with the laws of said State without regard to
conflict of law principles thereof.
SECTION 13.06 Evidence of Compliance with Conditions Precedent.
------------------------------------------------
Upon any application or demand by the Corporation to the Debenture Trustee
to take any action under any of the provisions of this Indenture, the
Corporation shall furnish to the Debenture Trustee an Officers' Certificate
stating that in the opinion of the signers all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Each certificate or opinion provided for in this Indenture and delivered to
the Debenture Trustee with respect to compliance with a condition or covenant
provided for in this Indenture (except certificates delivered pursuant to
Section 3.05) shall include (1) a statement that the Person making such
certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement
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as to whether or not, in the opinion of such person, such condition or covenant
has been complied with.
SECTION 13.07 Business Days.
-------------
In any case where the date of payment of principal of or interest on the
Securities is not a Business Day, the payment of such principal of or interest
on the Securities will not be made on such date but will be made on the next
succeeding Business Day, except if such Business Day is in the next succeeding
calendar year, such payment will be made on the immediately preceding Business
Day, with the same force and effect as if made on the original date of payment,
and no interest shall accrue for the period from and after such date.
SECTION 13.08 Trust Indenture Act to Control.
------------------------------
If and to the extent that any provision of this Indenture limits, qualifies
or conflicts with the duties imposed by Sections 310 to 318, inclusive, of the
Trust Indenture Act, such imposed duties shall control.
SECTION 13.09 Table of Contents, Headings, etc.
--------------------------------
The table of contents and the titles and headings of the articles and
sections of this Indenture have been inserted for convenience of reference only,
are not to be considered a part hereof, and shall in no way modify or restrict
any of the terms or provisions hereof.
SECTION 13.10 Execution in Counterparts.
-------------------------
This Indenture may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but one
and the same instrument.
SECTION 13.11 Separability.
------------
In case any one or more of the provisions contained in this Indenture or in
the Securities shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Indenture or of the Securities,
but this Indenture and the Securities shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein or therein.
SECTION 13.12 Assignment.
----------
The Corporation will have the right at all times to assign any of its
respective rights or obligations under this Indenture to a direct or indirect
wholly owned Subsidiary of the Corporation, provided that, in the event of any
such assignment, the Corporation will remain liable for all such obligations.
Subject to the foregoing, this Indenture is binding upon and inures to the
benefit of the parties thereto and their respective successors and assigns.
This Indenture may not otherwise be assigned by the parties thereto.
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SECTION 13.13 Acknowledgment of Rights.
------------------------
The Corporation acknowledges that, with respect to any Securities held by
the Trust or a trustee of such Trust, if the Property Trustee of such Trust
fails to enforce its rights under this Indenture as the holder of the Securities
held as the assets of the Trust, any holder of Capital Securities may institute
legal proceedings directly against the Corporation to enforce such Property
Trustee's rights under this Indenture without first instituting any legal
proceedings against such Property Trustee or any other person or entity.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Corporation to
pay principal of or interest on the Securities when due, the Corporation
acknowledges that a holder of Capital Securities may directly institute a
proceeding for enforcement of payment to such holder of the principal of or
interest on the Securities having an aggregate principal amount equal to the
aggregate liquidation amount of the Capital Securities of such holder on or
after the respective due date specified in the Securities.
ARTICLE XIV
PREPAYMENT OF SECURITIES;
NO SINKING FUND
SECTION 14.01 Special Event Prepayment.
------------------------
If, prior to the Maturity Date, a Special Event has occurred and is
continuing, then notwithstanding Section 14.02(a) but subject to Section
14.02(c), the Corporation shall have the right, at any time within days
following the occurrence of such Special Event, upon (i) not more than days
written notice to the Debenture Trustee and (ii) not less than days nor more
than days' written notice to the Securityholders, to prepay the Securities,
in whole (but not in part), at the Prepayment Price. The Prepayment Price shall
be paid prior to 12:00 noon, New York City time, on the date of such prepayment
or such earlier time as the Corporation determines, provided that the
-------- ----
Corporation shall deposit with the Debenture Trustee an amount sufficient to pay
the Prepayment Price by 10:00 a.m., New York City time, on the date such
Prepayment Price is to be paid.
SECTION 14.02 Optional Prepayment by Corporation.
----------------------------------
(a) Subject to Sections 14.02(b) and (c), the Corporation shall have the
right to prepay the Securities, in whole or in part, at any time on or after the
Initial Optional Redemption Date, upon not less than days nor more than 60
days' written notice at the Prepayment Price.
If the Securities are only partially prepaid pursuant to this Section
14.02, the Securities to be prepaid shall be selected on a pro rata basis not
more than days prior to the date fixed for prepayment from the outstanding
Securities not previously called for prepayment; provided, however, that with
-------- -------
respect to Securityholders that would be required to hold Securities with an
aggregate principal amount of less than $ but more than an aggregate principal
amount of zero as a result of such pro rata prepayment, the Corporation shall
prepay Securities of each such
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Securityholder so that after such prepayment such Securityholder shall hold
Securities either with an aggregate principal amount of at least $ or such
Securityholder no longer holds any Securities, and shall use such method
(including, without limitation, by lot) as the Corporation shall deem fair and
appropriate; provided, further, that any such proration may be made on the basis
-------- -------
of the aggregate principal amount of Securities held by each Securityholder and
may be made by making such adjustments as the Corporation deems fair and
appropriate in order that only Securities in denominations of $ or integral
multiples thereof shall be prepaid. The Prepayment Price shall be paid prior to
12:00 noon, New York City time, on the date of such prepayment or at such
earlier time as the Corporation determines, provided that the Corporation shall
--------
deposit with the Debenture Trustee an amount sufficient to pay the Prepayment
Price by 10:00 a.m., New York City time, on the date such Prepayment Price is to
be paid.
(b) Notwithstanding the first sentence of Section 14.02(a), upon the entry
of an order for dissolution of the Trust by a court of competent jurisdiction,
the Securities thereafter will be subject to optional prepayment, in whole only,
but not in part, on or after the Initial Optional Redemption Date, at the
Optional Prepayment Price and otherwise in accordance with this Article XIV.
(c) Any prepayment of Securities pursuant to Section 14.01 or Section
14.02 shall be subject to the Corporation obtaining any and all required
regulatory approvals.
SECTION 14.03 No Sinking Fund.
---------------
The Securities are not entitled to the benefit of any sinking fund.
SECTION 14.04 Notice of Prepayment; Selection of Securities.
---------------------------------------------
In case the Corporation shall desire to exercise the right to prepay all,
or, as the case may be, any part of the Securities in accordance with their
terms, it shall fix a date for prepayment and shall mail a notice of such
prepayment at least and not more than days prior to the date fixed for
prepayment to the holders of Securities to be so prepaid as a whole or in part
at their last addresses as the same appear on the Security Register. Such
mailing shall be by first class mail. The notice if mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the holder receives such notice. In any case, failure to give such notice by
mail or any defect in the notice to the holder of any Security designated for
prepayment as a whole or in part shall not affect the validity of the
proceedings for the prepayment of any other Security.
Each such notice of prepayment shall specify the CUSIP number of the
Securities to be prepaid, the date fixed for prepayment, the Prepayment Price at
which the Securities are to be prepaid (or the method by which such Prepayment
Price is to be calculated), the place or places of payment where payment will be
made upon presentation and surrender of the Securities, that interest accrued to
the date fixed for prepayment will be paid as specified in said notice, and that
on and after said date interest thereon or on the portions thereof to be prepaid
will cease to accrue. If less than all the Securities are to be prepaid, the
notice of prepayment shall specify the numbers of the Securities to be prepaid.
In case any Security is to be prepaid in part only, the notice of prepayment
shall state the portion of the principal amount thereof to be prepaid and shall
state that on and after the date fixed for prepayment, upon surrender of such
Security, a new Security or Securities in principal
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amount equal to the portion thereof that has not been prepaid will be issued.
By 10:00 a.m., New York City time, on the prepayment date specified in the
notice of prepayment given as provided in this Section, the Corporation will
deposit with the Debenture Trustee or with one or more paying agents an amount
of money sufficient to prepay on the prepayment date all the Securities so
called for prepayment at the Prepayment Price.
SECTION 14.05 Payment of Securities Called for Prepayment.
-------------------------------------------
If notice of prepayment has been given as provided in Section 14.04, the
Securities or portions of Securities with respect to which such notice has been
given shall become due and payable on the date and at the place or places stated
in such notice at the Prepayment Price, (subject to the rights of holders of
Securities at the close of business on a regular record date in respect of an
Interest Payment Date occurring on or prior to the prepayment date) and on and
after said date (unless the Corporation shall default in the payment of such
Securities at the Prepayment Price, interest (including Compounded Interest and
Additional Sums, if any) on the Securities or portions of Securities so called
for prepayment shall cease to accrue. On presentation and surrender of such
Securities at a place of payment specified in said notice, the said Securities
or the specified portions thereof shall be paid and prepaid by the Corporation
at the applicable Prepayment Price (subject to the rights of holders of
Securities on the close of business on a regular record date in respect of an
Interest Payment Date occurring on or prior to the prepayment date).
Upon presentation of any Security prepaid in part only, the Corporation
shall execute and the Debenture Trustee shall authenticate and make available
for delivery to the holder thereof, at the expense of the Corporation, a new
Security or Securities of authorized denominations, in principal amount equal to
the portion of the Security so presented that has not been prepaid.
ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.01 Agreement to Subordinate
------------------------
The Corporation covenants and agrees, and each holder of Securities issued
hereunder likewise covenants and agrees, that the Securities shall be issued
subject to the provisions of this Article XV; and each holder of a Security,
whether upon original issue or upon transfer or assignment thereof, accepts and
agrees to be bound by such provisions.
The payment by the Corporation of the principal of and interest (including
Compounded Interest and Additional Sums, if any) on all Securities issued
hereunder shall, to the extent and in the manner hereinafter set forth, be
subordinated and junior in right of payment to all Senior Indebtedness, whether
outstanding at the date of this Indenture or thereafter incurred.
No provision of this Article XV shall prevent the occurrence of any Default
or Event of Default hereunder.
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SECTION 15.02 Default on Senior Indebtedness.
------------------------------
In the event and during the continuation of any default by the Corporation
in the payment of principal, premium, interest or any other payment due on any
Senior Indebtedness, or in the event that the maturity of any Senior
Indebtedness has been accelerated because of a default, then, in either case, no
payment shall be made by the Corporation with respect to the principal
(including prepayment payments) of or interest on the Securities (including
Compounded Interest and Additional Sums, if any, or any other amounts which may
be due on the Securities pursuant to the terms hereof or thereof).
In the event of the acceleration of the maturity of the Securities, then no
payment shall be made by the Corporation with respect to the principal
(including prepayment payments) of or interest on the Securities (including
Compounded Interest and Additional Sums, if any, or any other amounts which may
be due on the Securities pursuant to the terms hereof or thereof) until the
holders of all Senior Indebtedness outstanding at the time of such acceleration
shall receive payment in full (or amounts sufficient to make such payment have
been irrevocably deposited or placed in trust for the sole benefit of the
holders of the Senior Indebtedness) of such Senior Indebtedness (including any
amounts due upon acceleration).
In the event that, notwithstanding the foregoing, any payment is received
by the Debenture Trustee, or any Securityholder, when such payment is prohibited
by the preceding paragraphs of this Section 15.02, such payment shall be held in
trust for the benefit of, and shall be paid over or delivered by the Debenture
Trustee (if the Notice requested by Section 15.06 has been received by the
Debenture Trustee) or by any Securityholder, to the holders of Senior
Indebtedness or their respective representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Senior Indebtedness may have
been issued, as their respective interests may appear, but only to the extent
that the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Debenture Trustee in writing within 90
days of such payment of the amounts then due and owing on such Senior
Indebtedness, and only the amounts specified in such notice to the Debenture
Trustee shall be paid to the holders of such Senior Indebtedness.
SECTION 15.03 Liquidation; Dissolution; Bankruptcy.
------------------------------------
Upon any payment by the Corporation or distribution of assets of the
Corporation of any kind or character, whether in cash, property or securities,
to creditors upon any dissolution, winding-up, liquidation or reorganization of
the Corporation, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, the holders of all Senior Indebtedness of the
Corporation will first be entitled to receive payment in full of such Senior
Indebtedness, before any payment is made by the Corporation on account of the
principal of or interest on the Securities (including Compounded Interest and
Additional Sums (if any) or any other amounts which may be due on the Securities
pursuant to the terms hereof or thereof); and upon any such dissolution,
winding-up, liquidation or reorganization, any payment by the Corporation, or
distribution of assets of the Corporation of any kind or character, whether in
cash, property or securities, which the Securityholders or the Debenture Trustee
would be entitled to receive from the Corporation, except for the provisions of
this Article XV, shall be paid by the Corporation or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Securityholders or by the Debenture Trustee under the
Indenture if received by them or it, directly to the holders of Senior
Indebtedness of the Corporation (pro rata to such holders on the basis of the
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respective amounts of Senior Indebtedness held by such holders, as calculated by
the Corporation) or their representative or representatives, or to the trustee
or trustees under any indenture pursuant to which any instruments evidencing
such Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay all such Senior Indebtedness in full, in
money or moneys worth, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness, before any
payment or distribution is made to the Securityholders or to the Debenture
Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Corporation of any kind or character prohibited by
the foregoing, whether in cash, property or securities, shall be received by the
Debenture Trustee, or any Securityholder, before all Senior Indebtedness is paid
in full, or provision is made for such payment in money in accordance with its
terms, such payment or distribution shall be held in trust for the benefit of
and shall be paid over or delivered by the Debenture Trustee (if the Notice
requested by Section 15.06 has been received by the Debenture Trustee) or by any
Securityholder, to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated by
the Corporation, for application to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to pay all such Senior Indebtedness in
full in money in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the benefit of the holders of such
Senior Indebtedness.
For purposes of this Article XV, the words "cash, property or securities"
shall not be deemed to include shares of stock of the Corporation as reorganized
or readjusted, or securities of the Corporation or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article XV with respect
to the Securities to the payment of Senior Indebtedness that may at the time be
outstanding, provided that (i) such Senior Indebtedness is assumed by the new
--------
corporation, if any, resulting from any such reorganization or readjustment, and
(ii) the rights of the holders of such Senior Indebtedness are not, without the
consent of such holders, altered by such reorganization or readjustment. The
consolidation of the Corporation with, or the merger of the Corporation into,
another Person or the liquidation or dissolution of the Corporation following
the sale, conveyance, transfer or lease of its property as an entirety, or
substantially as an entirety, to another Person upon the terms and conditions
provided for in Article X of this Indenture shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 15.03
if such other Person shall, as a part of such consolidation, merger, sale,
conveyance, transfer or lease, comply with the conditions stated in Article X of
this Indenture. Nothing in Section 15.02 or in this Section 15.03 shall apply
to claims of, or payments to, the Debenture Trustee under or pursuant to Section
6.06 of this Indenture.
SECTION 15.04 Subrogation.
-----------
Subject to the payment in full of all Senior Indebtedness, the rights of
the Securityholders shall be subrogated to the rights of the holders of such
Senior Indebtedness to receive payments or distributions of cash, property or
securities of the Corporation, as the case may be, applicable to such Senior
Indebtedness until the principal of and interest on the Securities shall be paid
in full; and, for the purposes of such subrogation, no payments or distributions
to the holders of such Senior Indebtedness of any cash, property or securities
to which the Securityholders or the Debenture
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Trustee would be entitled except for the provisions of this Article XV, and no
payment over pursuant to the provisions of this Article XV to or for the benefit
of the holders of such Senior Indebtedness by Securityholders or the Debenture
Trustee, shall, as between the Corporation, its creditors other than holders of
Senior Indebtedness of the Corporation, and the holders of the Securities, be
deemed to be a payment by the Corporation to or on account of such Senior
Indebtedness. It is understood that the provisions of this Article XV are and
are intended solely for the purposes of defining the relative rights of the
holders of the Securities, on the one hand, and the holders of such Senior
Indebtedness on the other hand.
Nothing contained in this Article XV or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as between the Corporation, its
creditors other than the holders of Senior Indebtedness of the Corporation, and
the holders of the Securities, the obligation of the Corporation, which is
absolute and unconditional, to pay to the holders of the Securities the
principal of and interest (including Compounded Interest and Additional Sums, if
any) on the Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the holders of the Securities and creditors of the Corporation, as the
case may be, other than the holders of Senior Indebtedness of the Corporation,
as the case may be, nor shall anything herein or therein prevent the Debenture
Trustee or the holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article XV of the holders of such Senior Indebtedness
in respect of cash, property or securities of the Corporation, as the case may
be, received upon the exercise of any such remedy.
SECTION 15.05 Debenture Trustee to Effectuate Subordination.
---------------------------------------------
Each Securityholder, by such Securityholder's acceptance thereof,
authorizes and directs the Debenture Trustee on such Securityholder's behalf to
take such action (as the Debenture Trustee, in its discretion, deems necessary
or appropriate, upon instruction or otherwise) to effectuate the subordination
provided in this Article XV and appoints the Debenture Trustee such
Securityholder's attorney-in-fact for any and all such purposes.
SECTION 15.06 Notice by the Corporation.
-------------------------
The Corporation shall give prompt written notice to a Responsible Officer
of the Debenture Trustee of any fact known to the Corporation that would
prohibit the making of any payment of monies to or by the Debenture Trustee in
respect of the Securities pursuant to the provisions of this Article XV.
Notwithstanding the provisions of this Article XV or any other provision of this
Indenture, the Debenture Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment of monies
to or by the Debenture Trustee in respect of the Securities pursuant to the
provisions of this Article XV, unless and until a Responsible Officer of the
Debenture Trustee shall have received written notice thereof from the
Corporation or a holder or holders of Senior Indebtedness or from any trustee
therefor; and before the receipt of any such written notice, the Debenture
Trustee, subject to the provisions of Article VI of this Indenture, shall be
entitled in all respects to assume that no such facts exist; provided, however,
-------- -------
that if the Debenture Trustee shall not have received the notice provided for in
this Section 15.06 at least two Business Days prior to the date upon which, by
the terms hereof, any money may become payable for any
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purpose (including, without limitation, the payment of the principal of or
interest (including Compounded Interest and Additional Sums, if any) on any
Security), then, anything herein contained to the contrary notwithstanding, the
Debenture Trustee shall have full power and authority to receive such money and
to apply the same to the purposes for which they were received, and shall not be
affected by any notice to the contrary that may be received by it within two
Business Days prior to such date.
The Debenture Trustee, subject to the provisions of Article VI of this
Indenture, shall be entitled to conclusively rely on a written notice delivered
to it by a Person representing himself to be a holder of Senior Indebtedness of
the Corporation (or a trustee on behalf of such holder), as the case may be, to
establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee on behalf of any such holder or holders. In the event
that the Debenture Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of such Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article XV, the Debenture Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Debenture Trustee as to the amount of such
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article XV, and, if such
evidence is not furnished, the Debenture Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment.
Upon any payment or distribution of assets of the Corporation referred to
in this Article XV, the Debenture Trustee, subject to the provisions of Article
VI of this Indenture, and the Securityholders shall be entitled to conclusively
rely upon any order or decree entered by any court of competent jurisdiction in
which such insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding-up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, liquidating trustee, custodian,
receiver, assignee for the benefit of creditors, agent or other person making
such payment or distribution, delivered to the Debenture Trustee or to the
Securityholders, for the purpose of ascertaining the persons entitled to
participate in such payment or distribution, the holders of Senior Indebtedness
and other indebtedness of the Corporation, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article XV.
SECTION 15.07 Rights of the Debenture Trustee; Holders of Senior
--------------------------------------------------
Indebtedness.
- ------------
The Debenture Trustee in its individual capacity shall be entitled to all
the rights set forth in this Article XV in respect of any Senior Indebtedness at
any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Debenture Trustee
of any of its rights as such holder.
With respect to the holders of Senior Indebtedness of the Corporation, the
Debenture Trustee undertakes to perform or to observe only such of its covenants
and obligations as are specifically set forth in this Article XV, and no implied
covenants or obligations with respect to the holders of such Senior Indebtedness
shall be read into this Indenture against the Debenture Trustee. The Debenture
Trustee shall not be deemed to owe any fiduciary duty to the holders of such
Senior Indebtedness and, subject to the provisions of Article VI of this
Indenture, the Debenture Trustee shall not be
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liable to any holder of such Senior Indebtedness if it shall pay over or deliver
to Securityholders, the Corporation or any other Person money or assets to which
any holder of such Senior Indebtedness shall be entitled by virtue of this
Article XV or otherwise.
Nothing in this Article XV shall apply to claims of, or payments to, the
Debenture Trustee under or pursuant to Section 6.06.
SECTION 15.08 Subordination May Not Be Impaired.
---------------------------------
No right of any present or future holder of any Senior Indebtedness of the
Corporation to enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Corporation, as the case may be, or by any act or failure to act, in good faith,
by any such holder, or by any noncompliance by the Corporation, as the case may
be, with the terms, provisions and covenants of this Indenture, regardless of
any knowledge thereof that any such holder may have or otherwise be charged
with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness of the Corporation may, at any time and from time
to time, without the consent of or notice to the Debenture Trustee or the
Securityholders, without incurring responsibility to the Securityholders and
without impairing or releasing the subordination provided in this Article XV or
the obligations hereunder of the holders of the Securities to the holders of
such Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, such Senior Indebtedness, or otherwise amend or supplement in any manner
such Senior Indebtedness or any instrument evidencing the same or any agreement
under which such Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing such Senior Indebtedness; (iii) release any Person liable in any manner
for the collection of such Senior Indebtedness; and (iv) exercise or refrain
from exercising any rights against the Corporation, as the case may be, and any
other Person.
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01 Extension of Interest Payment Period.
------------------------------------
So long as no Event of Default has occurred and is continuing, the
Corporation shall have the right, at any time and from time to time during the
term of the Securities, to defer payments of interest by extending the interest
payment period of such Securities for a period not exceeding 20 consecutive
quarterly periods, including the first such quarterly period during such
extension period (the "Extended Interest Payment Period"), during which Extended
Interest Payment Period no interest shall be due and payable, provided that no
--------
Extended Interest Payment Period shall end on a date other than an Interest
Payment Date or extend beyond the Maturity Date. To the extent permitted by
applicable law, interest, the payment of which has been deferred because of the
extension of the interest payment period pursuant to this Section 16.01, will
bear interest thereon at the applicable periodic Coupon Rate compounded
quarterly for each quarterly period during the Extended Interest Payment Period
("Compounded Interest"). At the end of the Extended Interest
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Payment Period, the Corporation shall pay all interest accrued and unpaid on the
Securities, including any Additional Sums and Compounded Interest (together,
"Deferred Interest"), that shall be payable to the holders of the Securities in
whose names the Securities are registered in the Security Register on the record
date immediately preceding the end of the Extended Interest Payment Period.
Before the termination of any Extended Interest Payment Period, the Corporation
may further defer payments of interest by further extending such Extended
Interest Payment Period, provided that such Extended Interest Payment Period,
--------
together with all such previous and further extensions within such Extended
Interest Payment Period, shall not (i) exceed 20 consecutive quarterly periods,
including the first such quarterly period during such Extended Interest Payment
Period, (ii) end on a date other than an Interest Payment Date or (iii) extend
beyond the Maturity Date of the Securities. Upon the termination of any Extended
Interest Payment Period and the payment of all amounts then due, the Corporation
may commence a new Extended Interest Payment Period, subject to the foregoing
requirements. No interest shall be due and payable during an Extended Interest
Payment Period, except at the end thereof, but the Corporation may prepay at any
time all or any portion of the interest accrued during an Extended Interest
Payment Period.
SECTION 16.02 Notice of Extension.
-------------------
(a) If the Property Trustee is the only holder of the Securities at the
time the Corporation elects to commence an Extended Interest Payment Period, the
Corporation shall give written notice to the Administrative Trustees, the
Property Trustee and the Debenture Trustee of its election to commence such
Extended Interest Payment Period at least five Business Days before the earlier
of (i) the next succeeding date on which Distributions on the Trust Securities
would have been payable, and (ii) the date the Property Trustee is required to
give notice of the record date, or the date such Distributions are payable, to
any national securities exchange or to holders of the Capital Securities, but in
any event at least five Business Days before such record date.
(b) If the Property Trustee is not the only holder of the Securities at the
time the Corporation elects to commence an Extended Interest Payment Period, the
Corporation shall give the holders of the Securities and the Debenture Trustee
written notice of its election of such Extended Interest Payment Period at least
10 Business Days before the earlier of (i) the next succeeding Interest Payment
Date, and (ii) the date the Debenture Trustee is required to give notice of the
record or payment date of such interest payment to any national securities
exchange.
(c) The quarterly period in which any notice is given pursuant to
paragraphs (a) or (b) of this Section 16.02 shall be counted as one of the 20
quarterly periods permitted in the maximum Extended Interest Payment Period
permitted under Section 16.01.
Wilmington Trust Company hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions hereinabove set forth.
-60-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed by their respective officers thereunto duly authorized, as of
the day and year first above written.
WESTBANK CORPORATION
By: __________________________________________
President and Chief Executive Officer
WILMINGTON TRUST COMPANY,
as Debenture Trustee
By: __________________________________________
Name:
Title:
<PAGE>
EXHIBIT A
---------
(FORM OF FACE OF SECURITY)
[IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF
DTC. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF
THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO
DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
A-1
<PAGE>
WESTBANK CORPORATION
CUSIP No.:
$17,000,0000
Certificate No.
[______]% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
DUE [__________], 2029
WESTBANK CORPORATION, a Delaware corporation (the "Corporation," which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to Westbank Capital Trust I or its
registered assigns, the principal sum of $17,000,000 (Seventeen Million Dollars)
on [__________], 2029 (the "Maturity Date"), unless previously prepaid, and to
pay interest on the outstanding principal amount hereof from [_______], 1999, or
from the most recent interest payment date (each such date, an "Interest Payment
Date") to which interest has been paid or duly provided for, quarterly (subject
to deferral as set forth herein) in arrears on , ,
and of each year, commencing , 1999 at the rate of
[______]% per annum until the principal hereof shall have become due and
payable, and on any overdue principal and (without duplication and to the extent
that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at the same rate per annum compounded quarterly
("Compounded Interest"). The amount of interest payable on any Interest Payment
Date shall be computed on the basis of a 360-day year consisting of twelve 30-
day months. In the event that any date on which the principal of or interest on
this Security is payable is not a Business Day (as defined in the Indenture),
then the payment payable on such date will be made on the next succeeding day
that is a Business Day, 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 (and without any interest or other payment in
respect of any such delay), with the same force and effect as if made on such
date. Pursuant to the Indenture, in certain circumstances the Corporation will
be required to pay Additional Sums (as defined in the Indenture) with respect to
this Security.
The interest installment so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture, be paid to
the Person in whose name this Security (or one or more Predecessor Securities,
as defined in said Indenture) is registered at the close of business on the
regular record date for such interest installment, which shall be one Business
Day prior to the relevant Interest Payment Date for Global Securities and the
/th/ day of the month in which the relevant Interest Payment Date falls for
Definitive Securities. Any such interest installment not punctually paid or
duly provided for shall forthwith cease to be payable to the holders on such
regular record date and may be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on a special record date to be fixed by the Debenture Trustee for the payment of
such defaulted interest, notice whereof shall be given to the holders of
Securities not less than days prior to such special record date, or may be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities
A-2
<PAGE>
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture.
The principal of and interest (including Compounded Interest and Additional
Sums, if any) on this Security shall be payable at the office or agency of the
Debenture Trustee maintained for that purpose in any coin or currency of the
United States of America that at the time of payment is legal tender for payment
of public and private debts; provided, however, that payment of interest may be
-------- -------
made at the option of the Corporation by (i) check mailed to the holder at such
address as shall appear in the Security Register or (ii) transfer to an account
maintained by the Person entitled thereto, provided that proper written transfer
instructions have been received by the relevant record date. Notwithstanding
the foregoing, so long as the holder of this Security is the Property Trustee of
Westbank Capital Trust I, the payment of the principal of and interest
(including Compounded Interest and Additional Sums, if any) on this Security
will be made at such place and to such account as may be designated by such
Property Trustee.
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and junior in right of payment to the prior payment
in full of all Senior Indebtedness, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Debenture Trustee on his or her behalf to take such
action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Debenture Trustee his or her
attorney-in-fact for any and all such purposes. Each holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
This Security shall not be entitled to any benefit under the Indenture or
be valid or become obligatory for any purpose until the Certificate of
Authentication hereon shall have been signed by or on behalf of the Debenture
Trustee.
The provisions of this Security are continued on the reverse side hereof
and such provisions shall for all purposes have the same effect as though fully
set forth at this place.
A-3
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this instrument to be duly
executed and sealed this ___ day of _________, 1999.
WESTBANK CORPORATION
By:___________________________________
Name:
Title:
Attest:
By:___________________________
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the [______]% Junior Subordinated Deferrable Interest
Debentures of WESTBANK CORPORATION referred to in the within-mentioned
Indenture.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Debenture Trustee
Dated: By:___________________________________
Authorized Signatory
A-4
<PAGE>
(FORM OF REVERSE OF SECURITY)
This Security is one of the Securities of the Corporation (herein sometimes
referred to as the "Securities"), specified in the Indenture, all issued or to
be issued under and pursuant to an Indenture, dated as of [________], 1999 (the
"Indenture"), duly executed and delivered between the Corporation and Wilmington
Trust Company, as Debenture Trustee (the "Debenture Trustee"), to which
Indenture reference is hereby made for a description of the rights, limitations
of rights, obligations, duties and immunities thereunder of the Debenture
Trustee, the Corporation and the holders of the Securities.
Upon the occurrence and continuation of a Special Event (as defined in the
Indenture), the Corporation shall have the right, at any time within 90 days
following the occurrence of such Special Event, to prepay this Security in whole
(but not in part) at the Prepayment Price. "Prepayment Price" shall mean, with
respect to any prepayment of the Securities, an amount equal to 100% of the
principal amount of the Securities to be prepaid plus any accrued and unpaid
interest thereon (including Compounded Interest and Additional Sums, if any) to
the date of such prepayment.
In addition, the Corporation shall have the right to prepay this Security,
in whole or in part, at any time on or after the Initial Optional Redemption
Date (an "Optional Prepayment"), at the Prepayment Price plus accrued and unpaid
interest thereon (including Compounded Interest and Additional Sums, if any) to
the date of such prepayment.
The Prepayment Price shall be paid prior to 12:00 noon, New York City time,
on the date of such prepayment or at such earlier time as the Corporation
determines, provided, that the Corporation shall deposit with the Debenture
--------
Trustee an amount sufficient to pay the applicable Prepayment Price by 10:00
a.m., New York City time, on the date such Prepayment Price is to be paid. Any
prepayment pursuant to this paragraph will be made upon not less than 30 days
nor more than 60 days' prior written notice.
If the Securities are only partially prepaid by the Corporation pursuant to
an Optional Prepayment, the particular Securities to be prepaid shall be
selected on a pro rata basis from the outstanding Securities not previously
called for prepayment; provided, however, that with respect to Securityholders
-------- -------
that would be required to hold Securities with an aggregate principal amount of
less than $ but more than an aggregate principal amount of zero as a result of
such pro rata prepayment, the Corporation shall prepay Securities of each such
Securityholder so that after such prepayment such Securityholder shall hold
Securities either with an aggregate principal amount of at least $ or such
Securityholder no longer holds any Securities and shall use such method
(including, without limitation, by lot) as the Corporation shall deem fair and
appropriate; provided, further, that any such proration may be made on the basis
-------- -------
of the aggregate principal amount of Securities held by each Securityholder
thereof and may be made by making such adjustments as the Corporation deems fair
and appropriate in order that only Securities in denominations of $ or
integral multiples thereof shall be prepaid. In the event of prepayment of this
Security in part only, a new Security or Securities for the portion hereof that
has not been prepaid will be issued in the name of the holder hereof upon the
cancellation hereof.
A-5
<PAGE>
Notwithstanding the foregoing, any prepayment of Securities by the
Corporation shall be subject to the receipt of any and all required regulatory
approvals.
In case an Event of Default (as defined in the Indenture) shall have
occurred and be continuing, the principal of all of the Securities may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Corporation and the
Debenture Trustee, with the consent of the holders of a majority in aggregate
principal amount of the Securities at the time outstanding (as defined in the
Indenture), to execute supplemental indentures for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of modifying in any manner the rights of the holders of the
Securities; provided, however, that no such supplemental indenture shall,
-------- -------
without the consent of each holder of Securities then outstanding and affected
thereby, (i) change the Maturity Date of any Security, or reduce the rate or
extend the time of payment of interest thereon (subject to Article XVI of the
Indenture), or reduce the principal amount thereof, or change any of the
prepayment provisions or make the principal thereof or any interest thereon
payable in any coin or currency other than U.S. dollars, or impair or affect the
right of any holder of Securities to institute suit for payment thereof, or (ii)
reduce the aforesaid percentage of Securities the holders of which are required
to consent to any such supplemental indenture. The Indenture also contains
provisions permitting the holders of a majority in aggregate principal amount of
the Securities at the time outstanding affected thereby, on behalf of all of the
holders of the Securities, to waive any past default in the performance of any
of the covenants contained in the Indenture, or established pursuant to the
Indenture, and its consequences, except a default in the payment of the
principal of or interest on any of the Securities or a default in respect of any
covenant or provision under which the Indenture cannot be modified or amended
without the consent of each holder of Securities then outstanding. Any such
consent or waiver by the holder of this Security (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such holder and upon all
future holders and owners of this Security and of any Security issued in
exchange herefor or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Corporation, which
is absolute and unconditional, to pay the principal of and interest (including
Compounded Interest and Additional Sums, if any) on this Security at the time
and place and at the rate and in the money herein prescribed.
So long as no Event of Default shall have occurred and be continuing, the
Corporation shall have the right, at any time and from time to time during the
term of the Securities, to defer payments of interest by extending the interest
payment period (an "Extended Interest Payment Period") of such Securities for a
period not (i) exceeding 20 consecutive quarterly periods, including the first
such quarterly period during such extension period, (ii) extending beyond the
Maturity Date of the Securities or (iii) ending on a date other than an Interest
Payment Date, at the end of which period the Corporation shall pay all interest
then accrued and unpaid (together with interest thereon at the rate specified
for the Securities to the extent that payment of such interest is enforceable
under applicable law). Before the termination of any such Extended Interest
Payment Period, the
A-6
<PAGE>
Corporation may further defer payments of interest by further extending such
Extended Interest Payment Period, provided that such Extended Interest Payment
Period, together with all such previous and further extensions within such
Extended Interest Payment Period, (i) shall not exceed 20 consecutive quarterly
periods including the first quarterly period during such Extended Interest
Payment Period, (ii) shall not end on any date other than an Interest Payment
Date, and (iii) shall not extend beyond the Maturity Date of the Securities.
Upon the termination of any such Extended Interest Payment Period and the
payment of all accrued and unpaid interest and any additional amounts then due,
the Corporation may commence a new Extended Interest Payment Period, subject to
the foregoing requirements. No interest shall be due and payable during an
Extended Interest Payment Period, except at the end thereof, but the Corporation
may prepay at any time all or any portion of the interest accrued during an
Extended Interest Payment Period.
The Corporation has agreed that if (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 constitute, an Event of Default and
(b) in respect of which the Corporation shall not have taken reasonable steps to
cure, (2) if the Securities are held by the Property Trustee of Westbank Capital
Trust I, the Corporation shall be in default with respect to its payment of any
obligations under the Capital Securities Guarantee or (3) the Corporation shall
have given notice of its election to exercise its right to commence an Extended
Interest Payment Period, and shall not have rescinded such Notice, and such
Extended Interest Payment Period or any extension thereof shall have commenced
and be continuing, 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, (ii) make any payment of principal of or
interest on or repay, repurchase or redeem any debt securities (including other
Debentures) of the Corporation that rank pari passu with or junior in right of
payment to the Securities or (iii) make any guarantee payments 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 Securities (other than (a) dividends or
distributions of Corporation's capital stock (which includes Common Stock and
preferred stock), (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 Capital Securities Guarantee, as
defined in the Indenture, (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 or compensation plans for its
directors, officers or employees or any of the Corporation's dividend
reinvestment plans).
Subject to (i) the Corporation having received any required regulatory
approvals and (ii) the Administrative Trustees of Westbank Capital Trust I
having received an opinion of counsel to the effect that such distribution will
not cause the holders of Capital Securities to recognize gain or loss for
federal income tax purposes, the Corporation will have the right at any time to
liquidate the Trust and, after satisfaction of liabilities of creditors of the
Trust as required by applicable law, to cause the Securities to be distributed
to the holders of the Trust Securities in liquidation of the Trust.
A-7
<PAGE>
The Securities are issuable only in registered form without coupons in
minimum denominations of $ and multiples of $ in excess thereof. As
provided in the Indenture and subject to the transfer restrictions limitations
as may be contained herein and therein from time to time, this Security is
transferable by the holder hereof on the Security Register of the Corporation,
upon surrender of this Security for registration of transfer at the office or
agency of the Corporation in Wilmington, Delaware accompanied by a written
instrument or instruments of transfer in form satisfactory to the Corporation or
the Debenture Trustee duly executed by the holder hereof or his or her attorney
duly authorized in writing, and thereupon one or more new Securities of
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
made for any such registration of transfer, but the Corporation may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in relation thereto.
Prior to due presentment for registration of transfer of this Security, the
Corporation, the Debenture Trustee, any authenticating agent, any paying agent,
any transfer agent and the security registrar may deem and treat the holder
hereof as the absolute owner hereof (whether or not this Security shall be
overdue and notwithstanding any notice of ownership or writing hereon made by
anyone other than the security registrar for the Securities) for the purpose of
receiving payment of or on account of the principal hereof and (subject to the
Indenture) interest due hereon and for all other purposes, and neither the
Corporation nor the Debenture Trustee nor any authenticating agent nor any
paying agent nor any transfer agent nor any security registrar shall be affected
by any notice to the contrary.
No recourse shall be had for the payment of the principal of or interest
(including Compounded Interest and Additional Sums, if any) on this Security, or
for any claim based hereon, or otherwise in respect hereof, or based on or in
respect of the Indenture, against any incorporator, stockholder, employee,
officer or director, past, present or future, as such, of the Corporation or of
any predecessor or successor Person, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of the
consideration for the issuance hereof, expressly waived and released.
All terms used in this Security that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAW PRINCIPLES THEREOF.
A-8
<PAGE>
Exhibit 5.1
August ____, 1999
Westbank Corporation
225 Park Avenue
West Springfield, Massachusetts 01089-3326
Ladies and Gentlemen:
We have acted as counsel to Westbank Corporation, a Delaware corporation
(the "Company"), and Westbank Capital Trust I, a Delaware business trust (the
"Trust"), in connection with the preparation of the Registration Statement on
Form S-2 (the "Registration Statement") filed by the Company and the Trust with
respect to the registration under the Securities Act of 1933, as amended (the
"Act"), of (i) up to $1,700,000 of the Trust's Capital Securities, liquidation
amount of $10.00 per capital security (the "Capital Securities"), (ii) the
guarantee by the Company of the Capital Securities, with respect to
distributions and payments upon liquidation, redemption and otherwise (the
"Guarantee") and (iii) up to $17,000,000 principal amount of Junior Subordinated
Deferrable Interest Debentures due 2029 (the "Junior Subordinated Debentures")
to be issued by the Company. In rendering the opinions set forth below, we do
not express any opinion concerning law other than the federal law of the United
States and the corporate law of the State of Delaware.
In connection with these opinions, we have reviewed originals or copies,
certified or otherwise identified to our satisfaction, of the following
documents:
(i) the Registration Statement, as filed by the Company and the Trust with
the Securities and Exchange Commission (the "Commission") on August 26, 1999, as
amended;
(ii) the certificate of trust of the Trust filed with the Secretary of
State of the State of Delaware on August 25, 1999;
(iii) the form of Amended and Restated Declaration of Trust (the
"Declaration"), by and among Wilmington Trust Company, as property trustee (the
"Property Trustee"), Wilmington Trust Company, as Delaware trustee, the Company,
as sponsor, and, Donald R. Chase, Gary L. Briggs and John M. Lilly as
administrative trustees;
<PAGE>
Westbank Corporation
August __, 1999 Page 2.
(iv) the form of certificate evidencing the Capital Securities;
(v) the form of Indenture (the "Indenture"), by and between Wilmington
Trust Company, as indenture trustee, and the Company pursuant to which the
Company will issue the Junior Subordinated Debentures;
(vi) the form of certificate evidencing the Junior Subordinated Debentures;
(vii) the form of Guarantee;
(viii) the Certificate of Incorporation, as amended, and the Bylaws, as
amended, of the Company; and
(ix) resolutions adopted by the Board of Directors of the Company in
connection with the issuance of the Guarantee and the Junior Subordinated
Debentures.
We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such other documents, corporate records and
other instruments, and have examined such matters of law, as we have deemed
necessary or advisable for purposes of rendering the opinions set forth herein.
As to matters of fact, we have examined and relied upon the information relating
to Company and the Trust contained in the Registration Statement and, where we
have deemed appropriate, representations or certificates of officers or other
representatives of the Company and the Trust, the trustees and public officials.
We have assumed the authenticity of all documents submitted to us as originals,
the genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all documents submitted to us as copies. In
making our examination of any documents, we have assumed that all parties other
than the Company and the Trust had the corporate power and authority to enter
into and perform all obligations thereunder, and, as to such parties, we have
also assumed the due authorization by all requisite action, the due execution
and delivery of such documents and the validity and binding effect and
enforceability thereof.
Based on the foregoing, and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, we are of the opinion that:
1. The Capital Securities have been duly authorized, and, when (i) the
Declaration and the Indenture have been duly executed and delivered and
qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and (ii) the Capital Securities are issued and sold in
accordance with the Registration Statement and the Declaration, the Capital
Securities will be fully paid and non-assessable undivided beneficial interests
in the assets of the Trust, subject to the qualifications set forth in this and
in the following paragraph, and entitle the holders thereof to the benefits of
the Declaration, except as rights to indemnity and contribution thereunder may
be limited under applicable law, and subject to the qualifications that
(a) enforcement thereof may be limited by bankruptcy, insolvency, receivership,
reorganization, liquidation, voidable preference, moratorium or other laws
(including the laws of fraudulent conveyance and transfer) or judicial
<PAGE>
Westbank Corporation
August __, 1999 Page 3.
decisions affecting the enforcement of creditors' rights generally or the
reorganization of financial institutions and (b) the enforceability of the
Trust's obligations thereunder is subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and to the effect of certain laws and judicial decisions upon
the availability and enforceability of certain remedies, including the remedies
of specific performance and self-help.
The holders of the Capital Securities will be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware. The holders of the Capital Securities may be obligated, pursuant
to the Declaration, to (a) provide indemnity and/or security in connection with,
and pay taxes or governmental charges arising from, transfers of Capital
Securities and the issuance of replacement Capital Securities and (b) provide
security and indemnity in connection with requests of or directions to the
Property Trustee to exercise its rights and powers under the Declaration.
2. The Guarantee has been duly authorized, and, when (i) the Declaration
and the Indenture have been duly executed and delivered and qualified under the
Trust Indenture Act and (ii) the Guarantee is issued by the Company as
contemplated in the Registration Statement, the Guarantee will constitute a
valid and binding agreement of the Company in favor of the holders of the
Capital Securities, enforceable against the Company in accordance with its
terms, except as rights to indemnity and contribution thereunder may be limited
under applicable law, and subject to the qualifications that (a) enforcement
thereof may be limited by bankruptcy, insolvency, receivership, reorganization,
liquidation, voidable preference, moratorium or other laws (including the laws
of fraudulent conveyance and transfer) or judicial decisions affecting the
enforcement of creditors' rights generally or the reorganization of financial
institutions, and (b) the enforceability of the Company's obligations thereunder
is subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and to the
effect of certain laws and judicial decisions upon the availability and
enforceability of certain remedies, including the remedies of specific
performance and self-help.
3. The Junior Subordinated Debentures have been duly authorized, and, when
(i) the Declaration and the Indenture have been duly executed and delivered and
qualified under the Trust Indenture Act and (ii) the Junior Subordinated
Debentures are issued and sold in accordance with the Registration Statement and
the Indenture, the Junior Subordinated Debentures will constitute valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as rights to indemnity and contribution
thereunder may be limited under applicable law, and subject to the
qualifications that (a) enforcement thereof may be limited by bankruptcy,
insolvency, receivership, reorganization, liquidation, voidable preference,
moratorium or other laws (including the laws of fraudulent conveyance and
transfer) or judicial decisions affecting the enforcement of creditors' rights
generally or the reorganization of financial institutions, and (b) the
enforceability of the Company's obligations thereunder is subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and to the effect of certain laws and judicial
decisions upon the availability and enforceability of certain remedies,
including the remedies of specific performance and self-help.
<PAGE>
Westbank Corporation
August __, 1999 Page 4.
In rendering the opinions set forth above, we have not passed upon and do
not purport to pass upon the application of securities or "blue-sky" laws of any
jurisdiction (except federal securities laws).
This opinion is given solely for the benefit of the Company, the Trust and
investors who purchase the Capital Securities pursuant to the Registration
Statement and may not be relied upon by any other person or entity, nor quoted
in whole or in part, or otherwise referred to in any document without our
express written consent.
We consent to the filing of this opinion as an Exhibit to the Registration
Statement. We also consent to the reference to our firm under the heading
"Validity of Securities" in the Prospectus which forms a part of the
Registration Statement.
Very truly yours,
Thacher Proffitt & Wood
By:____________________________
<PAGE>
August __,1999
Tucker Anthony Cleary Gull
One Beacon Street
Boston, Massachusetts 02108
Ryan, Beck & Co.
220 South Orange Avenue
Livingston, New Jersey 07039
Re: Westbank Capital Trust I
Ladies and Gentlemen:
We have acted as special tax counsel to Westbank Corporation, a
Massachusetts corporation (the "Corporation"), and Westbank Capital Trust I, a
business trust formed under the Business Trust Act of the State of Delaware (the
"Trust"), in connection with the Underwriting Agreement (the "Underwriting
Agreement"), among you, as Underwriters, the Corporation and the Trust, relating
to the offering of an aggregate of 1,700,000 of the Trust's Capital Securities,
liquidation amount of $10.00 per capital security (the "Capital Securities"). In
connection with the issuance of the Capital Securities, the Trust is also
issuing Common Securities, liquidation amount of $10.00 per common security (the
"Common Securities" and, together with the Capital Securities, the "Trust
Securities").
The Trust Securities are to be issued pursuant to the Amended and
Restated Declaration of Trust (the "Declaration") among the Corporation, as
Sponsor, Wilmington Trust Company, as Property Trustee and as Delaware Trustee,
and Donald R. Chase, Gary L. Briggs and John M. Lilly (collectively, as the
"Administrative Trustees"). The sole assets of the Trust will be the Junior
Subordinated Deferrable Interest Debentures due 2029 (the "Junior Subordinated
Debentures") of the Corporation issued pursuant to an indenture (the
"Indenture"), between the Corporation and Wilmington Trust Company, as Debenture
Trustee. Capitalized terms used and not defined herein shall have the respective
meanings set forth in the Underwriting Agreement.
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of (i) the
Registration Statement as filed by the Company and the Trust with the Securities
and Exchange Commission on August 26, 1999, as amended (the "Registration
Statement");
<PAGE>
Page 2.
Tucker Anthony Cleary Gull
Ryan, Beck & Co.
August __, 1999
(ii) the certificate of trust of the Trust filed with the Secretary of State of
the State of Delaware on August 25, 1999; (iii) the Declaration (including the
designations of the terms of the Trust Securities annexed thereto); (iv) the
form of certificates evidencing the Capital Securities and the Common
Securities, in each case annexed to the Declaration; (v) the Underwriting
Agreement; (vi) the Indenture and the form of certificate evidencing the Junior
Subordinated Debentures annexed thereto; (vii) the Debenture Subscription
Agreement between the Corporation and the Trust; (viii) the Common Securities
Subscription Agreement between the Corporation and the Trust; (ix) the Capital
Securities Guarantee Agreement between the Corporation as guarantor and
Wilmington Trust Company for the benefit of the Holders of the Capital
Securities; and (x) the Common Securities Guarantee Agreement by the Corporation
as guarantor for the benefit of the Holders of the Common Securities.
Furthermore, we have relied upon the letter of _______, 1999 from the
Corporation to us containing certain representations and upon certain statements
and representations made by officers of the Corporation and others. We have also
examined originals or copies, certified or otherwise identified to our
satisfaction, of such other documents, certificates and records as we have
deemed necessary or appropriate as a basis for the opinion set forth herein.
In rendering the opinions expressed below, we have participated
in the preparation of the Registration Statement. Our opinion is conditioned on,
among other things, the initial and continuing accuracy of the facts,
information, covenants and representations set forth in the documents referred
to above and the statements and representations made by officers of the
Corporation and others. In our examination, we have assumed the genuineness of
all signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such documents. We also have assumed that the
transactions related to the issuance of the Capital Securities, the Common
Securities, and the Junior Subordinated Debentures will be consummated in the
manner contemplated by the Registration Statement.
In rendering our opinion, we have considered the current
provisions of the Internal Revenue Code of 1986, as amended, Treasury
regulations promulgated thereunder, judicial decisions and Internal Revenue
Service rulings, all of which are subject to change, which changes may be
retroactively applied. A change in the authorities upon which our opinion is
based could affect our conclusions. There can be no assurances, moreover, that
any of the opinions expressed herein will be accepted by the Internal Revenue
Service or, if challenged, by a court.
Based solely upon the foregoing, we are of the opinion that under
current United States federal income tax law, as of the date hereof:
(i) The Junior Subordinated Debentures will be classified
for United States federal income tax purposes as
indebtedness of the Corporation.
(ii) The Trust will not be classified for United States
federal income tax purposes as an association taxable
as a corporation.
<PAGE>
Page 3.
Tucker Anthony Cleary Gull
Ryan, Beck & Co.
August 25, 1999
(iii) Although the discussion set forth in the prospectus
included in the Registration Statement under the
heading "CERTAIN FEDERAL INCOME TAX CONSEQUENCES"
does not purport to discuss all possible United
States federal income tax consequences of the
purchase, ownership and disposition of Capital
Securities, such discussion constitutes, in all
material respects, a fair and accurate summary under
current law of the material United States federal
income tax consequences of the purchase, ownership
and disposition of Capital Securities by a holder who
purchases Capital Securities upon original issuance.
For purposes of this letter, we do not express any opinion
concerning any law other than the federal income tax law of the United States.
Furthermore, our opinions are limited solely to the specific questions and
conclusions set forth herein and we express no opinion to any party as to the
tax consequences, whether federal, state, local or foreign, of the issuance of
the Junior Subordinated Debentures, the Capital Securities, the Common
Securities or of any transaction related to or contemplated by such issuance.
This opinion is furnished to you solely for your benefit in
connection with the offering of the Capital Securities and the Junior
Subordinated Debentures and is not to be used, circulated, quoted or otherwise
referred to for any other purpose or relied upon by any other person without our
prior written consent. We consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference thereto under the heading
"Certain Federal Income Tax Consequences" in the prospectus which is a part of
the Registration Statement. We disclaim any undertaking to advise you of any
subsequent changes of the facts stated or assumed herein or any subsequent
changes in applicable law.
Very truly yours,
THACHER PROFFITT & WOOD
By:
--------------------------------
<PAGE>
Exhibit 23.1
Independent Auditors' Consent
We consent to the incorporation by reference in this Registration Statement of
Westbank Corporation on Form S-2 of our report dated January 29, 1999 (July 30,
1999 as to the merger described in Note 1), included in the Annual Report on
Form 10-K/A of Westbank Corporation for the year ended December 31, 1998, and to
the use our report dated January 29, 1999 (July 30, 1999 as to the merger
described in Note 1), appearing in and incorporated by reference in the
Prospectus, which is part of this Registration Statement. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
Deloitte & Touche LLP
Hartford, Connecticut
August 26, 1999
<PAGE>
Exhibit 23.3
Independent Auditors' Consent
We consent to the incorporation by reference in this Registration Statement of
Westbank Corporation on Form S-2 of our report dated October 30, 1998, included
in the Annual Report on Form 10-K/A of Westbank Corporation for the year ended
December 31, 1998, and to the use our report dated October 30, 1998, appearing
in and incorporated by reference in the Prospectus, which is part of this
Registration Statement. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
Snyder & Haller
Hartford, Connecticut
August 26, 1999
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