<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 29, 1997
REGISTRATION NO. 333-27427
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C> <C>
WASHINGTON MUTUAL, INC. WASHINGTON MUTUAL WASHINGTON 91-1653725
CAPITAL I DELAWARE APPLIED FOR
(Exact name of registrant as (State or other jurisdiction of (I.R.S. Employer Identification No.)
specified in its charter) incorporation or organization)
</TABLE>
1201 THIRD AVENUE
SEATTLE, WASHINGTON 98101
(206) 461-2000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
MARC R. KITTNER
SENIOR VICE PRESIDENT AND CORPORATE COUNSEL
WASHINGTON MUTUAL, INC.
1201 THIRD AVENUE
SEATTLE, WASHINGTON 98101
(206) 461-2000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
DAVID R. WILSON LEE MEYERSON
Foster Pepper & Shefelman PLLC Simpson Thacher & Bartlett
1111 Third Avenue 425 Lexington Avenue
Seattle, Washington 98101 New York, New York 10017-3954
(206) 447-4400 (212) 455-2000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
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 of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of 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 delivery of the prospectus is expected to be made pursuant to rule 434,
please check the following box. / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
Subject to Completion, dated May 29, 1997
PROSPECTUS
$300,000,000
WASHINGTON MUTUAL CAPITAL I
SKISSM
% SUBORDINATED CAPITAL INCOME SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
[LOGO]
---------------------
The % Subordinated Capital Income Securities (the "Capital Securities")
offered hereby represent undivided beneficial ownership interests in the assets
of Washington Mutual Capital I, a Delaware statutory business trust (the
"Trust"). Washington Mutual, Inc., a Washington corporation ("Washington Mutual"
or the "Company"), will be the owner of all of the beneficial ownership
interests represented by common securities of the Trust (the "Common
Securities"; together with the Capital Securities, the "Trust Securities"). The
Trust exists for the sole purpose of issuing the Capital Securities and the
Common Securities and investing the proceeds thereof in % Junior Subordinated
Debentures (the "Junior Subordinated Debentures") to be issued by the Company.
(CONTINUED ON NEXT PAGE)
SEE "RISK FACTORS" BEGINNING ON PAGE 14 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE CAPITAL SECURITIES.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS
ASSOCIATION AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
<TABLE>
<CAPTION>
Initial Public Underwriting Proceeds to
Offering Price (1) Commissions (2) Trust (3)(4)
<S> <C> <C> <C>
Per Capital Security..................................... $1,000 (3) $1,000
Total.................................................... $300,000,000 (3) $300,000,000
</TABLE>
(1) Plus accrued distributions, if any, from , 1997.
(2) The Trust and the Company have each agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). See
"Underwriting."
(3) In view of the fact that the proceeds of the sale of the Capital Securities
will be invested in the Junior Subordinated Debentures, the Company has
agreed to pay to the Underwriters, as compensation for their arranging the
investment therein of such proceeds, $ per Capital Security (or $ in
the aggregate). See "Underwriting."
(4) Before deducting expenses payable by the Company, estimated at $ .
---------------------
The Capital Securities are offered, subject to prior sale, when, as and if
issued to and accepted by the several Underwriters and subject to certain
conditions. It is expected that delivery of the Capital Securities will be made
in book-entry form through the facilities of The Depository Trust Company on or
about , 1997 at the offices of Lehman Brothers Inc., New York, New York
against payment therefor in immediately available funds.
---------------------
LEHMAN BROTHERS
CHASE SECURITIES INC.
SALOMON BROTHERS INC
UBS SECURITIES
May , 1997
2
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CAPITAL
SECURITIES. SUCH TRANSACTIONS MAY INCLUDE THE PURCHASE OF CAPITAL SECURITIES
FOLLOWING THE PRICING OF THE OFFERING TO COVER A SYNDICATE SHORT POSITION IN THE
CAPITAL SECURITIES OR FOR THE PURPOSE OF MAINTAINING THE PRICE OF THE CAPITAL
SECURITIES. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
------------------------
(CONTINUED FROM PREVIOUS PAGE)
The Junior Subordinated Debentures will mature on , 2027 (the "Stated
Maturity"). The Capital Securities will have a preference under certain
circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise over the Common Securities. See
"Description of Capital Securities--Subordination of Common Securities."
Holders of the Capital Securities will be entitled to receive cumulative
cash distributions accruing from the date of original issuance and payable
semi-annually in arrears on and of each year, commencing ,
1997, at the annual rate of % of the liquidation preference of $1000 per
Capital Security ("Distributions"). The distribution rate and the distribution
payment dates and other payment dates for the Capital Securities will correspond
to the payments and payment dates on the Junior Subordinated Debentures, which
will be the sole assets of the Trust. The Company will guarantee the payment of
Distributions and payments on liquidation of the Trust or redemption of the
Capital Securities, but only in each case to the extent of funds held by the
Trust, as described herein (the "Guarantee"). See "Description of Guarantee"
herein. If the Company does not make interest payments on the Junior
Subordinated Debentures held by the Trust, the Trust will have insufficient
funds to pay Distributions on the Capital Securities. The Guarantee does not
cover payment of Distributions when the Trust has insufficient funds to pay such
Distributions. In such event, a holder of the Capital Securities may institute a
legal proceeding directly against the Company pursuant to the terms of the
Indenture to enforce payment to that holder of amounts equal to the
Distributions to that holder. See "Description of Junior Subordinated
Debentures--Enforcement of Certain Rights by Holders of Capital Securities." The
Company's obligations under the Guarantee, taken together with its obligations
under the Junior Subordinated Debentures and the Indenture (as defined herein),
including its obligation to pay all costs, expenses and liabilities of the Trust
(other than with respect to the Capital Securities), constitute a full and
unconditional guarantee of all of the Trust's obligations under the Capital
Securities.
The obligations of the Company under the Guarantee and the Junior
Subordinated Debentures are subordinate and junior in right of payment to all
Indebtedness (as defined in "Description of Junior Subordinated
Debentures--Subordination" herein) of the Company and will be structurally
subordinated to all liabilities and obligations of the Company's subsidiaries.
As of March 31, 1997, approximately $467.0 million aggregate principal amount of
Indebtedness was outstanding, and the Company's consolidated subsidiaries had
approximately $43.2 billion of indebtedness and other liabilities. The terms of
the Junior Subordinated Debentures place no limitation on the amount of
Indebtedness that may be incurred by the Company or on the amount of liabilities
and obligations of the Company's subsidiaries. See "Description of Junior
Subordinated Debentures--Subordination."
The Company has the right to defer payment of interest on the Junior
Subordinated Debentures at any time or from time to time for a period not
exceeding 10 consecutive semi-annual periods with respect to each deferral
period (each, an "Extension Period"), provided that no Extension Period may
extend beyond the Stated Maturity of the Junior Subordinated Debentures. Upon
the termination of any such Extension Period and the payment of all amounts then
due on any Interest Payment Date (as defined herein), the Company may elect to
begin a new Extension Period subject to the requirements set forth herein.
Accordingly, there could be multiple Extension Periods of varying lengths
throughout the term of the Junior Subordinated Debentures. If interest payments
on the Junior Subordinated Debentures are so deferred, distributions on the
Capital Securities will also be deferred and the Company may not, and may not
permit any subsidiary of the Company to, subject to certain exceptions set forth
herein, (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, the Company's
capital stock or (ii) make any payment of principal, interest or premium, if
any, on or repay, repurchase or redeem any debt securities of the Company that
rank PARI PASSU with or junior in interest to the Junior Subordinated
3
<PAGE>
Debentures or make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company if such
guarantee ranks PARI PASSU with or junior in interest to the Junior Subordinated
Debentures (other than (a) dividends or distributions in common stock of the
Company, (b) payments under the Guarantee, (c) 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, and (d) purchases of common
stock related to the issuance of common stock or rights under any of the
Company's benefit plans). During an Extension Period, interest on the Junior
Subordinated Debentures will continue to accrue (and the amount of Distributions
to which holders of the Capital Securities are entitled will accumulate) at the
rate of % per annum, compounded semi-annually, and holders of the Capital
Securities will be required to accrue interest income for United States federal
income tax purposes prior to receipt of cash related to such interest income.
See "Description of Junior Subordinated Debentures--Option to Extend Interest
Payment Period" and "Certain United States Federal Income Tax
Consequences--Interest Income and Original Issue Discount."
The Junior Subordinated Debentures are not redeemable prior to , 2007
unless a Special Event (as defined herein) has occurred. The Junior Subordinated
Debentures are redeemable prior to maturity at the option of the Company,
subject to the receipt of any necessary prior regulatory approval (i) on or
after , 2007, in whole or in part, at a redemption price equal to % of
the principal amount thereof on , 2007, declining ratably on each December
1 thereafter to 100% on or after , 2017, plus accrued and unpaid interest
thereon, or (ii) at any time, in whole (but not in part), upon the occurrence
and continuation of a Special Event, at a redemption price equal to the greater
of (a) 100% of the principal amount thereof or (b) as determined by a Quotation
Agent (as defined herein), the sum of the present values of the principal amount
and premium payable with respect to an optional redemption of such Junior
Subordinated Debentures on , 2007, together with scheduled payments of
interest from the prepayment date to , 2007, discounted to the prepayment
date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Adjusted Treasury Rate (as defined herein) plus, in either case,
accrued interest thereon to the date of prepayment, in each case subject to the
further conditions described under "Description of Junior Subordinated
Debentures--Redemption." The Capital Securities are subject to mandatory
redemption, in whole or in part, upon repayment of the Junior Subordinated
Debentures at maturity or their earlier redemption, in an amount equal to the
amount of related Junior Subordinated Debentures maturing or being redeemed and
at a redemption price equal to the redemption price of such Junior Subordinated
Debentures, in each case plus accumulated and unpaid Distributions thereon to
the date of redemption.
Upon the occurrence and continuation of a Special Event, the Company will
have the right, subject to the receipt of any necessary prior regulatory
approval, to dissolve the Trust and cause the Junior Subordinated Debentures to
be distributed to the holders of the Capital Securities and the Common
Securities in liquidation of the Trust. See "Description of Capital
Securities--Redemption--Special Event Redemption or Distribution of Junior
Subordinated Debentures."
In the event of the liquidation of the Trust, after satisfaction of the
claims of creditors of the Trust, if any, as provided by applicable law, the
holders of the Capital Securities will be entitled to receive a liquidation
preference of $1000 per Capital Security plus accumulated and unpaid
Distributions thereon to the date of payment, which may be in the form of a
distribution of such amount in Junior Subordinated Debentures as described
above. If such Liquidation Distribution (as defined herein) can be paid only in
part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Capital Securities shall be paid on a pro rata basis. The holder of
the Common Securities will be entitled to receive distributions upon any such
liquidation pro rata with the holders of the Capital Securities, except that if
an Indenture Event of Default (as defined herein) has occurred and is
continuing, the Capital Securities shall have a priority over the Common
Securities. See "Description of Capital Securities--Liquidation Distribution
Upon Dissolution."
The Capital Securities will be represented by global Capital Securities in
fully registered form, deposited with a custodian for and registered in the name
of a nominee of The Depository Trust Company ("DTC"). Beneficial interests in
the Capital Securities will be shown on and transfers thereof will be effected
through records maintained by DTC and its participants. Beneficial interests in
the Capital Securities will trade in DTC's Same-Day Funds Settlement System and
secondary market trading activity in such interests will therefore settle in
immediately available funds.
4
<PAGE>
SUMMARY
THIS SUMMARY IS QUALIFIED BY THE MORE DETAILED INFORMATION AND FINANCIAL
STATEMENTS APPEARING ELSEWHERE, OR INCORPORATED BY REFERENCE, IN THIS
PROSPECTUS. PROSPECTIVE INVESTORS ARE URGED TO READ THIS PROSPECTUS IN ITS
ENTIRETY.
THE TRUST
Washington Mutual Capital I (the "Trust") is a statutory business trust
created under the Delaware Business Trust Act, as amended (the "Trust Act"),
pursuant to a declaration of trust (as amended and restated, the "Declaration")
and the filing of a certificate of trust with the Secretary of State of the
State of Delaware. The Company will acquire Common Securities in an aggregate
liquidation preference equal to at least 3% of the total capital of the Trust.
All of the Common Securities will be owned directly by the Company. The Trust
will use all of the proceeds derived from the issuance of the Capital Securities
and the Common Securities to purchase the Junior Subordinated Debentures and,
accordingly, the assets of the Trust will consist solely of the Junior
Subordinated Debentures and payments made thereunder will be the sole revenue of
the Trust. The Trust exists for the exclusive purpose of (i) issuing the Trust
Securities representing undivided beneficial ownership interests in the assets
of the Trust, (ii) investing the gross proceeds of the Trust Securities in the
Junior Subordinated Debentures, and (iii) engaging in only those other
activities necessary or incidental thereto.
THE COMPANY
Washington Mutual is a regional financial services company committed to
serving consumers and small to mid-sized businesses throughout the Western
United States. Through its subsidiaries, Washington Mutual engages in the
following activities:
- MORTGAGE LENDING AND CONSUMER BANKING ACTIVITIES. Through its principal
subsidiaries, Washington Mutual Bank ("WMB"), American Savings Bank, F.A.
("ASB"), and Washington Mutual Bank fsb, at December 31, 1996, Washington
Mutual operated 413 consumer financial centers and 96 loan centers
offering a full complement of mortgage lending and consumer banking
products and services. In 1996, WMB was the leading originator of
first-lien, single-family residential loans in Washington and Oregon, and
ASB was the second largest such originator in California.
- COMMERCIAL BANKING ACTIVITIES. Through the commercial banking division of
WMB, at December 31, 1996, Washington Mutual operated 48 full-service
business branches offering a range of commercial banking products and
services to small and mid-sized businesses. WMB commenced its commercial
banking activities through the acquisition of Enterprise Bank of Bellevue,
Washington in 1995 and Western Bank of Coos Bay, Oregon in 1996.
- INSURANCE ACTIVITIES. Through WM Life Insurance Company and ASB Insurance
Services Inc., Washington Mutual underwrites and sells annuities and sells
a range of life insurance contracts, and selected property and casualty
insurance policies.
- SECURITIES ACTIVITIES. Through ASB Financial Services, Inc., Murphey
Favre, Inc. and Composite Research and Management Co., Washington Mutual
offers full service securities brokerage and acts as the investment
advisor to and the distributor of mutual funds.
Washington Mutual operates in Washington, California, Oregon, Utah, Idaho,
Montana, Arizona, Colorado and Nevada. At March 31, 1997, Washington Mutual had
consolidated assets of $46.1 billion, deposits of $24.3 billion and
stockholders' equity of $2.4 billion.
Washington Mutual has its principal executive offices at 1201 Third Avenue,
Seattle, Washington 98101, telephone number (206) 461-2000.
4
<PAGE>
PROPOSED MERGER WITH GREAT WESTERN FINANCIAL CORPORATION
The Company has entered into an Agreement and Plan of Merger (the "Merger
Agreement"), dated as of March 5, 1997, by and among the Company, New American
Capital, Inc., a Delaware corporation and wholly owned subsidiary of the Company
("NACI"), and Great Western Financial Corporation ("Great Western"), providing
for the merger of Great Western with and into NACI (the "Merger"). In the
Merger, each outstanding share of Great Western common stock will be converted
into the right to receive 0.9 shares of the Company's common stock, with cash
paid in lieu of fractional shares, and each outstanding share of preferred stock
of Great Western will be converted into the right to receive one newly-issued
share of a corresponding series of preferred stock of the Company with terms
substantially identical to those of the series of Great Western preferred stock
being converted. Consummation of the Merger is subject to certain conditions,
including, but not limited to, obtaining the requisite vote of the stockholders
of both Great Western and the Company and the approval of the Merger by various
regulatory agencies.
Great Western is a savings and loan holding company organized in 1955 under
the laws of the state of Delaware. The principal assets of Great Western are the
capital stock of Great Western Bank, a Federal Savings Bank ("GW Bank"), and
Aristar, Inc. ("Aristar"). GW Bank is a federally chartered stock savings bank
which has 416 branches in California and Florida. Real estate lending operations
are conducted directly by GW Bank and by direct subsidiaries through more than
200 offices in 27 states with concentrations in California, Florida, Texas and
Washington. Aristar conducts consumer finance operations through 502 offices in
23 states, most of which operate principally under the names of Blazer Financial
Services or City Finance Company, provides direct installment loans and related
credit insurance services, and purchases retail installment contracts. Great
Western and its subsidiaries also engage in related service businesses,
including investment company advisory and administrative activities, insurance
operations and real estate development.
At March 31, 1997, Great Western had total assets of $42.9 billion, deposits
of $28.2 billion and stockholders' equity of $2.6 billion. Based on deposits,
Great Western was at that date the fourth largest banking organization in
California and the 24th largest in the United States.
As a result of the Merger, Washington Mutual would rank as the third largest
banking organization in the western United States and the twelfth largest in the
United States, with over 1,500 retail and business banking, consumer lending and
mortgage lending offices located in 36 states and serving an estimated 4.1
million households. Following the Merger, Washington Mutual will have a strong
deposit market share in Washington, Oregon, Utah and the key consumer banking
market of California, as well as a strong market presence on the east coast of
Florida. In addition, Washington Mutual will rank as one of the largest
originators and servicers of residential mortgage loans in the United States,
giving it the economies of scale and efficiencies to compete effectively in the
rapidly consolidating financial services industry.
THE OFFERING
<TABLE>
<S> <C>
Securities Offered........... % Subordinated Capital Income Securities ("SKIS-SM-")
evidencing undivided beneficial interests in the assets
of the Trust. The Capital Securities will have a preference
under certain circumstances with respect to cash
distributions and amounts payable on liquidation, redemption
or otherwise over the Common Securities. Income received
with respect to the Capital Securities will generally be
interest income for federal income tax purposes.
Accordingly, corporate holders of Capital Securities will
not be entitled to a dividends received deduction with
respect to such income.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Distributions................ Holders of the Capital Securities will be entitled to
receive cumulative cash Distributions at an annual rate of
% of the liquidation preference of $1000 per Capital
Security, accruing from the date of original issuance and
payable semi-annually in arrears on and of each
year commencing on , 1997. The distribution rate and
the distribution and other payment dates for the Capital
Securities will correspond to the interest rate and interest
and other payment dates on the Junior Subordinated
Debentures. See "Description of Capital Securities."
Junior Subordinated The Trust will invest the proceeds from the issuance of the
Debentures................. Capital Securities and Common Securities in an equivalent
amount of % Junior Subordinated Debentures of the
Company. The Junior Subordinated Debentures will mature on
, 2027. The Junior Subordinated Debentures will rank
subordinate and junior in right of payment to all
Indebtedness of the Company. In addition, the Company's
obligations under the Junior Subordinated Debentures will be
structurally subordinated to all existing and future
liabilities and obligations of its subsidiaries. See "Risk
Factors--Ranking of Subordinated Obligations Under the
Guarantee and the Junior Subordinated Debentures," "Risk
Factors--Status of Company as Holding Company" and
"Description of Junior Subordinated
Debentures--Subordination."
Guarantee.................... Payment of distributions out of moneys held by the Trust,
and payments on liquidation of the Trust or the redemption
of Capital Securities, are guaranteed by the Company to the
extent the Trust has funds available therefor. If the
Company does not make principal or interest payments on the
Junior Subordinated Debentures, the Trust will not have
sufficient funds to make distributions on the Capital
Securities, in which event the Guarantee shall not apply to
such distributions until the Trust has sufficient funds
available therefor. The Company's obligations under the
Guarantee, taken together with its obligations under the
Junior Subordinated Debentures and the Indenture, including
its obligation to pay all costs, expenses and liabilities of
the Trust (other than with respect to the Capital
Securities), constitute a full and unconditional guarantee
of all of the Trust's obligations under the Capital
Securities. See "Description of Guarantee" and "Relationship
Among the Capital Securities, the Junior Subordinated
Debentures and the Guarantee." The obligations of the
Company under the Guarantee are subordinate and junior in
right of payment to all Indebtedness of the Company. See
"Risk Factors--Ranking of Subordinated Obligations Under the
Guarantee and the Junior Subordinated Debentures" and
"Description of Guarantee."
Right to Defer Interest...... The Company has the right to defer payment of interest on
the Junior Subordinated Debentures by extending the interest
payment period on the Junior Subordinated Debentures, from
time to time, for up to 10 consecutive semi-annual periods.
There could be multiple Extension Periods of varying lengths
throughout the term of the Junior Subordinated Debentures.
If interest payments on the Junior
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
Subordinated Debentures are so deferred, Distributions on
the Capital Securities will also be deferred for an
equivalent period and the Company may not, and may not
permit any subsidiary of the Company to, subject to certain
exceptions set forth herein, (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire,
or make a liquidation payment with respect to, the Company's
capital stock or (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or
redeem any debt securities that rank PARI PASSU with or
junior to the Junior Subordinated Debentures or make any
guarantee payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of the
Company if such guarantee ranks PARI PASSU with or junior to
the Junior Subordinated Debentures (other than (a) dividends
or distributions in common stock of the Company, (b)
payments under the Guarantee, (c) 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, and (d) purchases of
common stock related to the issuance of common stock or
rights under any of the Company's benefit plans). During an
Extension Period, interest on the Junior Subordinated
Debentures will continue to accrue (and the amount of
Distributions to which holders of the Capital Securities are
entitled will accumulate) at the rate of % per annum,
compounded semi-annually. During an Extension Period,
holders of Capital Securities will be required to include
deferred interest income allocated to their Capital
Securities in their gross income for United States federal
income tax purposes as original issue discount ("OID") even
though the cash payments attributable thereto have not been
made. See "Description of Junior Subordinated
Debentures--Option to Extend Interest Payments Period" and
"Certain United States Federal Income Tax
Consequences--Interest Income and Original Issue Discount."
Redemption................... The Capital Securities are subject to mandatory redemption,
in whole or in part, upon repayment of the Junior
Subordinated Debentures at maturity or their earlier
redemption in an amount equal to the amount of related
Junior Subordinated Debentures maturing or being redeemed at
a redemption price equal to the aggregate liquidation
preference of such Capital Securities plus accumulated and
unpaid Distributions thereon to the date of redemption. The
Junior Subordinated Debentures are redeemable prior to
maturity at the option of the Company in whole at any time
or in part from time to time on or after , 2007,
or at any time in whole upon the occurrence of a Special
Event, in either case subject to any necessary prior
regulatory approval. See "Description of Capital
Securities-- Redemption--Mandatory Redemption," "--Special
Event Redemption or Distribution of Junior Subordinated
Debentures" and "Description of Junior Subordinated
Debentures--Redemption."
Special Event................ Upon the occurrence and continuation of a Special Event, the
Company will have the right, subject to any necessary prior
regulatory approval, to dissolve the Trust and cause the
Junior Subordinated
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Debentures to be distributed to the holders of the Capital
Securities and the Common Securities in liquidation of the
Trust. See "Description of Capital
Securities--Redemption--Special Event Redemption or
Distribution of Junior Subordinated Debentures."
A "Special Event" means a Tax Event, Regulatory Capital
Event or an Investment Company Event. A "Tax Event" means
the receipt by the Trust of an opinion of counsel, rendered
by a law firm having an established tax practice, to the
effect that, as a result of any amendment to, change in or
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 adopted or which
proposed change, pronouncement or decision is announced on
or after the date of original issuance of the Capital
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 Junior
Subordinated Debentures, (ii) interest payable by the
Company on such Junior Subordinated Debentures is not, or
within 90 days of the date of such opinion, will not be,
deductible by the Company, in whole or in part, for United
States federal income tax purposes, or (iii) the Trust is,
or will be within 90 days of the date of such opinion,
subject to more than a DE MINIMIS amount of other taxes,
duties or other governmental charges. A "Regulatory Capital
Event" means that the Company shall have received an opinion
of independent bank regulatory counsel experienced in such
matters to the effect that, as a result of (a) any amendment
to or change (including any announced prospective change) in
the laws (or any regulations thereunder) of the United
States or any rules, guidelines or policies of the
appropriate regulatory authorities or (b) any official
administrative pronouncement or judicial decision for
interpreting or applying such laws or regulations which
amendment or change is effective or such pronouncement or
decision is announced on or after the date of original
issuance of the Capital Securities, the Capital Securities
do not constitute, or within 90 days of the date thereof,
will not constitute Tier 1 capital or its then equivalent,
applied as if the Company or its successor were a bank
holding company (as that concept is used in the guidelines
or regulations issued by the Board of Governors of the
Federal Reserve System); provided, however, that the
distribution of the Junior Subordinated Debentures in
connection with the liquidation of the Trust by the Company
shall not in and of itself constitute a Regulatory Capital
Event unless such liquidation shall have occurred in
connection with a Tax Event or an Investment Company Event.
"Investment Company Event" means the receipt by the Trust of
an opinion of counsel, rendered by a law firm having a
recognized securities practice, to the effect that, as a
result of the occurrence of a change in law or regulation or
a change in interpretation or application of law or
regulation by any legislative body, court,
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
governmental agency or regulatory authority (a "Change in
1940 Act Law"), the Trust is or will be considered an
"investment company" that is required to be registered under
the Investment Company Act of 1940, as amended (the "1940
Act"), which Change in 1940 Act Law becomes effective on or
after the date of original issuance of the Capital
Securities.
Liquidation of the Trust..... In the event of the liquidation of the Trust, after
satisfaction of the claims of creditors of the Trust, if
any, as provided by applicable law, the holders of the
Capital Securities will be entitled to receive a liquidation
preference of $1000 per Capital Security plus accumulated
and unpaid Distributions thereon to the date of payment,
which may be in the form of a distribution of such amount in
Junior Subordinated Debentures as described above. If such
Liquidation Distribution can be paid only in part because
the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts
payable directly by the Trust on the Capital Securities
shall be paid on a pro rata basis. The holder of the Common
Securities will be entitled to receive distributions upon
any such liquidation pro rata with the holders of the
Capital Securities, except that if an Indenture Event of
Default has occurred and is continuing, the Capital
Securities shall have a priority over the Common Securities.
See "Description of Capital Securities-- Liquidation
Distribution Upon Dissolution."
Use of Proceeds.............. The proceeds from the sale of the Capital Securities will be
used to purchase the Junior Subordinated Debentures. The
Company expects to use the proceeds from the sale of the
Junior Subordinated Debentures for general corporate
purposes, which may include the repayment of indebtedness,
investments in or extension of credit to its subsidiaries
and the financing of possible acquisitions. See "Use of
Proceeds."
ERISA Considerations......... Prospective purchasers must carefully consider the
restrictions on purchase set forth under "Certain ERISA
Considerations" herein.
</TABLE>
9
<PAGE>
SUMMARY FINANCIAL DATA OF WASHINGTON MUTUAL
The following table sets forth selected historical consolidated financial
information of the Company as of and for the periods indicated below. The
summary consolidated financial data as of and for the years ended December 31,
1994, 1995, and 1996 were derived from the audited consolidated financial
statements of the Company incorporated herein by reference. The following
information should be read in conjunction with the consolidated financial
statements of the Company, together with the related notes thereto incorporated
herein by reference. The financial information presented herein has been
restated for the mergers with Keystone Holdings, Inc. ("Keystone Holdings") and
Western Bank in 1996 and with Pioneer Savings Bank in 1993 as if the respective
companies had been combined for all prior periods presented. The information as
of March 31, 1997 and for the three-month periods ended March 31, 1997 and 1996
is not necessarily indicative of the operating results for the entire year.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
---------------------- ----------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Interest income...................... $ 826,733 $ 764,622 $3,149,236 $2,916,086 $2,295,413 $2,198,578 $2,170,969
Interest expense..................... 509,780 477,620 1,958,229 1,923,436 1,335,358 1,211,896 1,302,489
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income.................. 316,953 287,002 1,191,007 992,650 960,055 986,682 868,480
Provision for loan losses............ 15,526 20,889 201,512 74,987 122,009 158,728 158,537
Other income......................... 75,389 57,010 259,264 208,339 220,794 246,576 174,365
Other expense........................ 192,632 181,094 1,025,304 700,514 695,517 687,519 561,688
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes,
extraordinary items and cumulative
effect of change in tax accounting
method............................. 184,184 142,029 223,455 425,488 363,323 387,011 322,620
Income taxes......................... 65,803 31,155 70,420 111,906 109,880 96,034 42,462
Provision for payments in lieu of
taxes.............................. 4,309 18,540 25,187 7,887 (824) 14,075 53,980
Extraordinary items, net of federal
income tax effect(1)............... -- -- -- -- -- (8,953) (4,638)
Cumulative effect of change in tax
accounting method.................. -- -- -- -- -- 13,365 60,045
Minority interest in earnings of
consolidated subsidiaries.......... -- 3,527 13,570 15,793 13,992 13,991 14,030
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income(2)........................ $ 114,072 $ 88,807 $ 114,278 $ 289,902 $ 240,275 $ 267,323 $ 267,555
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, ----------------------------------------------------------
1997 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Assets.......................................... $46,051,150 $44,551,925 $42,026,622 $37,481,296 $33,614,912 $27,678,923
Loans........................................... 32,230,963 30,330,776 24,192,840 25,472,092 21,063,698 16,666,525
Trading, investment and mortgage-backed
securities.................................... 11,752,240 11,973,268 15,352,683 8,738,763 7,416,638 4,640,399
Deposits........................................ 24,298,493 24,080,141 24,462,960 23,344,006 23,516,317 20,729,204
Borrowings (includes annuities)................. 18,814,270 17,683,988 14,579,635 11,946,567 7,366,624 5,134,480
Stockholders' equity............................ 2,427,997 2,397,888 2,541,704 1,854,836 1,765,560 1,467,835
Stockholders' equity as a percentage of total
assets:
Total stockholders' equity.................... 5.27% 5.38% 6.05% 4.95% 5.25% 5.30%
Common stockholders' equity................... 5.02 5.12 5.77 4.63 4.90 5.05
Tangible stockholders' equity................. 5.00 5.10 5.69 4.46 4.64 5.09
Tangible common stockholders' equity.......... 4.75 4.83 5.40 4.14 4.28 4.84
Nonperforming assets as a percentage of total
assets........................................ 0.73 0.74 0.81 1.12 1.55 2.03
Reserve for loan losses as a percentage of:
Nonperforming assets, less real estate
owned....................................... 152.90 160.52 110.04 87.22 72.74 54.58
Nonperforming assets.......................... 109.76 110.29 69.42 58.52 46.91 31.98
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- ------------------------------------------
1997 1996 1996 1995 1994 1993
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
OTHER FINANCIAL DATA
Net interest margin........................................... 2.88% 2.90% 2.89% 2.62% 2.90% 3.31%
Operating efficiency ratio(2)(3).............................. 49.10 52.64 70.70 58.33 58.90 55.75
Return on average assets(2)................................... 1.01 0.85 0.27 0.73 0.69 0.84
Return on stockholders' equity(2)............................. 18.88 13.97 4.59 13.44 12.66 15.95
Dividend payout ratio(4)...................................... 27.54 25.40 29.01 25.74 24.50 15.98
<CAPTION>
1992
---------
<S> <C>
OTHER FINANCIAL DATA
Net interest margin........................................... 3.36%
Operating efficiency ratio(2)(3).............................. 53.86
Return on average assets(2)................................... 1.29
Return on stockholders' equity(2)............................. 21.05
Dividend payout ratio(4)...................................... 15.43
</TABLE>
- ------------------------
(1) Extraordinary items include the call of subordinated capital notes,
resulting in pretax losses of $2.2 million and $3.1 million during 1993 and
1992, and penalties for prepayment of Federal Home Loan Bank of San
Francisco advances, resulting in pretax losses of $10.8 million and $3.6
million during 1993 and 1992.
(2) Earnings for 1996 were reduced $294.6 million by an after-tax charge of
$209.8 million for transaction-related expense resulting from Washington
Mutual's merger with Keystone Holdings and acquisition of American Savings
Bank, and by an after-tax charge of $84.8 million representing Washington
Mutual's portion of the one-time assessment paid by savings institutions and
banks nationally to recapitalize the Savings Association Insurance Fund
("SAIF"). The following table presents selected financial data for 1996 as
reported and without the above mentioned charges:
<TABLE>
<CAPTION>
WITHOUT SAIF
ASSESSMENT AND
TRANSACTION-RELATED
AS REPORTED EXPENSES
----------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Net income....................................................... $ 114,278 $ 408,845
Operating efficiency ratio....................................... 70.70% 51.20%
Return on average assets......................................... 0.27 0.95
Return on stockholders' equity................................... 4.59 16.41
</TABLE>
(3) The operating efficiency ratio measures other expense as a percentage of
operating income (net interest income plus other income). No adjustments
have been made to the calculation for any nonrecurring or one-time charges
or assessments.
(4) Dividend payout ratio for each period is based on Washington Mutual's net
income prior to business combinations occurring subsequent to such period.
11
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA COMBINED FINANCIAL DATA
The following table sets forth certain selected historical financial data
for Washington Mutual and Great Western and selected pro forma combined
financial data. The pro forma amounts included in the table below give effect to
the Merger as if it had been consummated on January 1, 1994 for income statement
information and March 31, 1997 for balance sheet information. Pro forma
adjustments made to arrive at the pro forma combined amounts are based on the
pooling-of-interests method of accounting.
This information should be read in conjunction with and is qualified in its
entirety by reference to the Consolidated Financial Statements and notes thereto
from Washington Mutual's Annual Report on Form 10-K for the year ended December
31, 1996, Washington Mutual's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997, Great Western's Annual Report on Form 10-K/A for the year
ended December 31, 1996, Great Western's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997 and the pro forma combined financial statements and
accompanying discussion and notes thereto included in Washington Mutual's
Current Report on Form 8-K dated May 20, 1997 included in the documents
described under "Incorporation of Certain Documents by Reference." The pro forma
amounts in the tables below are presented for informational purposes and are not
necessarily indicative of the financial position or the results of operations of
Washington Mutual following the Merger that actually would have occurred had the
Merger been consummated as of the dates or for the periods presented. The pro
forma amounts are also not necessarily indicative of the future financial
position or future results of operations of Washington Mutual following the
Merger.
INCOME STATEMENT DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31, YEAR ENDED DECEMBER 31,
------------------------ ----------------------------------------
WASHINGTON MUTUAL 1997 1996 1996 1995 1994
- --------------------------------------------- ----------- ----------- ------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net interest income.......................... $ 316,953 $ 287,002 $ 1,191,007 $ 992,650 $ 960,055
Provision for loan losses.................... 15,526 20,889 201,512 74,987 122,009
Other income (expense), net.................. (117,243) (124,084) (766,040) (492,175) (474,723)
Income taxes................................. 70,112 49,695 95,607 119,793 109,056
Minority interest in income of consolidated
subsidiaries............................... -- 3,527 13,570 15,793 13,992
----------- ----------- ------------ ------------ ------------
Net income(1)................................ $ 114,072 $ 88,807 $ 114,278 $ 289,902 $ 240,275
----------- ----------- ------------ ------------ ------------
----------- ----------- ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31, YEAR ENDED DECEMBER 31,
------------------------ ----------------------------------------
GREAT WESTERN 1997 1996 1996 1995 1994
- --------------------------------------------- ----------- ----------- ------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net interest income.......................... $ 338,164 $ 352,286 $ 1,378,017 $ 1,302,129 $ 1,322,270
Provision for loan losses.................... 40,390 36,021 196,158 177,050 206,379
Other income (expense), net.................. (183,071) (197,471) (995,237) (702,957) (709,357)
Income taxes................................. 49,000 47,500 70,800 161,100 155,300
----------- ----------- ------------ ------------ ------------
Net income(1)................................ $ 65,703 $ 71,294 $ 115,822 $ 261,022 $ 251,234
----------- ----------- ------------ ------------ ------------
----------- ----------- ------------ ------------ ------------
</TABLE>
FOOTNOTES ON FOLLOWING PAGE
12
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31, YEAR ENDED DECEMBER 31,
------------------------ ----------------------------------------
PRO FORMA INCLUDING GREAT WESTERN(2) 1997 1996 1996 1995 1994
- ----------------------------------------------------- ----------- ----------- ------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net interest income.................................. $ 655,117 $ 639,288 $ 2,569,024 $ 2,294,779 $ 2,282,325
Provision for loan losses............................ 55,916 56,910 397,670 252,037 328,388
Other income (expense), net(3)....................... (300,314) (321,555) (1,761,277) (1,195,132) (1,184,080)
Income taxes......................................... 119,112 97,195 166,407 280,893 264,356
Minority interest in income of consolidated
subsidiaries....................................... -- 3,527 13,570 15,793 13,992
----------- ----------- ------------ ------------ ------------
Net income(1)........................................ $ 179,775 $ 160,101 $ 230,100 $ 550,924 $ 491,509
----------- ----------- ------------ ------------ ------------
----------- ----------- ------------ ------------ ------------
</TABLE>
- --------------------------
(1) "Net income from continuing operations" and "net income" are equal for all
periods presented.
(2) Merger-related expenses and addition to loan loss reserve anticipated to be
recorded are not included in the Pro Forma Including Great Western summary
statements of income for all periods presented.
(3) Includes pretax charge of $312.6 million representing Washington Mutual's
and Great Western portion of the one-time assessment paid by savings
institutions and banks nationally to recapitalize the SAIF.
BALANCE SHEET DATA
<TABLE>
<CAPTION>
MARCH 31, 1997
----------------------------------------------
PRO FORMA
WASHINGTON INCLUDING GREAT
MUTUAL GREAT WESTERN WESTERN(1)
------------- ------------- ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Assets............................................................ $ 46,051,150 $ 42,877,903 $ 88,486,053
Loans............................................................. 32,230,963 31,210,853 63,341,816
Deposits.......................................................... 24,298,493 28,158,331 52,456,824
Borrowings (including annuities).................................. 18,814,270 10,661,159 29,475,429
Stockholders' equity.............................................. 2,427,997 2,585,070 4,695,067
Loans serviced for others......................................... $ 26,649,521 $ 11,484,037 $ 38,133,558
Loans originated during the quarter............................... 3,461,882 2,220,312 5,682,194
Loans sold during the quarter..................................... 567,878 419,715 987,593
Nonperforming assets.............................................. 334,571 500,703 835,274
Reserve for loan losses........................................... 367,215 320,800 788,015
Stockholders equity as a percentage of total assets:
Total stockholders' equity...................................... 5.27% 6.03% 5.31%
Common stockholders' equity..................................... 5.02 5.64 4.99
Tangible stockholders' equity................................... 5.00 5.42 4.87
Tangible common stockholders' equity............................ 4.75 5.03 4.55
Nonperforming assets as a percentage of total assets.............. 0.73 1.17 0.94
Reserve for loan losses as a percentage of:
Nonperforming assets, less real estate owned.................... 152.90% 75.73% 118.72%
Nonperforming assets............................................ 109.76 64.07 94.34
</TABLE>
- --------------------------
(1) Merger-related expenses and addition to loan loss reserve anticipated to be
recorded are included in the Pro Forma Including Great Western financial
data. Merger-related expenses and addition to loan loss reserve expected to
be recorded by Washington Mutual are summarized in the following table
(dollars in thousands):
<TABLE>
<S> <C>
Addition loan loss reserves.............................................. $ 100,000
Severance and management payments........................................ 145,000
Facilities and equipment................................................. 106,000
Other expenses........................................................... 92,000
---------
Total expenses......................................................... 443,000
Tax benefit.............................................................. (125,000)
---------
Net expenses........................................................... $ 318,000
---------
---------
</TABLE>
13
<PAGE>
RISK FACTORS
PROSPECTIVE PURCHASERS OF THE CAPITAL SECURITIES SHOULD CAREFULLY REVIEW THE
INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS AND SHOULD PARTICULARLY
CONSIDER THE FOLLOWING MATTERS. IN ADDITION, BECAUSE HOLDERS OF THE CAPITAL
SECURITIES MAY RECEIVE JUNIOR SUBORDINATED DEBENTURES IN EXCHANGE THEREFOR UPON
LIQUIDATION OF THE TRUST, PROSPECTIVE PURCHASERS OF CAPITAL SECURITIES ARE ALSO
MAKING AN INVESTMENT DECISION WITH REGARD TO THE JUNIOR SUBORDINATED DEBENTURES
AND SHOULD CAREFULLY REVIEW ALL THE INFORMATION REGARDING THE JUNIOR
SUBORDINATED DEBENTURES CONTAINED HEREIN. TO THE EXTENT ANY OF THE INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS CONSTITUTES A
"FORWARD-LOOKING STATEMENT" AS DEFINED IN SECTION 27A(I)(L) OF THE SECURITIES
ACT, THE RISK FACTORS SET FORTH BELOW ARE CAUTIONARY STATEMENTS IDENTIFYING
IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE IN THE FORWARD-LOOKING STATEMENT.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES
The obligations of the Company under the Guarantee issued by the Company for
the benefit of the holders of Capital Securities and under the Junior
Subordinated Debentures are unsecured and rank subordinate and junior in right
of payment to all Indebtedness of the Company. At March 31, 1997, the
Indebtedness of the Company aggregated approximately $467.0 million. Neither the
Indenture, the Guarantee nor the Declaration (as defined herein) place any
limitation on the amount of secured or unsecured Indebtedness that may be
incurred by the Company. See "Description of Guarantee--Status of the Guarantee"
and "Description of Junior Subordinated Debentures--Subordination."
STATUS OF COMPANY AS HOLDING COMPANY
As a holding company, the ability of the Company to make payments of
interest and principal on the Junior Subordinated Debentures will be dependent
primarily upon the receipt of dividends and other distributions from the
Company's subsidiaries. The Company's principal subsidiaries are Washington
Mutual Bank and American Savings Bank (the "Banks"). There are various
regulatory restrictions on the ability of the Company's banking subsidiaries to
pay dividends or make other payments to the Company. At March 31, 1997, the
Company's banking subsidiaries could pay an aggregate of $468.6 million in
dividends to the Company without prior regulatory approval. In addition, the
right of the Company to participate in any distribution of assets of any
subsidiary, including the Banks, upon such subsidiary's liquidation or
reorganization or otherwise (and thus the ability of holders of the Capital
Securities to benefit indirectly from such distribution), will be subject to the
prior claims of creditors of that subsidiary, except to the extent that any
claims of the Company as a creditor of such subsidiary may be recognized as
such. Accordingly, the Capital Securities will effectively be subordinated to
all existing and future liabilities of the Company's subsidiaries, and holders
of the Capital Securities should look only to the assets of the Company for
payments on the Capital Securities. As of March 31, 1997, the Company's
consolidated subsidiaries had indebtedness and other liabilities of
approximately $43.2 billion.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a Trust Enforcement Event (as defined herein) occurs and is continuing,
then the holders of Capital Securities would rely on the enforcement by the
Property Trustee (as defined herein) of its rights as a holder of the Junior
Subordinated Debentures against the Company. The holders of a majority in
liquidation preference 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 Property Trustee or to direct the exercise of any trust or power
conferred upon the Property Trustee under the Declaration, including the right
to direct the Property Trustee to exercise the remedies available to it as a
holder of the Junior Subordinated Debentures. If the Property Trustee fails to
enforce its rights with respect to the Junior Subordinated Debentures held by
the Trust, any record holder of Capital Securities may institute legal
proceedings directly against the Company to enforce the Property Trustee's
rights under such Junior Subordinated Debentures without first instituting any
legal proceedings against such Property Trustee or any other person or entity.
14
<PAGE>
If the Company were to default on its obligation to pay amounts payable
under the Junior Subordinated Debentures, the Trust would lack funds for the
payment of Distributions or amounts payable on redemption of the Capital
Securities or otherwise, and, in such event, holders of the Capital Securities
would not be able to rely upon the Guarantee for payment of such amounts.
However, in the event the Company failed to pay interest on or principal of the
Junior Subordinated Debentures on the payment date on which such payment is due
and payable, then a holder of Capital Securities may directly institute a
proceeding against the Company for enforcement of payment to such holder of the
interest on or principal of such Junior Subordinated Debentures having a
principal amount equal to the aggregate liquidation preference of the Capital
Securities of such holder (a "Direct Action"). In connection with such Direct
Action, the Company will be subrogated to the rights of such holder of Capital
Securities under the Declaration to the extent of any payment made by the
Company to such holder of Capital Securities in such Direct Action. Except as
set forth herein, holders of Capital Securities will not be able to exercise
directly any other remedy available to the holders of Junior Subordinated
Debentures or assert directly any other rights in respect of the Junior
Subordinated Debentures. See "Description of Capital Securities-- Enforcement of
Certain Rights by Holders of Capital Securities," "Description of Guarantee" and
"Description of Junior Subordinated Debentures--Debenture Events of Default."
The Declaration provides that each holder of Capital Securities by acceptance
thereof agrees to the provisions of the Guarantee and the Indenture.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES; MARKET PRICE
CONSEQUENCES
The Company has the right under the Indenture to defer the payment of
interest on the Junior Subordinated Debentures at any time or from time to time
for a period not exceeding 10 consecutive semi-annual periods, provided that no
Extension Period may extend beyond the Stated Maturity of the Junior
Subordinated Debentures. As a consequence of any such deferral, semi-annual
Distributions on the Capital Securities by the Trust would be deferred but would
continue to accumulate at the rate of % per annum, compounded semi-annually
during any such Extension Period. During any such Extension Period, the Company
may not, and may not permit any subsidiary of the Company to, (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock or (ii)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank PARI PASSU
with or junior to the Junior Subordinated Debentures or make any guarantee
payments with respect to any guarantee by the Company of the debt securities of
any subsidiary of the Company if such guarantee ranks PARI PASSU with or junior
to the Junior Subordinated Debentures (other than (a) dividends or distributions
in common stock of the Company, (b) payments under the Guarantee, (c) 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, and
(d) purchases of common stock related to the issuance of common stock or rights
under any of the Company's benefit plans). Prior to the termination of any such
Extension Period, the Company may further extend the Extension Period, provided
that no Extension Period may exceed 10 consecutive semi-annual periods or extend
beyond the Stated Maturity of the Junior Subordinated Debentures. Upon the
termination of any Extension Period and the payment of all amounts then due on
any Interest Payment Date, the Company may elect to begin a new Extension Period
subject to the above requirements. See "Description of Capital
Securities--Distributions" and "Description of Junior Subordinated
Debentures--Option to Extend Interest Payment Period."
Should the Company defer payment of interest on the Junior Subordinated
Debentures, a holder of Capital Securities will be required to accrue income (in
the form of OID) in respect of its pro rata share of the Junior Subordinated
Debentures held by the Trust for United States federal income tax purposes. As a
result, a holder of Capital Securities will include such income in gross income
for United States federal income tax purposes in advance of the receipt of cash
attributable to such interest income, and will not receive the cash related to
such income from the Trust if the holder disposes of the Capital Securities
prior
15
<PAGE>
to the record date for the payment of Distributions with respect to such
extension period. See "Certain United States Federal Income Tax
Consequences--Interest Income and Original Issue Discount" and "-- Sales of
Capital Securities."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures. However, should the Company elect to exercise such
right in the future, the market price of the Capital Securities is likely to be
adversely affected. A holder that disposes of its Capital Securities during an
Extension Period, therefore, might not receive the same return on its investment
as a holder that continues to hold its Capital Securities. In addition, as a
result of the existence of the Company's right to defer interest payments, the
market price of the Capital Securities (which represent undivided beneficial
interests in the Junior Subordinated Debentures) may be more volatile than the
market prices of other similar securities where the issuer does not have such
right to defer interest payments.
SPECIAL EVENT REDEMPTION; PROPOSED TAX LEGISLATION
Upon the occurrence and continuation of a Special Event, the Company has the
right, subject to any necessary regulatory approval, to redeem the Junior
Subordinated Debentures in whole (but not in part) at the redemption price
described herein within 90 days following the occurrence of such Special Event
and thereby cause a mandatory redemption of the Capital Securities and Common
Securities.
A "Special Event" means a Tax Event, Regulatory Capital Event or an
Investment Company Event. A "Tax Event" means the receipt by the Trust of an
opinion of counsel, rendered by a law firm having an established tax practice,
to the effect that, as a result of any amendment to, change in or 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
adopted or which proposed change, pronouncement or decision is announced on or
after the date of original issuance of the Capital 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 Junior Subordinated Debentures,
(ii) interest payable by the Company on such Junior Subordinated Debentures is
not, or within 90 days of the date of such opinion, will not be, deductible by
the Company, in whole or in part, for United States federal income tax purposes,
or (iii) the Trust is, or will be within 90 days of the date of such opinion,
subject to more than a DE MINIMIS amount of other taxes, duties or other
governmental charges. A "Regulatory Capital Event" means that the Company shall
have received an opinion of independent bank regulatory counsel experienced in
such matters to the effect that, as a result of (a) any amendment to or change
(including any announced prospective change) in the laws (or any regulations
thereunder) of the United States or any rules, guidelines or policies of the
appropriate regulatory authorities or (b) any official administrative
pronouncement or judicial decision for interpreting or applying such laws or
regulations which amendment or change is effective or such pronouncement or
decision is announced on or after the date of original issuance of the Capital
Securities, the Capital Securities do not constitute, or within 90 days of the
date thereof, will not constitute Tier 1 capital or its then equivalent, applied
as if the Company or its successor were a bank holding company (as that concept
is used in the guidelines or regulations issued by the Board of Governors of the
Federal Reserve System); provided, however, that the distribution of the Junior
Subordinated Debentures in connection with the liquidation of the Trust by the
Company shall not in and of itself constitute a Regulatory Capital Event unless
such liquidation shall have occurred in connection with a Tax Event or an
Investment Company Event. "Investment Company Event" means the receipt by the
Trust of an opinion of counsel, rendered by a law firm having a recognized
securities practice, to the effect that, as a result of the occurrence of a
Change in 1940 Act Law, the Trust is or will be considered an "investment
company" that is required to be registered under the 1940 Act, which Change in
1940 Act Law becomes effective on or after the date of original issuance of the
Capital Securities.
16
<PAGE>
Legislation was proposed by the United States Department of the Treasury as
part of President Clinton's Fiscal 1998 Budget Proposal (the "Proposed
Legislation") that contains a provision which generally would deny an interest
deduction for interest paid or accrued on an instrument issued by a corporation
that (i) has a maximum term of more than 15 years and (ii) is not shown as
indebtedness on the separate balance sheet of the issuer or, where the
instrument is issued to a related party (other than a corporation), where the
holder or some other related party issues a related instrument that is not shown
as indebtedness on the issuer's consolidated balance sheet. This provision was
proposed to be effective generally for instruments issued on or after the date
of the first Congressional committee action taken on the Proposed Legislation.
If this provision were to apply to the Junior Subordinated Debentures, the
Company would not be able to deduct the interest on the Junior Subordinated
Debentures. As of the date of this Prospectus, no Congressional committee action
had been taken on the Proposed Legislation. There can be no assurance, however,
that the Proposed Legislation or future legislative proposals or final
legislation will not adversely affect the ability of the Company to deduct
interest on the Junior Subordinated Debentures or otherwise affect the tax
treatment of the transactions described herein. Moreover, such legislation could
give rise to a Special Event, which would permit the Company to cause a
redemption of the Capital Securities, as described more fully herein under the
caption "Description of Capital Securities--Redemption."
EXCHANGE OF PREFERRED SECURITIES FOR JUNIOR SUBORDINATED DEBENTURES
Upon the occurrence and continuation of a Special Event the Company will
have the right, subject to any necessary prior regulatory approval, to dissolve
the Trust and cause the Junior Subordinated Debentures to be distributed to the
holders of the Capital Securities and the Common Securities in liquidation of
the Trust. In addition, upon liquidation of the Trust and certain other events,
the Junior Subordinated Debentures may be distributed to such holders. Under
current United States federal income tax law and interpretations thereof and
assuming, as expected, the Trust is treated as a grantor trust for United States
federal income tax purposes, a distribution by the Trust of the Junior
Subordinated Debentures pursuant to a liquidation of the Trust will not be a
taxable event to the Trust or to holders of the Capital Securities and will
result in a holder of the Capital Securities receiving directly such holder's
pro rata share of the Junior Subordinated Debentures (previously held indirectly
through the Trust). If, however, the liquidation of the Trust were to occur
because the Trust is subject to United States federal income tax with respect to
income accrued or received on the Junior Subordinated Debentures as a result of
the occurrence of a Tax Event or otherwise, the distribution of Junior
Subordinated Debentures to holders of the Capital Securities by the Trust would
be a taxable event to the Trust and each holder, and holders of the Capital
Securities would recognize gain or loss as if they had exchanged their Capital
Securities for the Junior Subordinated Debentures they received upon the
liquidation of the Trust. See "Certain United States Federal Income Tax
Consequences--Distribution of Junior Subordinated Debentures or Cash Upon
Liquidation of the Trust."
MARKET PRICES
There can be no assurance as to the market prices for Capital Securities or
Junior Subordinated Debentures that may be distributed in exchange for Capital
Securities if a liquidation of the Trust occurs. Accordingly, the Capital
Securities that an investor may purchase, whether pursuant to the offer made
hereby or in the secondary market, or the Junior Subordinated Debentures that a
holder of Capital Securities may receive on liquidation of the Trust, may trade
at a discount to the price that the investor paid to purchase the Capital
Securities offered hereby. Because holders of Capital Securities may receive
Junior Subordinated Debentures on termination of the Trust, prospective
purchasers of Capital Securities are also making an investment decision with
regard to the Junior Subordinated Debentures and should carefully review all the
information regarding the Junior Subordinated Debentures contained herein. See
"Description of Capital Securities--Redemption--Special Event Redemption or
Distribution of Junior Subordinated Debentures" and "Description of Junior
Subordinated Debentures--General."
17
<PAGE>
LIMITED VOTING RIGHTS
Holders of Capital Securities generally will have limited voting rights
relating only to the modification of the Capital Securities and certain other
matters described herein. Holders of Capital Securities will not be entitled to
vote to appoint, remove or replace any of the Trustees (as defined below), which
voting rights are vested exclusively in the holder of the Common Securities. The
Trustees and the Company may amend the Declaration without the consent of
holders of Capital Securities to ensure that the Trust will be classified as a
grantor trust for United States federal income tax purposes, unless such action
adversely affects in any material respect the interests of such holders. See
"Description of Capital Securities--Voting Rights; Amendment of the Declaration"
and "--Removal of Trustees."
ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON TRANSFER
Prior to this offering there has been no public market for the Capital
Securities, and there can be no assurance that such a market will develop. The
Capital Securities will not be listed on any securities exchange. The
Underwriters have advised the Company that they intend to make a market in the
Capital Securities after the consummation of this offering, as permitted by
applicable laws and regulations; however, the Underwriters are not obligated to
do so, and may discontinue any such market making activities at any time without
notice. Therefore, there can be no assurance that an active market for the
Capital Securities will develop. If a trading market for the Capital Securities
does develop, the Capital Securities may trade at a discount from their initial
offering price depending upon prevailing interest rates, the market for similar
securities, the performance of the Company and other factors.
CONSEQUENCES OF HIGHLY LEVERAGED TRANSACTION
The Indenture does not contain any provisions that afford holders of the
Junior Subordinated Debentures protection in the event of a highly leveraged
transaction, including a change of control, or other similar transactions
involving Washington Mutual that may adversely affect such holders. See
"Description of Junior Subordinated Debentures."
18
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company and its subsidiaries as of March 31, 1997, and as adjusted to give
effect to the consummation of the offering of the Capital Securities. The
following data is qualified by the detailed information and financial statements
appearing in the documents incorporated by reference herein.
<TABLE>
<CAPTION>
MARCH 31, 1997
--------------------------
ACTUAL AS ADJUSTED
------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt(1)..................................................................... $ 246,753 $ 546,753
Shareholders' equity:
Preferred stock..................................................................... 118,063 118,063
Common stock........................................................................ 839,171 839,171
Net unrealized gain on investment securities available for sale..................... (12,935) (12,935)
Retained earnings................................................................... 1,483,698 1,483,698
------------ ------------
Total shareholders' equity........................................................ 2,427,997 2,427,997
------------ ------------
Total capitalization............................................................ $ 2,674,750 $ 2,974,750
------------ ------------
------------ ------------
</TABLE>
- ------------------------
(1) As adjusted reflects issuance of the Capital Securities. The Trust is a
wholly-owned subsidiary of the Company and will hold the Junior Subordinated
Debentures in the aggregate principal amount of $309,279,000 as its sole
asset.
19
<PAGE>
USE OF PROCEEDS
The Company expects to use the proceeds from the sale of the Junior
Subordinated Debentures ($300,000,000 before expenses of the offering) for
general corporate purposes, which may include the repayment of indebtedness,
redemption of one or more series of preferred stock, investments in or
extensions of credit to its subsidiaries and the financing of possible
acquisitions. Pending such use, the net proceeds may be temporarily invested in
short-term obligations. The precise amounts and timing of the application of
proceeds will depend upon the funding requirements of the Company and its
subsidiaries and the availability of other funds.
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The Company's consolidated ratios of earnings to fixed charges and
consolidated ratios of earnings to combined fixed charges and preferred stock
dividend requirements for each of the periods indicated are set forth below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits..................... 1.73x 1.70x 1.25x 1.54x 1.75x 2.13x 2.02x
Including Interest on Deposits..................... 1.36x 1.30x 1.11x 1.22x 1.27x 1.32x 1.25x
Earnings to Combined Fixed Charges and Preferred
Stock Dividend Requirements:
Excluding Interest on Deposits..................... 1.70x 1.64x 1.21x 1.49x 1.66x 2.01x 1.98x
Including Interest on Deposits..................... 1.35x 1.28x 1.10x 1.21x 1.25x 1.30x 1.24x
</TABLE>
For purposes of computing the ratios of both earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividend requirements,
earnings represent income before income taxes, extraordinary items, cumulative
effect of change in tax accounting method, minority interest and fixed charges.
Fixed charges, excluding interest on deposits, represent interest expense
(except interest on deposits). Fixed charges, including interest on deposits,
represent all interest expense. Combined fixed charges and preferred stock
dividend requirements, excluding interest on deposits, represent interest
expense (except interest paid on deposits), and an amount equal to the pre-tax
earnings required to meet applicable preferred stock dividend requirements.
Combined fixed charges and preferred stock dividend requirements, including
interest on deposits, represent all interest expense, and an amount equal to the
pre-tax earnings required to meet applicable preferred stock dividend
requirements.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a subsidiary
of the Company and, accordingly, the accounts of the Trust will be included in
the consolidated financial statements of the Company. The sole asset of the
Trust will be $309,279,000 aggregate principal amount of Junior Subordinated
Debentures, issued by the Company to the Trust. The Capital Securities will be
presented in the consolidated balance sheet of the Company in the "Trust
Preferred Securities" line item in the "Liabilities" section and appropriate
disclosures about the Capital Securities, the Guarantee and the Junior
Subordinated Debentures will be included in the notes to the consolidated
financial statements for financial reporting purposes. The Company will record
Distributions payable on the Capital Securities as interest expense in the
consolidated statements of income.
20
<PAGE>
THE TRUST
The Trust is a statutory trust created under the Trust Act pursuant to a
declaration of trust and the filing of a certificate of trust with the Secretary
of State of the State of Delaware. The Company will acquire Common Securities in
an aggregate liquidation preference equal to at least 3% of the total capital of
the Trust. The Trust will use all the proceeds derived from the issuance of the
Capital Securities and the Common Securities to purchase the Junior Subordinated
Debentures and, accordingly, the assets of the Trust will consist solely of the
Junior Subordinated Debentures. The Trust exists for the exclusive purpose of
(i) issuing the Trust Securities representing undivided beneficial ownership
interests in the assets of the Trust, (ii) investing the gross proceeds of the
Trust Securities in the Junior Subordinated Debentures, and (iii) engaging in
only those other activities necessary or incidental thereto.
Pursuant to the Declaration, there will initially be five trustees (the
"Trustees") for the Trust. Three of the Trustees (the "Regular Trustees") will
be individuals who are employees or officers of or who are affiliated with the
Company. The fourth trustee will be a financial institution that is unaffiliated
with the Company (the "Property Trustee"). The fifth trustee will be an entity
that maintains its principal place of business in the State of Delaware (the
"Delaware Trustee"). Initially, The Bank of New York, a New York banking
corporation, will act as Property Trustee, and its affiliate, The Bank of New
York (Delaware), a Delaware corporation, will act as Delaware Trustee until, in
each case, removed or replaced by the Company as holder of the Common
Securities. The Bank of New York will also act as trustee under the Guarantee
(the "Guarantee Trustee").
The Property Trustee will hold title to the Junior Subordinated Debentures
for the benefit of the holders of the Trust Securities, and the Property Trustee
will have the power to exercise all rights, powers and privileges with respect
to the Junior Subordinated Debentures under the Indenture (as defined herein) as
the holder of the Junior Subordinated Debentures. In addition, the Property
Trustee will maintain exclusive control of a segregated non-interest bearing
bank account (the "Property Account") to hold all payments made in respect of
the Junior Subordinated Debentures for the benefit of the holders of the Trust
Securities. The Guarantee Trustee will hold the Guarantee for the benefit of the
holders of the Capital Securities. The Company, as the holder of all the Common
Securities, will have the right to appoint, remove or replace any of the
Trustees and to increase or decrease the number of Trustees; PROVIDED that the
number of trustees shall be at least three; PROVIDED further that at least one
Trustee shall be a Delaware Trustee, at least one Trustee shall be the Property
Trustee and at least one Trustee shall be a Regular Trustee. The Company will
pay all fees and expenses related to the organization and operations of the
Trust (including any taxes, duties, assessments or governmental charges of
whatever nature (other than withholding taxes) imposed by the United States or
any other domestic taxing authority upon the Trust) and the offering of the
Capital Securities and be responsible for all debts and obligations of the Trust
(other than with respect to the Capital Securities).
For so long as the Capital Securities remain outstanding, the Company will
covenant (i) to maintain directly or indirectly 100% ownership of the Common
Securities, (ii) to cause the Trust to remain a statutory business trust and not
to voluntarily dissolve, wind-up, liquidate or be terminated, except as
permitted by the Declaration, (iii) to use its commercially reasonable efforts
to ensure that the Trust will not be an "investment company" for purposes of the
1940 Act and (iv) to take no action that would be reasonably likely to cause the
Trust to be classified as an association or a publicly traded partnership
taxable as a corporation for United States federal income tax purposes. It is
not expected that the Trust will file reports under Section 13(a) of the
Exchange Act.
The rights of the holders of the Capital Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration and the Trust Indenture Act. See "Description of Capital
Securities." The Declaration and the Guarantee also incorporate by reference the
terms of the Trust Indenture Act.
The location of the principal executive office of the Trust is c/o
Washington Mutual, Inc., 1201 Third Avenue, Seattle, Washington 98101, and its
telephone number is 206-461-2000.
21
<PAGE>
DESCRIPTION OF CAPITAL SECURITIES
Pursuant to the terms of the Declaration, the Regular Trustees on behalf of
the Trust will issue the Capital Securities and the Common Securities. The
Capital Securities will represent undivided beneficial ownership interests in
the assets of the Trust and the holders thereof will be entitled to a preference
in certain circumstances with respect to Distributions and amounts payable on
redemption or liquidation over the Common Securities, as well as other benefits
as described in the Declaration. This summary of certain provisions of the
Capital Securities and the Declaration does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all the provisions
of the Declaration, including the definitions therein of certain terms, and the
Trust Indenture Act. Wherever particular defined terms of the Declaration (as
supplemented or amended from time to time) are referred to herein, the
definitions of such defined terms are incorporated herein by reference.
GENERAL
The Capital Securities will rank PARI PASSU, and payments will be made
thereon pro rata, with the Common Securities except as described under
"--Subordination of Common Securities." Legal title to the Junior Subordinated
Debentures will be held by the Property Trustee in trust for the benefit of the
holders of the Capital Securities and the Common Securities. The Guarantee
executed by the Company 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
sufficient funds available to make such payments. See "Description of
Guarantee." In such event, the remedy of a holder of Capital Securities is to
vote to direct the Property Trustee to enforce the Property Trustee's rights
under the Junior Subordinated Debentures or to commence a Direct Action. See
"--Voting Rights; Amendment of the Declaration" below. The Company's obligations
under the Guarantee, taken together with its obligations under the Junior
Subordinated Debentures and the Indenture, including its obligation to pay all
costs, expenses and liabilities of the Trust (other than with respect to the
Capital Securities), constitute a full and unconditional guarantee of all of the
Trust's obligations under the Capital Securities.
Holders of the Capital Securities have no preemptive or similar rights.
DISTRIBUTIONS
Distributions on each Capital Security will be payable at the annual rate of
% of the liquidation preference of $1000, payable semi-annually in arrears on
and of each year. Distributions will accumulate from , 1997,
the date of original issuance, and commence on , 1997. The amount of
Distributions payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months.
Distributions on the Capital Securities must be paid on the dates payable to
the extent that the Trust has funds available for the payment of such
distributions. The revenue of the Trust available for distribution to holders of
its Capital Securities will be limited to payments under the Junior Subordinated
Debentures in which the Trust will invest the proceeds from the issuance and
sale of the Capital Securities and the Common Securities. See "Description of
Junior Subordinated Debentures." If the Company does not make interest payments
on the Junior Subordinated Debentures, the Property Trustee will not have funds
available to pay Distributions on the Capital Securities.
The Company will have the right under the Indenture to defer the payment of
interest on the Junior Subordinated Debentures at any time or from time to time
for a period not exceeding 10 consecutive semi-annual periods (each, an
"Extension Period"), provided that no Extension Period may extend beyond the
Stated Maturity of the Junior Subordinated Debentures. As a consequence of any
such extension, semi-annual Distributions on the Capital Securities will be
deferred by the Trust during any such Extension Period. Distributions to which
holders of the Capital Securities are entitled will accumulate and compound
semi-
22
<PAGE>
annually at the rate per annum of % thereof from the relevant payment date
for such Distributions. The term "Distributions" as used herein shall include
any such compounded amounts unless the context otherwise requires. During any
such Extension Period, the Company may not, and may not permit any subsidiary of
the Company to, (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of the
Company's capital stock or (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that rank PARI PASSU with or junior to the Junior Subordinated
Debentures or make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company if such
guarantee ranks PARI PASSU with or junior in interest to the Junior Subordinated
Debentures (other than (a) dividends or distributions in common stock of the
Company, (b) payments under the Guarantee, (c) 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, and (d) purchases of common
stock related to the issuance of common stock or rights under any of the
Company's benefit plans). Prior to the termination of any such Extension Period,
the Company may further extend the Extension Period, provided that no Extension
Period may exceed 10 consecutive semi-annual periods or extend beyond the Stated
Maturity of the Junior Subordinated Debentures. Upon the termination of any such
Extension Period and the payment of all amounts then due on any Interest Payment
Date, the Company may elect to begin a new Extension Period. See "Description of
the Junior Subordinated Debentures--Option to Extend Interest Payment Period"
and "Certain United States Federal Income Tax Consequences--Interest Income and
Original Issue Discount." The Company has no current intention of exercising its
right to defer payments of interest by extending the interest payment period of
the Junior Subordinated Debentures.
In the event that any date on which Distributions are payable on the Capital
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 additional Distributions or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the date such payment was
originally payable (each date on which Distributions are payable in accordance
with the foregoing, a "Distribution Date"). A "Business Day" shall mean any day
other than a Saturday or a Sunday, or a day on which banking institutions in The
City of New York are authorized or required by law or executive order to remain
closed or a day on which the corporate trust office of the Property Trustee or
the Indenture Trustee (as defined herein) is closed for business.
Distributions on the Capital Securities (other than distributions on a
Redemption Date) will be payable to the holders thereof as they appear on the
register of the Trust on the relevant record dates, which shall be the day of
the month prior to the relevant Distribution Date. Distributions payable on any
Capital Securities that are not punctually paid on any Distribution Date will
cease to be payable to the person in whose name such Capital Securities are
registered on the relevant record date, and such defaulted distribution will
instead be payable to the person in whose name such Capital Securities are
registered on the special record date or other specified date determined in
accordance with the Declaration.
REDEMPTION
MANDATORY REDEMPTION. Unless a Special Event has occurred, the Capital
Securities will not be redeemable prior to , 2007. Upon the repayment or
redemption of the Junior Subordinated Debentures, whether at Stated Maturity or
upon earlier redemption as provided in the Indenture, the proceeds from such
repayment or redemption shall be applied by the Property Trustee to redeem the
Capital Securities and Common Securities, upon not less than 30 nor more than 60
days notice prior to the date fixed for repayment or redemption. If less than
all of the Junior Subordinated Debentures are to be repaid or redeemed on a
Redemption Date, then the proceeds from such repayment or redemption shall be
allocated to the redemption PRO RATA of the Capital Securities and Common
Securities.
23
<PAGE>
SPECIAL EVENT REDEMPTION OR DISTRIBUTION OF JUNIOR SUBORDINATED
DEBENTURES. If a Special Event shall occur and be continuing, the Company will
have the right, subject to the receipt of any necessary prior regulatory
approval, to either (i) redeem within 90 days following the occurrence of such
Special Event the Junior Subordinated Debentures on the date of redemption (the
"Redemption Date") in whole (but not in part) and thereby cause a mandatory
redemption of the Capital Securities in whole (but not in part) at a redemption
price with respect to the Capital Securities equal to the Special Event
Redemption Price (which is equal to the Special Event Prepayment Price in
respect of the Junior Subordinated Debentures) or (ii) dissolve the Trust within
90 days following the occurrence of such Special Event and, after satisfaction
of the claims of creditors of the Trust as provided by applicable law, cause the
Junior Subordinated Debentures to be distributed to the holders of the Capital
Securities in liquidation of the Trust. Under current United States federal
income tax law and interpretations thereof and assuming, as expected, the Trust
is treated as a grantor trust, a distribution of the Junior Subordinated
Debentures should not be a taxable event to holders of the Capital Securities.
Should there be a change in law, a change in legal interpretation, certain Tax
Events or other circumstances, however, the distribution could be a taxable
event to holders of the Capital Securities. See "Certain United States Federal
Income Tax Consequences--Distribution of Junior Subordinated Debentures or Cash
upon Liquidation of the Trust."
If the Company does not elect either option described above, the Capital
Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures, whether at maturity or redemption, and in the event a
Tax Event has occurred and is continuing, the Company will be obligated to pay
any additional taxes, duties, assessments and other governmental charges (other
than withholding taxes) to which the Trust has become subject as a result of a
Tax Event. See "Description of Junior Subordinated Debentures."
A "Special Event" means a Tax Event, a Regulatory Capital Event or an
Investment Company Event. A "Tax Event" means the receipt by the Trust of an
opinion of counsel, rendered by a law firm having an established tax practice,
to the effect that, as a result of any amendment to, change in or 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
adopted or which proposed change, pronouncement or decision is announced on or
after the date of original issuance of the Capital 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 Junior Subordinated Debentures,
(ii) interest payable by the Company on such Junior Subordinated Debentures is
not, or within 90 days of the date of such opinion, will not be, deductible by
the Company, in whole or in part, for United States federal income tax purposes,
or (iii) the Trust is, or will be within 90 days of the date of such opinion,
subject to more than a DE MINIMIS amount of other taxes, duties or other
governmental charges. A "Regulatory Capital Event" means that the Company shall
have received an opinion of independent bank regulatory counsel experienced in
such matters to the effect that, as a result of (a) any amendment to or change
(including any announced prospective change) in the laws (or any regulations
thereunder) of the United States or any rules, guidelines or policies of the
appropriate regulatory authorities or (b) any official administrative
pronouncement or judicial decision for interpreting or applying such laws or
regulations which amendment or change is effective or such pronouncement or
decision is announced on or after the date of original issuance of the Capital
Securities, the Capital Securities do not constitute, or within 90 days of the
date thereof, will not constitute Tier 1 capital or its then equivalent, applied
as if the Company or its successor were a bank holding company (as that concept
is used in the guidelines or regulations issued by the Board of Governors of the
Federal Reserve System); provided, however, that the distribution of the Junior
Subordinated Debentures in connection with the liquidation of the Trust by the
Company shall not in and of itself constitute a Regulatory Capital Event unless
such liquidation shall have occurred in connection with a Tax Event or an
Investment Company Event. "Investment Company Event" means the receipt by the
Trust of an opinion of counsel, rendered by a law firm having a recognized
national securities practice,
24
<PAGE>
to the effect that, as a result of the occurrence of Change in 1940 Act Law, the
Trust is or will be considered an "investment company" that is required to be
registered under the 1940 Act, which Change in 1940 Act Law becomes effective on
or after the date of original issuance of the Capital Securities.
REDEMPTION PROCEDURES
Capital Securities redeemed on each Redemption Date shall be redeemed at the
Redemption Price with the applicable proceeds from the contemporaneous
redemption or payment at Stated Maturity of the Junior Subordinated Debentures.
Redemptions of the Capital Securities shall be made and the Redemption Price
shall be payable on each Redemption Date only to the extent that the Trust has
sufficient funds available for the payment of such Redemption Price. See also
"--Subordination of Common Securities."
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Capital Securities to be
redeemed at its registered address. If the Trust gives a notice of redemption in
respect of the Capital Securities, then, by 12:00 noon, New York City time, on
the Redemption Date, to the extent funds are available, the Property Trustee
will deposit irrevocably with DTC funds sufficient to pay the applicable
Redemption Price for all securities held in DTC and will give DTC irrevocable
instructions and authority to pay the Redemption Price to the holders of the
Capital Securities. See "--Book-Entry Issuance." Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date for any Capital
Security called for redemption shall be payable to the holders of such Capital
Security on the relevant record dates for the related Distribution Dates. If
notice of redemption shall have been given and funds deposited as required, then
upon the date of such deposit, all rights of the holders of such Capital
Securities so called for redemption will cease, except the right of the holders
of such Capital Securities to receive the Redemption Price, but without interest
on such Redemption Price, and such Capital Securities will cease to be
outstanding. In the event that any date fixed for redemption of Capital
Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such delay), except
that, if such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day, in each case with the same force
and effect as if made on the date such payment was originally payable. In the
event that payment of the Redemption Price in respect of Capital Securities
called for redemption is improperly withheld or refused and not paid either by
the Trust or by the Company pursuant to the Guarantee as described under
"Description of Guarantee," Distributions on such Capital Securities will
continue to accrue at the then applicable rate, from the Redemption Date
originally established by the Trust for the Capital Securities to the date such
Redemption Price is actually paid, in which case the actual payment date will be
the date fixed for redemption for purposes of calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Company or its subsidiaries may at any time and
from time to time purchase outstanding Capital Securities by tender, in the open
market or by private agreement.
The Trust may not redeem fewer than all of the outstanding Capital
Securities unless all accrued and unpaid distributions have been paid on all
Capital Securities for all semi-annual distribution periods terminating on or
prior to the date of redemption. If less than all of the Capital Securities and
Common Securities issued by the Trust are to be redeemed on a Redemption Date,
then the aggregate amount of such Capital Securities and Common Securities to be
redeemed shall be allocated pro rata among the Capital Securities and the Common
Securities. The particular Capital Securities to be redeemed shall be selected
on a PRO RATA basis not more than 60 days prior to the Redemption Date by the
Property Trustee from the outstanding Capital Securities not previously called
for redemption, by such method as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $1000 or integral multiples of $1000 in excess thereof) of the
liquidation preference of Capital Securities of denominations larger than $1000.
The Property Trustee shall promptly notify the trust registrar in writing of the
Capital Securities selected for redemption and, in the case of any Capital
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Security selected for partial redemption, the liquidation preference thereof to
be redeemed. For all purposes of the Declaration, unless the context otherwise
requires, all provisions relating to the redemption of Capital Securities shall
relate, in the case of any Capital Security redeemed or to be redeemed only in
part, to the portion of the aggregate liquidation preference of Capital
Securities which has been or is to be redeemed.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Capital
Securities and the Common Securities, as applicable, shall be made PRO RATA
based on the liquidation preference of such Capital Securities and Common
Securities; PROVIDED, HOWEVER, that if on any Distribution Date or Redemption
Date an Indenture Event of Default shall have occurred and be continuing, no
payment of any Distribution on, or Redemption Price of, any of the Common
Securities, and no other payment on account of the redemption, liquidation or
other acquisition of such Common Securities, shall be made unless payment in
full in cash of all accumulated and unpaid Distributions on all of the
outstanding Capital Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the Redemption Price the full amount
of such Redemption Price on all of the outstanding Capital Securities then
called for redemption, shall have been made or provided for, and all funds
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions on, or Redemption Price of, the Capital Securities
then due and payable.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Pursuant to the Declaration, the Trust shall automatically dissolve on the
first to occur of: (i) certain events of bankruptcy, dissolution or liquidation
of the Company or the Trust; (ii) upon receipt by the Property Trustee of
written notice from the Company, as Sponsor, directing the Property Trustee to
dissolve the Trust; (iii) the redemption of all of the Capital Securities in
connection with the maturity or redemption of all of the Junior Subordinated
Debentures; and (iv) the entry by a court of competent jurisdiction of an order
for the dissolution of the Trust.
If an early dissolution occurs as described in clause (i), (ii) or (iv)
above, the Trust shall be liquidated by the Trustees as expeditiously as the
Trustees determine to be possible by distributing, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, to the
holders of the Capital Securities and Common Securities their PRO RATA interest
in the Junior Subordinated Debentures, unless such distribution is determined by
the Property Trustee not to be practical, in which event such holders will be
entitled to receive out of the assets of the Trust available for distribution to
holders, after satisfaction of liabilities to creditors of the Trust as provided
by applicable law, an amount equal to, in the case of holders of Capital
Securities, the aggregate of the liquidation amount plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because the Trust has insufficient assets available to pay in full the aggregate
Liquidation Distribution, then the amounts payable directly by the Trust on the
Capital Securities shall be paid on a PRO RATA basis. The holder of the Common
Securities will be entitled to receive distributions upon any such liquidation
PRO RATA with the holders of the Capital Securities, except that if an Indenture
Event of Default has occurred and is continuing, the Capital Securities shall
have a priority over the Common Securities.
After the liquidation date is fixed for any distribution of Junior
Subordinated Debentures to holders of the Capital Securities (i) the Capital
Securities will no longer be deemed to be outstanding, and (ii) DTC or its
nominee, as a record holder of Capital Securities, will receive a registered
global certificate or certificates representing the Junior Subordinated
Debentures to be delivered upon such distribution.
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TRUST ENFORCEMENT EVENTS
An Indenture Event of Default constitutes a Trust Enforcement Event under
the Declaration with respect to the Trust Securities, provided that pursuant to
the Declaration, the holder of the Common Securities will be deemed to have
waived any Trust Enforcement Event with respect to the Common Securities until
all Trust Enforcement Events with respect to the Capital Securities have been
cured, waived or otherwise eliminated. Until such Trust Enforcement Event with
respect to the Capital Securities has 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 with respect to
certain matters under the Declaration, and therefore the Indenture.
Upon the occurrence of a Trust Enforcement Event, the Indenture Trustee (as
defined herein) or the Property Trustee as the holder of the Junior Subordinated
Debentures will have the right under the Indenture to declare the principal of
and interest on the Junior Subordinated Debentures to be immediately due and
payable. Each of the Company and the Trust is required to file annually with the
Property Trustee an officer's certificate as to its compliance with all
conditions and covenants under the Declaration.
If the Property Trustee fails to enforce its rights with respect to the
Junior Subordinated Debentures held by the Trust, any record holder of Capital
Securities may institute legal proceedings directly against the Company to
enforce the Property Trustee's rights under such Junior Subordinated Debentures
without first instituting any legal proceedings against such Property Trustee or
any other person or entity. In addition, if a Trust Enforcement Event has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest, principal or other required payments on the Junior
Subordinated Debentures issued to the Trust on the date such interest, principal
or other payment is otherwise payable, then a record holder of Capital
Securities may, on or after the respective due dates specified in the Junior
Subordinated Debentures, institute a proceeding directly against the Company for
enforcement of payment on Junior Subordinated Debentures having a principal
amount equal to the aggregate liquidation preference of the Capital Securities
held by such holder. In connection with such Direct Action, the Company will be
subrogated to the rights of such record holder of Capital Securities to the
extent of any payment made by the Company to such record holder of Capital
Securities.
VOTING RIGHTS; AMENDMENT OF THE DECLARATION
Except as provided below and under "Description of Guarantee--Amendments and
Assignment" and as otherwise required by law and the Declaration, the holders of
the Capital Securities will have no voting rights.
So long as any Junior Subordinated 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 Indenture Trustee or
executing any trust or power conferred on the Property Trustee with respect to
such Junior Subordinated Debentures, (ii) waive any past default that is
waivable under the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Junior Subordinated Debentures shall
be due and payable or (iv) consent to any amendment, modification or termination
of the Indenture or such Junior Subordinated Debentures, where such consent
shall be required, without, in each case, obtaining the prior approval of the
holders of a majority in aggregate liquidation preference of all outstanding
Capital Securities; PROVIDED, HOWEVER, that where a consent under the Indenture
would require the consent of each holder of Junior Subordinated Debentures
affected thereby, no such consent shall be given by the Property Trustee without
the prior consent of each holder of Capital Securities. The Trustees shall not
revoke any action previously authorized or approved by a vote of the holders of
the Capital Securities except pursuant to a subsequent vote of the holders of
the Capital Securities. The Property Trustee shall notify each holder of record
of the Capital Securities of any notice of default which it receives with
respect to the Junior Subordinated Debentures. In addition to obtaining the
foregoing approvals of the holders of the Capital Securities, prior to taking
any of the foregoing actions, the Trustees shall receive
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an opinion of counsel experienced in such matters to the effect that the Trust
will not be classified as other than a grantor trust for United States federal
income tax purposes on account of such action.
The Declaration may be amended from time to time by the Company and a
majority of the Regular Trustees (and in certain circumstances the Property
Trustee and the Delaware Trustee), without the consent of the holders of the
Capital Securities, (i) to cure any ambiguity, correct or supplement any
provisions in the Declaration that may be inconsistent with any other provision,
or to make any other provisions with respect to matters or questions arising
under the Declaration that 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
be classified for United States federal income tax purposes as a grantor trust
at all times that any Capital Securities and Common Securities are outstanding
or to ensure that the Trust will not be required to register as an "investment
company" under the 1940 Act; provided, however, that such action shall not
adversely affect in any material respect the interests of any holder of Capital
Securities or Common Securities, and any amendments of the Declaration shall
become effective when notice thereof is given to the holders of Capital
Securities and Common Securities. The Declaration may be amended by the Company
and a majority of the Regular Trustees with (i) the consent of holders
representing not less than a majority (based upon liquidation preferences) of
the outstanding Capital Securities and Common Securities and (ii) receipt by the
Regular Trustees of an opinion of counsel to the effect that such amendment or
the exercise of any power granted to the Regular Trustees in accordance with
such amendment will not affect the Trust's status as a grantor trust for United
States federal income tax purposes or the Trust's exemption from status of an
"investment company" under the 1940 Act; provided, further that without the
consent of each holder of Capital Securities and Common Securities affected
thereby, the Declaration may not be amended to (i) change the amount or timing
of any Distribution on the Capital Securities and Common Securities or otherwise
adversely affect the amount of any Distribution required to be made in respect
of the Capital Securities and Common Securities as of a specified date or (ii)
restrict the right of a holder of Capital Securities or Common Securities to
institute suit for the enforcement of any such payment on or after such date.
Any required approval of holders of Capital Securities may be given at a
meeting of holders of Capital Securities convened for such purpose or pursuant
to written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Capital Securities are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to be given to
each holder of record of Capital Securities in the manner set forth in the
Declaration.
No vote or consent of the holders of Capital Securities will be required for
the Trust to redeem and cancel its Capital Securities in accordance with the
Declaration.
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 Company, the Trustees or any affiliate of the
Company or any Trustees, shall, for purposes of such vote or consent, be treated
as if they were not outstanding.
EXPENSES AND TAXES
In the Indenture, the Company, as borrower, has agreed to pay all debts and
other obligations (other than with respect to the Capital Securities) and all
costs and expenses of the Trust (including costs and expenses relating to the
organization of the Trust, the fees and expenses of the Trustees and the costs
and expenses relating to the operation of the Trust) and to pay any and all
taxes and all costs and expenses with respect thereto (other than United States
withholding taxes) to which the Trust might become subject. The Company has also
agreed in the Indenture to execute such additional agreements as may be
necessary or desirable to give full effect to the foregoing.
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REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the
Capital Securities.
Registration of transfers of Capital Securities will be effected without
charge by or on behalf of the Trust, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Trust will not be required (i) to register or cause to be
registered the transfer or exchange of the Capital Securities during a period
beginning at the opening of business 15 days before the day of the mailing of
the relevant notice of redemption and ending at the close of business on the day
of mailing of such notice of redemption or (ii) to register or cause to be
registered the transfer or exchange of any Capital Securities so selected for
redemption, except in the case of any Capital Securities being redeemed in part,
any portion thereof not to be redeemed.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of a
Trust Enforcement Event, undertakes to perform only such duties as are
specifically set forth in the Declaration and, after such Trust Enforcement
Event, must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the Declaration at the request of any holder of Capital
Securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred thereby. If no Trust Enforcement Event
has occurred and is continuing and the Property Trustee is required to decide
between alternative causes of action, construe ambiguous provisions in the
Declaration or is unsure of the application of any provision of the Declaration,
and the matter is not one on which holders of Capital Securities are entitled
under the Declaration to vote, then the Property Trustee may, but shall be under
no duty to, take such action as is directed by the Company and, if not so
directed, shall take such action as it deems advisable and in the best interests
of the holders of the Capital Securities and the Common Securities and will have
no liability except for its own bad faith, negligence or willful misconduct. The
Property Trustee also serves as the Guarantee Trustee under the Guarantee and
the Indenture Trustee under the Indenture.
PAYMENT AND PAYING AGENCY
Payments in respect of the Global Certificates shall be made to DTC, which
shall credit the relevant accounts at DTC on the applicable Distribution Dates
or, if the Capital Securities are held in definitive form, such payments shall
be made by check mailed to the address of the holder entitled thereto as such
address shall appear on the Register. The paying agent (the "Paying Agent")
shall initially be the Property Trustee and any co-paying agent chosen by the
Property Trustee and acceptable to the Regular Trustees and the Company. The
Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written
notice to the Property Trustee and the Company. In the event that the Property
Trustee shall no longer be the Paying Agent, the Regular Trustees shall appoint
a successor (which shall be a bank or trust company acceptable to the Regular
Trustees and the Company) to act as Paying Agent.
BOOK-ENTRY ISSUANCE
The Capital Securities initially will be represented by one or more Capital
Securities in registered, global form (collectively, the "Global Capital
Securities"). The Global Capital Securities will be deposited upon issuance with
the Property Trustee as custodian for The Depository Trust Company ("DTC"), in
New York, New York, and registered in the name of DTC or its nominee, in each
case for credit to an account of a direct or indirect participant in DTC as
described below.
Except as set forth below, the Global Capital Securities may be transferred,
in whole and not in part, only to another nominee of DTC or to a successor of
DTC or its nominee. Beneficial interests in the Global Capital Securities may
not be exchanged for Capital Securities in certificated form except in the
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limited circumstances described below. See "--Exchange of Book-Entry Capital
Securities for Certificated Capital Securities."
Transfer of beneficial interests in the Global Capital Securities will be
subject to the applicable rules and procedures of DTC and its direct or indirect
participants, which may change from time to time.
DEPOSITARY PROCEDURES
DTC has advised the Trust and the Company that DTC is a limited-purpose
trust company created to hold securities for its participating organizations
(collectively, the "Participants") and to facilitate the clearance and
settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of its Participants. The Participants
include securities brokers and dealers (including the Underwriters), banks,
trust companies, clearing corporations and certain other organizations. Access
to DTC's system is also available to other entities such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interest and transfer of ownership interest
of each actual purchaser of each security held by or on behalf of DTC are
recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Trust and the Company that, pursuant to procedures
established by it, (i) upon deposit of the Global Capital Securities, DTC will
credit the accounts of Participants designated by the Underwriters with portions
of the principal amount of the Global Capital Securities and (ii) ownership of
such interests in the Global Capital Securities will be shown on, and the
transfer of ownership thereof will be effected only through, records maintained
by DTC (with respect to the Participants) or by the Participants and the
Indirect Participants (with respect to other owners of beneficial interests in
the Global Capital Securities).
Except as described below, owners of interests in the Global Capital
Securities will not have Capital Securities registered in their name, will not
receive physical delivery of Capital Securities in certificated form and will
not be considered the registered owners or holders thereof for any purpose.
Payments in respect of the Global Capital Security registered in the name of
DTC or its nominee will be payable by the Property Trustee to DTC in its
capacity as the registered holder. The Property Trustee will treat the persons
in whose names the Capital Securities, including the Global Capital Securities,
are registered as the owners thereof for the purpose of receiving such payments
and for any and all other purposes whatsoever. Consequently, neither the
Property Trustee nor any agent thereof has or will have any responsibility or
liability for (i) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interests in the Global Capital Securities, or for maintaining,
supervising or reviewing any of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in the
Global Capital Securities or (ii) any other matter relating to the actions and
practices of DTC or any of its Participants or Indirect Participants. DTC has
advised the Trust and the Company that its current practice, upon receipt of any
payment in respect of securities such as the Capital Securities, is to credit
the accounts of the relevant Participants with the payment on the payment date
unless DTC has reason to believe it will not receive payment on such payment
date. Payments by the Participants and the Indirect Participants to the
beneficial owners of Capital Securities will be governed by standing
instructions and customary practices and will be the responsibility of the
Participants or the Indirect Participants and will not be the responsibility of
DTC, the Property Trustee or the Trust. Neither the Trust nor the Property
Trustee will be liable for any delay by DTC or any of its Participants in
identifying the beneficial owners of the Capital Securities, and the Trust and
the Property Trustee may conclusively rely on and will be protected in relying
on instructions from DTC or its nominee for all purposes.
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Interests in the Global Capital Securities will trade in DTC's Same-Day
Funds Settlement System and secondary market trading activity in such interests
will therefore 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 be settled in same-day funds.
DTC has advised the Trust and the Company that it will take any action
permitted to be taken by a holder of Capital Securities only at the direction of
one or more Participants to whose account with DTC interests in the Global
Capital Securities are credited. However, if there is an Event of Default, DTC
reserves the right to exchange the Global Capital Securities for legended
Capital Securities in certificated form and to distribute such Capital
Securities to its Participants.
The information in this section concerning DTC and its book-entry systems
has been obtained from sources that the Trust and the Company believe to be
reliable, but neither the Trust nor the Company takes responsibility for the
accuracy thereof.
EXCHANGE OF BOOK-ENTRY CAPITAL SECURITIES FOR CERTIFICATED CAPITAL SECURITIES
A Global Capital Security is exchangeable for Capital Securities in
registered certificated form if (i) DTC (x) notifies the Trust that it is
unwilling or unable to continue as Depositary for the Global Capital Security or
(y) has ceased to be a clearing agency registered under the Exchange Act, and,
in either case, the Trust thereupon fails to appoint a Successor Depositary, or
(ii) the Company in its sole discretion elects to cause the issuance of the
Capital Securities in certificated form. In all cases, certificated Capital
Securities delivered in exchange for any Global Capital Security or beneficial
interests therein will be registered in the names, and issued in any approved
denominations, requested by or on behalf of the Depositary (in accordance with
its customary procedures).
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described below. The Trust may, at the request of the Company, with the consent
of the Regular Trustees and without the consent of the holders of the Capital
Securities, merge with or into, consolidate, amalgamate, be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to a trust organized as such under the laws of any State; provided that (i) such
successor entity either (a) expressly assumes all of the obligations of the
Trust with respect to the Capital Securities or (b) substitutes for the Capital
Securities other securities having substantially the same terms as the Capital
Securities (the "Successor Securities") so long as the Successor Securities rank
the same as the Capital Securities rank in priority with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii) the
Company expressly appoints a trustee of such successor entity possessing the
same powers and duties as the Property Trustee as the holder of the Junior
Subordinated Debentures, (iii) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the Capital Securities
(including any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization, (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Capital
Securities (including any Successor Securities) in any material respect, (v)
such successor entity has a purpose identical to that of the Trust, (vi) prior
to such merger, consolidation, amalgamation, replacement, conveyance, transfer,
or lease, the Company has received an opinion from independent counsel to the
Trust experienced in such matters to the effect that (a) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Capital Securities (including any Successor Securities) in any material respect
and (b) following such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, (1) neither the Trust nor such successor entity
will be required to register as an investment company under the Investment
Company Act and (2) the Trust or the successor entity will continue to be
classified as a grantor trust for United States federal income tax purposes,
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(vii) the Company or any permitted successor or assignee owns all of the Common
Securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent provided
by the Guarantee, (viii) such successor entity expressly assumes all of the
obligations of the Trust with respect to the Trustees and (ix) the Successor
Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or other
organization on which the Capital Securities are then listed. Notwithstanding
the foregoing, the Trust shall not, except with the consent of holders of 100%
in aggregate liquidation preference of the Capital Securities, consolidate,
amalgamate, merge with or into, be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to any other entity or permit
any other entity to consolidate, amalgamate, merge with or into, or replace it
if such consolidation, amalgamation, merger, replacement, conveyance, transfer
or lease would cause the Trust or the successor entity to be classified as other
than a grantor trust for United States federal income tax purposes.
MERGER OR CONSOLIDATION OF TRUSTEES
Any corporation into which the Property Trustee, the Delaware Trustee or any
Regular Trustee that is not a natural person may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which such Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of such Trustee, shall be the successor of such Trustee under the Declaration,
provided such corporation shall be otherwise qualified and eligible.
MISCELLANEOUS
The Regular Trustees are authorized and directed to conduct the affairs of
and to operate the Trust in such a way that the Trust will not be deemed to be
an "investment company" required to be registered under the Investment Company
Act or classified as other than a grantor trust for United States federal income
tax purposes and so that the Junior Subordinated Debentures will be treated as
indebtedness of the Company for United States federal income tax purposes. In
this connection, the Company and the Regular Trustees are authorized to take any
action, not inconsistent with applicable law, the Certificate of Trust or the
Declaration, that the Company and the Regular Trustees determine in their
discretion to be necessary or desirable for such purposes, as long as such
action does not materially adversely affect the interests of the holders of the
Capital Securities.
The Trust may not borrow money nor issue debt nor mortgage or pledge any of
its assets.
GOVERNING LAW
The Declaration and the Capital Securities will be governed by and construed
in accordance with the laws of the State of Delaware.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued under a Junior
Subordinated Indenture (the "Indenture"), between the Company and The Bank of
New York, a New York banking corporation, as trustee (the "Indenture Trustee").
This summary of certain terms and provisions of the Junior Subordinated
Debentures and the Indenture does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, the Indenture.
GENERAL
Concurrently with the issuance of the Capital Securities, the Trust will
invest the proceeds thereof and the consideration paid by the Company for the
Common Securities in the Junior Subordinated Debentures issued by the Company.
The Junior Subordinated Debentures will be in the principal amount equal to the
aggregate liquidation preference of the Capital Securities plus the Company's
concurrent investment in the
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Common Securities. The Junior Subordinated Debentures will bear interest at the
annual rate of % of the principal amount thereof, payable semi-annually in
arrears on and of each year (each, an "Interest Payment
Date"), commencing , 1997, to the person in whose name each Junior
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the 15th day of the month prior to the relevant Interest
Payment Date. It is anticipated that, until the liquidation, if any, of the
Trust, each Junior Subordinated Debenture will be held in the name of the
Property Trustee in trust for the benefit of the holders of the Capital
Securities and the Common Securities. The amount of interest payable for any
period will be computed on the basis of a 360-day year of twelve 30-day months.
In the event that any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on the date such payment was
originally payable. Accrued interest that is not paid on the applicable Interest
Payment Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate per annum of % thereof, compounded
semi-annually. The term "interest" as used herein shall include semi-annual
interest payments and interest on semi-annual interest payments not paid on the
applicable Interest Payment Date, as applicable.
The Junior Subordinated Debentures will mature on , 2027.
The Junior Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Indebtedness (as defined below) of
the Company. The Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of the Company, whether under the Indenture or any
existing or other indenture that the Company may enter into in the future or
otherwise. See "-- Subordination."
The federal banking agencies possess broad powers to take corrective action
as deemed appropriate for an insured depositary institution, including without
limitation, under certain circumstances, the ability to prohibit the payment of
principal or interest on subordinated debt.
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Company that may adversely affect holders of the
Junior Subordinated Debentures.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Indenture Event of Default has occurred and is continuing, the
Company has the right under the Indenture to defer the payment of interest at
any time or from time to time for a period not exceeding 10 consecutive
semi-annual periods with respect to each Extension Period, provided that no
Extension Period may extend beyond the Stated Maturity of the Junior
Subordinated Debentures. At the end of such Extension Period, the Company must
pay all interest then accrued and unpaid (together with interest thereon at the
annual rate of %, compounded semi-annually, to the extent permitted by
applicable law). During an Extension Period, interest will continue to accrue
and holders of Junior Subordinated Debentures (or holders of Capital Securities
while the Capital Securities are outstanding) will be required to accrue
interest income for United States federal income tax purposes. See "Certain
United States Federal Income Tax Consequences--Interest Income and Original
Issue Discount."
During any such Extension Period, the Company may not, and may not permit
any subsidiary of the Company to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank PARI PASSU with or junior in interest
to the Junior Subordinated Debentures or make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any subsidiary
of the Company if such guarantee ranks PARI PASSU or junior in interest to the
Junior
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Subordinated Debentures (other than (a) dividends or distributions in common
stock of the Company, (b) payments under the Guarantee, (c) 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, and (d) purchases of common
stock related to the issuance of common stock or rights under any of the
Company's benefit plans). Prior to the termination of any such Extension Period,
the Company may further extend the Extension Period, provided that no Extension
Period may exceed 10 consecutive semi-annual periods or extend beyond the Stated
Maturity of the Junior Subordinated Debentures. Upon the termination of any such
Extension Period and the payment of all amounts then due on any Interest Payment
Date, the Company may elect to begin a new Extension Period subject to the above
requirements. No interest shall be due and payable during an Extension Period,
except at the end thereof. The Company must give the Property Trustee, the
Regular Trustees and the Indenture Trustee notice of its election of such
Extension Period not less than one Business Day prior to such record date. The
Property Trustee shall give notice of the Company's election to begin a new
Extension Period to the holders of the Capital Securities.
REDEMPTION
The Junior Subordinated Debentures are not redeemable prior to ,
2007 unless a Special Event has occurred. The Junior Subordinated Debentures are
redeemable prior to maturity at the option of the Company, subject to the
receipt of any necessary prior regulatory approval, on or after ,
2007, in whole or in part at any time at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest, if any, to the date of redemption, if redeemed during the twelve-month
period beginning on of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ------------------------------------------------------------------------ -------------
<S> <C>
2007.................................................................... %
2008.................................................................... %
2009.................................................................... %
2010.................................................................... %
2011.................................................................... %
2012.................................................................... %
2013.................................................................... %
2014.................................................................... %
2015.................................................................... %
2016.................................................................... %
</TABLE>
On or after , 2017, the redemption price will be 100%, plus
accrued and unpaid interest, if any, to the date of redemption.
The Junior Subordinated Debentures are also redeemable at any time in whole
(but not in part), within 90 days of the occurrence of a Special Event, at a
redemption price (the "Special Event Prepayment Price") equal to the greater of
(i) 100% of the principal amount of such Junior Subordinated Debentures or (ii)
as determined by a Quotation Agent (as defined below), the sum of the present
values of the principal amount and premium payable with respect to an optional
redemption on such Junior Subordinated Debentures on , 2007, together
with scheduled payments of interest from the prepayment date to ,
2007 (the "Remaining Life") discounted to the prepayment date on a semi-annual
basis (assuming a 360-day year consisting of 30-day months) at the Adjusted
Treasury Rate, plus, in each case, accrued interest thereon to the date of
prepayment.
"Adjusted Treasury Rate" means, with respect to any prepayment date, the
Treasury Rate plus (i) 1.25% if such prepayment date occurs on or before
, 1998 or (ii) 0.50% if such prepayment date occurs after
, 1998.
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"Treasury Rate" means (i) the yield, under the heading which represents the
average for the immediately prior week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication which is
published weekly by the Federal Reserve and which establishes yields on actively
traded United States Treasury securities adjusted to constant maturity under the
caption "Treasury Constant Maturities", for the maturity corresponding to the
Remaining Life (if no maturity is within three months before or after the
Remaining Life, yields for the two published maturities most closely
corresponding to the Remaining Life shall be determined and the Treasury Rate
shall be interpolated or extrapolated from such yields on a straight-line basis,
rounding to the nearest month) or (ii) if such release (or any successor
release) is not published during the week preceding the calculation date or does
not contain such yields, the rate per annum equal to the semi-annual equivalent
yield to maturity of the Comparable Treasury Issue, calculated using a price for
the Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such prepayment date. The
Treasury Rate shall be calculated on the third business day preceding the
prepayment date.
"Comparable Treasury Issue" means with respect to any prepayment date the
United States Treasury security selected by the Quotation Agent as having a
maturity comparable to the Remaining Life that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the Remaining
Life. If no United States treasury security has a maturity which is within a
period from three months before to three months after , 2007, the two
most closely corresponding United States Treasury securities shall be used as
the Comparable Treasury Issue, and the Treasury Rate shall be interpolated or
extrapolated on a straight-line basis, rounding to the nearest month using such
securities.
"Quotation Agent" means (i) Lehman Brothers Inc. and its respective
successors; provided, however, that if the foregoing shall cease to be a primary
U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another Primary Treasury Dealer;
and (ii) any other Primary Treasury Dealer selected by the Indenture Trustee
after consultation with the Company.
"Comparable Treasury Price" means (A) the average of five Reference Treasury
Dealer Quotations for such prepayment date, after excluding the highest and
lowest such Reference Treasury Dealer Quotations, or (B) if the Indenture
Trustee obtains fewer than three such Reference Treasury Dealer Quotations, the
average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any prepayment date, the average, as determined by the
Indenture Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Indenture Trustee by such Reference Treasury Dealer at 5:00 p.m.
New York City time, on the third business day preceding such prepayment date.
If the Junior Subordinated Debentures are redeemed, the Trust must redeem
the Capital Securities having an aggregate liquidation preference equal to the
aggregate principal amount of Junior Subordinated Debentures so redeemed. See
"Description of Capital Securities--Mandatory Redemption."
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each Holder of Junior Subordinated
Debentures to be redeemed at its registered address. Unless the Company defaults
in payment of the redemption price, on and after the redemption date interest
ceases to accrue on such Junior Subordinated Debentures or portions thereof
called for redemption.
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<PAGE>
CERTAIN COVENANTS OF THE COMPANY
The Company will covenant in the Indenture that if and so long as the Trust
is the holder of all Junior Subordinated Debentures, the Company, as borrower,
will pay to the Trust all fees and expenses related to the Trust and the
offering of the Capital Securities and will pay, directly or indirectly, all
ongoing costs, expenses and liabilities of the Trust (including any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States or any domestic taxing authority
upon the Trust but excluding obligations under the Capital Securities).
The Company will also covenant that it will not, and will not permit any
subsidiary of the Company to, (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire, or make a liquidation payment with respect to,
any of the Company's capital stock or (ii) make any payment of principal,
interest or premium, if any, on or repay or repurchase or redeem any debt
securities of the Company that rank PARI PASSU with or junior in interest to the
Junior Subordinated Debentures or make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any subsidiary of the
Company if such guarantee ranks PARI PASSU with or junior in interest to the
Junior Subordinated Debentures (other than (a) dividends or distributions in
common stock of the Company, (b) payments under the Guarantee, (c) 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, and
(d) purchases of common stock related to the issuance of common stock or rights
under any of the Company's benefit plans) if at such time (x) there shall have
occurred any event of which the Company has actual knowledge that (I) with the
giving of notice or the lapse of time, or both, would constitute an Indenture
Event of Default with respect to Junior Subordinated Debentures and (II) in
respect of which the Company shall not have taken reasonable steps to cure, (y)
the Company shall be in default with respect to its payment of any obligations
under the Guarantee or (z) the Company shall have given notice of its election
of an Extension Period as provided in the Indenture and shall not have rescinded
such notice, or such Extension Period, or any extension thereof, shall be
continuing.
SUBORDINATION
In the Indenture, the Company has covenanted and agreed that any Junior
Subordinated Debentures issued thereunder will be subordinated and junior in
right of payment to all Indebtedness to the extent provided in the Indenture.
Upon any payment or distribution of assets to creditors upon any liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Company, the holders of Indebtedness will first be
entitled to receive payment in full of principal of and premium, if any, and
interest, if any, on such Indebtedness before the holders of Junior Subordinated
Debentures or the Property Trustee on behalf of the holders of Capital
Securities will be entitled to receive or retain any payment in respect of the
principal of and premium, if any, or interest, if any, on the Junior
Subordinated Debentures; PROVIDED, HOWEVER, that holders of Indebtedness shall
not be entitled to receive payment of any such amounts to the extent that such
holders would be required by the subordination provisions of such Indebtedness
to pay such amounts over to the obligees on trade accounts payable or other
liabilities arising in the ordinary course of the Company's business.
In the event of the acceleration of the maturity of any Junior Subordinated
Debentures, the holders of all Indebtedness outstanding at the time of such
acceleration will first be entitled to receive payment in full of all amounts
then due thereon (including any amounts due upon acceleration) before the
holders of Junior Subordinated Debentures will be entitled to receive or retain
any payment in respect of the principal of or premium, if any, or interest, if
any, on the Junior Subordinated Debentures; PROVIDED, HOWEVER, that holders of
Indebtedness shall not be entitled to receive payment of any such amounts to the
extent that such holders would be required by the subordination provisions of
such Indebtedness to pay such amounts over to the obligees on trade accounts
payable or other liabilities arising in the ordinary course of the Company's
business.
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<PAGE>
No payments on account of principal (or premium, if any) or interest, if
any, in respect of the Junior Subordinated Debentures may be made if there shall
have occurred and be continuing a default in any payment with respect to
Indebtedness, or an event of default with respect to any Indebtedness resulting
in the acceleration of the maturity thereof, or if any judicial proceeding shall
be pending with respect to any such default.
"Indebtedness" means with respect to any person, whether recourse is to all
or a portion of the assets of such person and whether or not contingent, (i)
every obligation of such person for money borrowed; (ii) every obligation of
such person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such person; (iv) every obligation of such person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such person; (vi) every
obligation of such person for claims (as defined in Section 101(4) of the United
States Bankruptcy Code of 1978, as amended) in respect of derivative products
such as interest and foreign exchange rate contracts, commodity contracts and
similar arrangements; and (vii) every obligation of the type referred to in
clauses (i) through (vi) of another person and all dividends of another person
the payment of which, in either case, such person has guaranteed or is
responsible or liable for, directly or indirectly, as obligor or otherwise;
provided that "Indebtedness" shall not include (i) any obligations which, by
their terms, are expressly stated to rank PARI PASSU in right of payment with,
or to not be superior in right of payment to, the Junior Subordinated
Debentures, (ii) any Indebtedness of the Company which when incurred and without
respect to any election under Section 1111(b) of the United States Bankruptcy
Code of 1978, as amended, was without recourse to the Company, (iii) any
Indebtedness of the Company to any of its subsidiaries, (iv) Indebtedness to any
employee of the Company or (v) any Indebtedness in respect of debt securities
issued to any trust, or a trustee of such trust, partnership or other entity,
affiliated with the Company that is a financing entity of the Company in
connection with the issuance by such financing entity of securities that are
similar to the Capital Securities.
The Indenture places no limitation on the amount of additional Indebtedness
that may be incurred by the Company or any indebtedness or other liabilities
that may be incurred by the Company's subsidiaries. As of March 31, 1997,
Indebtedness of the Company aggregated approximately $467.0 million, and the
Company's consolidated subsidiaries had indebtedness and other liabilities of
approximately $43.2 billion to which the Junior Subordinated Debentures would be
effectively subordinated.
INDENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures that has occurred and
is continuing constitutes an "Indenture Event of Default" with respect to the
Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on the Junior Subordinated
Debentures when due (subject to the deferral of any due date in the case of
an Extension Period); or
(ii) failure to pay any principal on the Junior Subordinated Debentures
when due whether at maturity, upon redemption, by declaration or otherwise;
or
(iii) failure to observe or perform in any material respect certain other
covenants contained in the Indenture for 90 days after written notice to the
Company from the Indenture Trustee or the holders of at least 25% in
aggregate outstanding principal amount of outstanding Junior Subordinated
Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Company.
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<PAGE>
The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee. The Indenture Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of Junior Subordinated Debentures may declare the
principal due and payable immediately upon an Indenture Event of Default, and,
should the Indenture Trustee or such holders of such Junior Subordinated
Debentures fail to make such declaration, the holders of at least 25% in
aggregate liquidation preference of the Capital Securities shall have such
right. The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debentures may annul such declaration and waive the default
if the default (other than the non-payment of the principal of Junior
Subordinated Debentures which has become due solely by such acceleration) has
been cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been deposited with the
Indenture Trustee, and should the holders of such Junior Subordinated Debentures
fail to annul such declaration and waive such default, the holders of a majority
in aggregate liquidation preference of the Capital Securities shall have such
right.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures affected thereby may, on behalf of the holders of
all the Junior Subordinated Debentures, waive 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 Indenture Trustee) or
a default in respect of a covenant or provision which under the Indenture cannot
be modified or amended without the consent of the holder of each outstanding
Junior Subordinated Debenture, and should the holders of such Junior
Subordinated Debentures fail to waive such default, the holders of a majority in
aggregate liquidation preference of the Capital Securities shall have such
right. The Company is required to file annually with the Indenture Trustee a
certificate as to whether or not the Company is in compliance with all the
conditions and covenants applicable to it under the Indenture.
In case an Indenture Event of Default shall occur and be continuing, the
Property Trustee will have the right to declare the principal of and the
interest on such Junior Subordinated Debentures and any other amounts payable
under the Indenture, to be forthwith due and payable and to enforce its other
rights as a creditor with respect to such Junior Subordinated Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If an Indenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest or principal
on the Junior Subordinated Debentures on the date such interest or principal is
otherwise payable, a holder of Capital Securities may institute a Direct Action
for payment. The Company may not amend the Indenture to remove the foregoing
right to bring a Direct Action without the prior written consent of the holders
of all of the Capital Securities. Notwithstanding any payment made to such
holder of Capital Securities by the Company in connection with a Direct Action,
the Company shall remain obligated to pay the principal of or interest on the
Junior Subordinated Debentures held by the Trust or the Property Trustee and the
Company shall be subrogated to the rights of the holder of such Capital
Securities with respect to payments on the Capital Securities to the extent of
any payments made by the Company to such holder in any Direct Action. The
holders of Capital Securities will not be able to exercise directly any other
remedy available to the holders of the Junior Subordinated Debentures.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Company shall not consolidate with or merge
into any other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, unless (i) in case the Company
consolidates with or merges into another Person or conveys, transfers or leases
its properties and assets substantially as an entirety to any Person, the
successor Person is organized under the laws of the United States or any state
or the District of Columbia, and such successor Person expressly
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<PAGE>
assumes the Company's obligations on the Junior Subordinated Debentures issued
under the Indenture; (ii) immediately after giving effect thereto, no Indenture
Event of Default, and no event which, after notice or lapse of time or both,
would become an Indenture Event of Default, shall have happened and be
continuing; (iii) if at the time any Capital Securities are outstanding, such
transaction is permitted under the Declaration and Guarantee and does not give
rise to any breach or violation of the Declaration or Guarantee; (iv) any such
lease shall provide that it will remain in effect so long as any Junior
Subordinated Debentures are outstanding; and (v) certain other conditions as
prescribed in the Indenture are met.
MODIFICATION OF INDENTURE
From time to time the Company and the Indenture Trustee may, without the
consent of the holders of the Junior Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies (provided that any such action
does not materially adversely affect the interest of the holders of Junior
Subordinated Debentures) and qualifying, or maintaining the qualification of,
the Indenture under the Trust Indenture Act. The Indenture contains provisions
permitting the Company and the Indenture Trustee, with the consent of the
holders of not less than a majority in principal amount of outstanding Junior
Subordinated Debentures affected, to modify the Indenture in a manner affecting
the rights of the holders of such Junior Subordinated Debentures; provided that
no such modification may, without the consent of the holder of each outstanding
Junior Subordinated Debenture so affected, (i) change the stated maturity of
Junior Subordinated Debentures, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon (except such
extension as is contemplated hereby) or (ii) reduce the percentage of principal
amount of Junior Subordinated Debentures, the holders of which are required to
consent to any such modification of the Indenture, provided that, so long as any
Capital Securities remain outstanding, no such modification may be made that
adversely affects the holders of such Capital Securities in any material
respect, and no termination of the Indenture may occur, and no waiver of any
Indenture Event of Default or compliance with any covenant under the Indenture
may be effective, without the prior consent of the holders of at least a
majority of the aggregate liquidation preference of the Capital Securities
unless and until the principal of the Junior Subordinated Debentures and all
accrued and unpaid interest thereon have been paid in full and certain other
conditions are satisfied.
DEFEASANCE AND DISCHARGE
The Indenture provides that the Company, at the Company's option: (a) will
be discharged from any and all obligations in respect of the Junior Subordinated
Debentures (except for certain obligations to register the transfer or exchange
of Junior Subordinated Debentures, replace stolen, lost or mutilated Junior
Subordinated Debentures, maintain paying agencies and hold moneys for payment in
trust) or (b) need not comply with certain restrictive covenants of the
Indenture (including that described in the second paragraph under "Certain
Covenants of the Company"), in each case if the Company deposits, in trust with
the Indenture Trustee or a defeasance agent, money or U.S. Government
Obligations which through the payment of interest thereon and principal thereof
in accordance with their terms will provide money in an amount sufficient to pay
all the principal of, and interest and premium, if any, on the Junior
Subordinated Debentures on the dates such payments are due in accordance with
the terms of such Junior Subordinated Debentures. To exercise any such option,
the Company is required to deliver to the Indenture Trustee or a defeasance
agent, if any, an opinion of counsel to the effect that the deposit and related
defeasance would not cause the holders of the Junior Subordinated Debentures to
recognize income, gain or loss for United States federal income tax purposes
and, in the case of a discharge pursuant to clause (a), such opinion shall be
accompanied by a private letter ruling to such effect received by the Company
from the United States Internal Revenue Service or revenue ruling pertaining to
a comparable form of transaction to the effect published by the United States
Internal Revenue Service.
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<PAGE>
DISTRIBUTIONS OF JUNIOR SUBORDINATED DEBENTURES; BOOK-ENTRY ISSUANCE
Under certain circumstances involving the liquidation of the Trust, Junior
Subordinated Debentures may be distributed to the holders of the Capital
Securities in liquidation of the Trust after satisfaction of liabilities to
creditors of the Trust as provided by applicable law. If distributed to holders
of Capital Securities in liquidation, the Junior Subordinated Debentures will
initially be issued in the form of one or more global securities and DTC, or any
successor depositary for the Capital Securities, will act as depositary for the
Junior Subordinated Debentures. It is anticipated that the depositary
arrangements for the Junior Subordinated Debentures would be substantially
identical to those in effect for the Capital Securities. There can be no
assurance as to the market price of any Junior Subordinated Debentures that may
be distributed to the holders of Capital Securities. For a description of DTC
and the terms of the depositary matters, see "Description of Capital
Securities--Book-Entry Issuance."
Under current United States federal income tax law and interpretations
thereof and assuming, as expected, the Trust is treated as a grantor trust for
United States federal income tax purposes, a distribution by the Trust of the
Junior Subordinated Debentures pursuant to a liquidation of the Trust will not
be a taxable event to the Trust or to holders of the Capital Securities and will
result in a holder of the Capital Securities receiving directly such holder's
pro rata share of the Junior Subordinated Debentures (previously held indirectly
through the Trust). If, however, the liquidation of the Trust were to occur
because the Trust is subject to United States federal income tax with respect to
income accrued or received on the Junior Subordinated Debentures as a result of
the occurrence of a Tax Event or otherwise, the distribution of Junior
Subordinated Debentures to holders of the Capital Securities by the Trust could
be a taxable event to the Trust and each holder, and holders of the Capital
Securities may be required to recognize gain or loss as if they had exchanged
their Capital Securities for the Junior Subordinated Debentures they received
upon the liquidation of the Trust. See "Certain United States Federal Income Tax
Consequences--Distribution of Junior Subordinated Debentures or Cash upon
Liquidation of the Trust."
PAYMENT AND PAYING AGENTS
The Company initially will act as Paying Agent with respect to the Junior
Subordinated Debentures except that, if the Junior Subordinated Debentures are
distributed to the holders of the Capital Securities in liquidation of such
holders' interests in the Trust, the Indenture Trustee will act as the Paying
Agent. The Company at any time may designate additional Paying Agents or rescind
the designation of any Paying Agent or approve a change in the office through
which any Paying Agent acts, except that the Company will be required to
maintain a Paying Agent at the place of payment.
Any moneys deposited with the Indenture Trustee or any Paying Agent, or then
held by the Company in trust, for the payment of the principal of and premium,
if any, or interest on any Junior Subordinated Debentures and remaining
unclaimed for two years after such principal and premium, if any, or interest
has become due and payable shall, at the request of the Company, be repaid to
the Company and the holder of such Junior Subordinated Debentures shall
thereafter look, as a general unsecured creditor, only to the Company for
payment thereof.
TRUST COSTS AND EXPENSES
In the Indenture, the Company, as borrower, has agreed to pay all debts and
other obligations (other than with respect to the Capital Securities) and all
costs and expenses of the Trust (including costs and expenses relating to the
organization of the Trust, the fees and expenses of the Trustees and the costs
and expenses relating to the operation of the Trust) and to pay any and all
taxes and all costs and expenses with respect thereto (other than United States
withholding taxes) to which the Trust might become subject.
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<PAGE>
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by and
construed in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The Indenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Indenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Indenture Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Indenture 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 the Company concurrently
with the issuance by the Trust of the Capital Securities for the benefit of the
holders from time to time of such Capital Securities. The Bank of New York, a
New York banking corporation, will act as indenture trustee ("Guarantee
Trustee"). This summary of certain provisions of the Guarantee does not purport
to be complete and is subject to, and qualified in its entirety by reference to,
all of the provisions of the Guarantee, including the definitions therein of
certain terms. The Guarantee Trustee will hold the Guarantee for the benefit of
the holders of the Capital Securities.
GENERAL
The Company will irrevocably and unconditionally agree to pay in full on a
subordinated basis, to the extent set forth herein, the Guarantee Payments (as
defined below) to the holders of the Capital Securities, as and when due,
regardless of any defense, right of set-off or counterclaim that the Trust may
have or assert other than the defense of payment. The following payments with
respect to the Capital Securities, to the extent not paid by or on behalf of the
Trust (the "Guarantee Payments"), will be subject to the Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on the Capital
Securities, to the extent that the Trust has funds on hand available therefor at
the time, (ii) the redemption price with respect to any Capital Securities
called for redemption, to the extent that the Trust has funds on hand available
therefor at such time, or (iii) upon a voluntary or involuntary dissolution,
winding up or liquidation of the Trust (unless the Junior Subordinated
Debentures are distributed to holders of the Capital Securities), the lesser of
(a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions to the date of payment and (b) the amount of assets of the Trust
remaining available for distribution to holders of Capital Securities. The
Company's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Company to the holders of the applicable
Capital Securities or by causing the Trust to pay such amounts to such holders.
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 on hand available to make such payments, and is
not a guarantee of collection.
If the Company does not make interest payments on the Junior Subordinated
Debentures held by the Trust, the Trust will not be able to pay Distributions on
the Capital Securities and will not have funds legally available therefor. The
Guarantee will rank subordinate and junior in right of payment to all general
liabilities of the Company. See "--Status of the Guarantee." The Guarantee does
not limit the incurrence or issuance of other secured or unsecured debt of the
Company, whether under the Indenture or any existing or other indenture that the
Company may enter into in the future or otherwise.
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The Company has, through the Guarantee, the Junior Subordinated Debentures
and the Indenture, taken together, fully and unconditionally guaranteed all of
the Trust's obligations under the Capital Securities. No single document
standing alone or operating in conjunction with fewer than all of the other
documents constitutes such guarantee. It is only the combined operation of these
documents that has the effect of providing a full and unconditional guarantee of
the Trust's obligations under the Capital Securities. See "Relationship Among
the Capital Securities, the Junior Subordinated Debentures and the Guarantee."
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to Indebtedness of the
Company. The Guarantee does not place a limitation on the amount of additional
Indebtedness that may be incurred by the Company.
The Guarantee will constitute a guarantee of payment and not of collection
(I.E., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee will be held for the benefit of the holders of the Capital Securities.
The Guarantee will not be discharged except by payment of the Guarantee Payments
in full to the extent not paid by the Trust or upon distribution of the Junior
Subordinated Debentures to the holders of the Capital Securities in exchange for
all of the Capital Securities.
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 not less than a majority of the aggregate liquidation preference of
the outstanding Capital Securities. The manner of obtaining any such approval
will be as set forth under "Description of Capital Securities--Voting Rights;
Amendment of the Declaration." All guarantees and agreements contained in the
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the holders of
the Capital Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of not less than a majority in aggregate liquidation preference 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 the Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee.
Any holder of the Capital Securities may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Trust, the Guarantee Trustee or
any other person or entity.
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with all
the conditions and covenants applicable to it under the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of a
default by the Company in performance of the Guarantee, undertakes to perform
only such duties as are specifically set forth in each Guarantee and, after
default with respect to the Guarantee, must exercise the same degree of
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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 is under no
obligation to exercise any of the powers vested in it by the Guarantee at the
request of any holder of any Capital Security unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might be incurred
thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon full
payment of the redemption price of the Capital Securities, upon full payment of
the amounts payable upon liquidation of the Trust or upon distribution of Junior
Subordinated Debentures to the holders of the Capital Securities in exchange for
all of the Capital Securities. The Guarantee will continue to be effective or
will be reinstated, as the case may be, if at any time any holder of the Capital
Securities must restore payment of any sums paid under the Capital Securities or
the Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
RELATIONSHIP AMONG THE CAPITAL SECURITIES,
THE JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
Payments of Distributions and other amounts due on the Capital Securities
(to the extent the Trust has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Company as and to the extent
set forth under "Description of Guarantee." A holder of Capital Securities may
institute a legal proceeding directly against the Company to enforce payment of
such Distributions to such holder after the respective due dates. Taken
together, the Company's obligations under the Junior Subordinated Debentures,
the Indenture and the Guarantee provide, in the aggregate, a full and
unconditional guarantee of payments of Distributions and other amounts due on
the Capital Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full and unconditional guarantee of the Trust's
obligations under the Capital Securities. The obligations of the Company under
the Guarantee and the Junior Subordinated Debentures are subordinate and junior
in right of payment to all Indebtedness of the Company.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Capital Securities, primarily
because (i) the aggregate principal amount of the Junior Subordinated Debentures
will be equal to the sum of the aggregate stated liquidation amount of the
Capital Securities and the Common Securities; (ii) the interest rate and
interest and other payment dates on the Junior Subordinated Debentures will
match the Distribution rate and Distribution and other payment dates for the
related Capital Securities; (iii) the Company shall pay for all and any costs,
expenses and liabilities of the Trust except the Trust's obligations under the
Capital Securities; and (iv) the Declaration further provides that the Trust
will not engage in any activity that is not consistent with the limited purposes
of the Trust.
Notwithstanding anything to the contrary in the Indenture, the Company has
the right to set off any payment it is otherwise required to make thereunder
with and to the extent the Company has theretofore made, or is concurrently on
the date of such payment making, a payment under the Guarantee.
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ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES
A holder of Capital Securities may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Trust or any
other person or entity.
A default or event of default under any Indebtedness of the Company will not
constitute a default or Indenture Event of Default. In addition, in the event of
payment defaults under, or acceleration of, Indebtedness of the Company, the
subordination provisions of the Indenture provide that no payments may be made
in respect of the Junior Subordinated Debentures until such Indebtedness has
been paid in full or any payment default thereunder has been cured or waived.
Failure to make required payments on the Junior Subordinated Debentures would
constitute an Indenture Event of Default under the Indenture.
LIMITED PURPOSE OF TRUST
The Capital Securities evidence a beneficial interest in the Trust, and the
Trust exists for the sole purpose of issuing the Capital Securities and the
Common Securities and investing the proceeds thereof in Junior Subordinated
Debentures. A principal difference between the rights of a holder of Capital
Securities and a holder of Junior Subordinated Debentures is that a holder of
Junior Subordinated Debentures is entitled to receive from the Company the
principal amount of and interest accrued on Junior Subordinated Debentures held,
while a holder of Capital Securities is entitled to receive Distributions from
the Trust (or from the Company under the Guarantee) if and to the extent the
Trust has funds available for the payment of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary dissolution of the Trust involving the
liquidation of the Junior Subordinated Debentures, the holders of the Capital
Securities will be entitled to receive, out of assets held by the Trust, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, the liquidation distribution in cash. See "Description of Capital
Securities--Liquidation Distribution Upon Dissolution." Upon any voluntary or
involuntary liquidation or bankruptcy of the Company, the Property Trustee, as
holder of the Junior Subordinated Debentures, would be a subordinated creditor
of the Company, subordinated in right of payment to all Indebtedness, but
entitled to receive payment in full of principal and interest before any
stockholders of the Company receive payments or distributions. Since the Company
is the guarantor under the Guarantee and has agreed to pay for all costs,
expenses and liabilities of the Trust (other than the Trust's obligations to the
holders of the Capital Securities), the positions of a holder of Capital
Securities and a holder of the Junior Subordinated Debentures relative to other
creditors and to stockholders of the Company in the event of liquidation or
bankruptcy of the Company would be substantially the same.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Foster Pepper & Shefelman PLLC, counsel to the Company and
the Trust, the following summary describes the material United States federal
income tax consequences that may be relevant to the purchase, ownership and
disposition of the Capital Securities. Unless otherwise stated, this summary
deals only with Capital Securities held as capital assets by holders who
purchase the Capital Securities upon original issuance. The tax treatment of a
holder may vary depending on his, her or its particular situation. This summary
does not address all the tax consequences that may be relevant to a particular
holder or to holders who may be subject to special tax treatment, such as banks,
real estate investment trusts, regulated investment companies, insurance
companies, dealers in securities or currencies, tax-exempt investors, persons
holding the Capital Securities as a hedge or hedged against currency risks or as
part of a straddle or conversion transaction or persons whose functional
currency is not the United States dollar. In addition, this summary does not
include any description of any alternative
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minimum tax consequences or the tax laws of any state, local or foreign
government that may be applicable to a holder of Capital Securities.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury regulations promulgated thereunder and administrative and
judicial interpretations thereof as of the date hereof, all of which are subject
to change, possibly on a retroactive basis.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE CAPITAL
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN, AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR
OTHER TAX LAWS.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
Assuming full compliance with the terms of the Indenture and the
Declaration, in the opinion of Foster Pepper & Shefelman PLLC the Junior
Subordinated Debentures will be classified for United States federal income tax
purposes as indebtedness of the Company.
CLASSIFICATION OF THE TRUST
Assuming full compliance with the terms of the Indenture and the
Declaration, in the opinion of Foster Pepper & Shefelman PLLC, the Trust will be
classified for United States federal income tax purposes as a grantor trust.
Accordingly, for United States federal income tax purposes, each holder of
Capital Securities generally will be considered the owner of an undivided
interest in the Junior Subordinated Debentures and each holder will be required
to include in its gross income interest and original issue discount ("OID"), if
any, accrued with respect to its allocable share of the Junior Subordinated
Debentures.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
The Company has concluded that the likelihood of its exercising its option
to defer payment of interest is "remote" because the exercise of such option
would prevent the Company from declaring dividends on any class of its stock.
Accordingly, the Company intends to treat the Junior Subordinated Debentures as
having been issued without OID. Therefore, holders of the Capital Securities
will accrue interest income under their particular methods of accounting (I.E.,
cash or accrual) rather than accruing OID on a constant yield basis.
If, however, the Company exercises its right to defer payments of interest,
the Junior Subordinated Debentures would, at that time, become OID instruments
and holders of the Capital Securities would thereafter be required to accrue
interest on a constant yield basis during any Extension Period even though the
Company would not pay the interest in cash until the end of the Extension
Period, and even though a holder may be on the cash method of accounting.
Further, if the Junior Subordinated Debentures become OID instruments because
the Company exercises its right to defer payment of interest, they will be taxed
as OID instruments for as long as they remain outstanding, even after the
expiration of the Extension Period. Any amount of OID included in a holder's
gross income (whether or not during an Extension Period) with respect to a
Capital Security will increase such holder's tax basis in such Capital Security,
the amount of Distributions received by a holder in respect of such accrued OID
will reduce the tax basis of such Capital Security, and actual cash payments of
interest on the Junior Subordinated Debentures would not be reported separately
as taxable income.
The above conclusions are based on recently promulgated Treasury
regulations, which have not been interpreted by any court decisions or addressed
in any rulings or other pronouncements of the Internal Revenue Service ("IRS"),
and it is possible that the IRS could take a position contrary to the
conclusions
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herein. If the IRS were to assert successfully that the stated interest on the
Junior Subordinated Debentures was OID regardless of whether the Company
exercises its option to defer payments of interest on such debentures, all
holders of Capital Securities would be required to include such stated interest
in income as a daily economic accrual basis as described above.
Corporate holders of Capital Securities will not be entitled to a dividends
received deduction with respect to any income recognized by such holders with
respect to the Capital Securities.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE
TRUST
As described under the caption "Description of Junior Subordinated
Debentures--Distributions of Junior Subordinated Debentures," Junior
Subordinated Debentures may be distributed to holders in exchange for the
Capital Securities and in liquidation of the Trust. Under current law, such a
distribution would be non-taxable and would result in the holder receiving
directly its PRO RATA share of the Junior Subordinated Debentures, previously
held indirectly through the Trust, with a holding period and aggregate tax basis
equal to the holding period and aggregate tax basis such holder had in its
Capital Securities before such distributions. If, however, the liquidation of
the Trust were to occur because the Trust is subject to United States federal
income tax with respect to income accrued or received on the Junior Subordinated
Debentures, the distribution of the Junior Subordinated Debentures to holders
would be a taxable event to the Trust and to each holder and a holder would
recognize gain or loss as if the holder had exchanged its Capital Securities for
the Junior Subordinated Debentures it received upon liquidation of the Trust.
A holder would accrue interest in respect of the Junior Subordinated
Debentures received from the Trust in the manner described above under "Interest
Income and Original Issue Discount."
Under certain circumstances described herein (see "Description of Capital
Securities--Redemption-- Special Event Redemption or Distribution of Junior
Subordinated Debentures"), the Junior Subordinated Debentures may be redeemed
for cash, with the proceeds of such redemption distributed to holders in
redemption of their Capital Securities. Under current law, such a redemption
would constitute a taxable disposition of the redeemed Capital Securities for
United States federal income tax purposes and a holder would recognize gain or
loss as if it sold such redeemed Capital Securities for cash. See "--Sales of
Capital Securities."
SALES OF CAPITAL SECURITIES
A holder that sells Capital Securities will recognize gain or loss equal to
the difference between the amount realized by the holder on the sale or
redemption of the Capital Securities (except to the extent that such amount
realized is characterized as a payment in respect of accrued but unpaid interest
on such holder's allocable share of the Junior Subordinated Debentures) and the
holder's adjusted tax basis in the Capital Securities sold or redeemed. Such
gain or loss generally will be a capital gain or loss and generally will be a
long-term capital gain or loss if the Capital Securities have been held for more
than one year. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax purposes.
NON-UNITED STATES HOLDERS
As used herein, the term "Non-United States Holder" means any person or
entity that is not (i) a person that is a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized
under the laws of the United States or any political subdivision thereof, (iii)
an estate the income of which is subject to United States federal income
taxation regardless of its source, or (iv) a trust if a court within the United
States is able to exercise primary supervision over the administration of such
trust and one or more United States fiduciaries have the authority to control
all the substantial decisions of such trust.
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As discussed above, the Capital Securities will be treated as evidence of an
indirect beneficial ownership interest in the Junior Subordinated Debentures.
Thus, under present United States federal income tax law, and subject to the
discussion below concerning backup withholding:
(a) no withholding of United States federal income tax will be required
with respect to the payment by the Company or any paying agent of principal
or interest (which for purposes of this discussion includes any OID) on the
Junior Subordinated Debentures to a Non-United States Holder, if (i) the
beneficial owner of the Capital Securities ("Beneficial Owner") does not
actually or constructively own 10% or more of the total combined voting
power of all classes of stock of the Company entitled to vote (within the
meaning of section 871(h)(3) of the Code), (ii) the Beneficial Owner is not
a controlled foreign corporation that is related to the Company through
stock ownership, (iii) the Beneficial Owner is not a bank whose receipt of
interest on the Junior Subordinated Debentures is described in section
881(c)(3)(A) of the Code and (iv) the Beneficial Owner satisfies the
statement requirement (described generally below) set forth in section
871(h) and section 881(c) of the Code and the regulations thereunder; and
(b) no withholding of United States federal income tax will be required
with respect to any gain realized by a Non-United States Holder upon the
sale or other disposition of the Capital Securities.
To satisfy the requirement referred to in (a)(iv) above, the Beneficial
Owner, or a financial institution holding the Capital Securities on behalf of
such owner, must provide, in accordance with specified procedures, to the Trust
or its paying agent, a statement to the effect that the Beneficial Owner is a
Non-United States Holder. Pursuant to current temporary Treasury regulations,
these requirements will be met if (1) the Beneficial Owner provides such owner's
name and address, and certifies, under penalties of perjury, that such owner is
not a United States person (which certification may be made on IRS Form W-8 (or
successor form)) or (2) a financial institution holding the Capital Securities
on behalf of the Beneficial Owner certifies, under penalties of perjury, that
such statement has been received by it and furnishes a paying agent with a copy
thereof.
If a Non-United States Holder cannot satisfy the requirements of the
"portfolio interest" exception described in (a) above, payments of premium, if
any, and interest (including any OID) made to such Non-United States Holder will
be subject to a 30% withholding tax unless the Beneficial Owner provides the
Company or its paying agent, as the case may be, with a properly executed (1)
IRS Form 1001 (or successor form) claiming an exemption from, or a reduction of,
such withholding tax under the benefit of a tax treaty or (2) IRS Form 4224 (or
successor form) stating that interest paid on the Junior Subordinated Debentures
is not subject to withholding tax because it is effectively connected with the
Beneficial Owner's conduct of a trade or business in the United States.
If a Non-United States Holder is engaged in a trade or business in the
United States and interest on the Junior Subordinated Debentures is effectively
connected with the conduct of such trade or business, then the Non-United States
Holder, although exempt from the withholding tax discussed above, will be
subject to United States federal income tax on such interest on a net income
basis in the same manner as a United States person or entity. In addition, if
such Non-United States Holder is a foreign corporation, it may be subject to a
branch profits tax equal to 30% of its effectively connected earnings and
profits for the taxable year, subject to adjustments. For this purpose, such
interest would be included in such foreign corporation's effectively connected
earnings and profits.
Any gain realized upon the sale or other disposition of the Capital
Securities by a Non-United States Holder generally will not be subject to United
States federal income tax unless (i) such gain is effectively connected with a
trade or business in the United States of the Non-United States Holder, (ii) in
the case of a Non-United States Holder who is an individual, such individual is
present in the United States for 183 days or more in the taxable year of such
sale, exchange or retirement, and certain other conditions are met, or (iii) in
the case of any gain representing accrued interest on the Junior Subordinated
Debentures, the requirements described above are not satisfied.
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INFORMATION REPORTING AND BACKUP WITHHOLDING
Income on the Capital Securities held of record by United States holders
(other than corporations and other exempt holders) will be reported annually to
such holders and to the IRS. The Regular Trustees currently intend to deliver
such reports to holders of record prior to January 31 following each calendar
year. It is anticipated that persons who hold Capital Securities as nominees for
beneficial holders will report the required tax information to beneficial
holders on Form 1099.
"Backup withholding" at a rate of 31% will apply to payments of interest to
non-exempt United States holders unless the holder furnishes its taxpayer
identification number in the manner prescribed in applicable Treasury
regulations, certifies that such number is correct, certifies as to no loss of
exemption from backup withholding and meets certain other conditions.
No information reporting or backup withholding will be required with respect
to payments made by the Trust or any paying agent to Non-United States Holders
if a statement described in (a)(iv) under "Non-United States Holders" has been
received and the payor does not have actual knowledge that the beneficial owner
is a United States person.
In addition, backup withholding and information reporting will not apply if
payments of the principal, interest, OID or premium on the Junior Subordinated
Debentures are paid or collected by a foreign office of a custodian, nominee or
other foreign agent on behalf of the Beneficial Owner, or if a foreign office of
a broker (as defined in applicable Treasury regulations) pays the proceeds of
the sale of the Capital Securities to the owner thereof. If, however, such
nominee, custodian, agent or broker is, for United States federal income tax
purposes, a United States person, a controlled foreign corporation or a foreign
person that derives 50% or more of its gross income for certain periods from the
conduct of a trade or business in the United States, then such payments will not
be subject to backup withholding but will be subject to information reporting,
unless (1) such custodian, nominee, agent or broker has documentary evidence in
its records that the Beneficial Owner is not a United States person and certain
other conditions are met or (2) the Beneficial Owner otherwise establishes an
exemption.
Payment of the proceeds from disposition of Capital Securities to or through
a 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.
Any amounts withheld from a holder of the Capital Securities under the
backup withholding rules will be allowed as a refund or a credit against such
holder's United States federal income tax liability if the required information
is furnished to the IRS.
PROPOSED TAX LEGISLATION
Legislation was proposed by the United States Department of the Treasury as
part of President Clinton's Fiscal 1998 Budget Proposal (the "Proposed
Legislation") that contains a provision which generally would deny an interest
deduction for interest paid or accrued on an instrument issued by a corporation
that (i) has a maximum term of more than 15 years and (ii) is not shown as
indebtedness on the separate balance sheet of the issuer or, where the
instrument is issued to a related party (other than a corporation), where the
holder or some other related party issues a related instrument that is not shown
as indebtedness on the issuer's consolidated balance sheet. This provision was
proposed to be effective generally for instruments issued on or after the date
of the first Congressional committee action taken on the Proposed Legislation.
If this provision were to apply to the Junior Subordinated Debentures, the
Company would not be able to deduct the interest on the Junior Subordinated
Debentures. As of the date of this Prospectus, no Congressional committee action
had been taken on the Proposed Legislation. There can be no assurance, however,
that the Proposed Legislation or future legislative proposals or final
legislation will not adversely affect the ability of the Company to deduct
interest on the Junior Subordinated Debentures or otherwise affect the tax
treatment of the transactions described herein. Moreover,
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such legislation could give rise to a Special Event, which would permit the
Company to cause a redemption of the Capital Securities, as described more fully
herein under the caption "Description of Capital Securities--Redemption."
CERTAIN ERISA CONSIDERATIONS
Each of the Company (the obligor with respect to the Junior Subordinated
Debentures held by the Trust) and its affiliates may be considered a "party in
interest" (within the meaning of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) or a "disqualified person" (within the meaning of
Section 4975 of the Code) with respect to certain employee benefit plans
("Plans") that are subject to ERISA. Any purchaser proposing to acquire Capital
Securities with assets of any Plan should consult with its counsel. The purchase
and/or holding of Capital Securities by a Plan that is subject to the fiduciary
responsibility provisions of ERISA or the prohibited transaction provisions of
Section 4975 of the Code (including individual retirement arrangements and other
plans described in Section 4975(e)(1) of the Code) and with respect to which the
Company or any affiliate is a service provider (or otherwise is a party
in interest or a disqualified person) may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless such Capital
Securities are acquired pursuant to and in accordance with an applicable
prohibited transaction exemption published by the U.S. Department of Labor. In
addition, a Plan fiduciary considering the purchase of Capital Securities should
be aware that the assets of the Trust may be considered "plan assets" for ERISA
purposes. In such event, service providers and fiduciaries with respect to the
assets of the Trust may become parties in interest or disqualified persons with
respect to investing Plans, and any discretionary authority exercised with
respect to the Junior Subordinated Debentures by such persons could be deemed to
constitute a prohibited transaction under ERISA or the Code. In order to avoid
such prohibited transactions, each investing Plan, by purchasing the Capital
Securities, will be deemed to have directed the Trust to invest in the Junior
Subordinated Debentures and to have appointed the Property Trustee.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the form of which is filed as on exhibit to the
Registration Statement of which this Prospectus forms a part, the Trust has
agreed to sell to each of the Underwriters named below, for whom Lehman Brothers
Inc. is acting as representative (the "Representative"), and each of the
Underwriters has severally agreed to purchase, the liquidation amount of Capital
Securities set forth opposite its name below. In the Underwriting Agreement, the
several Underwriters have agreed, subject to the terms and conditions set forth
therein, to purchase from the Trust all the Capital Securities offered hereby if
any of the Capital Securities are purchased. In the event of default by an
Underwriter, the Underwriting Agreement provides that, in certain circumstances,
the purchase commitments of the non-defaulting Underwriters may be increased or
the Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
LIQUIDATION AMOUNT
OF CAPITAL
UNDERWRITERS SECURITIES
- -------------------------------------------------------------------------- ------------------
<S> <C>
Lehman Brothers Inc.......................................................
Chase Securities Inc......................................................
Salomon Brothers Inc......................................................
UBS Securities............................................................
------------------
Total................................................................. $ 300,000,000
------------------
------------------
</TABLE>
The Company and the Trust have been advised by the Representative that the
Underwriters propose to 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 certain securities dealers at such price less a
concession
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of $ per Capital Security. The Underwriters may allow, and such dealers
may reallow, a concession not in excess of $ per Capital Security to
certain brokers and dealers. After the Capital Securities are released for sale
to the public, the offering price and other selling terms may from time to time
be varied by the Representative.
In view of the fact that the proceeds of the sale of the Capital Securities
will ultimately be used to purchase the Junior Subordinated Debentures of the
Company, the Underwriting Agreement provides that the Company will pay as
compensation ("Underwriters' Compensation") to the Underwriters arranging the
investment therein of such proceeds, an amount in immediately available funds of
$ per Capital Security (or $ in the aggregate) for the accounts
of the several Underwriters.
Because NASD Regulation, Inc. ("NASD") is expected to view the Capital
Securities offered hereby as interests in a direct participation program, the
offering is being made in compliance with Rule 2810 of the NASD's Conduct Rules.
Offers and sales of Capital Securities will be made only to (i) "qualified
institutional buyers," as defined in Rule 144A under the Securities Act of 1933
or (ii) institutional "accredited investors," as defined in Rule 501(a)(1)-(3)
of Regulation D under the Securities Act. The Underwriters may not confirm sales
to any accounts over which they exercise discretionary authority without the
prior written approval of the transaction by the customer.
Prior to this offering there has been no public market for the Capital
Securities. The Representative has advised the Trust that the Underwriters
intend to make a market in the Capital Securities. The Underwriters will have no
obligation to make a market in the Capital Securities, however, and may cease
market-making activities, if commenced, at any time.
Until the distribution of the Capital Securities is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters and
certain selling group members 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 may consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of the Capital Securities.
If the Underwriters create a short position in the Capital Securities in
connection with the offering (I.E., if they sell more Capital Securities than
are set forth on the cover page of this Prospectus), they may reduce that short
position by purchasing Capital Securities in the open market.
In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases.
Neither the Company nor any of the Underwriters makes any representation 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 the Company nor any of the Underwriters makes any representation that
the Underwriters will engage in such transactions or that such transactions,
once commenced, will not be discontinued without notice.
The Trust and the Company have agreed to indemnify the Underwriters against,
or contribute to payments that the Underwriters may be required to make in
respect of, certain liabilities, including liabilities under the Securities Act.
The Company has retained Lehman Brothers Inc. to act as its financial
advisor in connection with the Merger. See "Summary--Proposed Merger with Great
Western Financial Corporation."
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Capital
Securities, the enforceability of the Declaration and the formation of the Trust
will be passed upon by Morris, Nichols, Arsht & Tunnell, special Delaware
counsel to the Company and the Trust. The validity of the Junior Subordinated
50
<PAGE>
Debentures and the Guarantee will be passed upon for the Company and the Trust
by Foster Pepper & Shefelman PLLC, Seattle, Washington and for the Underwriters
by Simpson Thacher & Bartlett (a partnership which includes professional
corporations), New York, New York. Foster Pepper & Shefelman PLLC and Simpson
Thacher & Bartlett will rely on the opinion of Morris, Nichols, Arsht & Tunnell
as to matters of Delaware law, Simpson Thacher & Bartlett will rely on the
opinion of Foster Pepper & Shefelman PLLC as to matters of Washington law and
Foster Pepper & Shefelman PLLC will rely on the opinion of Simpson Thacher &
Bartlett as to matters of New York law. Certain United States federal income
taxation matters also will be passed upon for the Company and the Trust by
Foster Pepper & Shefelman PLLC. Simpson Thacher & Bartlett is acting as counsel
to the Company in connection with the Merger.
EXPERTS
The consolidated financial statements of Washington Mutual as of December
31, 1996 and 1995, and for each of the years in the three-year period ended
December 31, 1996, have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of Deloitte & Touche LLP,
independent auditors. Insofar as the report of Deloitte & Touche LLP relates to
the amounts included for Keystone Holdings, Inc. and Subsidiaries for 1995 and
1994, it is based solely on the report of KPMG Peat Marwick LLP, independent
auditors, incorporated by reference herein, and upon the authority of such firms
as experts in accounting and auditing.
The consolidated financial statements of Great Western Financial Corporation
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
for the year ended December 31, 1996, have been so incorporated in reliance on
the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy and information statements and other
information with the Commission. Such material filed by the Company with the
Commission may be inspected by anyone without charge at the Public Reference
Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material may also be obtained at the Public Reference Section of
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of prescribed fees. Certain of such
reports, proxy statements and other information are also available from the
Commission over the Internet at http://www.sec.gov. The periodic reports, proxy
statements and other information filed by Washington Mutual with the Commission
may also be inspected at the offices of the National Association of Securities
Dealers, Inc., NASDAQ Reports Section, 1735 K Street, Washington, D.C. 20006
No separate financial statements of the Trust have been included or
incorporated by reference herein. The Company does not believe such financial
statements would be material to holders of the Capital Securities because (i)
all of the common securities of the Trust will be owned, directly or indirectly,
by the Company, a reporting company under the Exchange Act, (ii) the Trust has
no independent operations but exists for the sole purpose of issuing securities
representing undivided beneficial interests in its assets and investing the
proceeds thereof in Junior Subordinated Debentures issued by the Company, and
(iii) the obligations of the Trust under the Capital Securities are guaranteed
by the Company to the extent described herein.
51
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Washington Mutual (File
No. 0-25188) are incorporated herein by reference: (a) Annual Report on Form
10-K for the year ended December 31, 1996, as amended by Form 10-K/A dated April
25, 1997 (the "1996 Washington Mutual 10-K"); (b) Quarterly Report on Form 10-Q
for the quarter ended March 31, 1997; and (c) Current Reports on Form 8-K dated
March 6, 1997, March 24, 1997, as amended on March 26, 1997; March 28, 1997;
April 1, 1997; April 3, 1997; April 10, 1997; and April 15, 1997; April 28,
1997; April 30, 1997; May 2, 1997; May 5, 1997; May 6, 1997; May 8, 1997; May
15, 1997; and May 20, 1997.
The following documents filed with the Commission by Great Western Financial
Corporation (File No. 1-4075) are incorporated herein by reference: (a) "Item 8.
Financial Statements and Supplementary Data" from the Annual Report on Form 10-K
for the year ended December 31, 1996, as amended by Form 10-K/A filed May 9,
1997 and "Part I--Item 1. Financial Statements" of the Quarterly Report on Form
10-Q for the quarter ended March 31, 1997.
All documents filed by Washington Mutual pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date hereof shall be deemed to
be incorporated herein by reference and to be a part hereof from the date of
such filing.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. Such documents (other than exhibits to such
documents unless such exhibits are specifically incorporated therein by
reference) relating to Washington Mutual are available without charge upon
request to: Washington Mutual, Inc., 1201 Third Avenue, Seattle, Washington
98101, attention: Investor Relations.
52
<PAGE>
- ---------------------------------------------
---------------------------------------------
- ---------------------------------------------
---------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY WASHINGTON MUTUAL, INC.,
WASHINGTON MUTUAL CAPITAL I OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF WASHINGTON MUTUAL, INC. OR WASHINGTON MUTUAL CAPITAL I SINCE THE DATE HEREOF.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Summary........................................... 4
Summary Financial Data of Washington Mutual....... 10
Summary Historical and Pro Forma Combined
Financial Data................................... 12
Risk Factors...................................... 14
Capitalization.................................... 19
Use of Proceeds................................... 20
Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Combined Fixed Charges and Preferred
Stock Dividends.................................. 20
Accounting Treatment.............................. 20
The Trust......................................... 21
Description of Capital Securities................. 22
Description of Junior Subordinated Debentures..... 32
Description of Guarantee.......................... 41
Relationship Among the Capital Securities, the
Junior Subordinated Debentures and the
Guarantee........................................ 43
Certain United States Federal Income Tax
Consequences..................................... 44
Certain ERISA Considerations...................... 49
Underwriting...................................... 49
Legal Matters..................................... 50
Experts........................................... 51
Available Information............................. 51
Incorporation of Certain Documents by Reference... 52
</TABLE>
$300,000,000
WASHINGTON MUTUAL
CAPITAL I
SKISSM
% SUBORDINATED CAPITAL
INCOME SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
[LOGO]
-------------------
PROSPECTUS
, 1997
---------------------
LEHMAN BROTHERS
CHASE SECURITIES INC.
SALOMON BROTHERS INC
UBS SECURITIES
- ---------------------------------------------
---------------------------------------------
- ---------------------------------------------
---------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with issuance and distribution of the
securities being registered, other than underwriting compensation, are:
<TABLE>
<S> <C>
Securities Act Filing Fee......................................... $ 90,909
Legal Fees and Expenses........................................... 40,000
Accounting Fees and Expenses...................................... 30,000
Printing and Engraving Fees....................................... 40,000
Miscellaneous..................................................... 4,091
---------
Total......................................................... $ 205,000
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 23B.08.320 of the Washington Business Corporation Act (the
"Corporation Act") provides that the personal liability of directors to a
corporation imposed by Section 23B.08.310 of the Corporation Act may be
eliminated by the articles of incorporation of the corporation, except in the
case of acts or omissions involving certain types of conduct. At Article XIII of
its Restated Articles of Incorporation, the Registrant has elected to eliminate
the liability of directors to the Registrant to the extent permitted by law.
Thus, a director of the Registrant is not personally liable to the Registrant or
its shareholders for monetary damages for conduct as a director, except for
liability of the director (i) for acts or omissions that involve intentional
misconduct by the director or a knowing violation of law by the director, (ii)
for conduct violating Section 23B.08.310 of the Corporation Act, or (iii) for
any transaction from which the director will personally receive a benefit in
money, property or services to which the director is not legally entitled. If
Washington law is amended to authorize corporate action that further eliminates
or limits the liability of directors, then the liability of Washington Mutual
directors will be eliminated or limited to the fullest extent permitted by
Washington law, as so amended.
Section 23B.08.560 of the Corporation Act provides that if authorized by (i)
the articles of incorporation, (ii) a bylaw adopted or ratified by the
shareholders, or (iii) a resolution adopted or ratified, before or after the
event, by the shareholders, a corporation will have the power to indemnify
directors made party to a proceeding, or to obligate itself to advance or
reimburse expenses incurred in a proceeding, without regard to the limitations
on indemnification contained in Sections 23B.08.510 through 23B.08.550 of the
Corporation Act.
Pursuant to Article X of Washington Mutual's Restated Articles of
Incorporation and Article VIII of Washington Mutual's Bylaws, Washington Mutual
must, subject to certain exceptions, indemnify and defend its directors against
any expense, liability or loss arising from or in connection with any actual or
threatened action, suit or proceeding relating to service for or at the request
of Washington Mutual, including without limitation, liability under the
Securities Act. Washington Mutual is not permitted to indemnify a director from
or on account of acts or omissions of such director which are finally adjudged
to be intentional misconduct, or from or on account of conduct in violation of
RCW 23B.08.310, or a knowing violation of the law from or on account of any
transaction with respect to which it is finally adjudged that such director
received a benefit in money, property or services to which he or she was not
entitled. If Washington law is amended to authorize further indemnification of
directors, then Washington Mutual directors shall be indemnified to the fullest
extent permitted by Washington law, as so amended. Also, pursuant to Article X
of Washington Mutual's Restated Articles of Incorporation and Article VIII of
Washington Mutual's Bylaws, Washington Mutual may, by action of the Board of
Directors of Washington Mutual, provide indemnification and pay expenses to
officers, employees and agents of Washington Mutual or another corporation,
partnership, joint venture, trust or other enterprise with the same scope and
effect as above described in relation to directors. Insofar as indemnification
for liabilities arising under
II-1
<PAGE>
the Securities Act may be permitted to directors, officers or persons
controlling Washington Mutual pursuant to the provisions described above,
Washington Mutual has been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
Article IV of the Declaration of Trust provides for the indemnification by
Washington Mutual, Inc. of the Property Trustee and the Delaware Trustee (as
defined therein).
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1. Form of Underwriting Agreement.
3.1 Restated Articles of Incorporation of the Registrant, as amended (Incorporated by
reference to Washington Mutual, Inc.'s Annual Report on Form 10-K for the year
ended December 31, 1996. File No. 0-25188).
3.2 Bylaws of the Registrant (Incorporated by reference to the Washington Mutual, Inc.
Annual Report on Form 10-K for the year ended December 31, 1995. File No. 0-25188).
4.1* Form of Amended and Restated Declaration of Trust of Washington Mutual Capital I.
4.2* Form of Indenture between Washington Mutual, Inc. and The Bank of New York, Trustee.
4.3* Form of Guarantee Agreement between Washington Mutual, Inc. and The Bank of New York,
Trustee.
4.4 Form of Subordinated Debt Security (included in Item 4.2 above).
4.5 Form of Capital Security (included in Item 4.1 above).
5.1 Opinion of Morris, Nichols, Arsht & Tunnell.
5.2 Opinion of Foster Pepper & Shefelman PLLC.
8.1 Opinion of Foster Pepper & Shefelman PLLC.
12.* Washington Mutual, Inc.--Calculation of Ratio of Income to Fixed Charges.
23.1* Consent of Deloitte & Touche LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3* Consent of Price Waterhouse LLP.
23.4 Consent of Morris, Nichols, Arsht & Tunnell (included in its Opinion filed as Exhibit
5.1).
23.5* Consent of Foster Pepper & Shefelman PLLC.
24.2 Powers of Attorney (included on the signature page of this Registration Statement).
25.1 Form T-1, Statement of Eligibility under the Trust Indenture Act of 1939, as amended
of The Bank of New York, as Trustee under the Indenture.
25.2 Form T-1, Statement of Eligibility under the Trust Indenture Act of 1939, as amended
of The Bank of New York, as Property Trustee under the Amended and Restated
Declaration of Trust of Washington Mutual Capital I.
25.3 Form T-1, Statement of Eligibility under the Trust Indenture Act of 1939, as amended
of The Bank of New York, as Guarantee Trustee under the Guarantee of Washington
Mutual, Inc. for the benefit of holders of the Capital Securities of Washington
Mutual Capital I.
</TABLE>
- ------------------------
* Previously filed.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
The Undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
by a director, officer or controlling person of the 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
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, each
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Seattle, State of Washington on May 28, 1997.
WASHINGTON MUTUAL CAPITAL I
By: /s/ WILLIAM A. LONGBRAKE*
------------------------------------------
William A. Longbrake
TRUSTEE
By: /s/ DOUGLAS G. WISDORF*
------------------------------------------
Douglas G. Wisdorf
TRUSTEE
By: /s/ MARANGAL I. DOMINGO
------------------------------------------
Marangal I. Domingo
TRUSTEE
By: /s/ MARC R. KITTNER
------------------------------------------
Marc R. Kittner
ATTORNEY-IN-FACT
WASHINGTON MUTUAL, INC.
By: /s/ KERRY K. KILLINGER*
------------------------------------------
Kerry K. Killinger
Title: PRESIDENT AND CHIEF EXECUTIVE
OFFICER
II-4
<PAGE>
Pursuant to the requirement of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
indicated below on the 28th day of May, 1997.
<TABLE>
<S> <C>
/s/ KERRY K. KILLINGER* /s/ WILLIAM A. LONGBRAKE*
- -------------------------------------------- --------------------------------------------
Kerry K. Killinger William A. Longbrake
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER; DIRECTOR (PRINCIPAL EXECUTIVE OFFICER (PRINCIPAL FINANCIAL OFFICER)
OFFICER)
/s/ DOUGLAS G. WISDORF*
--------------------------------------------
Douglas G. Wisdorf
SENIOR VICE PRESIDENT AND CONTROLLER
(PRINCIPAL ACCOUNTING OFFICER)
/s/ DOUGLAS P. BEIGHLE* /s/ ANNE V. FARRELL*
- -------------------------------------------- --------------------------------------------
Douglas P. Beighle Anne V. Farrell
DIRECTOR DIRECTOR
/s/ DAVID BONDERMAN* /s/ WILLIAM P. GERBERDING*
- -------------------------------------------- --------------------------------------------
David Bonderman William P. Gerberding
DIRECTOR DIRECTOR
/s/ J. TAYLOR CRANDALL*
- -------------------------------------------- --------------------------------------------
J. Taylor Crandall Dr. Samuel B. McKinney
DIRECTOR DIRECTOR
/s/ ROGER H. EIGSTI* /s/ MICHAEL K. MURPHY*
- -------------------------------------------- --------------------------------------------
Roger H. Eigsti Michael K. Murphy
DIRECTOR DIRECTOR
/s/ JOHN W. ELLIS* /s/ WILLIAM G. REED, JR.*
- -------------------------------------------- --------------------------------------------
John W. Ellis William G. Reed, Jr.
DIRECTOR DIRECTOR
/s/ DANIEL J. EVANS* /s/ JAMES H. STEVER*
- -------------------------------------------- --------------------------------------------
Daniel J. Evans James H. Stever
DIRECTOR DIRECTOR
*By: /s/ MARC R. KITTNER
----------------------------------------
Marc R. Kittner
ATTORNY-IN-FACT
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBITS
- ------------- ---------------------------------------------------------------------------------------------
<C> <S> <C>
1. Form of Underwriting Agreement...............................................................
3.1 Restated Articles of Incorporation of the Registrant, as amended (Incorporated by reference
to Washington Mutual, Inc.'s Annual Report on Form 10-K for the year ended December 31,
1996. File No. 0-25188)....................................................................
3.2 Bylaws of the Registrant (Incorporated by reference to the Washington Mutual, Inc. Annual
Report on Form 10-K for the year ended December 31, 1995. File No. 0-25188)................
4.1* Form of Amended and Restated Declaration of Trust of Washington Mutual Capital I.............
4.2* Form of Indenture between Washington Mutual, Inc. and The Bank of New York, Trustee..........
4.3* Form of Guarantee Agreement between Washington Mutual, Inc. and The Bank of New York,
Trustee....................................................................................
4.4 Form of Subordinated Debt Security (included in Item 4.2 above)..............................
4.5 Form of Capital Security (included in Item 4.1 above)........................................
5.1 Opinion of Morris, Nichols, Arsht & Tunnell..................................................
5.2 Opinion of Foster Pepper & Shefelman PLLC....................................................
8.1 Opinion of Foster Pepper & Shefelman PLLC....................................................
12.* Washington Mutual, Inc.--Calculation of Ratio of Income to Fixed Charges.....................
23.1* Consent of Deloitte & Touche LLP.............................................................
23.2 Consent of KPMG Peat Marwick LLP.............................................................
23.3* Consent of Price Waterhouse LLP..............................................................
23.4 Consent of Morris, Nichols, Arsht & Tunnell (included in its Opinion filed as Exhibit 5.1)...
23.5* Consent of Foster Pepper & Shefelman PLLC....................................................
24.2 Powers of Attorney (included on the signature page of this Registration Statement)...........
25.1 Form T-1, Statement of Eligibility under the Trust Indenture Act of 1939, as amended of The
Bank of New York, as Trustee under the Indenture...........................................
25.2 Form T-1, Statement of Eligibility under the Trust Indenture Act of 1939, as amended of The
Bank of New York, as Property Trustee under the Amended and Restated Declaration of Trust
of Washington Mutual Capital I.............................................................
25.3 Form T-1, Statement of Eligibility under the Trust Indenture Act of 1939, as amended of The
Bank of New York, as Guarantee Trustee under the Guarantee of Washington Mutual, Inc. for
the benefit of holders of the Capital Securities of Washington Mutual Capital I............
</TABLE>
- ------------------------
* Previously filed.
<PAGE>
$300,000,000
WASHINGTON MUTUAL CAPITAL I
__% SUBORDINATED CAPITAL INCOME SECURITIES (SKIS-SM-)
UNDERWRITING AGREEMENT
May __, 1997
LEHMAN BROTHERS INC.,
As Representative of the several
Underwriters named in Schedule 1
Three World Financial Center
New York, New York 10285
Dear Sirs:
Washington Mutual Capital I, a Delaware statutory business trust (the
"Trust") and Washington Mutual, Inc., a Washington corporation (the "Company")
propose to issue and sell an aggregate of $ million of % Subordinated
Capital Income Securities (the "Capital Securities"), liquidation preference
$1,000 per Capital Security, of the Trust, guaranteed (the "Guarantee" and,
together with the Capital Securities and the Junior Subordinated Debentures
referred to below, the "Securities") by the Company pursuant to the Guarantee
Agreement (the "Guarantee Agreement") to be entered into between the Company and
The Bank of New York (the "Guarantee Trustee"), the form of which has been filed
as an exhibit to the Registration Statements (as defined below). The Company
will be the owner of all of the beneficial ownership interests represented by
the common securities (the "Common Securities") of the Trust. Concurrently with
the issuance of the Securities and the Company's purchase of all of the Common
Securities, the Trust will invest the proceeds of each thereof in % Junior
Subordinated Debentures (the "Junior Subordinated Debentures") issued by the
Company. The Junior Subordinated Debentures are to be issued pursuant to an
Indenture (the "Indenture") to be entered into between the Company and The Bank
of New York (the "Indenture Trustee"), the form of which has been filed as an
exhibit to the Registration Statements. This is to confirm the agreement
concerning the purchase of the Capital Securities from the Trust by the
Underwriters named in Schedule 1 hereto (the "Underwriters").
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY AND THE
TRUST. The Company and the Trust, jointly and severally, represent, warrant and
agree that:
(a) A registration statement on Form S-3, and any amendments thereto,
with respect to the Securities has (i) been prepared by the Company and the
Trust in conformity with the requirements of the Securities Act of 1933
(the "Securities Act") and the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, (ii) been filed with the Commission under the Securities Act
and (iii) become effective under the Securities Act; and a second
registration statement on Form S-3 with respect to the Securities (i) may
also be prepared
<PAGE>
2
by the Company and the Trust in conformity with the requirements of the
Securities Act and the Rules and Regulations and (ii) if so prepared, will
be filed with the Commission under the Securities Act pursuant to Rule
462(b) of the Rules and Regulations on the date hereof; and the Indenture
and the Guarantee have been qualified under the Trust Indenture Act of 1939
(the "Trust Indenture Act"). Copies of the first such registration
statement, together with the form of any such second registration
statement, have been delivered by the Company and the Trust to you as the
representative (the "Representative") of the Underwriters. As used in this
Agreement, "Effective Time" means (i) with respect to the first such
registration statement, the date and the time as of which such registration
statement, or the most recent post-effective amendment thereto, if any, was
declared effective by the Commission and (ii) with respect to any second
registration statement, the date and time as of which such second
registration statement is filed with the Commission, and "Effective Times"
is the collective reference to both Effective Times; "Effective Date" means
(i) with respect to the first such registration statement, the date of the
Effective Time of such registration statement and (ii) with respect to any
second registration statement, the date of the Effective Time of such
second registration statement, and "Effective Dates" is the collective
reference to both Effective Dates; "Preliminary Prospectus" means each
prospectus included in any such registration statement, or amendments
thereof, before it became effective under the Securities Act and any
prospectus filed with the Commission by the Company and the Trust with the
consent of the Representative pursuant to Rule 424(a) of the Rules and
Regulations; "Primary Registration Statement" means the first registration
statement referred to in this Section 1(a), as amended at its Effective
Time, "Rule 462(b) Registration Statement" means the second registration
statement, if any, referred to in this Section 1(a), as filed with the
Commission, and "Registration Statements" means both the Primary
Registration Statement and any Rule 462(b) Registration Statement,
including in each case any documents incorporated by reference therein at
such time and all information contained in the final prospectus filed with
the Commission pursuant to Rule 424(b) of the Rules and Regulations in
accordance with Section 5(a) hereof and deemed to be a part of the
Registration Statements as of the Effective Time of the Primary
Registration Statement pursuant to paragraph (b) of Rule 430A of the Rules
and Regulations; and "Prospectus" means such final prospectus, as first
filed with the Commission pursuant to paragraph (1) or (4) of Rule 424(b)
of the Rules and Regulations. Reference made herein to any Preliminary
Prospectus or to the Prospectus shall be deemed to refer to and include any
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Securities Act, as of the date of such Preliminary Prospectus or
the Prospectus, as the case may be, and any reference to any amendment or
supplement to any Preliminary Prospectus or the Prospectus shall be deemed
to refer to and include any document filed under the Securities Exchange
Act of 1934 (the "Exchange Act") after the date of such Preliminary
Prospectus or the Prospectus, as the case may be, and incorporated by
reference in such Preliminary Prospectus or the Prospectus, as the case may
be; and any reference to any amendment to either of the Registration
Statements shall be deemed to include any annual report of the Company
filed with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act after the Effective Time that is incorporated by reference in
the Registration Statements. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
<PAGE>
3
(b) The Primary Registration Statement conforms (and the Rule 462(b)
Registration Statement, if any, the Prospectus and any further amendments
or supplements to the Registration Statements or the Prospectus, when they
become effective or are filed with the Commission, as the case may be, will
conform) in all respects to the requirements of the Securities Act and the
Rules and Regulations and do not and will not, as of the applicable
effective date (as to the Registration Statements and any amendment
thereto) and as of the applicable filing date (as to the Prospectus and any
amendment or supplement thereto) contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; PROVIDED that no
representation or warranty is made as to information contained in or
omitted from the Registration Statements or the Prospectus in reliance upon
and in conformity with written information furnished to the Company and the
Trust through the Representative by or on behalf of any Underwriter
specifically for inclusion therein; and the Indenture and the Guarantee
conform in all material respects to the requirements of the Trust Indenture
Act and the applicable rules and regulations thereunder.
(c) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents
contained 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 not misleading; and any further documents so filed and
incorporated by reference in the Prospectus, when such documents become
effective or are filed with Commission, as the case may be, will conform in
all material respects to the requirements of the Securities Act or the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
(d) The Company and each of Washington Mutual Bank, American
Savings Bank, N.A. Capital Holdings, Inc., New American Capital, Inc. and
New American Holdings, Inc. have been duly incorporated and are validly
existing as corporations or depository institutions in good standing under
the laws of their respective jurisdictions of incorporation are duly
qualified to do business and are in good standing as foreign corporations
in each jurisdiction in which their respective ownership or lease of
property or the conduct of their respective businesses requires such
qualification other than where such failures would not, either individually
or in the aggregate, have a material adverse effect on the business,
financial condition, operating results or prospects of the Company and its
subsidiaries taken as a whole, and have all power and authority necessary
to own or hold their respective properties and to conduct the businesses in
which they are engaged; and none of the subsidiaries of the Company (other
than Washington Mutual Bank, American Savings Bank, N.A. Capital
Holdings, Inc., New American Capital, Inc. and New American Holdings, Inc.
(collectively, the "Significant Subsidiaries")) is a "significant
subsidiary", as such term is defined in Rule 405 of the Rules and
Regulations.
<PAGE>
4
(e) The Company has been duly registered as a savings and loan
holding company under the applicable provisions of the Home Owners' Loan
Act; the Company and each of its Significant Subsidiaries are in compliance
in all material respects with all laws administered by and regulations of
the Federal Deposit Insurance Corporation (the "FDIC"), the Office of
Thrift Supervision and any other federal or state bank regulatory authority
(the "Bank Regulatory Authorities") with jurisdiction over the Company or
any of its subsidiaries, other than where such failures to comply would not
have a material adverse effect on the Company and its subsidiaries, taken
as a whole; and neither the Company nor any of its Significant Subsidiaries
or Washington Mutual Bank fsb is a party to any written agreement or
memorandum of understanding with, or a party to any commitment letter or
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has adopted any
board resolutions at the request of, any Bank Regulatory Authority which
restricts materially the conduct of its business, or in any manner relates
to its capital adequacy, its credit policies or its management, nor have
any of them been advised by any Bank Regulatory Authority that it is
contemplating issuing or requesting (or is considering the appropriateness
of issuing or requesting) any such order, decree, agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter or
similar submission, or any such board resolutions.
(f) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable; and all of the issued shares of capital stock of each
Significant Subsidiary of the Company have been duly and validly authorized
and issued and are fully paid and non-assessable and (except for directors'
qualifying shares) are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or claims.
(g) The Capital Securities and the Common Securities have been duly
and validly authorized and, when issued and delivered against payment
therefor as provided herein, will be duly and validly issued, fully paid
and non-assessable; and the Capital Securities and the Common Securities,
when issued and delivered, will conform in all material respects to the
descriptions thereof contained in the Prospectus.
(h) The Indenture has been duly authorized, and when duly executed by
the proper officers of the Company (assuming due execution and delivery by
the Indenture Trustee) and delivered by the Company will constitute a valid
and binding agreement of the Company enforceable against the Company in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing; and the Junior
Subordinated Debentures have been duly authorized, and, when duly executed,
authenticated, issued and delivered as contemplated in the Indenture, will
constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture and enforceable in accordance with their terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
<PAGE>
5
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing; and the Junior Subordinated Debentures, when
issued and delivered, will conform in all material respects to the
description thereof contained in the Prospectus.
(i) The Trust has been duly created and is validly existing as a
statutory business trust in good standing under the Business Trust Act of
the State of Delaware (the "Delaware Business Trust Act") with the trust
power and authority to own property and conduct its business as described
in the Prospectus, and has conducted and will conduct no business other
than the transactions contemplated by this Agreement as described in the
Prospectus; the Trust is not a party to or bound by any agreement or
instrument other than this Agreement, the Amended and Restated Declaration
of Trust (the "Declaration") among the Company, The Bank of New York, as
property trustee (the "Property Trustee"), The Bank of New York (Delaware),
as Delaware trustee (the "Delaware Trustee") and the individuals named
therein as the Regular Trustees (the "Regular Trustees", and together with
the Property Trustee and the Delaware Trustees, the "Trustees"), and the
agreements and instruments contemplated by the Declaration 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 agreements and instruments contemplated by the Declaration and
described in the Prospectus; and the Trust is not a party to or subject to
any action, suit or proceeding of any nature.
(j) The Declaration has been duly authorized by the Company and, when
duly executed and delivered by the Company and the Trustees, will be a
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting the rights of creditors generally,
general equitable principles (whether considered in a proceeding in equity
or at law) and an implied covenant of good faith and fair dealing, and will
conform in all material respects to the description thereof contained in
the Prospectus. Each of the Regular Trustees is an employee of the Company
and has been duly authorized by the Company to serve in such capacity and
to execute and deliver the Declaration.
(k) The Guarantee Agreement has been duly authorized and, when duly
executed and delivered by the proper officers of the Company and the
Guarantee Trustee, will constitute a valid and legally binding agreement of
the Company enforceable against the Company in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing; and the Guarantee Agreement, when executed and
delivered, will conform in all material respects to the description thereof
contained in the Prospectus.
(l) This Agreement has been duly authorized, executed and delivered
by each of the Company and the Trust.
<PAGE>
6
(m) The execution, delivery and performance of this Agreement, the
Declaration, the Guarantee Agreement, the Indenture and the Junior
Subordinated Debentures by the Company and the Trust, as applicable, and
the consummation of the transactions contemplated herein and therein will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which the
Company or any of its Significant Subsidiaries is a party or by which the
Company or any of its Significant Subsidiaries is bound or to which any of
the properties or assets of the Company or any of its Significant
Subsidiaries is subject and will not violate or conflict with any statute
or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries or any
of their properties or assets or court, except for such conflict, breach,
violations or defaults as would not, either individually or in the
aggregate, have a material adverse effect on the business, financial
condition, operating results or prospects of the Company and its
subsidiaries taken as a whole, nor will such actions result in any
violation of the provisions of the charter or by-laws of the Company or any
of its Significant Subsidiaries; and except for the registration of the
Securities under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under
the Exchange Act and applicable state securities laws in connection with
the purchase and distribution of the Capital Securities by the
Underwriters, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of this Agreement, the
Declaration, the Guarantee Agreement, the Indenture or the Junior
Subordinated Securities or the consummation of the transactions
contemplated herein and therein, including the issuance of the Common
Securities and the Capital Securities by the Trust and the purchase of the
Junior Subordinated Debentures by the Trust from the Company.
(n) There are no contracts, agreements or understandings between the
Company or any of its subsidiaries or the Trust and any person granting
such person the right to require the Company or the Trust to file a
registration statement under the Securities Act with respect to any
securities of the Company or the Trust owned or to be owned by such person
or to require the Company or the Trust to include such securities in the
securities registered pursuant to the Registration Statements.
(o) Neither the Company nor any of its Significant Subsidiaries has
sustained, since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, any material loss
or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus; and, since such date, there has not been
any material change in the capital stock or long-term debt of the Company
or any of its subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth or contemplated
in the Prospectus.
<PAGE>
7
(p) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statements or
included or incorporated by reference in the Prospectus present fairly the
financial condition and results of operations of the entities purported to
be shown thereby, at the dates and for the periods indicated, and have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved; the pro
forma financial information included in the Prospectus has been prepared in
accordance with the requirements of Regulation S-X promulgated by the
Commission and contains all adjustments necessary for a fair presentation
of the information set forth therein; and the information contained in the
Prospectus that constitutes "forward-looking statements" within the meaning
of Section 21E(i)(1) of the Exchange Act has been prepared on the basis of
the Company's best current judgments and estimations as to future operating
plans and results.
(q) Deloitte & Touche, LLP, who have certified certain financial
statements of the Company, whose report appears in the Prospectus or is
incorporated by reference therein and who have delivered the initial letter
referred to in Section 7(e) hereof, are independent public accountants as
required by the Securities Act and the Rules and Regulations.
(r) There are no legal or governmental proceedings pending to which
the Company or any of its subsidiaries is a party or of which any property
or asset of the Company or any of its subsidiaries is the subject which
could reasonably be expected to have a material adverse effect on the
consolidated financial position, results of operations, business or
prospects of the Company and its subsidiaries taken as a whole; and to the
best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(s) The conditions for use of Form S-3, as set forth in the General
Instructions thereto, have been satisfied.
(t) There are no contracts or other documents which are required to be
described in the Prospectus or filed as exhibits to either of the
Registration Statements by the Securities Act or by the Rules and
Regulations which have not been described in the Prospectus or filed as
exhibits to either of the Registration Statements or incorporated therein
by reference as permitted by the Rules and Regulations.
(u) Neither the Company nor any of its Significant Subsidiaries (i) is
in violation of its charter or by-laws, (ii) is in default in any material
respect, and no event has occurred which, with notice or lapse of time or
both, would constitute such a default, in the due performance or observance
of any term, covenant or condition contained in any material indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which it is a party or by which it is bound or to which any of its
properties or assets is subject or (iii) is in violation in any material
respect of any law, ordinance, governmental rule, regulation or court
decree to which it or its properties or assets may be subject or has failed
to obtain any material license, permit, certificate, franchise or other
<PAGE>
8
governmental authorization or permit necessary to the ownership of its
properties or assets or to the conduct of its business.
(v) Neither the Trust, the Company nor any subsidiary will be required
to register as an "investment company" within the meaning of such term
under the Investment Company Act of 1940 (the "Investment Company Act") and
the rules and regulations of the Commission thereunder as a result of the
consummation of the transactions contemplated by this Agreement, the
Declaration, the Indenture, the Junior Subordinated Debentures or the
Guarantee Agreement.
2. PURCHASE OF THE CAPITAL SECURITIES BY THE UNDERWRITERS. The Trust
and the Company hereby agree to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations, warranties and agreements
herein contained, but subject to the conditions hereinafter stated, agrees,
severally and not jointly, to purchase from the Trust, the respective
liquidation amount of Capital Securities set forth in Schedule 1 hereto opposite
their names at a purchase price of % of the liquidation amount thereof.
As compensation to the Underwriters for their commitments hereunder,
the Company agrees to pay the Underwriters a commission of % of the
liquidation amount of the Capital Securities set forth in Schedule 1 opposite
each Underwriter's name.
3. OFFERING OF CAPITAL SECURITIES BY THE UNDERWRITERS. Upon
authorization by the Representative of the release of the Capital Securities,
the several Underwriters propose to offer the Capital Securities for sale upon
the terms and conditions set forth in the Prospectus; PROVIDED, HOWEVER, that no
Capital Securities registered pursuant to the Rule 462(b) Registration
Statement, if any, shall be offered prior to the Effective Time thereof.
4. DELIVERY OF AND PAYMENT FOR THE STOCK. Delivery of and payment
for the Capital Securities shall be made at the office of Simpson Thacher &
Bartlett at 425 Lexington Avenue, New York, New York at 10:00 A.M., New York
City time, on the [third] [fourth] full business day following the date of this
Agreement or at such other date or place as shall be determined by agreement
between the Representative, the Trust and the Company. This date and time are
sometimes referred to as the "Closing Date". On the Closing Date, the Trust
shall deliver or cause to be delivered to the Representative for the account of
each Underwriter against payment to or upon the order of the Trust of the
purchase price in Federal or other funds immediately available in New York City,
the Capital Securities in the form of one or more permanent global securities in
definitive form (the "Global Securities") deposited with the Property Trustee as
custodian for the Depository Trust Company ("DTC") and registered in the name of
Cede & Co., as nominee for DTC. Interests in any permanent Global Securities
will be held only in book-entry form through DTC. Time shall be of the essence,
and delivery at the time and place specified pursuant to this Agreement is a
further condition of the obligation of each Underwriter hereunder. On the
Closing Date, the Company will pay, or cause to be paid, the commission payable
on the Closing Date to the Underwriters under the last paragraph of Section 2 in
Federal or other funds immediately available in New York City.
<PAGE>
9
5. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees:
(a) To prepare the Rule 462(b) Registration Statement, if
necessary, in a form approved by the Representative and to file such
Rule 462(b) Registration Statement with the Commission on the date
hereof; to prepare the Prospectus in a form approved by the
Representative and to file such Prospectus pursuant to Rule 424(b)
under the Securities Act not later than 10:00 A.M., New York City
time, on the day following the execution and delivery of this
Agreement; to make no further amendment or any supplement to the
Registration Statements or to the Prospectus prior to the Closing Date
except as permitted herein; to advise the Representative, promptly
after it receives notice thereof, of the time when any amendment to
either Registration Statement has been filed or becomes effective or
any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish the Representative with copies thereof; to file
promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering
or sale of the Securities; to advise the Representative, promptly
after it receives notice thereof, of the issuance by the Commission of
any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Securities for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending
or supplementing of the Registration Statements or the Prospectus or
for additional information; and, in the event of the issuance of any
stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its
withdrawal;
(b) To furnish promptly to the Representative and to counsel for
the Underwriters a signed copy of each of the Registration Statements
as originally filed with the Commission, and each amendment thereto
filed with the Commission, including all consents and exhibits filed
therewith;
(c) To deliver promptly to the Representative in New York City
such number of the following documents as the Representative shall
reasonably request: (i) conformed copies of the Registration
Statements as originally filed with the Commission and each amendment
thereto (in each case excluding exhibits other than this Agreement,
the Indenture, the Declaration, the Guarantee Agreement and the
computation of the ratio of earnings to fixed charges,(ii) each
Preliminary Prospectus, the Prospectus (not later than 10:00 A.M., New
York City time, of the day following the execution and delivery of
this Agreement) and any amended or supplemented Prospectus (not later
than 10:00 A.M., New York City time, on the day following the date of
such amendment or supplement) and (iii) any document incorporated by
reference in the Prospectus (excluding exhibits thereto); and, if the
delivery of a prospectus is required at any time after the Effective
Time of the
<PAGE>
10
Primary Registration Statement in connection with the offering or sale
of the Capital Securities (or any other securities relating thereto)
and if at such time any event shall have occurred as a result of which
the Prospectus as then amended or supplemented would include any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated
by reference in the Prospectus in order to comply with the Securities
Act or the Exchange Act, to notify the Representative and, upon its
request, to file such document and to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many
copies as the Representative may from time to time reasonably request
of an amended or supplemented Prospectus which will correct such
statement or omission or effect such compliance;
(d) To file promptly with the Commission any amendment to the
Registration Statements or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company, the Trust or the
Representative, be required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the Commission either of the
Registration Statements or supplement to the Prospectus, any document
incorporated by reference in the Prospectus or any Prospectus pursuant
to Rule 424 of the Rules and Regulations, to furnish a copy thereof to
the Representative and counsel for the Underwriters and obtain the
consent of the Representative to the filing;
(f) As soon as practicable after the Effective Date of the
Primary Registration Statement, to make generally available to the
Company's security holders and to deliver to the Representative an
earnings statement of the Company and its subsidiaries (which need not
be audited) complying with Section 11(a) of the Securities Act and the
Rules and Regulations (including, at the option of the Company, Rule
158);
(g) For a period of five years following the Effective Date of
the Primary Registration Statement, to furnish to the Representative
copies of all materials furnished by the Company to its shareholders
and all public reports and all reports and financial statements
furnished by the Company to the principal national securities exchange
or automatic quotation system upon which the Company's common stock
may be listed or quoted pursuant to requirements of or agreements with
such exchange or system or to the Commission pursuant to the Exchange
Act or any rule or regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as the
Representative may reasonably request to qualify the Securities for
offering and sale under the securities laws of such jurisdictions as
the Representative may request and to
<PAGE>
11
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Securities;
(i) For a period of 30 days from the date of the Prospectus, not
to, directly or indirectly, offer for sale, sell or otherwise dispose
of (or enter into any transaction or device which is designed to, or
could be expected to, result in the disposition or purchase by any
person at any time in the future of) (i) any trust certificate or
other securities of the Trust other than the sale of the Common
Securities to the Company and the sale of the Capital Securities to
the Underwriters, as contemplated by the Prospectus, (ii) any
securities that are substantially similar to the Securities, or
(iii) any securities that are convertible into, or exchangeable or
exercisable for, any of the foregoing, without, in any such case, the
prior written consent of the Representative; and
(j) To apply the net proceeds from the sale of the Securities as
set forth in the Prospectus.
6. EXPENSES. The Company and the Trust agree to pay (a) the costs
incident to the authorization, issuance, sale and delivery of the Securities
and any taxes payable in that connection; (b) the costs incident to the
preparation, printing and filing under the Securities Act of the Registration
Statements and any amendments and exhibits thereto; (c) the costs of
distributing the Registration Statements as originally filed and each
amendment thereto and any post-effective amendments thereof (including, in
each case, exhibits), any Preliminary Prospectus, the Prospectus and any
amendment or supplement to the Prospectus or any document incorporated by
reference therein, all as provided in this Agreement; (d) the costs of
reproducing and distributing this Agreement; (e) the costs of distributing
the terms of agreement relating to the organization of the underwriting
syndicate and selling group to the members thereof by mail, telex or other
means of communication; (f) the fees and expenses of qualifying the
Securities under the securities laws of the several jurisdictions as provided
in Section 5(h) and of preparing, printing and distributing a Blue Sky
Memorandum (including related fees and expenses of counsel to the
Underwriters); (g) any fees charged by securities rating services for rating
the Securities; and (h) all other costs and expenses incident to the
performance of the obligations of the Company and the Trust under this
Agreement; PROVIDED that, except as provided in this Section 6 and in Section
11, the Underwriters shall pay their own costs and expenses, including the
costs and expenses of their counsel, any transfer taxes on the Securities
which they may sell and the expenses of advertising any offering of the
Capital Securities made by the Underwriters.
7. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on the Closing Date, of the representations and warranties of the Company
and the Trust contained herein, to the performance by the Company and the Trust
of their respective obligations hereunder, and to each of the following
additional terms and conditions:
(a) The Rule 462(b) Registration Statement, if any, and the
Prospectus shall have been timely filed with the Commission in
accordance with Section 5(a);
<PAGE>
12
no stop order suspending the effectiveness of either of the
Registration Statements or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened
by the Commission; and any request of the Commission for inclusion of
additional information in either of the Registration Statements or the
Prospectus or otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to the Closing Date that either of the
Registration Statements or the Prospectus or any amendment or
supplement thereto contains any untrue statement of a fact which, in
the opinion of Simpson Thacher & Bartlett, counsel for the
Underwriters, is material or omits to state any fact which, in the
opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the
Indenture, the Declaration, the Guarantee Agreement, the Securities
and the Prospectus, and all other legal matters relating to this
Agreement and the transactions contemplated hereby, shall be
satisfactory in all respects to counsel for the Underwriters, and the
Company and the Trust shall have furnished to such counsel all
documents and information that they may reasonably request to enable
them to pass upon such matters.
(d) Foster Pepper & Shefelman PLLC shall have furnished to the
Representative its written opinion, as counsel to the Company,
addressed to the Underwriters and dated the Closing Date, in form and
substance satisfactory to the Representative, to the effect that:
(i) The Company and each of its Significant Subsidiaries
have been duly incorporated and are validly existing as
corporations or depository institutions in good standing under
the laws of their respective jurisdictions of incorporation; are
duly qualified to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective
ownership or lease of property or the conduct of their respective
businesses requires such qualification other than where such
failures would not, either individually or in the aggregate, have
a material adverse effect on the business, financial condition,
operating results or prospects of the Company and its
subsidiaries taken as a whole, and have all power and authority
necessary to own or hold their respective properties and conduct
the businesses in which they are engaged;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus; and all of the issued shares of capital
stock of each Significant Subsidiary of the Company have been
duly and validly authorized and issued and are fully paid and
non-assessable and (except for directors' qualifying shares) are
owned of record and, to the best of such
<PAGE>
13
counsel's knowledge, beneficially by the Company, either directly
or indirectly, free and clear of all liens, encumbrances,
equities or claims.
(iii) The Indenture has been duly authorized, executed
and delivered by the Company and (assuming due authorization,
execution and delivery thereof by the Indenture Trustee)
constitutes a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair
dealing; and the Junior Subordinated Debentures have been duly
authorized, executed, issued and delivered by the Company as
contemplated in the Indenture and (assuming due authentication by
the Indenture Trustee) constitute valid and binding obligations
of the Company entitled to the benefits of the Indenture and
enforceable in accordance with their terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing.
(iv) The Declaration has been duly authorized, executed and
delivered by the Company.
(v) The Guarantee Agreement has been duly authorized,
executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Guarantee
Trustee, constitutes a valid and legally binding obligation of
the Company enforceable against the Company in accordance with
its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
(vi) To the best of such counsel's knowledge and other than
as set forth in the Prospectus, there are no legal or
governmental proceedings pending or threatened to which the
Company or any of its subsidiaries is a party or of which any
property or asset of the Company or any of its subsidiaries is
the subject which could reasonably be expected to have a material
adverse effect on the financial condition, results of operations,
business or prospects of the Company and its subsidiaries,
taken as a whole;
(vii) To the best of such counsel's knowledge neither the
Company, any of its Significant Subsidiaries nor Washington
Mutual Bank fsb is a party to any written agreement or memorandum
of understanding with, or a party to any commitment letter
<PAGE>
14
or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory
letter from, or has adopted any board resolutions at the request
of, any Bank Regulatory Authority which restricts materially the
conduct of its business, or in any manner relates to its capital
adequacy, its credit policies or its management, nor have any of
them been advised by any Bank Regulatory Authority that it is
contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree,
agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission, or any such
board resolutions.
(viii) The Primary Registration Statement was declared
effective under the Securities Act and the Indenture and the
Guarantee were qualified under the Trust Indenture Act as of the
date and time specified in such opinion, the Rule 462(b)
Registration Statement, if any, was filed with the Commission on
the date specified therein, the Prospectus was filed with the
Commission pursuant to the subparagraph of Rule 424(b) of the
Rules and Regulations specified in such opinion on the date
specified therein and no stop order suspending the effectiveness
of either of the Registration Statements has been issued and, to
the knowledge of such counsel, no proceeding for that purpose is
pending or threatened by the Commission;
(ix) The Registration Statements, as of their respective
Effective Dates, and the Prospectus, as of its date, and any
further amendments or supplements thereto, as of their respective
dates, made by the Company or the Trust prior to the Closing Date
(other than the financial statements and other financial and
statistical data contained therein, as to which such counsel need
express no opinion) complied as to form in all material respects
with the requirements of the Securities Act and the Rules and
Regulations; the documents incorporated by reference in the
Prospectus and any further amendment or supplement to any such
incorporated document made by the Company or the Trust prior to
the Closing Date (other than the financial statements and other
financial and statistical data contained therein, as to which
such counsel need express no opinion), when they became effective
or were filed with the Commission, as the case may be, complied
as to form in all material respects with the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules
and regulations of the Commission thereunder; and the Indenture
and the Guarantee conform in all material respects to the
requirements of the Trust Indenture Act and the applicable rules
and regulations thereunder.
(x) The statements contained in the Prospectus under the
caption "CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES"
are accurate in all material respects and constitute a fair
summary of the matters set forth therein;
<PAGE>
15
(xi) To the best of such counsel's knowledge, there are no
contracts or other documents which are required to be described
in the Prospectus or filed as exhibits to the Registration
Statements by the Securities Act or by the Rules and Regulations
which have not been described or filed as exhibits to the
Registration Statements or incorporated therein by reference as
permitted by the Rules and Regulations.
(xii) This Agreement has been duly authorized, executed
and delivered by the Company.
(xiii) The execution, delivery and performance of this
Agreement, the Indenture, the Junior Subordinated Debentures, the
Declaration and the Guarantee Agreement by the Company and the
Trust, as applicable, and the consummation of the transactions
contemplated hereby and thereby, will not conflict with or result
in a breach or violation of any of the terms or provisions of, or
constitute a default under, any material indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument
known to such counsel to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the properties or assets
of the Company or any of its subsidiaries is subject, nor will
such actions result in any violation of the provisions of the
charter or by-laws of the Company or any of its Significant
Subsidiaries or any statute or any order, rule or regulation
known to such counsel of any court or governmental agency or body
having jurisdiction over the Company or any of its Significant
Subsidiaries or any of their properties or assets; and, except
for the registration of the Securities under the Securities Act
and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and
applicable state securities laws in connection with the purchase
and distribution of the Capital Securities by the Underwriters,
no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body
is required for the execution, delivery and performance of this
Agreement the Declaration, the Guarantee Agreement, the Indenture
or the Junior Subordinated Securities by the Company or the
consummation by the Company of the transactions contemplated
herein and therein.
(xiv) The statements made in the Prospectus under the
captions "Description of Capital Securities", "Description of
Junior Subordinated Debentures", "The Trust", "Description of
Guarantee" and "Relationship Among the Capital Securities, the
Junior Subordinated Debentures and the Guarantee", insofar as
such statements purport to constitute summaries of the terms of
the Capital Securities, the Junior Subordinated Debentures and
the Guarantee Agreement, constitute accurate summaries of the
terms of such instruments in all material respects.
<PAGE>
16
(xv) To the best of such counsel's knowledge, there are no
contracts, agreements or understandings between the Company and
any person granting such person the right to require the Company
to file a registration statement under the Securities Act with
respect to any securities of the Company owned or to be owned by
such person or to require the Company to include such securities
in the securities registered pursuant to the Registration
Statements.
(xvi) Neither the Company nor the Trust is required to
register as an investment company under the Investment Company
Act as a result of the consummation of the transactions
contemplated by this Agreement, the Declaration, the Indenture,
the Junior Subordinated Debentures or the Guarantee Agreement.
In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the Federal laws of the United States
of America, the laws of the State of Washington and the General
Corporation Law of Delaware. Such counsel shall also have furnished
to the Representative a written statement, addressed to the
Underwriters and dated the Closing Date, in form and substance
satisfactory to the Representative, to the effect that (x) such
counsel has acted as counsel to the Company on a regular basis
(although the Company is also represented by its General Counsel and
with respect to certain other matters, by other outside counsel), has
acted as counsel to the Company in connection with previous financing
transactions and has acted as counsel to the Company in connection
with the preparation of the Registration Statements, and (y) based on
the foregoing, no facts have come to the attention of such counsel
which lead it to believe that the Registration Statements, as of their
respective Effective Dates, contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary in order to make the statements therein
not misleading, except that no view need be expressed as to the
financial statements and other financial and statistical data included
in the Registration Statements or the Prospectus.
(e) With respect to the letter of Deloitte & Touche LLP and Price
Waterhouse LLP delivered to the Representative concurrently with the
execution of this Agreement (the "initial letter"), the Company shall
have furnished to the Representative letters (the "bring-down
letters") of each of such accountants, addressed to the Underwriters
and dated the Closing Date (i) confirming that they are independent
public accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of the date of the bring-down letter (or,
with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given
in the Prospectus, as of a date not more than five days prior to the
date of the bring-down letter), the conclusions and findings of such
firm with respect to the financial information and other matters
covered by the initial
<PAGE>
17
letter and (iii) confirming in all material respects the conclusions
and findings set forth in the initial letter.
(f) Morris, Nichols, Arsht & Tunnell shall have furnished to the
Representative its written opinion, as special Delaware counsel to the
Company and the Trust, addressed to the Underwriters and dated the
Closing Date, in form and substance satisfactory to the
Representative, 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 and, under the Declaration and the Delaware Business
Trust Act, has the business trust power and authority to own
property and to conduct its business, all as described in the
Prospectus, and to enter into and perform its obligations under
each of this Agreement, the Capital Securities, the Common
Securities and the Declaration.
(ii) The Common Securities have been duly authorized for
issuance by the Declaration, and, when issued and delivered by the
Trust to the Company as described in the Prospectus and the
Declaration, will be validly issued undivided beneficial interests
in the assets of the Trust; under the Declaration and the Delaware
Business Trust Act, the issuance of the Common Securities is not
subject to preemptive or other similar rights.
(iii) The Capital Securities have been duly authorized for
issuance by the Declaration and, when issued and delivered as set
forth in this Agreement and the Declaration, will be validly
issued and (subject to the qualifications set forth herein) fully
paid and non-assessable undivided beneficial interests in the
assets of the Trust, will be entitled to the benefits of the
Declaration, and 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; provided
that such counsel may note that the holders of Capital Securities
will be subject to the withholding provisions of Section 10.4 of
the Declaration and may be required to make payment or provide
indemnity or security as set forth in the Declaration.
(iv) Under the Declaration and the Delaware Business Trust
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.
<PAGE>
18
(v) Assuming the Declaration has been duly authorized,
executed and delivered by the Company and the Trustees, the
Declaration constitutes a valid and binding obligation of the
Company and the Trustees, and is enforceable against the Company
and the Trustees in accordance with its terms, except to the
extent that enforcement thereof may be limited by (A) bankruptcy,
insolvency, moratorium, receivership, reorganization, liquidation,
fraudulent conveyance or transfer and other similar laws relating
to or affecting the rights and remedies of creditors generally,
(ii) principles of equity, including applicable law relating to
fiduciary duties (regardless of whether considered and applied in
a proceeding in equity or at law), and (iii) the effect of
applicable public policy on the enforceability of provisions
relating to indemnification or contribution.
(vi) The execution, delivery and performance by the Trust
of this Agreement and the consummation by the Trust of the
transactions contemplated by this Agreement will not violate
(i) any of the provisions of the Certificate of Trust or the
Declaration or (ii) any applicable Delaware law or
administrative regulation. After due inquiry on May , 1997,
limited to, and solely to the extent disclosed thereupon, court
dockets for active cases of the Court of Chancery of the State of
Delaware in and for New Castle County, Delaware, of the Superior
Court of the State of Delaware in and for New Castle County,
Delaware, and of the United States District Court sitting in the
State of Delaware, such counsel is not aware of any legal or
governmental proceeding pending against the Trust.
(vii) Assuming that the Trust derives no income from or
connected with services provided within the State of Delaware
and has no assets, activities (other than having a Delaware
Trustee as required by the Delaware Business Trust Act and the
filing of documents with the Secretary of State of the State of
Delaware) or employees in the State of Delaware. No filing with,
or authorization, approval, consent, license, order, registration,
qualification or decree of, any Delaware court or Delaware
governmental authority or Delaware agency (other than as may be
required under the securities or blue sky laws of the State of
Delaware, as to which such counsel need express no opinion) is
necessary or required solely in connection with the due
authorization, execution and delivery of this Agreement by the
Trust or for the offering, issuance, sale or delivery of the
Securities by the Trust in accordance with the Declaration and
the Prospectus.
(g) The Company shall have furnished to the Representative a
certificate, dated the Closing Date, of its Chairman of the Board, its
President or a Vice President and its chief financial officer stating
that:
(i) The representations, warranties and agreements of the
Company and the Trust in Section 1 are true and correct as of the
Closing Date; the Company and the Trust have complied with all
their agreements contained herein; and the conditions set forth
in Section 7 have been fulfilled;
<PAGE>
19
(ii) (A) Neither the Company nor any of its Significant
Subsidiaries has sustained since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus and (B) since such date there
has not been any material change in the capital stock or
long-term debt of the Company or any of its Significant
Subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results
of operations of the Company and its subsidiaries taken as a
whole, otherwise than as set forth or contemplated in the
Prospectus; and
(iii) They have carefully examined the Registration
Statements and the Prospectus and, in their opinion (A) the
Registration Statements, as of their respective Effective Dates,
and the Prospectus, as of each of the Effective Dates, did not
include any untrue statement of a material fact and did not omit
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (B)
since the Effective Date of the Primary Registration Statement,
no event has occurred which should have been set forth in a
supplement or amendment to either of the Registration Statements
or the Prospectus.
(h)(i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus any
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus and (ii) since
such date there shall not have been any change in the capital stock or
long-term debt of the Company or any of its Significant Subsidiaries
or any change, or any development involving a prospective change, in
or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is, in the judgment of the
Representative, so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities on the terms and in the manner contemplated in the
Prospectus.
(i) Subsequent to the execution and delivery of this Agreement
(i) no downgrading shall have occurred in the rating accorded the
Company's debt securities or preferred stock by any "nationally
recognized statistical rating organization", as that term is defined
by the Commission for purposes of Rule 436(g)(2) of the Rules and
Regulations and (ii) no such organization shall have
<PAGE>
20
publicly announced that it has under surveillance or review, with
possible negative implications, its rating of any of the Company's
debt securities or preferred stock.
(j) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following:(i) trading in
securities generally on the New York Stock Exchange or the American
Stock Exchange or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter
market, shall have been suspended or minimum prices shall have been
established on any such exchange or such market by the Commission, by
such exchange or by any other regulatory body or governmental
authority having jurisdiction,(ii) a banking moratorium shall have
been declared by Federal or state authorities,(iii) the United States
shall have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States or there shall
have been a declaration of a national emergency or war by the United
States or (iv) there shall have occurred such a material adverse
change in general economic, political or financial conditions (or the
effect of international conditions on the financial markets in the
United States shall be such) as to make it, in the judgment of a
majority in interest of the several Underwriters, impracticable or
inadvisable to proceed with the public offering or delivery of the
Securities on the terms and in the manner contemplated in the
Prospectus.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance satisfactory to counsel
for the Underwriters.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and the Trust, jointly and severally, shall indemnify
and hold harmless each Underwriter, its officers and employees and each person,
if any, who controls any Underwriter within the meaning of the Securities Act,
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of the Securities),
to which that Underwriter, officer, employee or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon,(i) any untrue
statement or alleged untrue statement of a material fact contained (A) in any
Preliminary Prospectus, either of the Registration Statements or the Prospectus,
or in any amendment or supplement thereto, or (B) in any blue sky application or
other document prepared or executed by the Company or the Trust (or based upon
any written information furnished by the Company or the Trust) specifically for
the purpose of qualifying any or all of the Securities under the securities laws
of any state or other jurisdiction (any such application, document or
information being hereinafter called a "Blue Sky Application"), or (ii) the
omission or alleged omission to state in any Preliminary Prospectus, either of
the Registration Statements or the Prospectus, or in any amendment or supplement
thereto, or in any Blue Sky Application any material fact required to be stated
therein or necessary to make the statements therein not misleading, and shall
reimburse each Underwriter and each such officer, employee and controlling
person promptly upon demand for any legal or other expenses reasonably incurred
<PAGE>
21
by that Underwriter, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; PROVIDED, HOWEVER,
that the Company and the Trust shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of, or
is based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statements
or the Prospectus, or in any such amendment or supplement, or in any Blue Sky
Application in reliance upon and in conformity with the written information
furnished to the Company through the Representative by or on behalf of any
Underwriter specifically for inclusion therein and described in Section 8(e).
The foregoing indemnity agreement is in addition to any liability which the
Company or the Trust may otherwise have to any Underwriter or to any officer,
employee or controlling person of that Underwriter.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company and the Trust, their officers and employees, each of
their directors and each person, if any, who controls the Company within the
meaning of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company or the Trust or any such director, officer or controlling person may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon,(i) any
untrue statement or alleged untrue statement of a material fact contained (A) in
any Preliminary Prospectus, either of the Registration Statements or the
Prospectus, or in any amendment or supplement thereto, or (B) in any Blue Sky
Application or (ii) the omission or alleged omission to state in any Preliminary
Prospectus, either of the Registration Statements or the Prospectus, or in any
amendment or supplement thereto, or in any Blue Sky Application any material
fact required to be stated therein or necessary to make the statements therein
not misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with the written information furnished to the Company and
the Trust through the Representative by or on behalf of that Underwriter
specifically for inclusion therein and described in Section 8(e), and shall
reimburse the Company and the Trust and any such director, officer or
controlling person for any legal or other expenses reasonably incurred by the
Company or the Trust or any such director, officer or controlling person in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred.
The foregoing indemnity agreement is in addition to any liability which any
Underwriter may otherwise have to the Company and the Trust or any such
director, officer or controlling person.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; PROVIDED, HOWEVER, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, PROVIDED FURTHER, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall
<PAGE>
22
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; PROVIDED, HOWEVER, that
any indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
employment thereof has been specifically authorized by the indemnifying party in
writing, (ii) such indemnified party shall have been advised by such counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party and in the
reasonable judgment of such counsel it is advisable for such indemnified party
to employ separate counsel or (iii) the indemnifying party has failed to assume
the defense of such action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party,
it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all such indemnified
parties, which firm shall be designated in writing by the Representative, if the
indemnified parties under this Section 8 consist of any Underwriter or any of
their respective officers, employees or controlling persons, or by the Company,
if the indemnified parties under this Section consist of the Company or the
Trust or any of the Company's or the Trust's directors, officers, employees or
controlling persons. No indemnifying party shall (i) without the prior written
consent of the indemnified parties (which consent shall not be unreasonably
withheld), settle or compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding, or (ii) be liable for any settlement
of any such action effected without its written consent (which consent shall not
be unreasonably withheld), but if settled with its written consent or if there
be a final judgment of the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss of liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof,(i) in
such proportion as shall be
<PAGE>
23
appropriate to reflect the relative benefits received by the Company and the
Trust on the one hand and the Underwriters on the other from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company and the Trust on the one hand and the Underwriters on the
other with respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Trust on the one hand and the Underwriters on the other with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Securities purchased under this
Agreement (before deducting expenses) received by the Company and the Trust, on
the one hand, and the total underwriting discounts and commissions received by
the Underwriters with respect to the shares of the Securities purchased under
this Agreement, on the other hand, bear to the total gross proceeds from the
offering of the shares of the Securities under this Agreement, in each case as
set forth in the table on the cover page of the Prospectus. The relative fault
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company and the Trust or the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
For purposes of the preceding two sentences, the net proceeds deemed to be
received by the Company shall be deemed to be also for the benefit of the Trust
and information supplied by the Company shall also be deemed to have been
supplied by the Trust. The Company and the Trust and the Underwriters agree
that it would not be just and equitable if contributions pursuant to this
Section 8(d) were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 8(d) shall be deemed to include, for purposes
of this Section 8(d), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 8(d), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to the
public was offered to the public exceeds the amount of any damages which such
Underwriter has otherwise paid or become liable to pay by reason of any untrue
or alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute as provided in this Section 8(d) are several in proportion to their
respective underwriting obligations and not joint.
(e) The Underwriters severally confirm that the statements with
respect to the public offering of the Securities set forth on the cover page of,
and under the caption "Underwriting" in, the Prospectus are correct and
constitute the only information furnished in writing to the Company by or on
behalf of the Underwriters specifically for inclusion in the Registration
Statements and the Prospectus.
<PAGE>
24
9. DEFAULTING UNDERWRITERS.
If, on the Closing Date, any Underwriter defaults in the performance
of its obligations under this Agreement, the remaining non-defaulting
Underwriters shall be obligated to purchase the Capital Securities which the
defaulting Underwriter agreed but failed to purchase on the Closing Date in the
respective proportions which the Capital Securities set opposite the name of
each remaining non-defaulting Underwriter in Schedule 1 hereto bears to the
total Capital Securities set opposite the names of all the remaining
non-defaulting Underwriters in Schedule 1 hereto; PROVIDED, HOWEVER, that the
remaining non-defaulting Underwriters shall not be obligated to purchase any of
the Capital Securities on the Closing Date if the total Capital Securities which
the defaulting Underwriter or Underwriters agreed but failed to purchase on such
date exceeds 9.09% of the total Capital Securities to be purchased on the
Closing Date, and any remaining non-defaulting Underwriter shall not be
obligated to purchase more than 110% of the Capital Securities which it agreed
to purchase on the Closing Date pursuant to the terms of Section 2. If the
foregoing maximums are exceeded, the remaining non-defaulting Underwriters, or
those other underwriters satisfactory to the Representative who so agree, shall
have the right, but shall not be obligated, to purchase, in such proportion as
may be agreed upon among them, all the Capital Securities to be purchased on the
Closing Date. If the remaining Underwriters or other underwriters satisfactory
to the Representative do not elect to purchase the Capital Securities which the
defaulting Underwriter or Underwriters agreed but failed to purchase on the
Closing Date, this Agreement shall terminate without liability on the part of
any non-defaulting Underwriter or the Company and the Trust, except that the
Company and the Trust will continue to be liable for the payment of expenses to
the extent set forth in Sections 6 and 11. As used in this Agreement, the term
"Underwriter" includes, for all purposes of this Agreement unless the context
requires otherwise, any party not listed in Schedule 1 hereto who, pursuant to
this Section 9, purchases the Capital Securities which a defaulting Underwriter
agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company or the Trust for damages caused by its
default. If other underwriters are obligated or agree to purchase the Capital
Securities of a defaulting or withdrawing Underwriter, either the
Representative, the Company or the Trust may postpone the Closing Date for up to
seven full business days in order to effect any changes that in the opinion of
counsel for the Company or counsel for the Underwriters may be necessary in the
Registration Statements, the Prospectus or in any other document or arrangement.
10. TERMINATION. The obligations of the Underwriters hereunder may
be terminated by the Representative by notice given to and received by the
Company and the Trust prior to delivery of and payment for the Capital
Securities if, prior to that time, any of the events described in Sections 7(h),
7(i) or 7(j) shall have occurred or if the Underwriters shall decline to
purchase the Capital Securities for any reason permitted under this Agreement.
11. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If (a) the Company or
the Trust shall fail to tender the Securities for delivery to the Underwriters
for any reason permitted under this Agreement, or (b) the Underwriters shall
decline to purchase the Capital Securities for any reason permitted under this
Agreement (including the termination of this Agreement pursuant to Section 10)
the Company and the Trust shall reimburse the Underwriters for the fees and
<PAGE>
25
expenses of their counsel and for such other out-of-pocket expenses as shall
have been incurred by them in connection with this Agreement and the proposed
purchase of the Capital Securities, and upon demand the Company and the Trust
shall pay the full amount thereof to the Representative. If this Agreement is
terminated pursuant to Section 9 by reason of the default of one or more
Underwriters, neither the Company nor the Trust shall be obligated to reimburse
any defaulting Underwriter on account of those expenses.
12. NOTICES, ETC. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to Lehman Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate
Department (Fax: 212-528-8822);
(b) if to the Company or to the Trust, shall be delivered or sent
by mail, telex or facsimile transmission to the address of the Company
set forth in the Primary Registration Statement, Attention:
Marc R. Kittner (Fax: 206-554-2790);
PROVIDED, HOWEVER, that any notice to an Underwriter pursuant to Section 8(c)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representative, which address will be supplied to any other party hereto by the
Representative upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company and
the Trust shall be entitled to act and rely upon any request, consent, notice or
agreement given or made on behalf of the Underwriters by Lehman Brothers Inc.
13. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Company and
the Trust and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
(A) the representations, warranties, indemnities and agreements of the Company
and the Trust contained in this Agreement shall also be deemed to be for the
benefit of the officers and employees of each Underwriter and the person or
persons, if any, who control each Underwriter within the meaning of Section 15
of the Securities Act and (B) the indemnity agreement of the Underwriters
contained in Section 8(b) of this Agreement shall be deemed to be for the
benefit of directors, officers and employees of the Company and any person
controlling the Company within the meaning of Section 15 of the Securities Act.
Nothing in this Agreement is intended or shall be construed to give any person,
other than the persons referred to in this Section 13, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
contained herein.
14. SURVIVAL. The respective indemnities, representations,
warranties and agreements of the Company and the Trust and the Underwriters
contained in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Securities and shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person controlling any
of them.
<PAGE>
26
15. DEFINITION OF THE TERMS "BUSINESS DAY" AND "SUBSIDIARY". For
purposes of this Agreement,(a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations.
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF NEW YORK.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
18. HEADINGS. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
<PAGE>
27
If the foregoing correctly sets forth the agreement among the Company
and the Trust and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
WASHINGTON MUTUAL, INC.
By
----------------------------------
Name:
Title:
WASHINGTON MUTUAL CAPITAL I
By
----------------------------------
Name:
Title:
Accepted:
LEHMAN BROTHERS INC.
By
----------------------------------
AUTHORIZED REPRESENTATIVE
For itself and as Representative
of the several Underwriters named
in Schedule 1 hereto
<PAGE>
SCHEDULE 1
Number of
Underwriters Shares
------------ ---------
Lehman Brothers Inc. . . . . . . . . . . . . .
---------
Total . . . . . . . . . . . . . . . . . . . . . . . ---------
---------
<PAGE>
[Letterhead of Morris, Nichols, Arsht & Tunnel1]
May 28, 1997
Washington Mutual Capital I
c/o Washington Mutual, Inc.
1201 Third Avenue
Seattle, Washington 98101
Re: WASHINGTON MUTUAL CAPITAL I
Ladies and Gentlemen:
We have acted as special Delaware counsel to Washington Mutual Capital I, a
Delaware statutory business trust (the "Trust"), in connection with certain
matters relating to the organization of the Trust and the proposed issuance of
Capital Securities to beneficial owners pursuant to and as described in
Registration Statement No. 333-27427 (and the Prospectus forming a part thereof)
on Form S-3 filed with the Securities and Exchange Commission on May 20,
1997, as amended by Amendment No. 1 thereto (as amended, the "Registration
Statement"). Capitalized terms used herein and not otherwise herein defined
are used as defined in the Amended and Restated Declaration of Trust of the
Trust in the form attached as an exhibit to the Registration Statement (the
"Governing Instrument").
In rendering this opinion, we have examined copies of the following
documents in the forms provided to us: the Certificate of Trust of the Trust
as filed in the Office of the Secretary of State of the State of Delaware (the
"State Office") on May 15, 1997 (the "Certificate"); a Declaration of Trust of
the Trust dated as of May 15, 1997 (the "Original Governing Instrument"); the
Governing Instrument; the Indenture to be entered into between Washington
Mutual, Inc. ("Washington Mutual"), and The Bank of New York, as Trustee; the
Guarantee Agreement to be made by Washington Mutual; the form of Underwriting
Agreement relating to the Capital Securities between, among others, Washington
Mutual, the Trust and Lehman Brothers Inc. (the "Underwriting Agreement"); the
Registration Statement; and a certification of good standing of the Trust
obtained as of a recent date from the State Office. In such examinations, we
have assumed the genuineness of all signatures, the conformity to original
documents of all documents submitted to us as drafts or copies or forms of
documents to be executed and the
<PAGE>
Washington Mutual Capital I
c/o Washington Mutual, Inc.
May 28, 1997
Page 2
legal capacity of natural persons to complete the execution of documents. We
have further assumed for purposes of this opinion: (i) the due formation or
organization, valid existence and good standing of each entity that is a
party to any of the documents reviewed by us under the laws of the jurisdiction
of its respective formation or organization; (ii) the due authorization,
execution and delivery by, or on behalf of, each of the parties thereto of the
above-referenced documents (including, without limitation, the due
authorization, execution and delivery of the Governing Instrument and the
Underwriting Agreement prior to the first issuance of Capital Securities); (iii)
that no event has occurred subsequent to the filing of the Certificate, or will
occur prior to the issuance of the Capital Securities, that would cause a
dissolution or liquidation of the Trust under the Original Governing Instrument
or the Governing Instrument, as applicable; (iv) that the activities of the
Trust have been and will be conducted in accordance with the Original Governing
Instrument or the Governing Instrument, as applicable, and the Delaware Business
Trust Act, 12 DEL. C. Sections 3801 ET SEQ. (the "Delaware Act"); (v) that each
Holder of Capital Securities has, or prior to the first issuance of Capital
Securities, will have made payment of the required consideration therefor and
received a Capital Securities Certificate in consideration thereof in accordance
with the terms and conditions of the Governing Instrument, the Registration
Statement and the Underwriting Agreement and that the Capital Securities are
otherwise issued and sold to the Captial Securities Holders in accordance with
the terms, conditions, requirements and procedures set forth in the Governing
Instrument, the Registration Statement and the Underwriting Agreement; and
(vi) that the documents examined by us are in full force and effect, express
the entire understanding of the parties thereto with respect to the subject
matter thereof and have not been modified, supplemented or otherwise amended,
except as herein referenced. No opinion is expressed with respect to the
requirements of, or compliance with, federal or state securities or blue sky
laws. Further, we express no opinion with respect to the Registration
Statement or any other offering materials relating to the Capital Securities
and we assume no responsibility for their contents. As to any fact material
to our opinion, other than those assumed, we have relied without independent
investigation on the above-referenced documents and on the accuracy, as of
the date hereof, of the matters therein contained.
Based on and subject to the foregoing, and limited in all respects to
matters of Delaware law, it is our opinion that, upon issuance, the Capital
Securities will constitute validly-issued and, subject to the terms of the
Governing Instrument, fully-paid and nonassessable beneficial interests in the
assets of the Trust. We note that, pursuant to section 10.4 of the Governing
Instrument,
<PAGE>
Washington Mutual Capital I
c/o Washington Mutual, Inc.
May 28, 1997
Page 3
the Trust may withhold amounts otherwise distributable to a Holder and pay over
such amounts to the applicable jurisdictions in accordance with federal, state
and local law and any amount withheld will be deemed to have been distributed
to such Holder and that, pursuant to the Governing Instrument, Capital
Security Holders may be obligated to make payments or provide indemnity or
security under the circumstances set forth therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "LEGAL
MATTERS" in the Prospectus forming a part thereof. In giving this consent, we
do not thereby admit that we come within the category of persons whose consent
is required under Section 7 of the Securities Act of 1933, as amended, or the
rules and regulations of the Securities and Exchange Commission thereunder.
This opinion speaks only as of the date hereof and is based on our
understandings and assumptions as to present facts, and on our review of the
above-referenced documents and the application of Delaware law as the same
exist as of the date hereof, and we undertake no obligation to update or
supplement this opinion after the date hereof for the benefit of any person
or entity with respect to any facts or circumstances that may hereafter
come to our attention or any changes in facts or law that may hereafter occur or
take effect. This opinion is intended solely for the benefit of the addressee
hereof in connection with the matters contemplated hereby and may not be
relied on by any other person or entity or for any other purpose without our
prior written consent.
Very truly yours,
MORRIS, NICHOLS, ARSHT & TUNNELL
<PAGE>
[Letterhead of Foster Pepper & Shefelman PLLC]
May 27, 1997
Washington Mutual, Inc.
1201 Third Avenue
Seattle, Washington 98101
Gentlemen:
We have acted as counsel for Washington Mutual, Inc. in connection with the
registration on Form S-3, Registration No. 333-27427 (the "Registration
Statement") under the Securities Act of 1933, as amended, of Junior Subordinated
Debentures in the principal amount $300,000,000, and guarantees of Capital
Securities of Washington Mutual Capital I (the "Guarantee"). Capitalized terms
not defined herein have the meaning set forth in the Prospectus included in the
Registration Statement.
In connection with the opinion expressed below, we have examined and are
familiar with:
(a) the form of Trust Indenture between Washington Mutual, Inc. and
the Bank of New York as trustee, which includes the form of the Junior
Subordinated Debentures;
(b) the form of Guarantee Agreement between Washington Mutual, Inc.
and the Bank of New York as Trustee;
(c) the actions of the Board of Directors of Washington Mutual, Inc.
pertaining to the Junior Subordinated Debentures and the Guarantee; and
(d) the Registration Statement.
Based upon the foregoing, we are of the opinion that when (1) the
Registration Statement shall have been declared effective by order of the
Securities and Exchange Commission and (2) the Junior Subordinated Debentures
and the Guarantee shall have been issued, sold and delivered upon the terms and
conditions set forth in the Registration Statement and the Prospectus, the
Junior Subordinated Debentures and the Guarantee shall have been duly authorized
and will constitute valid and binding obligations of Washington Mutual,
<PAGE>
Washington Mutual, Inc.
May 27, 1997
Page 2
Inc., subject, as to enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles, assuming that enforcement of rights and
remedies is undertaken in a commercially reasonable manner and in good faith.
In rendering this opinion, we are not expressing an opinion as to the laws
of any jurisdiction other than the State of Washington and the United States of
America and we assume no responsibility as to the applicability of the laws of
any other jurisdiction to the subject matter hereof and to the effects of such
laws thereon.
This opinion is rendered solely to you and for your benefit solely in
connection with the registration of the Junior Subordinated Debentures and the
Guarantee. This opinion may not be relied upon by you for any other purpose and
may not be relied upon by any other person, firm, corporation or entity for any
purposes whatsoever without our prior written consent. We hereby consent to the
inclusion of this opinion as an exhibit to the Registration Statement. Unless
the prior written consent of our firm is obtained, this opinion may not be
quoted or otherwise referred to in any written report, proxy statement or other
registration statement, nor is it to be filed with or furnished to any other
governmental agency or other person, except as otherwise required by law.
Very truly yours,
FOSTER PEPPER & SHEFELMAN PLLC
<PAGE>
[Foster Pepper & Shefelman PLLC letterhead]
May 19, 1997
Board of Directors
Washington Mutual, Inc.
1201 Third Avenue, Suit 1500
Seattle, Washington 98101
Ladies and Gentlemen
FORM S-3 TAX CONSEQUENCES
Based upon our review of the Form S-3 dated May 20, 1997 and certain other
facts and documents we consider relevant, under federal income tax laws in
effect on the date hereof, in our opinion the description of tax consequences
set forth in that portion of such Form S-3 under the caption "Certain United
States Federal Income Tax Consequences" is true, correct and, to the extent
set forth therein, complete.
Our opinion is intended solely for the benefit of Washington Mutual and may
not be relied upon for any other purpose or by any other person or entity or
made available to any other person or entity without our prior written
consent, except that a copy of this opinion may, as required, be delivered to
any appropriate governmental regulatory agency.
Very truly yours,
/s/Carl J. West
Carl J. West
CJW:dw
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the registration statement on
Form S-3 of Washington Mutual, Inc., relating to Trust Capital Securities, of
our report dated January 26, 1996, except as to Note 27 to the consolidated
financial statements, which is as of February 8, 1996, with respect to the
consolidated balance sheet of Keystone Holdings, Inc. and subsidiaries as of
December 31, 1995, and the related consolidated statements of earnings,
stockholder's equity, and cash flows for each of the years in the two-year
period ended December 31, 1995, which report appears in the 1996 Annual
Report on Form 10-K/A of Washington Mutual, Inc., and to the reference to our
firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG PEAT MARWICK LLP
Los Angeles, California
May 16, 1997
<PAGE>
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
---------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
---------------------
WASHINGTON MUTUAL, INC.
(Exact name of obligor as specified in its charter)
Washington 91-1653725
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1201 Third Avenue
Seattle, Washington 98101
(Address of principal executive offices) (Zip code)
----------------------
Subordinated Debt Securities
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 27th day of May, 1997.
THE BANK OF NEW YORK
By: /s/WALTER N. GITLIN
--------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
-4-
<PAGE>
- -------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the Federal Reserve
System, at the close of business December 31, 1996, published in accordance with
a call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ......................... $ 6,024,605
Interest-bearing balances ................. 808,821
Securities:
Held-to-maturity securities ............... 1,071,747
Available-for-sale securities ............. 3,105,207
Federal funds sold in domestic offices
of the bank: ............................. 4,250,941
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................................. 31,962,915
LESS: Allowance for loan and
lease losses ............................ 635,084
LESS: Allocated transfer risk
reserve.................................. 429
Loans and leases, net of unearned
income, allowance, and reserve........... 31,327,402
Assets held in trading accounts ............. 1,539,612
Premises and fixed assets (including
capitalized leases) ....................... 692,317
Other real estate owned ..................... 22,123
Investments in unconsolidated
subsidiaries and associated
companies ................................. 213,512
Customers' liability to this bank on
acceptances outstanding ................... 985,297
Intangible assets ........................... 590,973
Other assets ................................ 1,487,903
-----------
Total assets ................................ $52,120,460
-----------
-----------
LIABILITIES
Deposits:
In domestic offices ....................... $25,929,642
Noninterest-bearing ....................... 11,245,050
Interest-bearing .......................... 14,684,592
In foreign offices, Edge and
Agreement subsidiaries, and IBFs .......... 12,852,809
Noninterest-bearing ....................... 552,203
Interest-bearing ......................... 12,300,606
Federal funds purchased and securities
sold under agreements to repurchase
in domestic offices of the
bank and of its Edge and Agreement
subsidiaries, and in IBFs:
Federal funds purchased ................... 1,360,877
Securities sold under agreements
to repurchase............................ 226,158
Demand notes issued to the U.S.
Treasury .................................. 204,987
Trading liabilities ......................... 1,437,445
Other borrowed money:
With original maturity of one year
or less ................................. 2,312,556
With original maturity of more than
one year ................................ 20,766
Bank's liability on acceptances exe-
cuted and outstanding ..................... 1,014,717
Subordinated notes and debentures ........... 1,014,400
Other liabilities ........................... 1,721,291
-----------
Total liabilities ........................... 48,095,648
-----------
-----------
EQUITY CAPITAL
Common stock ................................ 942,284
Surplus ..................................... 731,319
Undivided profits and capital
reserves .................................. 2,354,095
Net unrealized holding gains
(losses) on available-for-sale
securities ................................ 7,030
Cumulative foreign currency transla-
tion adjustments .......................... (9,916)
-----------
Total equity capital ........................ 4,024,812
-----------
Total liabilities and equity
capital ................................... $52,120,460
-----------
-----------
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
- -------------------------------------------
<PAGE>
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
--------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
--------------------
WASHINGTON MUTUAL CAPITAL I
(Exact name of obligor as specified in its charter)
Delaware Applied for
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1201 Third Avenue
Seattle, Washington 98101
(Address of principal executive offices) (Zip code)
----------------------
Preferred Securities
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 27th day of May, 1997.
THE BANK OF NEW YORK
By: /S/WALTER N. GITLIN
--------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
-4-
<PAGE>
- ----------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the Federal Reserve
System, at the close of business December 31, 1996, published in accordance with
a call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 6,024,605
Interest-bearing balances .......... 808,821
Securities:
Held-to-maturity securities ........ 1,071,747
Available-for-sale securities ...... 3,105,207
Federal funds sold in domestic offices
of the bank: .......................... 4,250,941
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ........................... 31,962,915
LESS: Allowance for loan and
lease losses ..................... 635,084
LESS: Allocated transfer risk
reserve........................... 429
Loans and leases, net of unearned
income, allowance, and reserve 31,327,402
Assets held in trading accounts ...... 1,539,612
Premises and fixed assets (including
capitalized leases) ................ 692,317
Other real estate owned .............. 22,123
Investments in unconsolidated
subsidiaries and associated
companies .......................... 213,512
Customers' liability to this bank on
acceptances outstanding ............ 985,297
Intangible assets .................... 590,973
Other assets ......................... 1,487,903
-----------
Total assets ......................... $52,120,460
-----------
-----------
LIABILITIES
Deposits:
In domestic offices ................ $25,929,642
Noninterest-bearing ................ 11,245,050
Interest-bearing ................... 14,684,592
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 12,852,809
Noninterest-bearing ................ 552,203
Interest-bearing .................. 12,300,606
Federal funds purchased and securities
sold under agreements to repurchase
in domestic offices of the
bank and of its Edge and Agreement
subsidiaries, and in IBFs:
Federal funds purchased ............ 1,360,877
Securities sold under agreements
to repurchase....................... 226,158
Demand notes issued to the U.S.
Treasury ........................... 204,987
Trading liabilities .................. 1,437,445
Other borrowed money:
With original maturity of one year
or less .......................... 2,312,556
With original maturity of more than
one year ......................... 20,766
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,014,717
Subordinated notes and debentures .... 1,014,400
Other liabilities .................... 1,721,291
-----------
Total liabilities .................... 48,095,648
-----------
-----------
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 731,319
Undivided profits and capital
reserves .......................... 2,354,095
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ 7,030
Cumulative foreign currency transla-
tion adjustments .................. ( 9,916)
-----------
Total equity capital ................ 4,024,812
-----------
Total liabilities and equity
capital ........................... $52,120,460
-----------
-----------
-----------
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
- --------------------------------------------------
<PAGE>
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
--------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
--------------------
WASHINGTON MUTUAL, INC.
(Exact name of obligor as specified in its charter)
Washington 91-1653725
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1201 Third Avenue
Seattle, Washington 98101
(Address of principal executive offices) (Zip code)
----------------------
Guarantee of Preferred Securities of
Washington Mutual Capital I
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 27th day of May, 1997.
THE BANK OF NEW YORK
By: /S/WALTER N. GITLIN
---------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
-4-
<PAGE>
- ------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the Federal Reserve
System, at the close of business December 31, 1996, published in accordance with
a call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 6,024,605
Interest-bearing balances .......... 808,821
Securities:
Held-to-maturity securities ........ 1,071,747
Available-for-sale securities ...... 3,105,207
Federal funds sold in domestic offices
of the bank: .......................... 4,250,941
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ........................... 31,962,915
LESS: Allowance for loan and
lease losses ..................... 635,084
LESS: Allocated transfer risk
reserve........................... 429
Loans and leases, net of unearned
income, allowance, and reserve 31,327,402
Assets held in trading accounts ...... 1,539,612
Premises and fixed assets (including
capitalized leases) ................ 692,317
Other real estate owned .............. 22,123
Investments in unconsolidated
subsidiaries and associated
companies .......................... 213,512
Customers' liability to this bank on
acceptances outstanding ............ 985,297
Intangible assets .................... 590,973
Other assets ......................... 1,487,903
-----------
Total assets ......................... $52,120,460
-----------
-----------
LIABILITIES
Deposits:
In domestic offices ................ $25,929,642
Noninterest-bearing ................ 11,245,050
Interest-bearing ................... 14,684,592
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 12,852,809
Noninterest-bearing ................ 552,203
Interest-bearing .................. 12,300,606
Federal funds purchased and securities
sold under agreements to repurchase
in domestic offices of the
bank and of its Edge and Agreement
subsidiaries, and in IBFs:
Federal funds purchased ............ 1,360,877
Securities sold under agreements
to repurchase....................... 226,158
Demand notes issued to the U.S.
Treasury ........................... 204,987
Trading liabilities .................. 1,437,445
Other borrowed money:
With original maturity of one year
or less .......................... 2,312,556
With original maturity of more than
one year ......................... 20,766
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,014,717
Subordinated notes and debentures .... 1,014,400
Other liabilities .................... 1,721,291
-----------
Total liabilities .................... 48,095,648
-----------
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 731,319
Undivided profits and capital
reserves .......................... 2,354,095
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ 7,030
Cumulative foreign currency transla-
tion adjustments .................. ( 9,916)
-----------
Total equity capital ................ 4,024,812
-----------
Total liabilities and equity
capital ........................... $52,120,460
-----------
-----------
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
- ------------------------------------------------------------------
